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Developments in Private Wealth and Estate Planning for People’s Republic of China Citizens and Residents

February 2020 Peter Ch’ng

The growth and momentum of China’s billionaires appears unstoppable. In a matter of a few years, the total wealth in Asia ‒ with the People’s Republic of China (PRC) dominating the list ‒ will overtake that of the USA. This has in part been driven by an exceptional period of business for Chinese entrepreneurs. In the past decade China’s industrial sector has undergone rapid expansion. High tech manufacturing industry is now a key part of the Chinese economy and the IT and FinTech industries are growing fast. Geographically, High Net Worth individuals have spread from the traditional cities of Shanghai, Beijing, Guangdong, Jiangsu and Zhejiang to Shandong, Sichuan, Hubei and Fujian, and are continuing on to Liaoning, Henan, Tianjin, Hebei, Anhui and Hunan.

More than 80% of family enterprises in China are still controlled by the first generation of wealth creators and a massive transfer of assets to the second generation is just getting started. Affluent Chinese family leaders are no longer just focused on creating wealth; they are dealing with succession planning for their businesses and wealth inheritance. A top priority for many of them is to create an enduring shareholder structure that will preserve family ownership, frequently involving reserved-power trusts.

Private wealth generally falls into two categories. The first is hard assets in the form of the family business’ operating company and real estate, which are by far the most important assets in terms of succession planning. The second is investments and liquid assets. There are differences in how to structure the ownership of each type of assets, based on many factors such as location, access to capital, deal flow, tax efficiency, legal protection and personal safety.


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Peter Ch’ng

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