Goldman Sachs Gains Momentum in Targeting Chinese Market... Secures 100% Stake in Chinese Securities Firm

[Photo by Reuters-Yonhap News]

[Asia Economy Reporter Park Byung-hee] Goldman Sachs has secured a wholly-owned subsidiary in China. This move is expected to further strengthen Goldman Sachs' efforts to penetrate the Chinese market.

According to Bloomberg on the 18th (local time), the China Securities Regulatory Commission (CSRC) approved Goldman Sachs' 100% ownership of Gao Hua Securities.

Gao Hua Securities is a joint venture established in 2004 by Goldman Sachs and Fang Fenglei, a major player in China's financial sector. With CSRC's approval, Goldman Sachs will sever its 17-year partnership with Fang Fenglei and take full ownership of Gao Hua Securities.

Goldman Sachs is expected to expand its presence in the Chinese market and pursue various investment strategies for growth.

David Solomon, CEO of Goldman Sachs, along with other senior executives, stated in an internal announcement that this move marks a new chapter for their China business, and owning a wholly-owned subsidiary will enable them to pursue long-term growth and success in China.

Goldman Sachs plans to increase its workforce in China to 600 employees and expand its asset management division. According to a Goldman Sachs spokesperson, the company has already hired 116 new employees in China this year, bringing the total workforce to over 400.

It is noteworthy that the CSRC allowed Goldman Sachs' full ownership of Gao Hua Securities amid growing uncertainties in the Chinese economy due to regulatory tightening, a cooling real estate market, and power shortages. Hedge fund pioneer George Soros has recently expressed a negative stance on investing in China. The fact that China is opening its doors to American banks amid escalating tensions between China and the U.S. is also significant.

Goldman Sachs becomes the second Wall Street bank, after JPMorgan Chase, to have a wholly-owned subsidiary in China. JPMorgan received approval from Chinese authorities for full ownership two months ago.

Furthermore, the approval came 10 months after Goldman Sachs agreed with Fang Fenglei on the complete transfer of shares.

In August 2019, Goldman Sachs agreed with Fang Fenglei to increase its stake in Gao Hua Securities from 33% to 51%, and regulatory approval was granted seven months later, in March of last year.