The research firm examines the ways foreign firms that don't wish to go down the joint venture route in China can win in the mainland's asset management market.

The best way for foreign asset managers to win market share on the Chinese mainland is through a “quasi-onshore” presence, concludes research firm Cerulli in a report wrestling with how non-domestic players have sometimes struggled to gain traction in the Asian giant.

The most suitable model is that of a wholly foreign-owned enterprise because it allows full ownership by foreign asset managers without having to worry about obtaining a joint-venture structure with a local partner, the firm said in its study, called Asset Management in China 2015. 

“The wholly foreign-owned enterprise space in China remains an area that has baffled market participants regarding permissible business scope. The most obvious reason is a lack of clear direction on what WFOEs can do, given that they come under the purview of the Ministry of Commerce and not the China Securities Regulatory Commission (CSRC),” the report said.

The most important element of the WFOE business revolves around the partnership model, and local partners in particular, the firm said.

"The most obvious way of interpreting this is that structuring of products directly by the WFOE is not allowed within the mainland, except under certain circumstances such as when QDLP (Qualified Domestic Limited Partnership) or QDIE (Qualified Domestic Investment Enterprise) quotas are used, in which case the WFOE will act as a private fund manager for offshore investments," Evonne Gan, an analyst with Cerulli who co-led the China research initiative, said.

"Thus, an important role of WFOEs also centers on conferring goodwill to partners, such as offering value-added service in areas such as education or advising them on plans relating to overseas expansion, if needed," said Yoon Ng, Cerulli's Asia research director.