The continuous stringent “zero-COVID” policy, coupled with a brutal crackdown have worsened the economic downturn and prompted more and more affluent Chinese to flee the country and set up family offices in Singapore.

According to a Financial Times report on December 13, the rising number of Chinese family offices in Singapore this year is attracting thousands of financial experts, including from international investment banks.

The outlet noted that a family office is a privately held company that handles investment and wealth management for rich families. Since the COVID-19 pandemic started in early 2020, Singapore has witnessed the number of family offices spike almost 200% to 1,500.

In addition, as much as 50% of the family offices in Singapore are from rich Chinese, moving wealth out of their hometowns.

Last year, Derrick Tan decided to quit the Bank of Singapore to establish a wealth management company to serve single family offices. He explained that the fear of missing out was the primary incentive for people to set up the offices. 

Tan said, “I was asking many of them the purpose in setting up a family office, and it seemed like 20 or 30 years ago — you listed your company because your friend or colleague listed a company.”

Therefore, since April this year, Singapore’s authority has required local family offices looking for tax exemptions to have at least two investment experts in their workforce. Meanwhile, bigger funds must have three or more.

Kher Sheng Lee, Managing Director and  Co-Head of APAC in Singapore, said that many family offices recruit from top banks and asset managers. They want to find “individuals with specific investment focus and expertise.”

The regulations have triggered a new wave of recruitment in the industry for thousands of asset management, private wealth management, and other banking experts. 

But Caroline Lee, a former private banker who oversees a Singapore-based single family office for a group of Chinese customers, thinks this phenomenon will make it a “lot tougher” for family offices to find true talent.

Lee said, “The large family offices are trying to offer the kind of salary senior wealth professionals at private banks are paid.”

She added, “A lot [depends] on the individual bankers, but it might appeal to people who feel there is too much politics at a big bank.”

A Singapore-based top investment banker working for a U.S. financial institution said family offices have taken several professionals away from his company.

He said, “I know of several other [banks] where they have lost someone senior and that person has gone straight to a family office. We are probably going to see more of them taking whole teams with them.”

The Financial Times reported that upon seeing the booming family office funds, Singapore’s policymakers have stepped in to raise higher requirements for the minimum capital and recruitment processes.

To meet the tax exemption criteria, family offices must grow assets under management to as much as $14.8 million within 2 years. 

Additionally, applicants must invest at least 10% of their assets under management or $10 million into domestic firms, including Singapore-based equities or start-ups.

Regarding China’s wealth, the Financial Times reported that under the CCP’s common prosperity approach, which tackles income inequality in the nation, wealthy citizens have decided to seek residency abroad and move capital out of the country, fearing for their own personal safety and high taxes.

Ryan Lin, director of Singapore-based law firm Bayfront Law, claimed that five wealthy Chinese families went to see him and asked for help establishing a family office in Singapore right in the middle of the 20th National Party Congress. 

Additionally, Bloomberg, citing investment migration consultancy Henley & Partners, reported that Beijing this year would likely suffer a massive loss of $48 billion following the emigration of 10,000 high-net-worth individuals from their homeland.

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