Goldman Sachs Wants Lightning to Strike Twice in China

Goldman Sachs Wants Lightning to Strike Twice in China

Goldman Sachs Group Inc. is staging its next big act in China. The last time the global investment banking giant made a similarly big play was 15 years ago and it was tremendously rewarding. It was, as the Wall Street firm said then, a "historic investment.“ This latest overture involves the same mainland partner but the conditions have changed. It may prove a lot less profitable.

Tapping into Chinese money is, of course, part of an old Wall Street obsession. Where else can you lay your hands on a captive, multi-trillion dollar savings market in the post-pandemic world? Indeed, Goldman's partner is China's largest bank: Industrial and Commercial Bank of China, with over $4 trillion of deposits. The US firm will own 51% of their wealth management joint venture, set up through both of their asset management subsidiaries.

A partnership with ICBC alone opens up a distribution network of almost 9 million corporate and 680 million retail customers. Wealth management services were one of ICBC's fastest-growing businesses in terms of fee and commission income last year. Just as importantly, China's regulators have blessed the venture because Beijing wants foreign capital right now.

It's a little more complicated this time, though. The backdrop has