In recent years China has seen an increase in wealth management products. This has been a result of the country’s restrictive financial system that offers limited investment techniques for the growing population of wealthy Chinese. These new wealth management products have on average a yield that is two percent higher than what bank deposits offer. Banks currently have a ceiling on their deposit rates and many have called for the liberalization of interest rates. Until this happens, households will continue to look for new investment avenues that increases returns on their money.
Internet companies are looking to capitalize on the wealth management void. For example, Alibaba affiliate, Aliplay, offers Yu E Bao, “an investment product created by Beijing-based Tian Hong Asset Management Co, that places investor money in funds.” As of the beginning of this year, Yu E Bao had over 250 billion yuan ($41 billion USD) in investments from around 50 million investors, making it the 14th largest money market in the world, according to Tian Hong.