Nicolo Polli (HSBC): Can Luxembourg become “Singapore West?”
As wealth creation blossoms in China, Niccolo Polli, CEO of HSBC of Luxembourg, discusses how the younger generation of entrepreneurs is influencing traditional Chinese appetites towards greater diversification across sector and geography and Luxembourg’s prospects of becoming the European Chinese family office hub, mirroring Singapore’s success in that role in Asia.
Evolving: Chinese Attitudes to Internationalizing Their Wealth
We are witnessing an evolution of attitudes to wealth management in China. The average age of the 626 billionaires in the country has fallen to 53 years old. The older generation grew their wealth from the traditional economy sectors like construction and real estate. They are typically quite happy keeping most of their wealth in physical assets within China. The next generation is more open to the concept of cashing in their wealth and then reinvesting it. They will also consider other ideas including internationalization – creating and managing their wealth beyond the borders of mainland China as a diversification play. This creates more opportunities around family offices.
“People looking for internationalization aren’t simply looking for a family office.”
Steppingstones Via Singapore
There are two centers that attract those open to diversification: obviously, there’s Hong Kong, which is right across the border. But now there's a rapidly emerging competitor, Singapore. People looking for internationalization aren’t simply looking for a family office. They want the whole ecosystem that accompanies that: geography, fiscal treatment, stability and an investment ecosystem that includes the lawyers and other investment professionals. When people in China think of Europe they typically think of London or Switzerland neither of which is in the EU which is not immediately understood. Luxembourg could be their steppingstone into Europe, but the Duchy must come up with a compelling proposition that can compete to attract these types of clients.
Developing a Definition of Diversification
Other elements can be considered diversification including estate planning, philanthropy, impact investing and ESG. In the past, conversations with the Chinese about wills and testaments wasn’t easy - they would think you were cursing them! But intergenerational planning has become acceptable following press reports of family feuds and business breakups arising from failures to engage in estate planning. Many considering their legacy following the rapid growth in wealth over the past 10 or 20 years are contributing through philanthropy or impact investing to give back to the community without asking for anything in return. China has recently committed to reducing its carbon footprint to net-zero by 2060, so it is a conversation that they are having. At present, it's probably only the top echelon who are thinking about it but, again, they are who we're targeting.