Illustration: Lu Ting/GT

According to a report released last week by consulting giant PricewaterhouseCoopers (PwC), the global financial services industry is expected to have nearly $101.7 trillion worth of assets under management by 2020, up dramatically from $63.9 trillion in 2012. Specifically, the Asia-Pacific market is projected to have assets worth nearly $16.2 trillion under management by the end of the current decade; accounting for 16.2 percent of the global total, versus 12 percent in 2012.

PwC's report also predicts that China will become one of the world's leaders in the asset management industry as local financial authorities move ahead with efforts to internationalize the yuan and liberalize the country's capital market. At the same time, more members of China's increasingly affluent society will need professional help to manage their accumulated wealth. And the need from this group is expected to become more pressing over the coming years as changes and uncertainties in the country's pension system force more citizens to prepare independently for life after retirement.

But compared against the expansive asset management industries seen in the US and Europe, China's asset managers are still very much in their infancy.

Census figures from 2010 show that China had more than 160 cities with a population of over 1 million, yet Shanghai is arguably the only place in the country with the resources needed to support a modern financial service sector. With demand poised to explode, asset managers in the city should look for creative ways to capture current and future opportunities.

First and foremost among Shanghai's major advantages is its geographic position - the city is located in the middle of China's eastern coastline and is easily accessible from air, land or sea. Municipal leaders have also been moving since the early 1990s - when work began in earnest to build Lujiazui into the city's business district - to cultivate the human resources necessary to run a world-class financial service hub. At present, Shanghai's banking, securities, insurance, trust and asset management industries employ nearly 230,000 professionals, according to media reports. Amid local plans to attract talent from both China and overseas, this figure is expected to hit 320,000 by 2015. Of course, local financial institutions should not only look for incentives to attract top-level talent, but also offer professional development opportunities to all their staff.

The city's free trade zone is also set to give local asset managers a leg up. It's widely believed that financial authorities will use the zone to test favorable policies related to taxation, interest rates and foreign exchange reforms. Interest is already running high, as reports say that the zone had 1,383 registered financial institutions, including 1,090 investment and asset management companies, by the end of February. Most of these firms entered the zone with the hopes that it would help them provide more innovative products and services to their clients. But as the zone's policy advantages become clearer, asset managers based in the area should also focus on building up their brands and their reputations in anticipation of broader demand down the road.

While the industry prepares for faster growth ahead, regulators should also take steps of their own to push forward policies to protect consumers. It's often the case in China that new industries attract intense competition and race-to-the-bottom practices that can easily create havoc if regulators aren't there to maintain order.

Indeed, the battle for market share is only expected to become more heated as foreign asset managers look for bigger pieces of the action. Several highly experienced overseas groups have already established joint ventures to participate in China's asset management market. Shenzhen-based UBS SDIC, China's first joint venture fund management company, has been an active player in the local market for years and had 32.6 billion yuan ($5.25 billion) in assets under management as of September 2013. And in August, 2013, the venture also established the first investment fund to invest in Shanghai's government-subsidized public rental housing market.

Over the coming months and years, success in the burgeoning asset management market will hinge on product innovation and risk controls. Authorities and asset managers in Shanghai and other major cities should concentrate on these two goals as they work to cultivate a healthy financial service environment.

The author is a reporter from the Global Times. bizopinion@globaltimes.com.cn