New York-based world's largest money manager, BlackRock, has been in talks over the past year with one of China's largest internet and technology companies, Shenzhen-based Tencent, on ways the two could tie up so BlackRock gains a strong foothold in the mainland.
People familiar with the matter said the talks have been how to make the US company's tools and models applicable to Chinese investment portfolios.
However, staff members at BlackRock have differing views and want BlackRock's tools for constructing a portfolio and recommending investment combinations to get offered through the Tencent platform instead.
Talks also circulate about using Aladdin, a BlackRock technology that sells to other asset managers and financial institutions, as a model for codeveloping a financial software system that models risks and helps execute trades.
BlackRock, with $6.8 trillion in assets under global management, has had its presence in China for more than a decade.
BlackRock has been taking care of some domestic funds of institutional investors and wealthy clients.
The company also has offshore investment funds holding Chinese bonds and stocks.
The company now has China as a priority market more than ever since rival Vanguard Group had forged with Ant Financial Services Group, an affiliate of Alibaba Group Holding Ltd.
Ant and Vanguard have not yet announced their plans.
They are still waiting for regulatory approval to start operating.
Asset managers have been eyeing China's fast-growing mutual fund industry with Larry Fink, chief executive officer of BlackRock, now relying on China for growth.
He said that Asia will be responsible for 50% of the growth in assets under management over the next five years.
This growth will be greatly brought forth by China.
Just this June, BlackRock got approved to have investment advisory services to asset managers, securities firms and other institutions in China.
Just like any foreign asset managers, like Fidelity International, and several other large global money managers, BlackRock is expected to apply for licenses to manage and sell its mass-market mutual funds next year when China allows foreign asset managers to do so.
BlackRock is considering doing a tie-up with Tencent because it also has financial-services that sell mutual funds together with investment products.
Still in its early stage, the talks between BlackRock and Tencent do not guarantee anything.
A fierce competitor of Ant in mobile payments, the tie-up will give Tencent new ground in China's fast-growing financial technology.
Tasked with the development and execution of BlackRock's business strategy is a former chief executive in one of China's largest domestic investment managers, Tony Tang, who got appointed early this year.