Family Offices Comparative Guide

Compare this Guide in other jurisdictions?

1. Market snapshot

1.1 How embedded is the family office model in your jurisdiction? Describe its evolution to date.

Chinese civilisation dates back 5,000 years, and a longstanding family culture and management system has developed in the country over thousands of years of social governance. The origin of Chinese family management institutes can be traced back to 1046 BC Western Zhou dynasty and evolved further during the Spring and Autumn Periods; these institutes not only managed the daily affairs and financial matters of the ruling families but also participated in family receptions and social activities.

More recently, as China reformed and opened up – experiencing an economic boom as a result – the modern family office officially emerged. This business form has gradually established itself in China since the turn of the millennium. With the sharp increase in high-net-worth individuals since 2012, the development of family offices in China has accelerated.

1.2 What types of families typically opt to set up a family office in your jurisdiction and what are the most common reasons for doing so? How has this changed over time?

In China, families with a certain amount of investable assets may consider establishing a family office. According to statistics:

the recommended threshold for a single family office (SFO) is RMB 1 billion in investable assets; and
the recommended threshold for a multi-family office (MFO) is RMB 100 million in investable assets.

Most traditional family offices are established to provide families with comprehensive wealth management and family services, with the aim of facilitating:

long-term development;
intergenerational inheritance; and
the preservation and appreciation of assets.

Looking at the establishment of family-run businesses from a developmental perspective, the basic traditional needs of families have become more diverse over time. Today, there is heightened demand for the establishment of family offices, often due to liquidity events in industrial enterprises, such as:

the partial realisation of equity after the company goes public;
the family receiving a large amount of dividends from the company; or
the family selling the company for significant consideration.

Due to their different profit motives, various financial institutions may have conflicts of interest with business families, to varying degrees. This is often why entrepreneurs choose to establish or join family offices on their own. Further, for business families that sell industrial enterprises, the establishment of a family office resembles the start of a new entrepreneurial venture. Industrial enterprises often reflect the family's culture and values, social status and development goals. The family office thus serves as a vehicle to strive to preserve and achieve these, much like a new family business.

1.3 Who are the main providers of family office services in your jurisdiction? How has this changed over time?

Several different types of institutions provide family office services in China.

The first are institutions that provide full family office services, covering matters such as:

asset management;
day-to-day finance;
corporate management;
legal services; and
charitable endeavours.

Both SFOs and MFOs may collaborate with organisations that provide specific family office services through commissioned or outsourced relationships. The second category encompasses professional institutions such as the following:

Law firms provide comprehensive family office services – covering matters such as legal, financial consulting, inheritance, asset allocation planning and charity consulting – with a greater degree of customisation and privacy than other service providers.
Trust companies mainly provide services such as family trusts, charitable trusts and insurance trusts.
Banks have the widest customer base but provide limited services. They mainly cooperate with trust companies to upgrade bank wealth management services into family trust businesses.
Insurance companies can serve as investment advisers in family trust structures and also offer products such as life insurance policies, annuities and insurance fund trusts.
Securities companies have research advantages and can collaborate effectively with trust companies, banks, insurance companies and law firms to provide customised wealth planning.
Third-party wealth management institutions transform wealth management for non-specific clients into customised wealth management around family assets.

Service providers are increasingly seeking to expand their service scope and are ramping up investment in technology and personnel in order to improve service quality, reduce costs and better customise services for families.

1.4 Where are family offices typically located in your jurisdiction?

A family office sits at the intersection of family, wealth and enterprise, and all three factors should thus be considered when selecting a physical location. Due to the growing convenience of digital technology and transportation, the choice of location is no longer limited to places where the family is resident; rather, a package of factors should be considered, such as:

the business environment – including:
- the regulatory environment;
- the legal environment;
- the tax environment
- the talent supply; and
- opportunities for enterprise development;
quality of life; and
the social and cultural environment.

The most important of these factors are the legal environment, the tax environment and the talent supply. A stable legal environment provides the basic conditions for the long-term development of a family office. Standardised regulation also:

reduces the various risks faced by family offices; and
enhances the professionalism of both their own operations and external financial institutions.

Given these factors, Hong Kong, Beijing, Shanghai and Singapore are popular locations for Chinese families, with Hong Kong proving the most popular. However, in order to accommodate multiple objectives and global configurations, most family offices have several physical office addresses.

1.5 What is the general approach of the government towards family offices in your jurisdiction? Have any programmes, incentives or similar initiatives been launched to encourage families to establish family offices in your jurisdiction?

The Chinese government's attitude towards family offices has become clearer and more positive over time. As the Chinese economy continues to evolve, market demand for family offices as a high-end wealth management method will only increase. The government may also introduce more supportive policies to promote the healthy development of family offices, while strengthening their supervision to ensure compliance and protect the interests of investors.

From a national perspective, the Chinese government is strengthening the support systems of legislation, the judiciary and legal enforcement to embrace the rule of law in multiple respects. Innovations include:

formulating systems for:
- family trusts;
- testamentary trusts; and
- charitable trusts;
improving the tax system;
perfecting the notarisation system; and
promoting the preservation of family customs and family literature

1.6 What industry codes of conduct, professional guidelines or similar govern family offices in your jurisdiction?

The family office is not a specific type of industrial or industry classification, but rather an institution that provides comprehensive wealth management and family affairs services to wealthy families. Therefore, it is not subject to its own official industrial code.

To understand this issue from a broader perspective, we should consider the services that family offices provide and the industries in which they operate. For example, a family office may provide services such as:

financial services (eg, investment management, tax planning);
legal services (eg, estate planning, establishment of family trusts);
accounting services;
real estate management; and
charity planning.

These service areas each have their own corresponding industry classifications, although these do not relate specifically to the family office itself. Similarly, the laws, policies and industry norms that apply in these different fields provide professional guidelines for family offices.

As the family office industry evolves, its service scope is also continually expanding. Therefore, the industry codes of conduct, professional guidelines and standardised management systems to which family offices are subject should be flexibly understood and applied in specific situations, which may vary depending on:

the services provided; and
the countries and regions in which they are provided.

2. Family office models

2.1 Which types of family office models are typically found in your jurisdiction (eg, single office; multi-office; virtual office)? What are the advantages and disadvantages of each?

Family offices can be divided into:

single family offices (SFOs), serving only one family; and
multi-family offices (MFOs), serving multiple families. There are three main types of MFOs:
- licensed financial institutions (eg, banks, trusts or securities companies) established to serve top clients;
- independent institutions founded by senior professionals; and
- MFOs that have evolved through an SFO absorbing other family clients.

SFOs have high costs, but strong privacy and customisation. The entry threshold for MFOs is relatively low, with a wider audience and good economies of scale, but privacy and customisation are relatively weak.

In addition, the virtual family office is becoming increasingly popular due to its convenience, efficiency and cost effectiveness. This is a model that more affluent families hope to explore. However, due to its embryonic nature and immature technology, there may be some unsatisfactory aspects in the service that require further updating and improvement; and there is less scope for customisation and the correction of errors.

2.2 What services do family offices typically provide in your jurisdiction? Do these vary depending on the type of model?

Comprehensive wealth management includes services such as:

asset management;
investment management;
stock brokerage; and
insurance agency.

These services aim to help families to preserve, increase and manage their wealth.

Family governance and business operation includes services such as:

corporate investment consulting;
listing consulting;
tax planning; and
family business management.

Legal management services aim to:

assist families with various legal affairs and risk controls;
ensure the safety and legality of family assets; and
help to maintain good reputation.

They include assistance with:

developing a family charter;
maintaining family members' relationships;
establishing family inheritance rules; and
resolving disputes.

Charity and Inheritance Planning, ensuring that the family's charitable causes and inheritance can be distributed and managed according to the family's wishes.

Personalised services are highly customisable and may include niche matters such as:

identity planning for family members;
education planning for family members; and
art investment planning.

The services provided by an SFO are very extensive, with strong customisation and privacy. More personalised services include:

equity investment;
legal management and dispute settlement;
education planning;
ESG planning;
family tradition building;
art investment; and
care for peers and collateral relatives.

These services aim to ensure the long-term prosperity and harmony of the family, usually under the management of family members or professional teams.

MFOs focus more on standardised services such as asset management, investment management, enterprise management and initial public offering consulting, provided through collaboration between different expert advisory groups.

2.3 What key factors should a family consider in selecting the most appropriate model for their needs?

The main considerations when choosing the most appropriate model of family office include:

asset size;
budget;
talent reserve capacity;
management ability;
goals;
level of confidentiality of privacy and trade secrets;
degree of personalised needs; and
cultural factors.

In general, an SFO is more suitable for families with:

large asset size;
a large budget;
strong talent reserve capacity;
strong management ability;
significant personalised needs;
high privacy requirements; and
high customisation of family office purposes.

By contrast, families with average asset size and low personalised needs (eg, focused on financial management and investment) tend to prefer MFOs and virtual family offices.

3. Ownership structures

3.1 What types of ownership structures are typically used for family offices in your jurisdiction? What are the advantages and disadvantages of each?

Family offices can be further subdivided based on ownership and management rights. In terms of ownership, family offices can be divided into two main types:

family owned; and
professionally owned.

The type of shareholder largely determines the strategic goals and governance structure of the family office.

Family-owned family offices have:

stronger loyalty to the family;
consistent cultural backgrounds;
more unified strategic development;
more personalised services; and
stronger privacy.

Compared to professionally owned family offices, the specialisation and independence of management are relatively weak.

Professionally owned family offices have:

a more focused and centralised business scope, which facilitates standardised management;
richer talent reserves; and
a wider business development space.

However, in terms of customisation, flexibility and privacy, they are not as good as family-owned family offices – especially in terms of recognition of family values and loyalty.

3.2 Are all of these structures available to families based outside the jurisdiction? If not, what options are available to them?

If overseas shareholders are involved, it is important to bear in mind when establishing a family office controlled by overseas shareholders that:

the legal provisions for foreign-funded enterprises and domestic enterprises in China are different; and
there are access lists for the nature and business scope of family office enterprises. In practice, it is recommended that foreign shareholders avoid engaging in business activities specified in the negative list. If necessary, they can entrust other professional institutions to share this part of the business.

3.3 What key factors should a family consider in selecting the most appropriate ownership structure for their needs?

The following factors should be considered when considering the ownership structure:

the concept of continuous family growth;
the family culture;
the attributes of the family's assets;
the professional qualifications and experience of family members; and
the family's trust in professionals.

4. Establishment and operation

4.1 What formal and substantive requirements are required to establish a family office in your jurisdiction?

At present, there is no unified requirement for the establishment of a family office. Specific issues should be analysed based on the nature, location, subject, ownership structure and main business of the institution established by the family office. Depending on the different regions, the services provided may be regulated and managed differently.

4.2 What are the typical costs involved in establishing and operating a family office in your jurisdiction? How do these vary depending on the chosen model and structure, and/or the services provided?

The costs of a family office mainly include the following:

Operating costs: Among other things, these include:
- office leasing;
- procurement of equipment; and
- daily office expenses.
The costs of market promotion, brand promotion and other aspects should also be considered.
Labour costs: The core team of a family office generally includes personnel such as:
- investment advisers;
- legal advisers; and
- financial advisers.
In addition, expenses relating to employee salaries, benefits and training should be considered.
Tax costs: These include related taxes such as income tax and value-added tax.
Given that family offices are still in development in China, it is also necessary to consider trial and error costs and reconstruction costs caused by factors such as:
- market developments; and
- policy adjustments.

The cost differential between a single family office (SFO) and a multi-family office (MFO) is mainly reflected in:

operating costs;
resource utilisation efficiency; and
economies of scale.

The operating costs of SFOs are usually higher than those of MFOs. However, MFOs are more efficient, as they can achieve economies of scale. By sharing resources, MFOs can better utilise resources and avoid duplicated investment and waste. By contrast, SFOs may have limited resource utilisation, making it difficult to achieve the advantages of economies of scale and resource sharing. However, an SFO may attract higher-quality legal experts, investment managers and other professionals. In the case of an MFO, the extensive business networks of different families can also assist in unlocking investment opportunities and facilitating the sharing of implicit knowledge.

4.3 What regulatory requirements apply to family offices in your jurisdiction? How do these vary depending on the chosen model and structure, and/or the services provided?

If asset management is involved, the corresponding licences must be obtained. The specific licence will depend on the business scope of the company. The family office itself is not subject to industrial and commercial registration, and there is no prior approval requirement. However, if asset management and fund management fall within the scope of the business, relevant approval processes will apply.

4.4 What other concerns and considerations should be borne in mind in relation to the establishment and operation of family offices in your jurisdiction?

It is well worth establishing a mechanism for the resolution of internal conflicts and disputes in advance, in order to help:

preserve family relationships;
achieve consensus on goals; and
facilitate the settlement of disputes that may arise from family affairs in a mutually acceptable manner, avoiding traditional litigation or arbitration.

Efficiency and privacy should be taken into account, as well as family emotions.

Due to the lack of network connection among various government services, the establishment of family trusts has been hindered. Currently, the establishment of each trust asset requires separate negotiations with different local government agencies, and some of them are not knowledgeable enough to handle this matter. .

The main purpose of establishing a family office and the values of the family will shape the strategic development of the family office. Family offices should not be treated merely as wealth management companies, as this could lead to a large number of unprofessional financial institutions flooding the market and affecting the reputation of family offices.

5. Governance

5.1 What key risks do a family office and family members face in your jurisdiction, and what processes, policies and procedures should be put in place to mitigate them?

The main market risks faced by family offices are economic uncertainty, geopolitical and inflation risks.
The risk of insufficient talent reserves and a shortage of key management personnel should also be considered. In the early stages of a family office's development, a dearth of sufficient talent may result in operational failure.
The stability of the legal environment and the friendliness of the business environment are further risk points to consider.

Strategies to mitigate these risks include the following:

Put in place a sound risk management system, conduct regular risk assessments and monitoring, and promptly identify and respond to potential risks.
Develop a compliance management system to ensure that the operation of the family office:
- complies with relevant laws and regulations; and
- avoids illegal fundraising and other violations.
Diversify investments to spread risk and reduce dependence on a single market or asset.
Maintain good communication and cooperate actively with regulatory agencies to ensure the transparent and compliant operation of the family office.
Strive to attract and retain experienced and trustworthy management personnel, and invest in continually developing their skills.
Ramp up technological investment and utilise modern technology to enhance management's capabilities.

5.2 What key documents (eg, family charter/value statement/mission statement) should guide the activities of the family office, and how should these be developed and updated?

At present, the activities of family offices are mainly guided by family charters. China has a long culture of formulating family rules and family charters generally also include spiritual guidance. They can roughly be divided into three levels:

At the decision-making level, the charter stipulates the use of family committees, advisory boards and other bodies as platforms for internal communication and decision-making within the family, to make decisions on major family issues.
At a practical level, the charter guides the family in managing and operating the family business.
At a value level, the charter emphasises the values, mission, responsibility and development of behavioural norms for family members, as well as educational directions, including requirements for:
- marriage;
- family relationships; and
- the cultivation of the next generation.

As society has evolved, the role of the family charter has further developed in the following respects:

Family businesses are linked through family charters, utilising family committees/boards of directors, family values, family business management principles and so on to promote the connection and penetration of the family in the business.
As the family charter is a result of the collective discussion and formulation of internal rules and regulations, it integrates the opinions of all family members. The value orientation, purpose and mission are enshrined in the charter by consensus after sufficient exploration. This value framework:
- creates space for more harmonious, stable and equal dialogue between all parties; and
- lays the foundation for a new type of family dispute resolution mechanism.
The personalised design of the terms of the family charter ensures that its spirit can be concretely and practically implemented, fully leveraging its functions in:
- family affairs management;
- family wealth inheritance;
- education of family member education; and
- reward and punishment mechanisms.

5.3 How should the family office communicate and engage with key stakeholders (eg, family members; trusted advisers; the media)?

Communication and interaction between the family office, family members, trusted advisers and the media are crucial to ensure the effective operation of the family office and successful family wealth management. ‌

Communication and interaction with family members:
- Family events: Family offices are usually the centre of communication among family members, hosting family meetings and board meetings, and arranging family vacations to promote information exchange and emotional connections among family members.
- Dissemination of information: Family leaders can disseminate information about family affairs to the younger generation through the family office, thus passing on the family's vision and values.
- Emotional connection: Family offices must build emotional connections with family members to avoid failure due to a lack of such connections.
Interaction with trusted advisers:
- Collaborative spirit: Collaboration between the family office and consultants should be based on trust, ensuring that they maintain the same values and provide all necessary professional resources and advice.
- Professional resources: The family office integrates professional resources from multiple fields – such as finance, law and taxation – to ensure comprehensive service provision for the family.
Communication with the media:
- Confidentiality: Due to the privacy requirements of the family office, it should handle information carefully when communicating with the media to avoid leaking family secrets.
- Positive image: When communicating with the media, family offices should maintain a positive social image of the family and showcase its professionalism and positive values.

5.4 How and by whom should oversight of the activities of the family office be exercised?

The family committee, comprised of senior family members, is responsible for:

formulating the family's long-term development strategy;
making decisions on major family affairs; and
overseeing the operation of the family office.

The family office executive committee, comprised of family representatives and senior management personnel, is responsible for:

implementing the strategies and decisions formulated by the family committee; and
managing and supervising various departments.

In addition, the regulation of family offices involves the following aspects:

Industry access: Family offices in China are not subject to special licensing requirements and can exist in various forms. Whether to establish industry access is under discussion.
Business regulation: The services of a family office cover a variety of financial and non-financial business, and typical business types should be classified and regulated.
Industry regulation: While developed countries and regions have industry bodies which exercise self-regulation, there is no such authoritative organisation in China.

5.5 What other concerns and considerations should be borne in mind in relation to the operation of the family office from a governance perspective?

The governance of a family office should take account of the following:

Centralised leadership and balance: While the vision and strategy of the family office are formulated by the family, tactical decision-making and execution are the responsibility of family office employees, who should also seek advice from external consultants in a timely manner.
Board composition: The composition of the board of directors is extremely important. It should include core family members and independent professionals with objective positions to provide different perspectives.
Succession and emergency plans: Family offices should actively prepare succession and emergency plans to reduce the risk of confusion or disputes between family members should unexpected situations arise.
Continuous improvement of operations: Faced with constantly evolving operational challenges, family offices should continuously improve their operational processes and actively innovate, regardless of how long they have been established or how long management has been in office.
Internal governance platform for wealth management: Led by the chief investment officer, a family office should establish an investment team, an investment committee and an investment policy statement to ensure that investment decisions are made on a scientific and transparent basis.
Innovative dispute resolution mechanism: Relationship conflicts, task conflicts and process conflicts may all arise within the family office. These conflicts can affect cooperation and trust among family members, thereby impacting on the overall effectiveness of the family office. An efficient, fair, authoritative and private dispute resolution mechanism is thus essential.

These governance points collectively ensure the long-term stable operation and sustainable development of family offices.

6. Family office activities

6.1 What specific concerns and considerations should be borne in mind in relation to the following activities of family offices in your jurisdiction?

(a) Investment and wealth management

It is essential to ensure that all relevant approvals are obtained and all regulatory documents are cleared before starting the business. Investment and wealth management are governed by the management standards of finance and other related industries to avoid operating beyond the permitted scope and violating regulations. Operations should be standardised and financial violations such as suspected illegal fundraising avoided.

Investment requires:

a comprehensive understanding of China's investment market;
knowledge of history; and
the ability to forecast the future.

Autonomous wealth management requires:

relevant qualifications in wealth management; and
a re-examination of the legality and compliance of funding sources.

Entrusted wealth management requires a deep understanding of the wealth management institution, including its:

integrity;
credit rating;
business performance; and
development expectations.

(b) Tax management

As Chinese tax legislation and law enforcement are continuously strengthened:

the strictness of tax management has been increased; and
the transparency of household income and assets has been enhanced through digital governance.

Tax management is a core focus of family office work. It is essential to:

conduct overall tax planning;
avoid duplicate tax payments;
make reasonable use of preferential tax policies; and
design transaction structures to avoid increasing tax costs.

However, it is also necessary to:

stringently prevent tax evasion; and
maintain the reputation and image of the family.

(c) Succession planning

The main challenges include:

Cultivation of talents: The cultivation of talents requires both an international perspective and a deep understanding of traditional Chinese culture. Reflect the personalized advantages of family development.
Establishment a sound talent selection mechanism: The selection plan should consider diversity and long-term development concepts. The formulation of details and the feasibility are also important matters of the plan.

(d) Estate planning

China's inheritance law is relatively protective of the weak and of social interests, so wills cannot significantly counteract the provisions on statutory inheritance. To avoid the provisions on statutory inheritance frustrating the original intentions of the founder, advance planning can be carried out through instruments such as testamentary trusts. Strong technical skills are also required. It is recommended to engage experienced personnel with a comprehensive understanding of:

statutory inheritance;
estate tax;
testamentary trusts; and
financial planning.

(e) Management of real estate

On a macro level, based on the overall dynamics of the real estate industry and the current development status of Chinese real estate, the proportion of family investment in real estate has significantly decreased in recent years. As Chinese government policies have a significant impact on the investment value of real estate, policy prediction is also an important factor.

On a micro level, family real estate can be managed through trusts and other means, which requires:

strong technical expertise; and
advanced administrative coordination skills.

(f) Management of luxury assets (eg, private jets; yachts; art collections)

Due to its unique characteristics, Chinese art is not yet well established as an standardized investable asset. Chinese family offices should bear the following points in mind in terms of art management:

Chinese art has a unique investment value, with different appreciation opportunities for each type of art. Artworks that combine elements of traditional Chinese culture can sometimes defy sluggish investment markets and gain contrarian investment value.
Pay attention to the places where art is collected in the international market and allocate assets in conjunction with the tax planning scheme. This is a key objective for high-end family offices.

(g) Reputational management

Key factors in this regard include:

passing on the family culture and formulating the family charter to establish solid foundations for the family's cultural heritage and social image;
establishing a dedicated department to handle social influence and maintain the family's public image; and
dealing with the negative impact of crises on the family's public image.

(h) Education and development of upcoming generations

Family offices should seek to combine traditional culture and traditional Chinese education with the cultivation of an entrepreneurial spirit.

The upcoming generation faces more diverse potential career development paths, so family offices should pay attention to:

the internationalisation of family development; and
the continuity of social relationships.

(i) Hiring and management of staff (eg, domestic, PAs, security, other)

Chinese labour law tends to protect the rights and interests of workers and has relatively strict requirements for employers. All employment relationships should be strictly bound by employment contracts to avoid disputes.

The selection of quality and competence in employees is an extremely important consideration.

(j) Other

Upgraded legal services: Everyday legal services are insufficient to meet the needs of family offices. These typically require significant enhancement – for example:

the establishment of a comprehensive risk control and compliance system;
the improvement of internal dispute resolution mechanisms and international resolution mechanisms; and
the establishment of a comprehensive asset isolation system to protect family property.

Health management services: With the rapid development of modern technology, health management services are becoming more comprehensive. Personalised and specialised health management plans for family members are now being promoted. Associations with high-quality international medical institutions and the application of cutting-edge technology are characteristic of family office services.

7. Philanthropy and ESG

7.1 What forms does philanthropy typically take in your jurisdiction? What are the advantages and disadvantages of each?

Charitable activities in China typically take the following forms:

Direct establishment of charitable trusts: The advantages include:
- standardised operation;
- professional management;
- regulatory mechanisms; and
- strict auditing.
The disadvantage is the lack of flexibility, as the founders can only advise on the main direction and industry attributes of charitable donations but cannot actually specify donation projects. The founders will not have a deep understanding of donors and will have no management role in the trust.
Donation through charitable foundations: There are many charitable foundations with wide coverage that can be chosen for this purpose, which is relatively simple and easy to implement. The downside is that domestic foundations are often associated with scandals due to non-standard operations and failure to use donated funds for specific purposes, raising doubts about their integrity.
Direct donation to recipients: This method is relatively direct and can achieve the expected effect, but actively seeking and communicating with recipients is relatively complex and inefficient. It is also difficult to complete the normal charitable donation procedures in a standardised manner, which restricts available tax deductions, resulting in additional taxes and transaction costs.
Establishment of charitable industries with local governments or charitable organisations: This approach involves the participation of local governments, charitable organisations and similar bodies, which can solve the problem of insufficient donation procedures and tax issues. It may also benefit from local support policies and have a positive social impact.

7.2 How embedded is impact investing in your jurisdiction? What key concerns and considerations should be borne in mind in this regard?

Impact investing in China is still in its infancy but is gradually growing. The institutions in China that are currently establishing social impact investment funds mainly include:

government/state-owned enterprises;
charitable foundations; and
private investment companies.

These institutions have broken new ground in fields such as:

environment and energy;
technological innovation; and
rural revitalisation.

The public welfare capital model and the government funding/state-owned capital model are the main models of social impact investing in China.

The development of impact investing is having a positive influence on Chinese society and business, as it helps to:

attract more funds to the public welfare sector; and
promote the resolution of social issues.

Challenges include the need to establish a supportive industrial network to meet the diverse requirements of both investment institutions and invested institutions. It is anticipated that:

China's impact investment ecosystem will become more diversified;
social impact assessment tools will continue to improve; and
technological innovation and social impact will become more closely integrated.

Family offices are also paying more attention to impact investing and the proportion of investment is gradually increasing. In order to promote impact investing by family offices, it is necessary to:

promote interdisciplinary cooperation;
strengthen talent team building; and
foster the development of innovative financial tools.

7.3 In what ways is the environmental, social and governance (ESG) agenda shaping the activities of family offices in your jurisdiction? What key concerns and considerations should be borne in mind in this regard?

The impact of ESG on family offices is mainly reflected in the following respects:

Passing on values: Through ESG investment, family offices can:
- help family members to gain a deeper understanding and unite around a common strategy; and
- pass on the family's values and beliefs.
A shift in investment strategy: The ESG investment philosophy emphasises a company's ESG status, rather than traditional financial performance. This can help family offices to achieve long-term value creation and social responsibility.
Industry transformation and market demand: As consumers pay increasing attention to environmental protection, social responsibility and other issues, products that reflect ESG concepts are becoming more popular. Family offices should consider these factors during the investment process to meet market demand and seize new business opportunities.
Risk management and long-term value creation: ESG indicators can more effectively measure a company's sustainability and ethical impact, helping investors to forecast its future financial situation and performance. This helps family offices to make responsible investments, ensuring that investments are aligned with the core values of the family.

ESG thus has a multifaceted impact on family offices, which not only helps to transform investment strategies and clarify values, but also promotes the sustainable development and social responsibility of the enterprise. Through ESG investment, family offices can encourage businesses to:

take on greater social responsibility;
focus on employee rights, environmental protection and social welfare activities; and
promote sustainable development.

7.4 What other concerns and considerations should be borne in mind in relation to philanthropy and ESG in your jurisdiction?

Due to the growing influence of philanthropy and ESG, the challenges for family offices are becoming more diverse, including:

the need for greater technological innovation; and
heightened demand for talent.

Correspondingly, financial processing, legal risk control and internal control systems should be properly adapted to the operation of the entire system.

8. Talent acquisition and retention

8.1 What key personnel does a family office require for its smooth operation? How does this vary depending on the chosen model and structure, and/or the services provided?

Lawyers: Lawyers play a crucial role in family offices. They are responsible for handling all legal affairs, including:

the formulation of family charters;
asset allocation;
risk isolation;
trust design;
tax planning;
dispute resolution;
testamentary inheritance;
charitable causes;
internal risk control of institutions;
family business capital market operations; and
corporate compliance.

In a single family office (SFO) or where family office services are undertaken by a law firm, the scope of work for lawyers is more comprehensive and extensive. Multi-family offices (MFOs) and other professional organisations generally entrust lawyers to engage in one or more of the above tasks.

Financial planners: Financial planners are responsible for the financial and liquidity management of the family, ensuring the safety and rational allocation of family assets. Financial planners should have in-depth professional knowledge of financial planning, tax planning and other areas in order to provide comprehensive financial solutions to their families.

Professional managers: Professional managers are responsible for the daily operation and management of family businesses, ensuring the normal operation of the enterprise. They should have rich management experience and leadership skills to lead the team to achieve the goals of the enterprise.

8.2 What are the optimal strategies for attracting talent to a family office in your jurisdiction? What key concerns and considerations should be borne in mind in this regard?

Enhancing reputation and brand building: Family offices need to improve their public image and expand their influence through streamlined promotion across all communication platforms. Key executives should consider participating in industry events or publishing articles to enhance brand awareness.
Establishing connections with potential talent: This could involve collaborating with universities to hold lectures or seminars to teach students about the work content and opportunities of family offices.
Offering attractive compensation and benefits: Family offices should offer competitive compensation and benefits to attract and retain talent – for example:
- flexible working hours;
- health insurance; and
- retirement plans.
Providing professional training and career development opportunities: Family offices should strive to help personnel to improve their skills and knowledge. This can assist not only in attracting talent, but also in retaining existing employees.

8.3 Do family members typically assume official positions in family offices in your jurisdiction? What key concerns and considerations should be borne in mind in this regard?

Family members usually hold public positions in the family office – for example, as members of the board of directors or executive committees established to implement democratic management. These family members should be deeply committed to the family's culture, beliefs and ideas.

The roles and positions held by family members usually vary depending on the type of family office. In an SFO, family members usually:

have full decision-making power;
participate in management; and
formulate strategies.

In an MFO, family members can play important roles on the board of directors, the supervisory board and other institutions to supervise and execute various decisions of the family office.

8.4 What other key concerns and considerations should be borne in mind concerning the attraction and retention of talent in family offices in your jurisdiction?

The compatibility of values is a key consideration in the attraction and retention of talent. Once a candidate meets the basic prerequisites, the alignment of values may be the most critical quality to evaluate. The main management team of the family office must be able to establish and maintain close working relationships with the family, which requires a professional to have the same values as the family. This can increase cohesion and facilitate long-term development.

9. Dispute resolution

9.1 In which forums are family disputes typically resolved in your jurisdiction? What issues do these disputes typically involve?

Dispute resolution mechanisms include litigation, arbitration, internal negotiation and mediation. Public litigation channels are always regarded as a last resort, due to the nature of family disputes. The role of diversified dispute resolution methods is increasingly being highlighted – especially mediation, which is more private, efficient and economical.

Family disputes usually involve issues such as the following:

marriage and property disputes;
testamentary inheritance disputes;
investment disputes; and
disputes over company shareholder rights or management rights.

9.2 What specific considerations and concerns should be borne in mind in relation to the resolution of family disputes in your jurisdiction?

The privacy of family-related affairs;
The efficiency and cost of dispute resolution;
Fairness and enforcement;
The impact on maintaining family relationships; and
The social and market influence on the family business.

9.3 What specific considerations and concerns should be borne in mind where family disputes involve international aspects?

The choice of international dispute resolution methods;
Language issues;
Convenience and economic benefits;
Cultural conflicts;
The international social influence on the family; and
The efficiency and intensity of enforcement.

It is thus essential to agree on effective international dispute resolution mechanisms and institutions.

10. Cessation of activities

10.1 Under what circumstances might a family decide to cease the activities of its family office in your jurisdiction? What key concerns and considerations should be borne in mind in this regard?

Economic pressure and financial issues: If the family faces economic pressure or financial problems, it may be unable to continue to maintain the operations of the family office.
Legal and regulatory issues: If a family office violates relevant laws, regulations, good customs or similar during its operation, it may face legal litigation or regulatory penalties. As a result, the family office may be unable to continue operating, forcing the family to cease its activities.
Strategic adjustment: Families may decide to shift their resources and energy to other important areas based on their own strategic adjustments, thus ceasing the activities of the family office.
Changes in the market environment: Events such as recessions or investment market fluctuations may have adverse effects on the operation of a family office. The family may consider it economically unreasonable to continue maintaining the family office and decide to cease its activities.

Before establishing a family office, it is necessary to:

conduct in-depth analysis of economic, legal and regulatory issues; and
repeatedly analyse and reasonably forecast the market environment and company development strategy.

This knowledge should underpin the family office establishment plan.

Once the family office has been established, a sufficient risk control and sound internal control system should be put in place to avoid losses caused by subsequent suspension.

11. Trends and predictions

11.1 How would you describe the current family office landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms that may affect the operation of family offices?

The family office landscape in China is still evolving and is characterised by a diverse range of opportunities and exploratory developments. Today, Russia's invasion of Ukraine and the changes brought about by the COVID-19 pandemic, inflation and financial market fluctuations are challenging past assumptions. Families are thus seeking to reassess the strategies and priorities of family offices. In the following months, many family offices will face institutional restructuring. Their operations will continue to be affected by multiple factors, including:

the Chinese government's ongoing efforts to:
- introduce and improve legislation and industry standards; and
- strengthen tax systems and enforcement efforts; and
increased support from Singapore and Hong Kong for family offices.

The market is further expected to become more diversified due to trends such as:

the emergence of the virtual family office;
the use of AI and other technologies to assist management;
the establishment of offices in other jurisdictions; and
the exploration of diverse dispute resolution mechanisms that offer greater effectiveness and stronger privacy.

12. Tips and traps

12.1 What are your top tips for the smooth operation of family offices in your jurisdiction and what potential sticking points would you highlight?

Implementing internal governance and internal control systems: Family offices should consider how to establish internal control positions and improve their risk control systems. Simple legal services should be upgraded to comprehensive internal control systems, encompassing:
- legal compliance;
- tax compliance; and
- financial compliance.
Establishing tailored dispute resolution mechanisms: Mechanisms for the swift and private resolution of disputes, such as mediation, should be established for both single family offices and multi-family offices. These mechanisms can help to:
- protect internal family information;
- safeguard companies' business secrets; and
- maintain a good family reputation.
Integrating the core culture of the family into the family charter to inform long-term governance: This will be more conducive to the long-term stability of the family culture and family businesses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.