US investment bank Goldman Sachs has announced plans of expanding its operations in China, including the doubling of its workforce in the country over the next five years. The increase of its workforce will reportedly be essential as the company fully intends to eventually take ownership of its Chinese joint venture.
According to sources familiar with the company's hiring plan, Goldman Sachs intends to increase its employees in China to as many as 600 people. The same source also revealed that the increase of its manpower in the country would be contingent on its plans of eventually taking full ownership of its securities brokerage joint venture company.
Goldman Sachs is taking full advantage of China's recent opening-up efforts that will allow foreign firms to take ownership of their Chinese joint ventures. China's strategy to open up its financial markets have so far proven to be effective as major multinational firms have expressed their intentions of further investing in their Chinese businesses and units amid the government's support.
However, analysts have pointed out that being a US-based company could become a hurdle for Goldman Sachs given the currently strained relations between China and the United States. If the current negotiations between both nations continue, and both countries sign the long sought after phase one trade deal, Goldman will likely be able to achieve its goals without a hitch.
The investment bank originally submitted its application to take control of its joint venture to the China Securities Regulatory Commission (CSRC) in August last year. The company intends to raise its stake on its Chinese joint venture firm Goldman Sachs Gao Hua Securities from 33 percent to 51 percent. Sources close to the matter have stated that the CSRC will likely render its decision within the year.
The first company to receive the CSRC's approval was the UBS Group. The bank received the green light to take a controlling stake of its Chinese joint venture UBS Securities China in November 2018, effectively making it the first bank to act on China's relaxed ownership rules. UBS is expected to take full control of its Chinese business this year.
The hiring of new employees in China is reportedly part of the strategy rolled out by Goldman Sachs CEO David Solomon, who previously stated that he fully intends to improve the firm's profitability and share price performance by strengthening its businesses in foreign markets.
At the start of the year, the company also changed its reporting segments to give investors more clarity on its operations and its revenue streams. This included more comprehensive reporting on the company's segments, namely its investment banking, investment management, consumer and wealth management, and its institutional client services segment.
