(Bloomberg) -- Asset manager Matthews International Capital Management LLC is closing its Shanghai office, adding to the list of global firms that have cut back in mainland China. 

The San Francisco-based company will centralize its regional research business in Hong Kong and remains committed to conducting China analysis, it said in an emailed statement to Bloomberg on Friday. 

The firm had fewer than 10 people in the Shanghai office focusing mostly on research about the mainland stock market and opportunities for expansion, a person familiar with the matter said. Some of the people were offered the chance to relocate to Hong Kong, the person said, asking not to be named because the information is private. A spokesperson for Matthews declined to comment on the details. 

Matthews joins Vanguard Group Inc. and Van Eck Associates Corp. in pulling back from mainland China in recent years, even as other global firms led by BlackRock Inc. step up efforts to tap the growth potential of the 127 trillion yuan ($17.7 trillion) asset management market. Aside from stock-market declines that are hurting investment returns, regulators are tightening scrutiny of the private fund management industry and cutting fees for mutual funds, adding to challenges for money managers.

Asset managers’ views on China are diverging as they navigate an increasingly challenging market. Goldman Sachs Group Inc.’s chief investment officer for its wealth management business said this month that “one should not invest in China” partly due to expectations for a steady economic slowdown in the next decade. JPMorgan Chase & Co., however, said on Friday that the country “remains an irreplaceable growth market.” 

Despite the country’s promises of opening up its financial sector, many have found it hard to make forays, while others lost money betting on assets related to the country. 

Matthews set up a private fund management company in Shanghai in 2018. It’s not registered for a license to manage onshore assets yet, according to public records. The company has a Qualified Foreign Institutional Investor license, which allows it to invest in mainland stocks. 

By centralizing its regional research capabilities in Hong Kong, Matthews’ clients “will benefit from closer collaboration among investment team members,” the firm said in the statement. “This decision reinforces our commitment to conduct in-depth fundamental research in China while continuing to deliver high-quality client service within Asia.”

The move came after the company suffered setbacks on China-related funds and while assets there also shrank.

The 26-year-old Matthews China Fund lost 23% in the 12 months through Feb. 29, underperforming the 14% decline in the MSCI China Index, according to information posted on its website. Assets of the $425 million fund have slumped from the $3 billion peak seen at the end of 2010 and $1.8 billion as recently as June 2021, data compiled by Bloomberg show.

Vanguard sold its stake in a robo-advisory venture with Ant Group Co. late last year and said it would close its Shanghai office. Van Eck disbanded a team for its planned China mutual fund business early last year and let go of more than 10 people in the country, Bloomberg reported then. 

©2024 Bloomberg L.P.