(Bloomberg) -- Van Eck Associates Corp. has disbanded the team for its planned China mutual fund business, becoming the latest global firm to retreat from the 27 trillion yuan ($3.9 trillion) mutual fund market.

The New York-based company has let go of more than 10 people in China, according to people familiar with the matter. The firm has retained a team of fewer than 10 to seek a private fund business, they said, requesting not to be named because the matter is private.

The company didn’t immediately reply to emailed requests for comment. Phone calls to the office of Van Eck Investment Management (Shanghai) Co., the local unit, couldn’t get through. 

Van Eck follows the footsteps of Vanguard Group Inc., which is planning a complete exit from China, marking a reversal for the Wall Street companies that once saw significant potential in the world’s second-largest economy. China’s asset management industry, which poses a combination of endless opportunity and regulatory hurdles, has proved challenging for global businesses.

That hasn’t deterred firms including BlackRock Inc. and Fidelity International Ltd. The companies are still racing to build up local operations, especially as the nation emerges from Covid lockdowns and pursues a pension reform. 

China accelerated approvals for global companies in the past few months, paving the way for them to tap the fund market as the economy rebounds.  

Fidelity and Neuberger Berman Group recently joined BlackRock in launching onshore funds through new wholly-owned units, while Manulife Financial Corp., JPMorgan Chase & Co. and Morgan Stanley have obtained approvals to buy out local partners to gain full control of existing ventures.

Van Eck set up a wholly-owned unit in Shanghai in 2013 to provide consulting services, and its application for a mutual fund business was accepted by the China Securities Regulatory Commission in 2020, according to its Chinese-language website.

In its feedback released in March 2021, the regulator said it noticed Van Eck wasn’t among top players globally in terms of assets under management, but asked for more information on its exchange-traded funds business where it had an advantage of scale. The CSRC also asked the firm to provide a commitment of support should the fund management business suffer a liquidity crisis, according to the statement.

Van Eck, which manages $69 billion of assets, decided to terminate its application for the mutual fund license, according to people familiar with the matter. 

The remaining staff are seeking a license for the Qualified Domestic Limited Partner program, which will allow the company to raise money onshore from qualified investors for overseas investments, the people said. 

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