A Fidelity Investments office in Boston, Massachusetts. The company has started to provide private equity products on the Chinese mainland. [Photo/IC}

Foreign private equity managers are rushing to apply for onshore business licenses in China.

As the financial system continues to open up, PE firms plan to roll out financial products in the world's second largest economy.

"More qualified foreign fund management companies are welcomed to the Chinese mainland," said Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission.

Global giant BNY Mellon has set up BNY Mellon Investment Management, a wholly foreign-owned enterprise or WFOE.

The company is preparing to launch and sell onshore private equity funds to high-net-worth clients and institutional investors.

In June, the firm was established in the Shanghai Pilot Free Trade Zone with registered capital of $2 million.

Swiss firm UBS AG and United States-based Fidelity Investments have also started up WFOEs in Shanghai to provide private equity products and asset management services on the Chinese mainland.

Naturally, they are not alone. More than 40 foreign asset management institutions, including global corporation BlackRock Inc and Vanguard Group, have launched, or plan to wheel out, WFOEs in Shanghai's FTZ.

These global asset management firms have been encouraged to set up businesses here after the China Securities Regulatory Commission last year opened up the market to qualified WFOEs.

The new policy was a sign that the country will further develop its financial industry with foreign market players expected to bring in advanced management techniques along with competition.

"This can (only) enrich institutional investors' diversification and deepen the opening up of the Chinese capital market," Zhang said.

A research report released by China Merchants Bank and Bain & Co showed that private asset investments in the mainland are expected to increase to 188 billion yuan ($29.02 billion) by the end of this year compared to 165 billion yuan in 2016.

"The annual average compounded growth rate of investible Chinese private assets was 21 percent during the two years since 2014," the report stated.

Analysis point out that the rise of high-net-worth individuals in the mainland and their desire to invest their assets worldwide will drive market growth for financial services.

Fueled by a surge of yuan-denominated fund-raising, $72.51 billion were raised by private equity companies and venture capital firms on the Chinese mainland last year.

This was a record high, according to research conducted by PwC, also known as PricewaterhouseCoopers, a multinational professional services firm and one of the big four auditors.

Wu Fan, general manager with the Alternative Investment Management Association, stressed that the financial industry is expected to grow considerably in the future.

"As regulatory policy continues to ease for foreign institutional investors with more creative measures, it is expected that overseas financial institutions will decide to start asset management services in China," Wu said.