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# Bullish on China: Institutional Licensing of Japanese Financial Groups in Mainland China
- URL: https://www.fintechobserver.com/bullish-on-china-institutional-licensing-of-japanese-financial-groups-in-mainland-china/
- Published: 2026-10-26T07:54:09.000Z
- Updated: 2026-10-26T07:54:09.000Z
- Author: Norbert Gehrke
- Tags: capital markets, china, regulation, broker/dealer, supervision

In mid-October 2026, Chinese financial authorities notified Daiwa Securities Group and Mizuho Financial Group that they had passed final operational readiness reviews, system audits, and on-site supervisory inspections, granting both groups full regulatory authorization to conduct wholly owned securities operations in mainland China. These approvals conclude protracted licensing processes and reflect Beijing’s pragmatic approach toward Japanese financial capital, even as key Western peer institutions experience prolonged regulatory delays.

Mizuho Financial Group secured market access via an entirely greenfield route through its brokerage arm, Mizuho Securities. Mizuho submitted its initial application to establish a mainland securities subsidiary in November 2023, obtaining formal establishment approval from the China Securities Regulatory Commission (CSRC) in September 2025\. Incorporated in Beijing as Mizuho Securities (China), the subsidiary underwent comprehensive physical inspections, technological validations, and regulatory reviews before securing final sign-off to launch operations. Mizuho’s mainland securities platform is designed to operate in tandem with its commercial banking unit, concentrating on debt capital markets, fixed income distribution, and corporate underwriting to connect Chinese domestic entities and multinational corporations with Asian regional capital pools.

Daiwa Securities Group executed an equity consolidation strategy to establish full ownership. In 2021, Daiwa was authorized to establish Daiwa Securities (China) under a 51% majority-controlled joint venture alongside Beijing State-Owned Capital Operation and Management Center and other domestic partners. In April 2026, Daiwa agreed to purchase the remaining 49% equity interest from its local partners through the Beijing Property Rights Exchange for approximately $100 million (RMB 706 million, or roughly ¥16 billion). The formal supervisory transfer approval in October 2026 completed the subsidiary’s conversion into a wholly foreign-owned enterprise (WFOE). This transition affords Daiwa unfettered operational control over strategic planning, client engagement, and enterprise risk management, bypassing the structural misalignments that frequently characterized minority-partner joint ventures.

The administrative progress achieved by Mizuho and Daiwa stands in sharp relief against the pending applications of major American financial institutions. Citigroup, which filed for a wholly owned mainland securities license in late 2021, has had to manage regulatory scrutiny alongside operational shifts. Similarly, market maker Citadel Securities, which submitted an application for a wholly foreign-owned brokerage license in early 2025 following an earlier attempt to acquire Credit Suisse’s onshore venture, continues to wait for regulatory clearance. This divergence highlights a bifurcated operating environment: while US institutions must navigate bilateral technology disputes, geopolitical friction, and stringent cross-border data security evaluations, Japanese financial institutions are seen as lower systemic and regulatory risks, facilitating a smoother transition toward fully owned onshore operations.

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## Major Japanese Banking and Securities Conglomerates

Beyond the recent operational milestones of Daiwa and Mizuho, Japan’s primary financial holding companies have constructed significant operational foundations across China’s banking, wholesale securities, and domestic investment markets.

### Nomura Holdings

Nomura Holdings established an early-mover advantage in China’s liberalized capital markets by securing approval in March 2019 to launch Nomura Orient International Securities, which commenced operations in Shanghai later that year. Nomura holds a 51% controlling interest in the venture, with domestic consortium partners holding the remaining 49%. Rather than concentrating exclusively on institutional debt underwriting, Nomura designed its onshore strategy around retail and private wealth management, becoming the first foreign-controlled securities firm in China granted a comprehensive onshore license covering wealth management, proprietary trading, securities brokerage, and asset management. The firm aims to build a wealth management model targeting high-net-worth individuals and family offices across the Yangtze River Delta.

Nomura’s presence is reinforced by Nomura Asset Management’s wholly owned Shanghai subsidiary, which operates under both Private Fund Management (PFM) and Qualified Domestic Limited Partnership (QDLP) licenses. This structure allows Nomura to raise onshore RMB capital from qualified institutional investors for deployment into domestic private funds, while simultaneously utilizing QDLP quotas to route mainland institutional wealth into international markets.

### Mitsubishi UFJ Financial Group (MUFG)

Mitsubishi UFJ Financial Group maintains an extensive commercial banking franchise through MUFG Bank (China), which operates as a wholly owned subsidiary supervised by the National Financial Regulatory Administration (NFRA) and the People's Bank of China (PBOC). Headquartered in Shanghai, the bank manages branches across Beijing, Guangzhou, Shenzhen, Tianjin, Dalian, and other primary industrial regions, providing corporate lending, transaction banking, treasury management, and structured cross-border trade settlements. MUFG Bank (China) has embedded itself in the supply chain financing of Japanese multinational corporations operating in China, while expanding corporate banking relationships with large-scale Chinese state-owned enterprises and private blue-chip corporates.

MUFG has also extended its capital markets operations by securing bond underwriting credentials through the National Association of Financial Market Institutional Investors (NAFMII), allowing it to underwrite Panda bonds and trade on the China Interbank Bond Market (CIBM). This interbank liquidity capability is paired with preparations within its securities division to operationalize a dedicated securities platform, strengthening its ability to arrange primary debt originations and cross-border syndicated financing.

### Sumitomo Mitsui Financial Group (SMFG)

Sumitomo Mitsui Financial Group conducts mainland commercial operations primarily through Sumitomo Mitsui Banking Corporation (China) (SMBCCN). Headquartered in the Shanghai World Financial Center, SMBCCN commands a network of 14 branches and sub-branches located across Beijing, Tianjin, Guangzhou, Shenzhen, Chongqing, Dalian, Shenyang, Suzhou, Hangzhou, and the Shanghai Pilot Free Trade Zone. The bank focuses on bilateral corporate financing, structured trade finance, foreign exchange risk mitigation, and cash pool management, serving both Japanese manufacturing ecosystems and domestic Chinese corporates engaged in cross-border trade.

SMFG has mirrored this banking presence in the domestic fund industry through Sumitomo Mitsui DS Asset Management. In October 2023, its subsidiary, Sumitomo Mitsui DS Private Fund Management (Shanghai), completed registration with the Asset Management Association of China (AMAC) as a Private Securities Investment Fund Manager (PFM). This PFM license allows the firm to issue private securities investment products to mainland institutional and accredited high-net-worth investors, focusing on onshore Chinese equity and fixed-income portfolios.

## Specialized Asset Managers, Trust Banks, and Insurance Conglomerates

Outside the three megabanks and independent brokerages, the Japanese financial footprint extends into mainland trust financing, mutual fund management companies, non-life insurance operations, and regional banking corridors.

### Sumitomo Mitsui Trust Group (SuMi TRUST)

Sumitomo Mitsui Trust Holdings has established a specialized footprint by deploying commercial banking branches alongside strategic joint venture equity stakes in trust finance and public fund management:

In the trust sector, Sumitomo Mitsui Trust Bank holds a 19.9% equity stake in Zijin Trust, a licensed trust company headquartered in Nanjing, Jiangsu Province. This shareholding approaches the 20% regulatory ceiling applied by Chinese banking and trust regulators to non-controlling single foreign investors in domestic trust companies. To retain its governance presence and strategic equity level, SuMi TRUST Bank has consistently participated in corporate capital increases—contributing an additional RMB 500 million during structural equity expansions that enlarged Zijin Trust’s registered capital to roughly RMB 4 billion. Zijin Trust focuses on asset-backed securitization, infrastructure financing, and family trust services targeting private wealth across Jiangsu and adjacent coastal provinces.

In public asset management, SuMi TRUST’s asset management arm—anchored by Amova Asset Management (which was rebranded from Nikko Asset Management on September 1, 2025)—holds a 40% equity stake in Rongtong Fund Management. Rongtong FMC is an established domestic fund house licensed by the CSRC to manufacture, manage, and retail public mutual funds across the mainland. The platform manages broad-market equity index funds, fixed income strategies, and balanced wealth management products distributed through Chinese state commercial banks.

In corporate trust and custody services, SuMi TRUST Bank operates direct commercial banking branches in Shanghai and Beijing. These locations coordinate corporate debt structuring, escrow accounts, cross-border custody, and syndicated loan administration for Japanese and institutional clients.

### Japanese Non-Life and Life Insurance Groups

Japanese insurance conglomerates maintain significant licensed operations across mainland China, shifting their underwriting strategies alongside evolving foreign investment limits:

Japan’s "Big Three" property and casualty (P&C) insurers hold wholly owned operational subsidiaries licensed by the NFRA. Tokio Marine Holdings operates Tokio Marine & Nichido Fire Insurance (China). MS&AD Insurance Group Holdings runs Mitsui Sumitomo Insurance (China), with specialized support from Aioi Nissay Dowa Insurance. Sompo Holdings operates Sompo Japan Insurance (China). Historically focused on providing property, industrial casualty, and marine cargo coverage to Japanese automotive and electronics supply chains, these insurers have broadened their scopes to underwrite corporate risks for domestic Chinese enterprises, cross-border infrastructure, logistics chains, and green energy investments.

In life insurance, foreign access was historically structured via 50:50 joint ventures. Nippon Life Insurance Company operates Nissay-Greatwall Life Insurance, a 50:50 joint venture with China Great Wall Asset Management, deploying endowment, pension, and critical illness policies through retail commercial banks. Meiji Yasuda Life Insurance holds a major strategic stake in Founder Meiji Yasuda Life Insurance, marketing life and retirement products to metropolitan consumer bases. Similarly, Dai-ichi Life Holdings maintains an equity and technical alliance with BoComm Life Insurance, which is majority-owned by the Bank of Communications.

### Regional Banking and Alternative Platforms

A distinctive characteristic of Japan’s institutional exposure to China is the presence of regional banks, boutique securities houses, and venture capital conglomerates serving specific economic corridors:

The Yamaguchi Bank, a regional bank headquartered in Shimonoseki, Yamaguchi Prefecture, holds commercial banking branch licenses in Dalian (Liaoning Province) and Qingdao (Shandong Province). While Japanese regional banks typically restrict their foreign footprint to non-operational representative offices, Yamaguchi Bank’s branches provide trade settlement, working capital loans, and RMB clearing services for industrial and logistics corridors connecting western Japan with the Bohai Rim and the Shandong Peninsula.

SBI Holdings manages private equity, venture capital, and cross-border incubation businesses through SBI (China) in Dalian, supplemented by operating branches in Beijing and Shanghai. Through joint entities like Shanghai SBI-INESA Equity Investment Management and Wuxi SBI Private Equity Investment Management, SBI directs capital toward mainland startups in industrial semiconductors, healthcare technology, and green transition initiatives.

Mid-tier securities groups, such as Okasan Securities Group and Tokai Tokyo Financial Holdings, maintain access to Greater China capital flows through licensed Hong Kong operating hubs (Okasan International Asia and Tokai Tokyo Securities Asia) coupled with mainland technology and operational joint ventures. These firms focus on cross-border equity research, institutional trade execution, and structured retail brokerage, directing institutional order flow into mainland exchanges via the Shanghai and Shenzhen Stock Connect programs.

## Evolution of the Regulatory Framework and Capital Access Regimes

The expansion of Japanese financial institutions in China has been enabled by successive structural changes in mainland regulatory frameworks and cross-border investment access channels.

The modern phase of market entry followed the regulatory opening announced in 2018, which led to the complete abolition of foreign ownership limits on securities companies and mutual fund management companies on April 1, 2020\. This reform removed the historical 49% equity cap that had required foreign brokerages to accept minority positions, as well as the intermediate 51% majority-stake threshold established during the initial phases of financial liberalization. Foreign parent institutions were granted the legal right to apply for greenfield wholly owned securities subsidiaries or to acquire the remaining stakes held by domestic partners in existing joint ventures, providing the legal foundation for Daiwa’s equity buyout and Mizuho’s greenfield establishment.

This liberalization was accompanied by a reorganization of China’s financial regulatory apparatus in 2023\. The establishment of the National Financial Regulatory Administration replaced the China Banking and Insurance Regulatory Commission (CBIRC), consolidating prudential and conduct supervision over the commercial banking, trust, and insurance industries. This streamlined supervisory oversight for groups like MUFG, SMBC, and SuMi TRUST. Concurrently, the CSRC was elevated directly under the State Council and given broader authority over mainland capital markets, focusing on brokerage market entry, institutional compliance, securities trading, and public investment fund governance. The People's Bank of China and the State Administration of Foreign Exchange (SAFE) refined their oversight of system-wide liquidity, foreign exchange operations, and macroprudential capital-account balances.

Japanese asset managers operate through distinct access channels depending on the intended direction of capital flows. Inward market access is governed primarily by the Private Fund Management (PFM) regime, supervised by the Asset Management Association of China under CSRC oversight. A registered PFM WFOE can design and distribute onshore private securities investment funds directly to qualified domestic institutional and high-net-worth investors, an avenue utilized by both Nomura Asset Management and Sumitomo Mitsui DS Asset Management. Outward capital flows are managed largely via the Qualified Domestic Limited Partnership (QDLP) program run by municipal financial bureaus in financial centers like Shanghai. Through QDLP quotas, foreign fund managers can raise RMB from qualified mainland investors and convert the capital to foreign currency for deployment into overseas private equity, infrastructure, and alternative assets. These schemes operate alongside the unified Qualified Foreign Institutional Investor (QFII) and RMB Qualified Foreign Institutional Investor (RQFII) framework, which eliminated individual quota constraints, simplified registration requirements, and broadened permissible offshore investments to encompass onshore futures, commodities, and private funds.

In the debt markets, the China Interbank Bond Market (CIBM), overseen by the PBOC and NAFMII, has become an important channel for foreign commercial banks. The rapid growth of Panda bond issuances—renminbi-denominated debt sold by non-resident corporate and sovereign issuers within the mainland interbank market—has been accelerated by low onshore renminbi borrowing costs compared to US dollar and euro benchmark rates. To participate beyond basic distribution, commercial banks must secure underwriting licenses from NAFMII. In January 2024, Mizuho Bank (China) secured a license to act as a lead underwriter for Panda bonds in the interbank market, building upon its initial underwriting approvals and enabling it to lead syndications for international corporate, development, and sovereign issuers.

## Strategic Objectives, Opportunities, and Structural Challenges

The operational milestones achieved by Daiwa and Mizuho illustrate a wider strategic repositioning of Japanese financial groups within the world’s second-largest capital market.

A clear dynamic is the divergence in geopolitical and regulatory friction between Japanese and American financial institutions in China. Major US firms have faced prolonged regulatory waitlists, heightened domestic scrutiny from Washington regarding outward capital deployment, and extensive data localization and technology security audits from Chinese authorities. In contrast, Japanese financial institutions have advanced through the regulatory pipeline with administrative support. This smoother progress is supported by regular high-level bilateral trade engagements, such as dialogues overseen by Chinese Vice Premier He Lifeng, as well as the specialized commercial focus of Japanese houses. Japanese firms generally prioritize bilateral corporate debt underwriting, trade finance, and wealth structuring over high-frequency quantitative market making or large-scale retail consumer lending, aligning well with regulatory preferences focused on real-economy financing and capital market stability.

The push by Daiwa and Mizuho to establish 100% owned entities reflects clear operational limits associated with the earlier 51:49 joint venture model. Historical partnerships often experienced structural deadlocks caused by conflicting strategic horizons. Domestic partners tended to prioritize retail client growth, short-term brokerage volume, and local market share, whereas Japanese parent groups sought to maintain rigorous risk controls, global anti-money laundering frameworks, and high-margin institutional advisory practices. Operating via wholly owned subsidiaries allows Japanese groups to integrate their mainland platforms directly into global reporting lines, enterprise risk architectures, and unified capital allocation strategies without the operational compromises required in shared-governance ventures. Full operational control also streamlines compliance with China’s Data Security Law and Personal Information Protection Law (PIPL), which enforce strict rules on handling sensitive financial records and cross-border data transfers.

In terms of competitive strategy, Japanese institutions avoid competing directly with dominant domestic brokerages—such as CITIC Securities, Huatai Securities, or CSC Financial—in commoditized retail equity brokerage, where sharp commission compression has eroded margins. Instead, they focus on higher-margin institutional niches where cross-border connectivity offers a competitive edge:

- **Panda Bond Origination:** Underwriting onshore RMB bonds for foreign multinationals, regional Asian issuers, and Japanese corporate headquarters seeking to benefit from low mainland borrowing rates.
- **Cross-Border M&A and Restructuring Advisory:** Assisting Japanese multinational corporations in reorganizing, divesting, or expanding their Chinese operational subsidiaries, while advising Chinese industrial firms pursuing acquisitions and joint ventures across Southeast Asia, Europe, and Japan.
- **Targeted Wealth and Asset Management:** Deploying PFM strategies and utilizing QDLP quotas to provide onshore institutional and family office clients with access to global fixed income, specialized alternatives, and multi-asset strategies.

Despite securing full operational licenses, Japanese financial firms face clear macroeconomic and operational headwinds. The prolonged adjustment in China’s commercial and residential property markets, subdued domestic consumer sentiment, and deflationary pressures have softened broad capital market demand and weighed on domestic equity valuations. Subdued primary equity issuance on the Shanghai and Shenzhen exchanges limits IPO underwriting fees, forcing new securities units to rely more heavily on fixed income, Panda bond origination, and advisory assignments to support their cost bases.

Furthermore, building out full-scale local operations—including deploying isolated onshore IT systems, recruiting high-cost compliance personnel, and building localized institutional distribution networks—involves substantial initial capital expenditures. Consequently, Japanese financial institutions view their mainland operations with measured expectations, treating their newly licensed platforms not as quick-return initiatives, but as long-term strategic platforms designed to support cross-border corporate integration and regional capital intermediation across East Asia.

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[Daiwa Securities to Reshape Wealth Management Landscape with ¥370 Billion Acquisition of ORIX BankDaiwa Securities Group has announced the ¥370 billion acquisition of ORIX Bank Corporation (OBK) in a move to immunize its earnings against market volatility. This transaction represents a decisive step in Daiwa’s "Passion for the Best 2026" management plan, shifting the group’s weight toward a stable, interest-rate-![](https://storage.ghost.io/c/46/cb/46cbd57f-e0e8-41a4-a1e2-710103a4267b/content/images/icon/Newsletter-Small-49654be9-d5d5-446d-9131-07e45765a29e.png)Japan FinTech ObserverNorbert Gehrke![](https://storage.ghost.io/c/46/cb/46cbd57f-e0e8-41a4-a1e2-710103a4267b/content/images/thumbnail/Daiwa-1-e0d54774-35b1-48ce-a5b0-228b25c7c5f5.png)](https://www.fintechobserver.com/daiwa-securities-to-reshape-wealth-management-landscape-with-y-370-billion-acquisition-of-orix-bank/)