State Street’s luck came from an unlikely source: in the 1970s, as was then the fashion, the city of Boston decided to adopt a Chinese sister city, Hangzhou. In the early 1980s a delegation of Hangzhou officials and academics visited Boston. Jerry was lecturing at Boston University at the time, met the party and kept up contact with the academics. He was then invited in 1986 to lecture at several Chinese universities, including Zhejiang. Fast-forward to 1998, when Jerry had become chief technology officer at State Street in Boston. The US mutual fund industry had mushroomed throughout the ’90s and State Street’s various legacy administration systems were struggling to cope. And Y2K was approaching. To complete a total re-engineering, State Street wanted to forge a link with a university computer science centre but the obvious choices, such as Harvard and MIT, were tied up by the likes of IBM and Microsoft. Jerry proposed to the then chief operating officer, Ron Logue, that he explore setting up an IT development operation in conjunction with Zhejiang University.
He was supported by Bob Williams, who headed up asset servicing in the Asia-Pacific region from Boston, after having run the Sydney office in the late 1980s. Both Logue, who went on to become chief executive and chairman and is retiring this year, and Williams, who is semi-retired but still sits on the board of another Chinese joint-venture for State Street, saw other possibilities as well. “State Street is looking at how we are going to further participate in asset servicing and asset management, and how to position ourselves to offer a broader range of services when de-regulation comes,” Jerry says. De-regulation, in all its forms, is happening quickly in China. Barely a day goes by without an announcement of some relaxation of the multifarious rules governing Chinese financial institutions and the people who invest through them. But many rules still remain and for the uninitiated they can be difficult to fathom.
There are four relevant regulators, for instance, although China is not alone in having sometimes over-lapping regulation. State Street now has a fullyowned subsidiary in China, State Street Hangzhou (SSHZ), having bought out the remaining 50 per cent of its initial joint-venture with the university in 2005. It has about 1,200 staff in two buildings, and a move to a new purpose-built building capable of accommodating 2,000 was scheduled for late last month. About 900 are in the IT area and the other 300 in BPO, doing fund accounting and asset servicing. During the sale process, back in 2005, the president of the University, said: “Please don’t run this as a sweat shop”. Jerry explains that the university wanted to give its students research opportunities. “We have helped them publish hundreds of research papers in the past few years,” he says. And, looking around, the place certainly doesn’t look like a sweat shop.