Nikko Asset Management Asia is expanding its China offering after receiving its RQFII licence.

Nikko Asset Management Asia, the Singapore-based asset management firm owned by Japan's Nikko Asset Management, has received a Renminbi qualified foreign institutional investor licence from the China Securities Regulatory Commission. 

An RQFII licence allows international banks to tap into offshore RMB funds to access China's financial system. In a statement, Nikko AM said it intends to generate $200 million in its maiden product and is targeting $800 million to $1 billion across three to five more products over the next three to five years. 

"The Chinese onshore bond market is the largest in Asia, and about $4 trillion of which, less than five per cent are held by foreign investors. This is larger than the entire bond market in the rest of Asia (ex-Japan) added up together," said Phillip Yeo, head of product development and management at Nikko Asset Management Asia.

China introduced the RQFII programme in 2011 as part of efforts to internationalise the RMB. In October 2013, it allocated some RMB80 billion ($12.8 billion) for European firms and around RMB50 billion for Singapore-based institutions. 

Nikko AM Asia is the combination of Nikko Asset Management Singapore and the former DBS Asset Management. The former acquired the latter in September 2011.