Mellon Financial Corp.said on Friday it was moving rapidly into the fast-growing China market with plans to set up a fund management venture and apply for investment quotas, both incoming and outgoing.

But the flurry of activity comes after many rivals such as Britain's Barclays Plc. and State Street Corp. have already established themselves in the mainland.

Mellon, the eighth largest U.S. asset manager at the end of 2005, established its first offices in China just this year, but sees its team of four staff in China expanding to 40 by the end of next year.

"In Asia, we see Japan and China as our two areas of growth," David Jiang, the head of Mellon's Asia operations, told Reuters on the sidelines of a Mellon investor conference.

Mellon, which owns the Dreyfus mutual funds, hopes to apply for a Qualified Foreign Institutional Investor (QFII) license before the end of this year, which would allow it to invest in China's A-share and bond markets.

The firm is also looking for partners in a fund management venture and plans to file an application to invest Chinese clients' money overseas under the mainland's Qualified Domestic Institutional Investor (QDII) scheme.

"We hope to have the fund management company set up next year," said Jiang, who said funds under management would be between $150 million and $240 million.

Jiang admitted the company was late in getting into China, but stressed that Mellon was taking a long-term approach to the opportunities in the huge market.

The Pittsburgh-based company, which manages about $918 billion globally, has only $5 billion invested in China. Mellon's investments in China include H-shares of Chinese firms listed in Hong Kong, non-performing loans and some private equity, said Jiang.

In contrast, earlier this year, a Mellon unit launched a single fund, the group's largest, a $3 billion global fund of funds to be managed by its Japanese business.

Mellon is also interested in helping China's $29 billion National Social Security Fund to invest in overseas capital markets, but is again a step behind.

The investment arms of Barclays, State Street and Wellington Management Co have all been said to be shortlisted to help manage the social security fund's assets.

"We are looking at that and speaking to regulators quite a bit. We are very interested, obviously," said Jiang.

The company was also looking at India but had no immediate plans to set up an office in that booming economy.

"We studied China for 2-3 years before opening the representative offices," he said.