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Why bankers don’t want to say goodbye to Shanghai

Hong Kong has long been the de facto location for Chinese bankers, but the mainland has developed from a relative backwater water for traders and investment bankers to the centre of the action in Asia. Chinese bankers are now more reluctant to pack their suitcases.

In a year when global banks have been cutting fiercely in Hong Kong, Chinese bankers are thinking twice of any relocation options to Hong Kong.

The main reason, as suggested by one HR manager at a Hong Kong bank, is that “Shanghai is more mature and well established now and it can provide a better career prospects” for bankers in the region, especially those with extensive networks in Mainland China.

Headhunters are noticing this too. “Most of my candidates are happy staying in Shanghai,” says Duncan Kennedy, head of Hong Kong and China for search firm Selby Jennings. “It’s quite difficult to get them from China to Hong Kong now.”

Not only does China have a burgeoning investment banking industry, but there are plenty of options on the buy-side. According to figures from the Asset Management Association of China, by the end of September 2015, there are altogether 20,383 private equity funds registered in China, among which 12,738 were formed in the past year.

Banking jobs in China are heavily dependent on bankers’ resources and networks. Given the importance of guanxi (the Chinese phrase for network) in China’s business world means that networks bring in deals, the amount of which can only go up as long as China’s economy continue to grow (albeit at a slower rate) and its market continue to open up.

Such networks take years to build up, with huge expense of time, money and even personal affections invested in the process. To many, especially seasoned bankers, it’s not easy to suddenly give it all up and move to somewhere to start all over again.

The notoriously cramped housing and ultra competitive admission to international schools also deter senior people from moving to Hong Kong, particularly those with a family. One HR manager of a Hong Kong bank revealed that they needed to pay a good amount of housing allowance in order to persuade a banker to move from Shanghai to Hong Kong, but this doesn’t always work, even if the job prospect sounds promising.

“It’s the opportunity cost,” points out Kennedy, “I find candidates in China tend to be very forward looking. If they move, they will look at whether they are going to miss out the potential opportunities in three years’ time.”

Hong Kong still has some sway. “The best professionals globally are present in Hong Kong, which means people become part of a strong global network of finance professionals, ” says Patrick Lecomte, an executive director at ESSEC Business School. “This network will be extremely useful during their careers.”

True, this network is useful, but only to those who are young enough to build up such a network from scratch, such as student interns or junior bankers. To those more experienced who are on headhunters’ radars, it’s a different story because they already have their networks in China. They make a living out of this. Hong Kong is good, but perhaps not as good as Shanghai which offers them the chance to make a good living.

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