Emerging finance hubs in Asia are offering out-of-work finance professionals new job opportunities, with one of the latest – in Qianhai, China – already attracting some of the world’s biggest names, and suggestions it could offer insurance companies special incentives.
Qianhai, which is being touted as the “Manhattan of the Pearl River Delta” in Shenzhen, is pitching to foreign private equity companies, with Carlyle and KKR among those reported to be signing up to the free trade zone. The new 15-square-kilometre special economic zone is being marketed as a test case for Chinese yuan internationalisation, and is offering business, support and preferential financing and personal income tax structures.
“Some overseas companies, including those from Hong Kong, are planning to move their back offices to Qianhai to reduce operational expenses, given the high office rents in Hong Kong,” says Bernard Chan, a Hong Kong deputy in the National People’s Congress of China and member of the Executive Council in Hong Kong. Chan believes that the move will create lots of finance jobs.
Chan says that while the development in Qianhai is still in its early stages, it is aiming to rival Shanghai and Hong Kong as a financial hub.
Speaking as president of Hong Kong-listed Asia Financial and its subsidiary Asia Insurance, Chan says the Chinese government may offer special preferential packages to Hong Kong general insurers to attract them to set up businesses in the Qianhai development zone.
Louis Tse, director at VC Brokerage, says Qianhai’s tax preferential policy of 15% personal income tax for qualified individuals – compared to the top rate of 45% in Shanghai – would be a big drawcard for foreign professionals.
“The authorities in Qianhai could also consider providing double taxation relief to the overseas talent, while specific terms would be determined by tax treaties signed on bilateral basis.”
Not everyone is convinced about Qianhai though. Reuters has reported previously that Qianhai has thus far failed to attract any of Hong Kong’s powerful property developers, signalling growing investor caution towards the ambitious US$45 billion project that is competing with a number of other Chinese cities setting up similar hubs.
“It’s a strange time because most of the people in the Hong Kong industry don’t buy the idea of having some of their businesses located there,” said Wanxin Li, a public policy professor at City University of Hong Kong, told Reuters.
To date, however, Qianhai has signed up 1,144 companies, with the majority being financial companies, including HSBC, UBS and Sumitomo Mitsui Banking Corp.
“We are a bit confused since there are so many free-trade zone proposals coming out following Qianhai, while even details of favourable policies in Qianhai are not very clear yet,” a senior banker in Hong Kong told Reuters. And there are also concerns about tax structures, which the banker said Qianhai officials had promised would be simple, but were turning out to be complex.
Reuters says that other cities in China that are setting up free trade hubs include Xiamen, Tianjin, Guangzhou, Nansha and Zhuhai.