China’s banking and financial services industry is experiencing a severe talent shortage as foreign banks expand throughout the country and Shanghai tries to become an international financial centre.
According to the recently published Hudson Report, respondents in the banking and finance industry are experiencing great difficulty finding talented candidates in China. The pool of job seekers with the necessary experience and product knowledge is too small to meet the foreign banks’ requirements.
But at least the talent crisis is no longer the elephant in the room, it is something people are clearly talking about and are concerned about. There are several reasons behind this. First and foremost, the expansion frenzy among foreign banks in China has escalated the existing shortage. In order to be ready for the expected fundraising boom in mainland China in the near future, foreign banks are expanding their operations throughout the country.
For example, J.P. Morgan aims to add up to 500 people across its businesses in Asia, including China, this year. Morgan Stanley wants to develop its investment banking business in China in the near future, while UBS is ready to double its headcount in three years. Standard Chartered and HSBC, as usual, maintain China as a top strategic priority.
All this hiring has not only already caused a spike in salaries, but it has pushed up staff turnover rates.
Not going global
Meanwhile, although there are a lot of talented professionals in China, there are relatively few people who have a global vision and can integrate both international rules and local practices. The shortage lies mainly in the investment banking, financial derivatives, sales and trading, and senior financial management spaces. According to China Daily, fewer than 10,000 financial professionals in Shanghai meet global standards. And in China as a whole, only 1.4 per cent of financial professionals have any international experience.
The recent eFinancialCareers’ China Talent Survey indicates that “companies not providing development opportunities to staff” is the chief reason for the skill shortage in China’s banking and finance industry. I think it is only a matter of time before foreign banks seriously consider investing more time and resources on innovative training, not just to enhance their workers’ skill sets, but also to retain them in the long run.
Last but not least, China has so far not done a good job in importing global professionals to help relieve the shortage. The reasons are straightforward. Firstly, China’s willingness to match global standards in pay is not yet comparable to that of Hong Kong and Singapore. Secondly, few international candidates understand China well enough in terms of its business environment and local practices.
A good product knowledge often does not compensate for not understanding local markets because the latter usually plays a more important role in China. I expect financial institutions to rectify these problems in the coming years.