As the European debt virus continues to contaminate ever more countries and the US Government struggles with its recent downgrade, the global economy seems to be on track for another recession. Given the gloomy outlook for the near future, banks – which have only started to recover from the last crisis – are reducing their headcounts once again. The question is therefore where and how to cut.
Over the last two years, banks have not had time to fully rebuild their middle ranks, so belt tightening in the centre seems unlikely. Their options now are either to adopt the Amazonian practice of shrinking heads (cutting at the top), or to reintroduce Chinese foot binding (shrinking the bottom).
The young and the jobless
My recent meetings with headhunters have confirmed that hiring for top rainmakers is still relatively active. However, by contrast, my junior counterparts have been talking about redundancies at their firms.
Cutting junior staff makes sense from a management point of view. Firstly, they make a limited contribution to revenue generation. Secondly, they are easily replaceable given their short experience. Thirdly, they are a commodity, with a much cheaper substitute in the Hong Kong market: HK-based PRC nationals.
In addition to being comparatively inexpensive, Chinese candidates have other qualities which are in demand as banks in Hong Kong try to generate more revenue from the PRC market: they understand Chinese culture, have mastered the subtleties of Mandarin, and have mainland networks.
How should a junior Hong Kong banker react to these new threats? I think some of the options are:
1) Improve your Chinese. Given that Hong Kong is relying more and more on China’s economic growth, speaking Mandarin is not only the new norm, you also need to master the complexities of the language. Being a good communicator in English will not get you the job. Being able to babble a few words in broken Mandarin will get you a “thanks for your time”. However, proving you can speak Mandarin like a government official from Beijing will open many doors.
2) Improve your understanding of the Chinese market. This could be rather difficult if you’re not living in China. However, it is a necessity in order to bring value to your gwailo managers, who would otherwise not see any difference between you and a Western candidate fleeing the US or European markets.
3) Pray that your ancestors or your parents have left you some guanxi. It may have been an intangible asset in the past, but now is the time to monetise it. In case praying doesn’t do the trick, you may also consider getting a Masters degree in China. This would allow you to get through this tough economic period, improve your Chinese, and build up your local network in China.