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The Hong Kong v mainland pay gap: it’s not as simple as it seems

Salaries are generally much lower in mainland China than in Hong Kong, but is the pay gap as extreme in the Chinese financial services sector, which is experiencing a long-term critical shortage of talent?

That mainly depends on how senior the role is, according to Kensy Sy, Talent2’s head of banking practice for Greater China. He says the biggest gulf between mainland and Hong Kong salaries is among junior banking staff with less than five years’ experience.

For example, most commercial and investment banks offer mainland trainees base pay of just 6k yuan a month in their first year, while people with five years’ experience can get between 10k yuan and 20k yuan.

This compares with HK$10k (about 8.7k yuan) and HK$40k (35k yuan) for Hong Kong front-office bankers with one and five years’ experience respectively, says Sy.

The junior base pay gap, which averages about 60 per cent, drops significantly to about 20 per cent at middle-management level, where salaries can reach 80k yuan in China.

It disappears altogether when executives reach senior management, and mainland bankers are sometimes paid more than their Hong Kong counterparts because of the talent shortage, adds Sy.

Emma Charnock, regional director for Hays in Hong Kong and China, says the total compensation gap, including both base pay and bonuses, hovers between 10 and 20 per cent. Coupled with higher taxes in the mainland, this can make China seem a less attractive employment market than Hong Kong, especially for candidates who are used to westernised standards of living.

“However, there are plenty of high calibre mainland Chinese investment banking candidates who will work in Shanghai regardless of the salary as they want to be part of the China story,” she says.

Charnock adds that, in terms of job functions, the pay gap is most noticeable in back-office roles. For example, an executive working in trade support may be paid as little as 10k yuan to 20k yuan a month in China, while their counterparts in Hong Kong earn double that.

In the front office, mainland salaries are on the rise. “China is a key future market for most of the global banks, and it’s these employees that bring the money through door. If a bank can source front-office candidates with the right networks, relationships and deal experience in China, they can potentially be paid more than their Hong Kong compatriots,” says Charnock.

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