Hong Kong expat exodus opens doors for Chinese investment bankers

Published:  20 Jun at 6 PM
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Two decades after the Hong Kong archipelago was given back to China, investment bankers and financiers from the mainland are taking over as Western expats leave.

Following an exodus of Western expat bankers, Hong Kong’s elite financial ranks are now being swollen by an influx of professionals from the Chinese mainland. Western banks’ lay-offs of expensive professionals in the sector has created opportunities for equally talented incomers from mainland China eager to create their own brand of financial prowess. The influx is coincidental with the Chinese government’s increased attempts to tame the former colony into acceptance of full Chinese rule.

Over the last decade, the biggest increase in Chinese nationals in the financial sector has taken place in investment banks. 80 per cent of which have taken on a total of 20 per cent of staff from the mainland. One Chinese MD who arrived five years ago considers the islands provide a far superior environment than China’s polluted, crowded cities. Hong Kong’s great food and low tax rate of 15 to 17 per cent against the mainland’s 45 per cent are also appreciated by Chinese incomers.

The former British colony’s financial services sector brings in 18 per cent of the Hong Kong economy as against just 10.4 per cent when the city came under full Chinese rule in 1997. Western businesses including Bank of America, Goldman Sachs and UBS are cutting back on their expat employees, causing concern amongst Hong Kong’s other business sectors as the expat professionals head home. One Michelin-starred restaurant saw its wealthy Western customers decline by 10 per cent whilst mainland clients grew by around the same number.

The expense of maintaining expat professionals in Hong Kong is one reason why international businesses are cutting back on expatriate staff, leaving incoming Chinese companies to take over in the prime Central Hong Kong district. The value of middle management expat packages has shrunk by five per cent since 2012, according to international relocation firms in the region, with many Western firms relocating their headquarters to more affordable districts such as Quarry Bay. Surprisingly, the changes have made attracting top Western talent from Wall Street to Chinese banks and brokerages far easier, even although mainland Chinese bankers earn far more than their Western equivalents.
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