Shanghai drawing financial talent with better pay and prospects
Global financial talent is increasingly looking to relocate to Shanghai as the city offers faster salary growth and wider career opportunities than Hong Kong, despite high taxes and quality-of-life concerns.
According to British recruitment agency Hays, 66 per cent of mainland employers increased salaries at least 6 per cent last year, compared with only 17 per cent of companies in Hong Kong.
A Hays survey of 2,600 employers across Asia also found that 67 per cent of mainland companies said they would give employees a pay rise this year, compared with just 17 per cent in Hong Kong.
"We've got a lot of inquiries from expats who want to relocate to Shanghai," said Simon Lance, the regional director for Hays in China. "They are prepared to accept compromises on life, air quality and those sorts of things."
Although executive pay is generally higher in Hong Kong, Shanghai is quickly catching up, and in some fields, the salaries are in fact higher there.
A salary guide compiled by the recruitment firm shows that a risk analyst with a hedge fund based in Shanghai could earn up to 800,000 yuan (HK$1.02 million) a year last year, 46 per cent more than a Hong Kong counterpart, who would make about HK$700,000.
Annual income for a director at a mainland private equity fund could top 2.5 million yuan, compared with HK$2.2 million for a similar position in Hong Kong.
The narrowing salary gap between the two cities does not bode well for Hong Kong, as it gives Shanghai a vital edge in talent acquisition in its race to establish itself as Asia's foremost financial hub.
While financial talent in Hong Kong still enjoys better tax rates, Shanghai offers far greater opportunities for future career development, the survey suggests.
Hays chief executive Alistair Cox said some bosses of multinational firms had told him people willing to move to the mainland stood to climb the corporate ladder faster because of their on-the-ground China exposure, making Shanghai a better career move than Hong Kong.
However, the one stumbling block for Shanghai's push to acquire talent is the central government's failure to implement radical liberalisation of the financial markets.
Lau Juen-yee, the chairman of the Hong Kong branch of CIC, the mainland's sovereign wealth fund, said it would be difficult for Shanghai to attract financial talent from Hong Kong because of lower personal income taxes in Hong Kong as well as the slow progress in deregulating the mainland capital markets.
A skills shortage remains the main reason for the high salaries on the mainland, where employers struggle to retain talent in a corporate culture that encourages job hopping.
"The high level of demand for mainland professionals over the last 10 years has put upward pressure on compensation in China," said David Nagy, the managing director of Chicago-based executive search firm DHR International's China operations.
"Salaries remain competitive in China, and for top talent, employers are willing to go over the top," Lance said.