Executives from the mainland are now first choice

Multinational companies on the mainland are increasingly hiring local executives to fill top positions, and the salaries they offer often exceed those given to Hongkongers and are approaching the pay packages given to expats.

'Companies in the retail, biotech, high tech and banking industries like to hire the local mainlanders to be their chief executives or directors,'' said Jimmy Ho, managing director of Korn/Ferry International, an international headhunting firm. 'They want people who know the local market and culture as they expand their mainland businesses. This is different from the 1990s when multi-nationals tended to send expatriates or hire Hong Kong people to head their offices in the mainland.'

The high demand for well-qualified and experienced mainlanders has led to a surge in their pay packages. A country-wide sales director's annual package could reach between 2 million yuan (HK$2.4 million) and 3 million yuan. In comparison, a Hong Kong executive would be offered about HK$1 million for the same job, the same as an expatriate, Ho said. 'There is almost no gap between the pay package of mainland top executives and the expatriates,' he said. 'In fact, in some cases a company may need to pay more than they would for an expat and may still not be able to recruit the person they want.'

But Ho said expatriates still have a role to play. Multinationals still send in expats to head finance departments and other key posts to make sure the company's culture and controls remain unchanged. 'In addition, some mainland companies that want to expand overseas like to hire the expatriates to add the international view to their teams,' he said. 'This is why the expatriates in China now may not work at the multi-nationals but are sought by mainland privately-owned enterprises.'

Jerry Chang, director of Barons & Company, said the mainland had a talent pool of people who joined the multi-nationals after graduating from universities. They started at the bottom and worked their way up over 15 to 20 years. 'Many of these people are now qualified to be directors or vice-presidents of multi-nationals,' he said. Multinationals, he said, previously offered expatriates a salary package and a car, tax benefits and children's education reimbursements - benefits that they are now offering to their high-ranking local successors.

A human resources head of a jewellery company, who asked not to be named, said his company had difficulties finding local senior executives. 'Even if we give them a high salary, car and tax benefits, we may still not get the talent we want because other companies are offering the same or even better terms.'

Louise Lam, head of human resources at Hang Seng Bank, which employs about 1,600 people in 13 mainland cities, said that many companies previously offered higher pay to expatriate staff to draw them to the mainland because they often had specific skills and experience that were not available in the local market. That was especially at a time when economic reforms were just beginning, she said.

'But over the years, the skill sets offered by locals have improved dramatically,' she said. 'Many companies no longer need to offer premium packages for expatriate staff because there is a larger local talent pool, especially in major cities.'

Lam said local experience was a valuable asset because these people had local knowledge, experience and contacts in business and government that they would work with. 'This is particularly true for senior or specialised positions such as finance, compliance, lawyers, marketing managers or human resource managers,'' she said. 'But even with the increase in people with stronger skill sets, the size of the available pool is small, especially in second-tier cities where the expatriate population is smaller. So strong demand for local staff there has driven up pay scales.'

Agnes Chan, regional managing partner at Ernst & Young, said competition for talent on the mainland was very high, adding that she was closely monitoring the situation and reviewing pay and benefits on a regular basis.