Growth in China Spurs Demand for Talent
Although a number of banks hit by the U.S. subprime crisis have announced cutbacks, they have not trimmed talent in high-growth markets in China and many other parts of Asia, reports China Daily. China’s economy, the world’s fourth-largest, grew 10.6% in the first quarter from a year ago after expanding by 11.4% in 2007, the fifth straight year of double-digit economic growth, according to the AFP. Now, attempting to capitalize on growth in China, a growing number of financial institutions, corporations and law firms are expanding in the region.
Executive search firm, A.E. Feldman, reports the trend is creating financial jobs and accounting jobs for professionals with experience in the formation of venture capital and private equity funds, M&A, securities, IPOs, derivatives and U.S. tax law. A.E. Feldman also notes that attorney jobs are opening up at the Senior Associate and Partner level for candidates who are bilingual and have experience in Asia. Among the practice areas in greatest demand: securities, M&A, public and private offerings, private equity and intellectual property. Firms are willing to pay top dollar for candidates who meet these specific needs.
China’s Economy
The recent 8.0 earthquake that ravaged northwest Sichuan last week is testing the resilience of the Chinese economy. The AFP reports that Southwest China’s massive earthquake is expected to bring down the nation’s soaring economic growth this year by at least 0.2%. The impact, however, is likely to be short-lived and the quake could eventually boost investment - a major driver of China’s economic growth - through reconstruction efforts.
Looking ahead, the Chinese economy is expected to overtake the U.S. by 2025, according to a new report from PricewaterhouseCoopers LLP (PwC).
PwC’s latest projections suggest that China’s economy will continue to grow to around 130% of the size of the US by 2050. One of the reasons behind China’s rapid growth is the nation’s speed of technological catch-up which boosted its growth potential over the next 10-15 years.
“The global center of economic gravity is already shifting to China, India and other large emerging economies and our analysis suggests that this process has a lot further to run,” according to John Hawksworth, head of macroeconomics at PwC.
China’s Spending Power
America needs to export its way back to balancing its books with countries like China increasing their imports from America, says Peter de Krassel, Author of The Custom Maid Trilogy of books. He contends that China was able to withstand the subprime crisis that wreaked economic havoc in the U.S. because it is no longer dependent solely on America. In fact, de Krassel says the U.S. subprime crisis made Hong Kong the China beachhead for foreign funds.
The PwC report finds that China is likely to be the second largest consumer market in the world by 2020. Meanwhile, cities across the leading emerging markets from Shanghai to Mexico City will have rapidly growing middle class populations with the spending power to afford Western consumer goods and services.
China has usurped the U.S. as the driver of world growth, says de Krassel. China is a geopolitical partner the U.S. should embrace so that it can cushion any future global inflationary or recessionary economic disasters, he adds.
China’s Capital Market
China’s capital market is expanding, supporting the role of foreign investment banks in China, according to China Daily. The report quotes China International Capital Corp Ltd’s Chief Economist, Ha Jiming, as saying, “China’s capital market has great potential in several sectors, including investment banking services, wealth management services and innovative product creation, because China still largely needs to develop the stock market and the private equity market.” The report also notes that dwindling overseas investment opportunities for foreign banks and security firms may cause them to look more closely at China.
Goldman Sachs, HSBC, Morgan Stanley, UBS and Merrill Lynch have all expanded their presence in Asia, capitalizing on soaring investment banking fees in the region, according to a Dow Jones Financial News.
One reason why the big banks are looking eastward is to offer advice on cross-border mergers. M&A transactions in China and Hong Kong increased 38% last year, contributing to $12.6 billion of fees from Asia, reports Bloomberg.
Looking ahead, China’s tightening monetary policy, which began in the fourth quarter of last year, has not been a deterrent to foreign banks’ expansion in the country, according to TradingMarkets. The report states that the Chinese banking industry will face a fiercer competition from foreign banks.
Attracting Talent
High economic growth rates over many years in the Asia Pacific, particularly China, has led to a shortage of suitable professionals, most prominently middle managers with the right skills, according to PwC. The firm contends that China-based CEOs must develop talent strategies that attract and retain the right people.
Findings from the PricewaterhouseCoopers 11th Annual Global CEO Survey, creativity and innovation are the top two qualities desired by CEO’s in the Asia Pacific. Also valued by CEOs in the region was the ability to change (73%), combined technical and business experience (72%) and the courage to challenge (69%). Moreover, 78% of CEOs in the Asia Pacific agree that their organization needs to change the way they develop talent.
