Friday, December 5, 2008
China Looks to Wall Street to Lure Back Native Talent
By JAMES T. AREDDY in Shanghai and CAROLYN CUI in New York China, which has long sent its best and brightest abroad, is now siphoning talent from Wall Street. Professionals are peppering brokerages, banks and law firms in Beijing and Shanghai with résumés, and Chinese officials and executives are taking advantage. This month, officials from Shanghai will lead a delegation to New York, Chicago and London looking to poach specialists in risk management and other fields. At an earlier session in New York last month, Wall Street professionals packed a theater to hear pitches from Chinese regulators and mutual funds. Jeff Lu Min The big lure: a belief that China's financial sector is in the early stages of an expansion while financial centers in New York and London are contracting. Of course, China's own financial sector has taken a hit in the past year. The benchmark Shanghai index is one of the worst performing in the world, losing nearly 70% since its peak in October 2007. Some of China's 100-plus brokerages have started to lay off staff. The 100 foreign banks with outlets in China, as well as overseas insurers, have slowed expansion. Language alone helps dictate that most of these jobs in China will go to those born in the country and who went overseas for school or work. Some 1.2 million Chinese have gone abroad to study -- mostly in engineering and finance -- in the past three decades. About one-fourth have come back to work in China, according to the Ministry of Education. Jeff Lu Min was ahead of the curve. Last February, the native of eastern China's Anhui province, left his stock-picking job at American International Group Inc. to join a big Chinese mutual-fund company, China Asset Management Co. He landed on Wall Street nearly a decade ago after earning masters degrees in science and business at Yale University, but was impressed with the growth in China's asset-management business. When Mr. Lu left New York, Wall Street's pains still were in the early stages and AIG looked solid. Mr. Lu's friends in New York greeted his decision to return home with "curious" comments, he said. Now, some want to replicate his move. "In this market absolutely," said the 40-year-old Mr. Lu. "You can imagine." Robert Grandy, an executive at recruitment firm Korn/Ferry International, said he sees five to six résumés a week from experienced executives who want a job in China, up from maybe one a week earlier this year. Ethnic Chinese with Wall Street experience and fluent Mandarin appear to have the best chances in local firms, as well as multinational companies. Chinese who return home after working overseas are dubbed "hai gui," or sea turtles, and government officials have for years worked hard to entice them back. Patriotism has been part of the pitch. But now, officials are floating the prospect of tax breaks to lure highly paid lawyers, accountants and bankers. Some top talent is being lured back. David Li, a former Barclays Capital and J.P. Morgan Chase & Co. executive, joined China International Capital Corp., a Beijing investment bank, in July as an executive director and chief risk officer. Mr. Li, who has extensive experience designing risk models used to value credit derivatives, declined to comment. Chinese companies also are starting to address one of the big impediments to drawing talent: low compensation. Cheng Haiyong, deputy chief investment officer of China Asset Management, which hired Mr. Lu, has visited the U.S. twice on recruiting drives looking for "people who are quite familiar with both the U.S. and Chinese financial sector." Mr. Cheng said his firm can afford "global standard" salaries for the industry. Top Chinese institutions are paying talent at least 75% of the global standard for some positions, according to Options Group, an executive-search firm. In some cases, Chinese firms are paying 100%, or slightly more, in areas such as private wealth management, private equity and portfolio management, Options Group said. China's financial markets are far less developed than those in the U.S., and Chinese officials pledge they will continue to liberalize markets, though they may introduce financial products carefully, particularly the kinds of derivatives blamed for sparking the crisis on Wall Street. Still, they note modern finance has plenty of basic products that remain untried in China. Surging stock prices through most of 2006 and 2007 gave China a taste of its potential as a financial-services center. For a brief period, Shanghai led the world in initial public offerings and mutual-fund launches. Also, the country saw its futures exchanges and bond markets start to influence global pricing. Not everyone is ready to return. Zhao Hongqiang, a 32-year-old manager of KPMG LLP's Audit & Risk Advisory Services in Washington, said he can see an approaching "glass ceiling" if he stays in the U.S. and was heartened with a recent offer to work for the firm in Beijing. But he is on the fence. The concern: reverse cultural shock after nine years in the U.S.