Overseas Recruitment Shows China’s Wealth Management Industry Expanding Quickly

Overseas Recruitment, Begun To Much Fanfare In 2008, Starts Again In Developed Markets As Firms Seek Western Talent For Shanghai, Beijing Offices

With individual wealth growing, demand for wealth management services is becoming more widespread

With individual wealth growing, demand for wealth management services is becoming more widespread

Demand for wealth management services, a relatively new financial sector in Mainland China, is growing quickly as more wealthy individuals become increasingly conscientious of the effects of global fluctuations on their savings. We’ve already seen wealthy Chinese investors move into a number of hedges in the last two decades, from traditional hedges like gold and real estate to more intrepid hedges like Chinese antiquities and art, but sophisticated wealth management services have yet to develop a strong foothold in the Mainland.

That  is changing, however, as more wealth management firms have sprung up (or come from other countries) in cities like Shanghai and Beijing. While the wealth management “capital” of China remains Hong Kong, with the gradual emergence of what some have called “Shangkong” — a financial “super city” formed by the gradual fusion of the Shanghai and Hong Kong financial sectors — the wealth management industry in China is making leaps and bounds. By some projections, the Chinese wealth management industry should outpace that of Japan as early as 2015.

To develop this industry, a number of financial organizations in Shanghai have started to look overseas for talent, making several trips to global financial hubs like New York to search for experienced financial professionals who are willing to relocate to China. From Xinhua:

The 17 organizations will hold three job fairs overseas, or in New York on Dec. 5, Toronto on Dec. 9 and Singapore on Dec. 13, to recruit high level financial talents.

A similar move last year brought 66 financial talents to the city, of whom five are enlisted in a national program on hiring overseas specialists and each enjoys 1 million yuan (146,400 U.S. dollars) in subsidies from the central government.

Ji Wenguan, head of Shanghai Financial Work Commission, told Xinhua that the Shanghai municipal government was planning to provide support of housing, insurance and education for the talents.

Tax cuts would also be provided for them, said Fang Xing, director of Shanghai Finance Office.

Fang said “Talents and innovation are prerequisite to building Shanghai into an international financial center.”

“It is a golden opportunity to do creative work here, work that can really make a difference, as the financial sector is developing rapidly in China,” said Hua Lei, who was recruited last year and is now supervisor of high-end wealth management at Orient Securities.

While many have noted that recruiting experienced overseas talent is easier said than done, since many executives have little interest in relocating their families half a world away in an unfamiliar city, younger professionals may be lured by the opportunity to develop their skills in a new market. Also, heading to Shanghai may be a good way to get into a field that should see steady growth for years; If many projections are correct, wealth management in emerging economies should be big business for quite a while. Recently, billionaire Canadian  investor Michael Lee-Chin spoke on the strength of the wealth management industry, saying

wealth management companies have proven to be the most reliable long-term investment and should be the core of a wise investor’s portfolio.

He said wealth management companies, which deal in mutual funds, present the lowest risk because they’re paid to manage investor money and are not directly exposed to bad loans or depreciating assets.

As China’s economy grows and more wealth is created, wealth management will be a necessity to more investors. While traditional hedges like gold, and trophy hedges like fine wine and art, will remain popular — and probably keep growing in popularity — more sophisticated investment strategies will likely continue to take root in Mainland China. With more firms headed to Shanghai and other cities, and more experienced talent building the industry, China’s financial centers should be on course to rival global financial centers like London and New York within a few decades.

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