Asian Investor

Funds from China Look for Help with Expansion Plans


It sounds like a dream job: authority over a global business development team, freedom to travel far and wide, and oversight of offshore sales ranging from North America and Europe to emerging markets. And it is testimony to how the businesses and ambitions of China's fund managers have grown.

A rising number of Chinese fund houses want to expand their sources of income beyond the retail-dominated and ultra-competitive domestic Chinese market. And they are looking to recruit global business development executives in Hong Kong who can help them achieve their aims.

The recruitment market is heating up as more offshore clients receive their qualified foreign institutional investor (QFII) quotas, allowing them to invest in China, and as more fund houses plan for a new round of offshore activities.

The usual chart toppers, such as China Asset Management, China Southern, E-fund and Harvest, already have a presence in Hong Kong. They will be later joined by Bosera, Hua An, China Universal, Fullgoal and more. The firms have chosen the city as their first offshore QFII business base, which also hosts the qualified domestic institutional investor (QDII) investment teams covering H-shares and red-chips. And at least half of them have been actively recruiting, judging from recent rounds of headhunters' hiring mandates.

A senior business development head says that the world view taken by mainland houses' management teams is increasingly splitting into 'China onshore' versus 'China offshore'. He sombrely repeats a mainland CEO's opinion that Asia ex-Japan may be replaced by Asia ex-China in the near future.

In Hong Kong, the ideal candidates are those with experience of regional institutional and wholesale clients and the ability to communicate in both English and Chinese. A hint of Ivy League twang with an accent indicating a PRC background are preferable—American accents apparently sound more professional.

But short of that, mainland bosses could warm to Mandarin tainted with dodgy Hong Kong accents, so long as the execs are effective and can get their point across when debriefing Shanghai or Beijing. (Headhunters say Taiwanese accents are hard to sell in Beijing, and Singaporean has not yet entered the competitive picture.)

The successful candidate will be expected to travel globally, have a ready database of client contacts and develop business relationships for the parent houses from scratch. And, more often than not, the candidate is expected to help put together even the most basic support. That could mean anything from creating standardised fund fact sheets, translating English RFPs to simplified Chinese for fund managers, and checking translations of product brochures, company background material and so on. No function will be too low or high for a senior executive.

Most of these companies openly state they expect their employees to be frugal—execs can find themselves operating in tier-one cities on travel budgets in line with mainland-city costs. Forget those business-class naps and mocktails, even on long-haul flights—the word 'perk' does not exist in the Chinese dictionary.

Furthermore, most Chinese houses prefer to recruit without paying an additional layer of fees to headhunters. After all, these fund bosses are used to receiving hundreds of CVs when they recruit on the mainland. Why would they need a recruiter in Hong Kong to whom they'd have to pay a hefty fee? (A headhunter gripes that only a small number of Chinese clients have been recently enlightened that they need professional help when approaching higher-tier candidates. But most continue to bargain hard for lower fees.)

As more and more Beijing and Shanghai meetings are ending with mainland execs dropping hints of "in case you know anyone", this correspondent wonders if such a frugal breed of global business development exec actually exists.

Senior business development execs in Hong Kong are quick to dismiss these attempts at poaching. They point to obvious mismatches in expectations between the level of candidates sought and the mainland fund houses looking to hire them. Such mismatches explain why most of these houses have been searching since the trough of the financial crisis, where pickings were relatively easy, and still can't find people to fill their roles.

Cross-regional communication is also an issue, reckons one director at a top-ranking US house. Asian business development execs may be fine speaking with head offices in the region, but few—if any—have experience selling to institutional or wholesale clients in European or US offices.

She says mainland bosses would actually be better off recruiting execs from headquarters in international hubs such as London or New York. Otherwise, there is still a ready pool of foreign business development execs residing in Hong Kong, who have been laid off and replaced by their younger Asian juniors over the crisis (and who are still surviving in Hong Kong via the Macau visa run).

But even that is a compromise. These execs will speak little Mandarin, and their working cultures and ethics may clash with those of the more homogeneous Chinese management teams.

When it comes down to it, opening up a global market is hard work. This is compounded by lack of supporting infrastructure, short track records and limited product lines beyond emerging A-share equities. Few want to risk their client databases and the shoestring travelling budget, especially when the Chinese houses are so ready to include 'frugality on expenses' as a criterion in their hiring mandates.

Ultimately, the actual Ivy League-educated, Mandarin-speaking community is very small in Hong Kong. If the mainland fund houses want to hire, they will need to drastically improve their terms to match even the drastically reduced packages that Western firms offer—or drastically expand the pool of candidates they are targeting. "All good relationships, after all, rest on compromises of some ideals," a headhunter points out.

Otherwise, another year may pass and more Chinese houses will find themselves missing out on QFII clients, as they end up in the hands of globally established Western fund managers or resort to the cheaper channels of competing Chinese brokers.

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