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Spotlight on China - Asset Management Outlook 2018

The scope of this document is to share our thoughts on China’s current asset management landscape, the impact of the high level of activity in the WFOE space and the potential opportunities and challenges for global players from a human capital perspective. Given this is a sector where changes happen quickly, it is important to note that the factual content is based on market research from public sources as of mid-April 2018, plus our first-hand experience in dealing directly with many asset managers and candidates in China over the past eight years of operating onshore. China is the core of our focus, now with half our business based in Beijing and Shanghai. A HUMAN CAPITAL CONUNDRUM FOR INTERNATIONAL ASSET MANAGERS Asset management opportunities continue to dominate conversations with industry practitioners in China across the front, middle and back offices. We see this first-hand, being engaged in an increasing number of searches for international asset managers as they vie for more access onshore and look to launch private fund products. The focus of global players on China is understandable. For example, the domestic private fund industry, including both wealthy individuals and institutional investors, tripled in size in 2017 to hit RMB 30.9 trillion (USD 4.74 trillion), according to the Asset Management Association of China. Yet what this race also brings, without exception, is a dilemma common for businesses: how to attract, hire and retain the right individuals to capitalise on this unprecedented opportunity. There is no quick or easy answer. Inevitably, it depends on individual ambitions, patience and depth of resources at each firm. Plus, it is too early for any kind of roadmap or tried-and-tested approach to provide a benchmark or model for a successful wholly foreign-owned enterprise (WFOE). We are on a voyage of discovery, and flexibility is key to long-term success. Finding answers is further complicated by the fact that most firms are at different stages of the lifecycle. At the same time, the asset management landscape is still evolving, from a regulatory as well as a product perspective. The only consistent theme, it seems, is an ever-tighter squeeze on an already-shallow talent pool. ​ This all makes the careful and strategic planning around human capital a critical success factor for global asset managers as China’s domestic landscape develops and evolves. ACTIVITY LEVELS The information provided below is current as of 9th April 2018 and is subject to change. It is for your general information only and is not intended as legal advice. Data source: Asset Management Association of China (AMAC). The numbers speak for themselves in terms of the pace of foreign asset managers entering the market: 27 foreign asset managers have set up WFOEs since September 2015 – 17 of which have been done since the start of 2017 11 global asset managers have secured private fund management (PFM) licences 6 of these asset managers with PFM licences have launched onshore private fund products PFM funds launched to date ​ Tracking the onshore flow to China ACQUIRING THE RIGHT TALENT We share the excitement and commitment that the world’s asset managers are showing to China, based on this “moment in time” for the industry. And, as the market’s potential continues to unfold, we predict that it will represent the single-largest human capital opportunity – and challenge – over the next five years. At the same time, we also share the appreciation of foreign asset managers of the complexities and challenges in navigating the market. Regulatory clarity is one of the key issues that foreign asset managers face, despite the easing ownership limits more broadly on foreign joint ventures across asset management, life insurance and securities. Other considerations relate to asset managers making a call on when – and how quickly – to grow their business. This includes the best route for launching their funds, as well as the best approach to take to fill the talent gaps that exist, and develop sufficient human capital. The pace at which foreign managers are actively hiring talent to fully implement their China growth strategy is different from firm to firm. However, the length of time a firm has had a WFOE does not always necessarily dictate how aggressive they are about ramping up their headcount in China. In fact, some asset managers are being deliberately cautious about the speed at which they grow. They are slowly adding firepower even though they might have more of a track-record onshore. Conversely, we are seeing some of the asset managers that are ‘newer’ to the market, with more recently-established WFOEs, looking to make a quick impact. They view a team of any less than 10 individuals who focus on investments, clients and relationship management as lacking in manpower and expertise to effectively run a successful WFOE to manage private funds. Further, if they can find enough people to fill the required roles, these firms believe they will have an edge going forward in terms of being more appealing to candidates looking for their next move. For firms with this ambition, we believe they need to fill a variety of senior positions to deliver a full-scale offering. CREATING THE RIGHT WFOE STRUCTURE The (perhaps obvious) reality is that WFOE structures represent a new chapter in the evolution of onshore funds management and distribution. As we are still in the early stages, no one firm or advisor has established the winning strategy. As such, many firms are setting out on the journey with a strategy, but learning along the way, and thus flexing when needed. This combination of a well-thought-out goal and process, along with a flexible mindset, seems to be the key. One of the early building blocks is which investment strategy the firm will pursue, as this will have the biggest influence on headcount. Some firms are focusing purely on one product, others are seeking investment teams within Equity, Fixed Income, Multi-Asset and Quant. This clearly has a multiplier effect on the size of the team needed. A cautious approach with a single asset class investment strategy, could be a total of sub-10 headcount. This is also applicable to those players just getting started in China, who tend to be in search of two or three key individuals as a minimum to lead and build the business, such as a general manager, a government relations / regulatory relations person and head of investment. However, if the firm wishes to run more aggressively and invest in multiple lines of product, then the overall number could be 25-plus within 18 months. Below is a rough breakdown of the more “full blown” WFOE structure, with headcount next to the functional areas. Using this as a guide we have observed several firms seeking to stay sub-10 headcount, and some aiming closer to 30 in the medium term. HIRING HOT-SPOTS We are finding that a top-down approach to hiring makes the most sense for foreign asset managers in China. Sequencing of hires is important, the leaders need to help to hire their team, and skipping to mid-level hires without a GM or CIO in place has resulted in problems. The top of the pecking order are general managers, followed by heads of investment / chief investment officers. The next critical hire is the head of compliance / chief compliance officer. Language and the ability to be culturally dynamic between local Chinese and global is absolutely key. In each case, asset managers need to assess a variety of attributes to determine if an individual is the right fit for a WFOE. We see some specific requirements for each role: General Managers / GM Onshore market knowledge and experience, to ensure a deep and rounded understanding of the scope of the opportunity A good cultural fit, and with English-language fluency, since they will need to be in regular communication with global headquarters and aligned with the strategy and vision of the firm The ability to offer strong leadership for the business, including motivating and managing staff on the ground, many of whom are likely to be relatively new to the firm Persistence, given that they will encounter various hurdles and challenges during the early stages of a WFOE, and in securing licences and approvals to launch funds Connections, in terms of clients as well as government and regulatory officials, especially if there is a need at any time to try to smooth or quicken the approval path Mainland national who has previously studied, worked and lived overseas – but has also more recently worked in China to have forged the required connections and market insights Heads of Investment / CIO Knowledge of China’s investment landscape and domestic markets A track-record in leading big investment teams Experience in working overseas in a similar investment role, to ensure they understand and can apply the type of structured investment process that their new employer will demand Understanding and appreciation of the regulatory landscape Cross asset class experience is generally desired First class communication skills in English and Mandarin are essential Heads of Compliance / CCO An ability to understand and apply the technical aspects of the job in a market where rules change frequently Language and cultural skills to liaise with counterparts in Hong Kong, Singapore and further afield Knowledge of – and ability to meet – standards of international best practice to help global colleagues get comfort in understanding the reality of the situation onshore A regulator network based on contacts and experience in getting approvals FINDING THE RIGHT BALANCE FOR BOTH SIDES Candidates For candidates as well as their potential employers, there are a number of factors that matter to them in their decision-making about their next move. It is a two-way street. Below are some recurring themes we have observed from both sides of the table. Motivators to move firms – The firm’s apparent commitment to China, based on the stated strategy, plans for growing its WFOE and its track-record to date in terms of implementation The levels of responsibility and trust that the candidate feels they will receive in their new firm The chance that they will be given sufficient autonomy to do their job without feeling they are under a management microscope Increase in their compensation package The opportunity to join a firm with an existing presence, to tap into their market positioning and onshore experience With newer market entrants, some candidates feel they can play a more pivotal role in the firm’s development in China and have a greater impact on the business Factors that make a move less appealing – If there is any question about the company's commitment to the WFOE long term In moving to an international asset manager with more established operation, there might only be openings for middle-tier and junior roles Working in a Chinese institution can offer a better, more natural, cultural fit personally, including communication with managers Compensation can be better within private funds / local companies Some candidates feel they can contribute in a more meaningful way as a part of the core team rather than a satellite operation Candidate might feel they want to be part of a firm at the start of its global growth journey, which applies to a growing number of Chinese asset managers Employers What makes certain candidates stand out – Market knowledge and experience within the onshore asset management landscape A good cultural fit with the international firm, and with English-language fluency, to communicate with senior management and colleagues outside of China Connectivity in the local market – not only with clients, but also in terms of government officials Experience in working overseas in a similar role, to ensure they understand and can apply the type of processes and standards of international best practice that their new employers will demand Understanding and appreciation of the regulatory landscape, as well as knowledge of how to operate successfully within it What makes some candidates less appealing –​ If money seems to be their number-one driver If they have weak communication skills in English, and lack cultural dynamism Insufficient level of knowledge of the market and connections to be successful If they are not senior enough to have the gravitas to help develop the business Their ability to manage their part of the business and lead or grow teams in what is often more akin to a start-up phase The track-record of a candidate – if it shows they move too frequently between different firms Their experience in working with an international organisation, in relation to their understanding of what is required within an international organisation SUMMARY AND OUR EXPERTISE Profile has invested significant time and effort building our China business, having been onshore for eight years. Today, half our business is in China and within that we have a team of experienced consultants and in-house researchers focusing on asset management. We have undertaken many searches in this space and work with WFOEs, JVs and local Chinese Asset Managers. We firmly believe that only by being fully immersed in the local market and by working with all client groups can you truly offer insight and advice of genuine value. The days of “covering China from overseas” are long gone. The landscape in China is rapidly changing and the knock-on effect for human capital is significant. Our experience has taught us to approach the market opportunity with enthusiasm, whilst bearing in mind that for candidates, employers and advisors alike, we are all in the early stages of this journey. Remaining true to our commitment to strive for excellence, the below themes are key to supporting hiring and retention of talent in a dynamic, fast-paced market. 1. Patience & Persistence Sometimes, you need to take a deep breath and move forward, as the opportunity – and the steps taken to grasp it – require a new approach. 2. Wage Disparity Particularly in support functions (especially Compliance), standardisation of salary levels seen in mature markets does not exist yet. Those with similar experience can be 50 to 80% apart on their package. Candidates are aware of this disparity and many less well-paid individuals are aiming for 50 to 100% increases to move.​ 3. Cultural Dynamism Clients see the cultural agility to work well between China and International as essential to successful hiring. The often ignored but very real issue on this point is that it is a two-way street; employers also need to show cultural flex in order to attract the best talent. 4. Strategic Vision (strength and flex) Whilst it is imperative to communicate a strong strategic vision for the WFOE, equally important is to always be flexible in delivery in this ever-changing market. Rigidity to every letter of the plan has caused issues for several WFOEs, resulting in costly lessons. 5. Hedge Your Bets The reality is that there is a slight frenzy in hiring activity, and individuals often have multiple options simultaneously. Having a longer shortlist than normal is a good thing as situations change so rapidly. Never assume a hire is complete until the person walks through the door. 6. Be Opportunistic If you find the right person, act swiftly, decisively and get the deal done. 7. Retention Employers must be realistic: Once you make a good hire you are now a target. Make sure employees are well-managed, well-respected and never take anything for granted. Below are examples of what we have completed or are currently engaged in to complete: Front Office – CIO / Portfolio Management / Trading / Product Management / Sales Infrastructure – Compliance / Finance / Operations / Legal / Human Resources For more information or individually tailored advice, please do not hesitate to contact our regional Asset Management team: Hong Kong Office - please contact Andrew Oliver Singapore Office - please contact Stanley Teo Shanghai Office - please contact Yao Xiong Beijing Office - please contact Winni Wei
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Profile Legal & Compliance Market Update 2018

The following report reflects our insights on the Legal & Compliance employment market in Asia. It highlights the key trends we observed in 2017 and pinpoints emerging themes across the sector for the next 12 months, including identifying the major factors impacting hiring and talent movement. LEGAL TRENDS - HONG KONG While 2017 started with much uncertainty and challenging conditions for many of our clients, the year ended on a much more positive note with increased activity reported in all our Asian offices. Costs were very much front of mind for most General Counsels within investment banking, with many seeking to stretch their recruitment budget as far as possible. We have seen consistent trends across the whole sector over the past 18 months. Senior roles have been replaced with more junior and affordable replacements, hiring at the Vice President level has been the most active and regulatory lawyers have been in high demand, with roles far outstripping demand as banks scramble to keep up with regulatory implementation projects relating to EMIR, Dodd Frank and MiFID II reforms. Increased regulatory scrutiny and investigations have ensured that financial institutions continue prioritising robust governance frameworks and cultivating the right culture; as a result, a greater number of lawyers are moving into corporate governance roles than ever before. In addition, specialist roles within banks have also been reasonably busy with increased hiring occurring within Employment, Litigation & Regulatory Investigations and IT legal teams. Asset Management firms in 2017 have enjoyed a relatively successful year with hiring across front office and back office at a marked increase over previous years. While Hong Kong and Singapore continue to be regional hubs for international asset managers, China is capturing the majority of attention. Many firms have been encouraged by the moves by PRC regulators to allow foreign firms wider access to onshore asset gathering and, as such, are planning expansion accordingly. Hiring in mainland China does present its own set of challenges as the candidate pool is far smaller and less experienced than in Hong Kong and Singapore. Competition for candidates can be fierce and often includes significant pay increases. Private equity firms remain the employers of choice for many transactional lawyers, with more and more PRC funded private equity firms hiring lawyers within this space. However, competition remains tough and the work hours are not for the faint of heart. Innovation in technology and disruption from fintech companies was the big buzz last year, with most financial services firms intently looking into client interfacing, product distribution and data protection as part of their operations. Data security and cyberfraud will be at the forefront of many legal teams' agendas this year, with developing global policy, implementing transfer agreements and training set to keep many teams busy. Insurance firms are facing a shake-up in Asia like never before. Firstly, M&A activity in Hong Kong is at an all-time high. Secondly, increased regulations are anticipated as the industry faces added scrutiny in Hong Kong, taking the form of the newly established Hong Kong Insurance Authority, and lastly, the increased cross-border activity between Hong Kong and mainland China has created a closer connection between the Hong Kong regulator and the China Insurance Regulatory Commission (“CIRC”). Insurance firms anticipating the scrutiny are hiring or reskilling their lawyers so that they can take on more regulatory-focused roles that emphasise building relationships with regulators in the region. We have also seen many hires from more highly regulated industries such as investment banking. Data privacy and cybersecurity are valid concerns today with many experts acknowledging that there are still many improvements to be made in this area. Innovations in technology and increased competition from fintech firms are pushing insurance firms to be more innovative with their sales and distribution channels and lawyers are working at the forefront of this area with the business. We predict greater legal hiring activity in this sector as legal teams face mounting pressure to upgrade and become more business focused. Within industry, the focus on legal hiring in Hong Kong has been within traditional industries, including FMCG, manufacturing, professional services, construction, pharmaceutical and healthcare. Increased government spending and investment from mainland companies is keeping these sectors buoyant. General commercial lawyers are always in demand within these industries, with exposure to data, IT and corporate governance proving popular. There is also a rising need for fluent English and Mandarin speakers as Hong Kong-based companies look north of the border for business opportunities. In regards to policy and conduct issues, it would be remiss not to mention the global movement towards greater awareness about what is appropriate and inappropriate in a workplace setting. Our HR teams report that hiring within Employee Relations teams is at an all-time high. Employment lawyers both in-house and in private practice will be kept busy with company policy and training. The global awareness of workplace culture appropriateness has resulted in an increase in investigations and enforcement. Placed Legal Professionals by Gender ​in Hong Kong, Singapore and China for 2016 and 2017 COMPLIANCE TRENDS - HONG KONG SFC’s Manager-in-Charge Regime The Securities and Futures Commission (SFC) implemented the Manager-in-Charge regime last year, which increases the accountability of senior management. All licensed corporations are now requiring individuals to be responsible for eight core functions within the areas of compliance, anti-money laundering and counter-terrorist financing. This has increased compliance and regulatory responsibility for compliance teams and has also affected hiring, as some compliance professionals may be reluctant to take the Manager-in-Charge title due to the additional accountability it comes with. Costs Due to increased compliance pressures, costs have been a key factor for compliance teams when expanding. Strategies adopted by companies to reduce costs include offshoring functions to lower-cost locations, replacing experienced headcounts with more junior options, and in some cases senior positions have been made redundant and not replaced. As a result, candidates are cautious about choosing roles that might disappear to an offshore location. Advisory roles are therefore more popular than surveillance roles. Hiring The majority of hiring within established US and European financial institutions have been replacement headcounts, with many compliance teams at capacity. We are seeing newly created headcounts at PRC financial institutions as well as at start-up organisations, both of which typically seek compliance professionals with experience working in well-structured compliance teams where they can bring their relevant expertise and knowledge to the table. Job Stability and Al With the onset of artificial intelligence and automation, candidates are increasingly choosing to leave roles that they feel may be outsourced or automated for roles that are perceived to be more secure. For example, professionals are leaving 1st level trade surveillance and 1st level AML transaction surveillance positions in favour of roles that remain in demand, such as AML Advisory. While some banks are looking to bring these roles back onshore, they may struggle to fill some of the headcounts initially. Banking Product advisory compliance remains an in-demand area. In particular, equities compliance has been active in the past year - although not due to newly created headcounts. There is perceived lack of talent in this space for people who have a mix of solid technical experience, communication skills and the personality to be based on the trading floor. Compliance testing and assurance has seen some growth as teams have expanded, with this providing a route into compliance for those with internal audit backgrounds. AML and financial crime remains a key focus for financial institutions, with the hiring in this space being more selective and strategic rather than the high-volume hiring which was prevalent in previous years. Asset Management Due to an ongoing regulatory focus on the asset management industry, such as the SFC’s consultation to enhance asset management regulation to protect investors’ interests and ensure market integrity, asset managers have been increasing their compliance resources. As a result, compliance consulting firms have had an active year. AML and financial crime within asset management has not been through the high levels of hiring activity visible within banks. This could be a focal area for asset managers moving forward as most AML and financial crime matters are covered by the general and business compliance teams rather than a specialist person or team. For the asset managers who have established a function for AML and financial crime, their teams are still relatively small. Placed Compliance Professionals by Gender in Hong Kong, Singapore and China ​for 2016 and 2017 LEGAL & COMPLIANCE TRENDS - SINGAPORE Singapore has seen a dramatic shift in the legal & compliance space. We have seen an increase in hiring within the asset management and insurance sectors in line with asset managers who are expanding their operations into new areas or requiring additional headcount to support the new regulatory regime. We have also seen increased hiring within the insurance sector as they come to terms with the changing regulatory landscape. Although hiring among banks has been largely replacement headcounts as a result of cost pressures, we are continuing to see strong hiring needs in the areas of regulatory compliance, compliance and AML assurance as well as AML/KYC. Clients are far more selective now than before given that headcount is precious, and candidates are being subject to a higher level of scrutiny. Juniorisation is happening more and more in banks due to cost constraints. For example, a Managing Director might leave and the role is replaced by a Director internally, with no increase in salary for the internal candidate. In many situations, replacement headcounts are not given due to headcount pressure. There has been some redeployment in banks that have moved out of monitorship and remediation. As the remediation requirements fall dramatically, the resource needs also reduce. Candidates with strong regulatory compliance advisory skill sets remain in high demand both internally and externally in these organisations. We continue to see demand within the financial crime space for private banks in Singapore, particularly in the aftermath of 1MDB. The areas of AML and KYC, client onboarding, client risk reviews as well as compliance assurance remain in demand. The hires are no longer just junior hires with bums on seats, but team leader roles that require making judgement calls. Due to an increased focus on the Singaporean core, we are seeing increased preferences of hiring Singaporeans and permanent residents for all roles. The Ministry of Manpower has tightened up issuing of employment passes for non-Singaporeans, making quality Singaporean and PR candidates highly visible within the local industry and, as a result, they are receiving multiple offers. Placed Legal & Compliance Professionals by Client Type in Hong Kong, Singapore and China ​for 2016 and 2017 ​ LEGAL & COMPLIANCE TRENDS - CHINA Since China opened the market for International Asset Management Companies to set up their Wholly Foreign-Owned Enterprise (WFOE) entities onshore in July 2016, many global players selected Shanghai as their point of entry. According to the regulations from the Asset Management Association of China (AMAC), one of the key requirements is to have a General Manager and a Compliance Head registered under AMAC prior to the WFOE framework. With this in mind, all international firms were operating under the private fund License in January last year, with Fidelity notably becoming the first one to receive their WFOE licence followed by UBS, Fullerton, Man Group, Value Partners, Invesco, Neuberger Berman and Aberdeen, all of whom completed their licence registration by early December that year. There are approximately 50 companies currently waiting for approval to set up a WFOE in China. Thus, global players are in competition with one another for local compliance experts who can help them set up their business. Candidates of choice tend to come from China mutual and private funds and joint venture mutual funds. The candidates targeted tend to be deputy heads of compliance in their current organisations, which means being appointed as a Chief Compliance Officer (CCO) of a WFOE entity is a step up from their current position. The sudden increase in demand has driven up the cost of hiring these candidates. While local candidates are less confident of private fund licensed fund managers in China, they are attracted to the international brand names as well as the opportunity to move into a larger role. Furthermore, the China Securities Regulatory Commission (CSRC) allows foreign investors to raise up to 51% of shares in joint ventures. It is likely that the CSRC will allow foreign investors to set up WFOE mutual funds and securities in the near future, which means that such companies will be seeking more and more legal & compliance experts. In relation to the primary market, Chinese financial companies are still very active in cross boarder merger and acquisitions (M&A) and, as a result, M&A experts in this space will be in high demand. CANDIDATE TRENDS IN ASIA 72% of regional respondents to our 2017 'Working in Asia' survey said they are considering moving organisations in the near future. Below are the main reasons why they are considering leaving their current organisation and what they are looking for in an organisation. ​ Why are candidates considering leaving their current organisation: Lack of career growth/opportunities Organisational politics Financial rewards Lack of appreciation/recognition What are candidates looking for in an organisation: Good leadership Culture Stability Employability Millennials are more likely to be interested in fintech, disruptors and start-ups than more traditional brick-and-mortar firms. As clients face an increasingly busy recruitment market in both legal and compliance – retaining and managing key staff is crucial! FORECAST Across the Asia region, we anticipate increased levels of hiring for lawyers and compliance staff. In particular, China and Hong Kong will continue to see a busy market for regulatory lawyers, buy-side compliance candidates and corporate lawyers. Insurance is an area to watch with regulatory and compliance teams being established and expanding. The focus on technology innovation and data security will impact most industries and lawyers with exposure to these issues will be needed. As companies and financial services firms in Hong Kong increasingly turn to China for expansion and as PRC firms open and expand in Hong Kong, the requirement for business level Mandarin speakers will continue to be very high. Competition for these candidates remains tight and potential employers will need to streamline their hiring processes to be in the best position to close an offer. In Singapore, fintech and start-ups will continue to attract lawyers wanting to work in a more entrepreneurial and less rigid environment. The imposed preference for hiring Singaporeans and permanent residents means that local market candidates will be in demand. In terms of compliance roles, financial crime, AML, KYC and product assurance will be the most active areas. Market optimism is on the up and this will be reflected in increased hiring this year. In all, our advice to employers is that the employment market is shifting, quickly. In-demand candidates will now be holding more offers than ever and competition will be tough. Streamline your recruitment process, do not allow long periods between interviews, be in ‘sell’ mode and anticipate the potential counter offer. For more information or individually tailored advice, please do not hesitate to contact our regional Legal & Compliance team: Hong Kong Office - please contact Laurence Munoz or Sonny Wong Singapore Office - please contact Suan Wei Yeo Shanghai Office - please contact Andy Zhi Beijing Office - please contact Winni Wei
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Profile Asset Management Market Update 2018

The following report reflects our insights on the Asset Management employment market in Asia. It highlights the key trends we observed in 2017 and pinpoints emerging themes across the industry for the next 12 months, including identifying the major factors impacting hiring and talent movement. We expect to see the pace of recruitment activity in 2018 continue along the same upward trajectory as it ended last year. With strong fundamentals fuelling financial markets, there is no reason to think that the increasing human capital demands that we saw in asset management in Asia in the second half of 2017 – and that we still see this year – will slow. This is a breath of fresh air in the wake of 2016, when fee compression and lagging performance dictated a tough year for the markets and industry alike. But since the landscape turned more positive in Asia around mid-2017, nobody has (yet) looked back. We are busier now than at any time since the pre-2008/2009 crisis – across each of the front-, middle- and back-offices in both the wholesale and institutional sides of the asset management business. With over 40 staff onshore, we have big ambitions for our growing China business, in line with the ever-increasing demand for both inbound and outbound expertise. BUILDING ON MOMENTUM A look at the key trends in 2017 can help us to understand what is likely to influence talent movement this year. Strong performance meant most managers were better-placed than during the previous 12 months, with notable appetite for multi-asset, more sophisticated fixed income, passive strategies and alternatives solutions. Broadly, the last 12 months saw asset owners – ranging from insurance to sovereign wealth funds to corporates – look to strengthen their own investment capabilities. China was the other big theme for the year, shaping firms’ strategic planning around hiring. Regulatory changes in terms of WFOE structures and joint venture ownership has led to a significant amount of interest among foreign asset managers, luring them to invest time, money and people power in the domestic market. In short, their onshore recruitment efforts have hit unprecedented levels. In demand in 2018 Multi-asset and structured solutions professionals, plus people with alternatives expertise across all sectors Compliance officers and operations practitioners – with an ability to navigate China are important, especially for WFOE and China-facing businesses Experience in China inbound investment – as foreign firms look to establish a foothold in the vast domestic market, to manage Chinese instruments onshore Specialists in China outbound transactions – as onshore players seek a slice of the action globally Individuals with a solid institutional sales track-record Expertise and knowledge in private credit and special situations FRONT OFFICE – INVESTMENT & PRODUCT 2017​ Yield was the buzz-word last year. With stock markets rallying for the full 12 months, investors were drawn to Asian and global stocks, along with other equities products. Although fixed income took a bit of a back-seat, multi-asset funds maintained their strong momentum from 2016. The industry had strong appetite for individuals across several roles. For example: Multi-asset product specialists had a stellar year over last 12 months – we expanded our book of business in this area by 20% to 25%, ranging from asset allocators to quants, with experienced portfolio managers sought after too Factor-based and passive investment specialists benefited from the impressive volume of capital pouring into ETFs – in turn, this highlighted the shortage of quality candidates with the right experience to fill the gaps In the alternatives space, hedge funds became as prominent as they have been for a long time On the private side of the business, the priority moved to private credit and special situations Further, from a skills perspective, last year saw a notable move by asset managers away from their focus in 2016 on product specialists and client portfolio managers who performed a more narrowly-defined role, and towards individuals with the capability to also perform a client service function – as a conduit to business development and sales. 2018 The trends we saw during the last 12 months are likely to maintain their momentum this year, assuming markets remain robust. In particular, we foresee demand in 2018 in several key areas: For equities specialists, with a specific need for A-Shares analysts and portfolio managers For individuals with multi-asset expertise, especially experienced asset allocators and quants For senior client portfolio managers, with the pecking order being: multi-asset, then fixed income, then equities FRONT OFFICE – DISTRIBUTION 2017 The multi-year war for talent across Asia in the wholesale asset gathering space (retail and private wealth) continued over the last 12 months. However, the demand shifted towards those with the investment product content knowledge combined with the intellectual horse-power to switch strategy and asset classes seamlessly. This reflects subject-matter expertise being valued above and beyond “connections” and old-school sales skills. This was evident as new entrants in the asset management space as well as established players looked to further strengthen their teams – especially in terms of dedicated private banking distribution expertise. Institutional sales roles also saw a marked comeback in terms of demand, as several strong houses sought to expand or upgrade their teams.​ Many firms took several approaches to try to deepen the talent pool: Exploring candidates from peripheral businesses, including private banks, alternatives firms and investment banks Identifying individuals with strong investment knowledge as well as networks Seeking those people able to ‘up’ the stakeholder engagement – which is key in the current environment, since gone are the days of simply ‘wining and dining’ a client; salespeople must now be market-savvy; without the right knowledge base and narrative, their value is now hard to justify 2018 More demanding clients yet fewer approved support headcount leave asset gatherers with little choice but to adapt: indeed, the blurring of the lines between asset gathering and client servicing will continue this year. Working with “new wave” distribution partners such as Ant Financial and Tencent will be a theme which continues to both excite and confuse the space. Without doubt, everyone sees the opportunity to collaborate with these technology-based giants – however, the trick seems to be the “how” not the “why”. Some of the trends we foresee in 2018 include: Distribution continuing to dominate for the foreseeable future within wholesale, and especially private banking Growing demand for a hybrid combination of a product and sales candidate who can function between a product specialist (managing technical conversations on the one hand) and a business development executive (performing more of a sales-led role on the other hand) Those asset gatherers with proven experience and a record of success being able to command much better packages than was the case several years ago (this is an important impact of unabated demand for high-quality distribution candidates in the asset management space) FRONT OFFICE – MARKETING ​ 2017 The most notable challenge for the role of marketers in 2017 was the need for them to be more digitally-minded. Experience in digital marketing, as well as the customer and user experiences, was – and remains – key. Love it or hate it, there is a perception that Asia has lagged on the digitisation of the asset management business. There was a prevailing feeling during 2017 of playing catch-up – and this has continued into 2018. However, we do not believe this should be considered a negative; indeed, there seems a very strong commitment to embrace change and push forward with real vigour into this newer reality of the marketing “seat at the table”. One of the major themes was the search for talent from outside the industry, and we do not see this slowing down. But the trick is inspiring digital talent to make the move into asset management from other “cooler” industries. 2018 Demand for digital expertise will gather pace this year. And as disruptive technologies dominate this marketplace, we see asset management firms adapting their hiring strategies in two main ways: Hunting for ways to improve and increase their market access and penetration via various social media and by leveraging smart tech to deliver their brand and raise their profile Importing digital marketing talent – both in terms of bringing people to Asia from overseas markets, such as the US and Europe, as well as from outside the financial services sector, including technology, media and consumer goods businesses One thing is clear: those players that have not aggressively adopted digitalisation strategies will continue to need to play catch-up. A definite trend we are observing is that companies are putting more senior or high-profile employees and leaders into this space. Marketing and digital alliances are possibly the future of many firms and this is reflected in the rising importance of the function. ​ INFRASTRUCTURE ​At Profile we concentrate on the following sub-sectors within Infrastructure: Operations (Ops), COO & Business Management (COO), Accounting & Finance (Fin) and Technology (Tech). 2017 The second half of last year saw a marked pick-up in hiring needs across infrastructure, with a real focus on meeting the needs of the growth and success of the business lines. However, the excitement was tempered by the fact that, in many instances, companies have certainly been careful not to over-hire and over-extend. The mantra of “doing more with less” has held true in most cases. Within Ops and COO functions across asset management, some of the most notable trends in 2017 included: A growing number of roles require fluent Mandarin capability, amid efforts by foreign firms to build relationships with Chinese clients, including domestic banks Increasing demand for project management expertise, especially for China-related work in line with the focus on WFOE structures More need for very specific product knowledge, mainly reflective of the continued expansion of fixed income and multi-asset teams More specifically, our hedge fund client base stepped up the need for COO roles. These have tended to be generalist positions, targeting candidates with an accounting background to support the need for greater stringency around financial governance. We also saw a resurgence – after a few subdued years – in client services and operational positions in prime broking. 2018 We have seen the pace of activity from the latter part of 2017 continue. In fact, we are getting even busier across several areas of Infrastructure. For example: Ops and COO functions continue to require extra headcount, with the same product skills and project experience as in 2017 still in high demand Tech is seeing increasing appetite across the board in people with experience in technology and digital, especially including big data and analytics – some of our buy-side clients are even looking to build-out their capability in artificial intelligence and robotics Also in Tech, cybersecurity is a front-of-mind, in-demand area of expertise, given recent data breaches Within Fin, the landscape remains broadly stable among senior finance executives; there are only a few hires at the chief financial officer level, although this is more common at the moment in the alternatives space. Internal controls, however, is seeing some movement. Internal audit and operational risk professionals are in demand – from vice presidents upwards. LEGAL & COMPLIANCE 2017 We were not surprised to see increased demand for legal and compliance professionals across asset management and insurance, in line with the ever-tighter regulatory environment. MiFID II has, for example, been a key driver of financial institutions adding resources to deal with the extra reporting requirements – plus, of course, the China WFOE demands. As a result of these trends, and despite budget constraints in several industries, we saw steady hiring within legal and compliance teams. Some of the specific skills and roles in high demand included: Technology/data privacy Regulatory compliance and financial crime Product advisory Compliance testing and assurance Across all roles, there was a trend towards more of a hands-on approach to employee management, with greater investments in training and internal processes to ensure standards and staff are in line with best practice. This was also influenced by heightened awareness about issues around discrimination, harassment, whistleblowing and occupational health. Meanwhile, China-focused roles dominated the attention of many asset management and private equity firms. Fluent Mandarin language skills continued to be a focus for many employers. 2018 Across all types of organisations, we expect many employees to remain focused this year on several areas to drive either retention or departure. These include: career development, performance management and enhancement, work/life balance and job security. Some of the specific legal and compliance-related trends we predict in 2018 include: China continuing to feature prominently in planning, driven by market dynamics such as the introduction of new WFOE licenses and growth in new industries such as fintech An increasing need in the insurance industry to add resources and upskill, in order to tackle challenges from digital disruption The growing importance of senior leadership positions – such as general counsel and chief compliance officer – to help manage ever-expanding legal and compliance departments amid the brighter spotlight on these roles HUMAN RESOURCES 2017 A relatively subdued first half of the year saw comparatively fewer roles available within financial services compared with other industries. From October, however, asset managers and boutique investment houses started to make their mark. In particular, there was a focus on senior HR practitioners as well as specialist roles, such as: HR business partnering Talent management Compensation & benefits Operations – including HR information systems and analytics Technical HR – including strong business acumen Although individuals seeking new roles seemed to be motivated by an increase in compensation, we saw more and more candidates leave firms due to other reasons, including: a lack of opportunities internally to develop; a limited work/life balance; and under-appreciation by their managers. Smaller asset managers were also increasingly capitalising on a loss of appeal among many HR professionals for traditional banking roles. 2018 The market has already accelerated again this year, with a number of new hires approved across a range of roles. Some of the notable trends we expect to see in the year ahead include: An uptick in front-office roles in expectation of increased market activity Changes in the senior HR business partnering space within asset management that will create more movement and opportunities Growing confidence within the candidate market, with many more people open to a move A focus among candidates on holistic offers that include benefits plus a work/life balance, rather than an increase in base-line salary Insurance companies continuing to hire, therefore attracting good talent away from banking and investment houses Below is our placement history in Hong Kong, Singapore, Shanghai and Beijing for 2016 and 2017 – based on Client Type, Position Type and Gender. Placed Asset Management Professionals by Client Type ​ Placed Asset Management Professionals by Position Type Placed Asset Management Professionals by Gender MARKET FOCUS – CHINA China continues to grab a lot of attention from asset management firms globally. Yet expanding with the right headcount in the Mainland to capitalise on the unprecedented scale of the opportunity that is coming from multiple avenues is much more challenging than many players realise. At the same time, the number of highly-motivated and ambitious Chinese managers vying for talent further accentuates the demand/supply imbalance.​ Inbound We are seeing more China-related searches at the moment than we have in recent memory. Certainly, the focus among foreign firms to set up a WFOE is playing a key role in this. Yet although predictions among market observers are that the number of investment management WFOEs could well more than double from the current 25 to over 50 by the end of 2018 (15 WFOEs were established in 2017) – staffing them will prove challenging. This is the case both for new players that are looking to fill leadership roles to set up the business from scratch, as it is for existing players that want to expand their China team from one or two people to between 10 and 20 on the ground. Any firms expecting to be able to hire less than 10 individuals focused on money management plus clients and relationship management need to realise that by doing so, they will lack both the manpower and expertise to effectively run a WFOE that manages private funds. Instead, our research indicates they would require one or two senior portfolio managers per asset class, and three to four analysts – and likely more. Some would argue, if one analyst covers 30 or 40 stocks, for instance, firms will need anything up to six or seven analysts for equities alone – and even then, their overall onshore coverage will be relatively limited. Added to this, a WFOE requires a suitable general manager, a compliance officer, people within infrastructure roles focused on operations and technology, and also salespeople. Another significant human capital issue is that, usually, sufficient English language skills are essential for individuals in senior roles. This applies to general managers and compliance officers, in particular, who will need to be able to liaise with their counterparts in Hong Kong, Singapore and further afield – and meet expectations that they can live up to international best practice to help colleagues get comfort in understanding the reality of the situation onshore. Further adding complication to an already-difficult task of staffing a WFOE is the fact that current structures all have subtle differences. This means the right model is not yet defined nor proven. Outbound Perhaps one of the biggest hiring needs, meanwhile, is the domestic one. Firms such as Ant Financial, Tencent, CreditEase and Noah, for example, are making real strides to expand with purpose into the international markets. They have the capital, the desire and the truly-global ambitions that make them extremely compelling. These types of opportunities are increasingly competing with the motivators to join a foreign firm, such as learning from global best practice. Working in a Chinese institution can appeal more to some local candidates, it seems. These individuals are more familiar with the corporate culture, plus feel they can contribute in a more meaningful way as a part of the core team rather than a satellite operation. In summary The talent shortage in China will increasingly impact foreign firms looking to take advantage of the easing ownership limits on foreign joint ventures across asset management, life insurance and securities. As asset managers either consider taking full ownership of their JV business or selling it, a lot of movement is expected from a recruitment perspective. Further, with QFII teams offering large incentives to retain their investment professionals, the talent market is becoming even more competitive. Local candidates are also able to be demanding, given the shortage. Further, if they tick all the boxes, they know they have choices that makes it even tougher for foreign firms to lure them. In conclusion, China is experiencing a “moment in time” within the asset management industry. It is an extremely exciting, complicated and difficult market to navigate from a human capital perspective, and 2018 will be no different. The race for talent in the short term is causing all the challenges one would expect, and the battle to keep true talent in the long term will not be an easy one. However, with almost eight years of operating onshore and with half our business based in China, we are very excited about what lies ahead and the prospect of success in the coming years in this industry. MARKET FOCUS – AUSTRALIA ​ It was interesting to see that Trump and Brexit had no direct effect really in Australia in 2017. What everyone has been watching, instead, is the increasing dominance of China on the world stage. There are several major themes in asset management in Australia: Superannuation funds continuing to increase their direct investment capabilities – both in listed and private markets Increasing regulatory pressure in the banking sector, and an ever-increasing demand for debt exposure, leading to a growth in private debt funds Ongoing conversations around retirement and retirement product offerings – given the significant trend from accumulation to retirement, most organisations are looking at how to capture an ever-growing market share Growing appetite for non-passive products, particularly among HNW investors, who seem to have the biggest appetite for risk Increasing demand for great marketers who are readily adapting to the changing digital environment In wealth management, meanwhile, some key themes have been emerging in Australia: A Royal Commission announcement (read ‘independent investigation’) into the financial services industry – the terms of reference are broad, as are the institutions that may be reviewed, leading to a potentially nervous year for many players Continuing digital and fintech disruption – even the Australian Stock Exchange is moving to blockchain technology Increasing use of data analytics and big data to create highly-personalised and targeted marketing strategies Significant M&A activity in the sector – with Superannuation funds merging and the larger financial institutions divesting themselves of both wealth and insurance businesses * This view is provided by Susie Moore, Founder, East Partnership
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Profile News: HR Insight Q4 2017

In the Macmillan Davies magazine, ‘HR Insight Q4 2017’, Profile's Amanda Clarke shares her thoughts on HR recruitment trends in Asia. The article is extracted below. GLOBAL MARKET TRENDS UK "As we enter 2018 many of the key hiring trends of 2017 look set to continue well into the new year. Demand for specialists continues across all sectors due to the complex regulatory changes set to take effect this year. Demand for policy and GDPR specialists is on the rise while requests for professionals experienced in gender pay gap reporting remains in demand. Reward and L&D roles have significantly increased across London, Manchester and Birmingham. Within financial services, candidates with knowledge of the Senior Managers and Certification Regime, that will apply to all financial services firms in 2018, has been a significant skill requirement for 2017. The senior end of the market remains highly competitive with no shortage of experienced candidates, but with a drop in senior level roles as businesses are managing their succession planning and often choosing to promote internally. Consequently we are seeing an exodus of talent moving from financial services into related and non-related sectors where specialist skill set and culture fit is trumping specific sector experience. The north-west has experienced an increase in roles in professional services, which has been mirrored in the midlands where we have also seen the bigger companies moving to Birmingham and experiencing a shortage of high calibre talent, as well as increased hiring in the charity sector. 18 months on, the uncertainty of Brexit and the prolonged negotiations is still impacting hiring. Businesses are understandably remaining cautious, particularly towards the senior end of the market. This has boosted the number of interim and fixed-term-contracts and we have also seen a steady stream of junior and mid-level HR generalist roles and an increase in low level admin/assistant roles, across both permanent and interim / FTC." Darren Hayman & Angela Franks - Macmillan Davies ASIA "The last quarter of 2017 was surprisingly busy. Not only did we not see a slow down, we actively took on several new mandates in the last few weeks of December. In particular, demand has been roles within financial services, specifically smaller investment houses, Chinese firms looking to increase their offshore offering and Insurance companies that are continuing to expand in the region. There was and will be an increased need for excellent and senior HR Business Partners with proven financial services experience and strong business acumen. In addition, we saw a marked interest in Talent Managers, strong HR Operations as well as seasoned C&B professionals with experience in HR Analytics (and HRIS). 2018 promises to be a buoyant year with additional headcounts already in the pipeline. That said, with a shortage of high-calibre candidates with specialist skills in the region, clients will be forced to look abroad (even outside of Asia Pacific) to fulfil their requirements." Amanda Clarke - Profile Seach & Selection AUSTRALIA "The final quarter for 2017 was predictably softer in the Australian HR market than the previous two quarters. This softness occurs every year in the lead up to the Christmas holiday, which also includes the start of the school summer holiday. The only state to record a rise in advertised opportunities was Queensland, which grew by 3.1%, with the other eastern states (NSW down 6.5% and Victoria down 4.7%) showing an expected seasonal decline. These figures though mask outstanding growth over the whole 2017 for these states (NSW up 16.1% and Victoria up 13.7%) where activity has been strong and consistent. Queensland recorded the highest growth over the full year with a figure of 18.2%, on the back of improved activity in the mining sector supporting activity in other key industry sectors such as education and the public sector. Within the occupational groups, whilst generalist HR professionals continue to show strong demand, the largest growth has been seen in the Occupational Health & Safety market with 27.6% growth over the year. This was though coming from a low base, but now stands at its highest level for 3 years. The only real disappointment for the market was with senior appointments where advertised opportunities actually fell in 2017 by 0.2%. These figures might not be a true representation of market activity, with many senior roles being sourced via search, but as a year on year comparison, is a fair indicator of overall activity. As we enter 2018 we remain confident that the market will continue to provide excellent opportunities for quality candidates. Whilst some macro-economic data gives some reason to be cautious, the Australian jobs market remains robust." John Baker - The Next Step To read the full magazine, please click here.
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Profile Sales & Marketing Market Update, Singapore, Jan 2018

The following report provides an update on the key trends that we have observed within the Sales & Marketing job market in Singapore. It identifies emerging themes across various industries and details the major factors impacting hiring and talent movement. ECONOMIC LANDSCAPE The Singapore economy expanded by 3.1% in the last three months of 2017, which can be largely attributed to robust growth in the manufacturing sector. This was higher than economists' expectations of 2.6% but moderate in comparison to the 5.4% expansion seen in the preceding quarter. As mentioned, the key growth driver in the fourth quarter was the manufacturing sector, which has expanded 6.2% year on year. In particular, solid performance has been seen in the electronics and precision engineering clusters, which outweighed slower performances in the biomedical manufacturing and transport engineering sectors. Conversely, the construction sector continued to slide downwards in the last quarter of 2017, shrinking by 8.5% on a year-on-year basis and extending upon a 7.7% decline in the previous quarter. Thanks to an upswing in global growth, and solid manufacturing performance, the Singapore economy expanded by 3.5% in 2017 as a whole - more than double what was previously forcasted. MARKET TRENDS Some prominent and well-know B2C brands undertook restructuring activities in the final quarter of 2017. It is not all doom and gloom with some clients still hiring, but competition has become fiercer among candidates. The beauty sector remains strong with clients hiring and fulfilling roles at the mid and senior-level. Enhancing the customer experience through the implementation of in-store technology is still top of mind for many retailers. As a result, there will be more job openings in store design and UX design. Travel retail, and airport retail in particular, has been experiencing rapid growth in the last couple of years. Industry experts expect this positive trend to continue. Reputable brands are capitalising on this and, as such, are expanding their SEA travel retail arms in Singapore. This growing trend had only fueled more positions in store design and development. As data security becomes an increasingly critical commercial issue in today’s market, there has been a growing demand for solid cybersecurity professionals, especially from institutions in the public and private sectors. The infamous Equifax breach has become a sombre reminder to many C-level executives about the importance of the IT security function. Change management has been another hot topic, which is not surprising given the amount of restructuring activity which has taken place by companies in recent times. As such, sales, marketing and communication professionals with expertise in change management projects are being favoured by employers as they are perceived to be more adaptable and resilient. SALARIES & BONUSES Professionals can expect salary increments of between 3 to 4% this year, while top performers can expect a higher uplift. Bonuses of 1 to 2 months, on average, can be expected across most sectors. THE FUTURE The uplift in the Singapore economy will create more opportunities for sales & marketing professionals. In particular, there will be more SEO, SEM, digital and product related roles. In terms of specific skill sets, employers will be searching for candidates with expertise in store design and development, cybersecurity, omnichannel marketing, marketing analytics and sales & product training. Mobile payment technology will continue to reengineer the retail landscape. CONTACT US For more information or individually tailored advice, please do not hesitate to contact our regional Sales & Marketing team: Singapore Office - please contact Karen Yap Hong Kong Office - please contact Brenda Choy Shanghai Office - please contact Johannes Tan Beijing Office - please contact Ming Ming​
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Profile News: Motivating Staff - Why Is Cash Still King in Hong Kong?

In the December ’17 edition of Human Resources, the official journal of the Hong Kong Institute of Human Resource Management, Profile's Richard Letcher shared insight from our recent Working in Asia survey about what motivates professionals at work. The article is extracted below. MOTIVATING STAFF - WHY IS CASH STILL KING IN HONG KONG? Data collected recently in an Asia-wide survey points to financial rewards being the main motivator among professionals in Hong Kong Why is this and how can the findings help HR professionals motivate, attract, and retain talent? The number one motivator at work among professionals in Hong Kong is “financial rewards”, according to a recent survey entitled Working in Asia – Key HR and Leadership Priorities for 2017 by Profile Search & Selection and Roffey Park. The survey polled 1,800 professionals across Hong Kong, Singapore and mainland China covering different sectors and functional areas, with a third of all respondents working in the HR sector. In terms of seniority, 85% of respondents had job titles ranging from manager to board director. The same question, “What motivates you at work?”, was asked in the 2016 edition of the survey, and the same result was found. Yet, in mainland China and Singapore, “financial rewards” was ranked third and fourth respectively in the 2017 survey as a motivator, with the far more altruistic, “opportunity to make a difference”, being number one in both countries. In Hong Kong, this was ranked fourth in priority, while “good leadership” and “achieving results” came in joint second place. “Insufficient financial awards” is also a key reason why professionals in Hong Kong would consider leaving their organisation. From a list of 15 different choices, professionals ranked it third, next to “a lack of career growth and development opportunities” (first) and “organisational politics” (second) as reasons to look for a role elsewhere. Many global studies have shown that money, an extrinsic motivator, does not buy engagement, and can actually suppress more intrinsic motivators, such as finding a job challenging and enjoyable or being engaged in a learning experience. So why is money so important in Hong Kong, compared to its neighbours in the region, when it comes to motivating staff? Hong Kong’s job market is a mature one and couldn’t be described as a particularly buoyant one in the current business environment, so what are the factors at play? Cost of living - a key culprit An obvious answer lies in Hong Kong’s high cost of living. From going to the supermarket to children’s education, and from dining out to exorbitant rents, Hong Kong is not a cheap place to live. Hong Kong has the world’s highest residential property prices based on square footage and they have been rising consistently for the last 18 months. A survey by ECA International in July this year – Has Hong Kong’s ability to attract multinationals and expatriates declined over the past 20 years? – points to Hong Kong being the most expensive location for rental accommodation in Asia-Pacific, using the cost of a three-bedroom apartment as a benchmark. Rental prices in Hong Kong are actually nearly 30% higher than they were 20 years ago whereas prices in Shanghai, Beijing and Singapore have actually decreased over the same period, most probably due to an increase in accommodation supply in those locations. In another ECA International survey – Hong Kong is the Asia Pacific region’s most expensive location for expatriates, carried out in June 2017, Hong Kong was found to be the second most expensive location for expatriates in the world, next to Luanda, in Angola. In Asia-Pacific, Hong Kong took the top spot, and the survey doesn’t take into account accommodation and children’s education costs. With these increasing costs of living in Hong Kong it might not be a surprise that financial rewards are important as a motivator. Salary increases have not kept up either, according to figures from the Hong Kong Institute of Human Resources Management – the average annual salary increase earlier this year was 3.3%, and 3.5% in 2016. This is compared to increases of between 4.2% and 4.5% in each of the years from 2011 to 2015. Financial services predominance The second reason could be the predominance of financial services organisations in Hong Kong, where financial rewards can be a main driver for staff. In a recent global survey by, a website which advertises jobs in the financial services sector, the number one driver for finance professionals thinking about their next employer, was “a competitive salary”, from the US to Europe to Asia. Many commercial multinationals, for example in the pharmaceutical, e-commerce and technology sectors, have relocated their Asia-Pacific regional headquarters to Singapore over the last two decades, leaving a relatively high proportion of professionals in Hong Kong working in banks and other financial institutions. Of those surveyed as part of the Working in Asia – Key HR and Leadership Priorities for 2017 survey, 49% of respondents in Hong Kong worked in financial services, 29% in Singapore, and 8% in mainland China. Cultural and historical legacy Thirdly, historical influences and cultural legacies might be at play. Many Hongkongers originally came to the city to escape the civil war in mainland China in the 1940’s and the Cultural Revolution in the 1960’s and 70’s, where a considerable number of people lost most of their hard-earned property and assets. Money therefore has an understandably important part to play in Hong Kong’s psyche in terms of the security that it can give. This, coupled with the influence of min zi (面子) (which translates as the need to gain prestige, of which financial rewards are a major source, in order to elevate one’s status in society), means it shouldn’t be a surprise that financial rewards are important. As the Cantonese proverb goes, “no money, no talk”. Solutions for HR The importance of money as the main motivator in Hong Kong cannot be ignored by HR functions. Many organisations, globally, have used creative means when it comes to the structure of rewards packages, to attract and retain staff. Long-term incentive plans, deferred bonuses, stock options, and attractive pension plans are all widely used and appeal to employee’s extrinsic motivators, but these are longer-term strategies and don’t really tackle the daily cost of living issues faced in Hong Kong. There is also the issue of expatriates being put off coming to Hong Kong when they baulk at rental prices and school fees. If these are not offered by an organisation, competitive base salaries are really what potential employees are looking for to cover them. The big fear with money being a main motivator though is that staff will focus less on learning, having fun at work and enjoying what they do and, ultimately, individual and organisational performance will suffer. Perhaps HR departments and leaders need to focus more on enhancing intrinsic goals for their employees. E-commerce and technology companies have been particularly good at ensuring that their staff enjoy what they do, as well as developing, learning, and feeling challenged, with everyone working towards a common purpose. HR functions can also focus and develop their employer brand in order to attract and retain staff. In the Working in Asia 2017 survey respondents were asked, “What are the things you look for in an organisation?” The top five in Hong Kong were (in order), good leadership (the most popular), a culture that embraces professional development and learning, financial stability, flexible work policies, and a culture that is non-political. These could be a starting point in moving people away from thinking of money as a motivator. As the Working in Asia – Key HR and Leadership Priorities for 2017 survey collects data in future years it will be interesting to observe how “financial rewards” ranks as a motivator in Hong Kong. Millennials, who are becoming a bigger cohort of the working population, have a different mindset and the need to make a difference, to have autonomy, and to work in a collaborative environment seem to be more important than financial rewards for this generation. This article originally appeared in the December ’17 edition of Human Resources, the official journal of the Hong Kong Institute of Human Resource Management, and is reproduced with permission from HKIHRM and Classified Post. To view the full article, please click here.
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