Financial talent lags behind big dreams

Updated: 2007-10-08 07:27

"When I hit the big time, I will buy a BMW7 series car as my marriage dowry," said 22-year-old Jian Jingtao. "I'll give it to my fiance to show him how much I love him."

In China, the cheapest BMW7 series model costs nearly 1 million yuan ($133,000) while the average annual income for urban residents, nationwide, was only 12,000 yuan in 2006.

Jian, a civil servant in the southwestern province of Sichuan, makes about 1,200 yuan a month, and she also works as a part-time weatherwoman at a TV station in Liangshan Yi Autonomous Prefecture, an impoverished area of the province. The part-time job doesn't bring her much money.

"I'm taking the Chartered Financial Analyst (CFA) test, and I've passed Level II," says Jian. "Just one step away from the best financial institutions!"

To Jian, getting a job working for such a company means taking a step closer to her dream car.

Official data suggests that staff workers at the country's more well known financial institutions make 15,000 yuan a month and more. And jobs in the financial sector have been taking the lead, driven by the basic principle of supply and demand.

Around 45 million people will join the labor force in the next five years in China, but many of them will have to take jobs as laborers and construction workers making just 800 yuan a month.

During a lecture at Tsinghua University, China Construction Bank (CCB) chairman Guo Shuqing said the most troubling problem facing his bank in its "go overseas" strategy is a shortage of talented professionals.

CCB, one of China's four biggest commercial banks, wants to set up branches in New York and London, Guo told the students, adding that the bank is "hungry for people specialized in financial accounting, securities analysis, portfolio management, interest rate pricing and foreign exchange pricing".

China, the world's fastest-growing economy with an annual GDP growth of almost 10 percent for the last 10 years, has long been considered the world's factory, producing about 75 percent of all home appliances.

But as the country moves toward a more market-oriented financial system, financial talent is at a premium because there are so many issues to deal with. As a major reform in the financial sector, China dropped its currency peg to the US dollar in July 2005 and linked the yuan to a basket of foreign currencies, allowing it to float in a 0.3 percent band around the official central parity.

In July 2005, 8.28 yuan could be exchanged for one US dollar. On July 10, 2007, the same dollar could be bought for just 7.58 yuan.

Referring to commentary from overseas observers, Yi Gang, assistant governor of the People's Bank of China, the country's central bank, said the exchange rate of the RMB would gradually become more flexible.

As for the stock market, the benchmark Shanghai Composite Index surged by more than 130 percent year-on-year last year after a five-year bearish market, thanks to reformed securities regulations and continuing strong economic growth.

China's stock market may become the third biggest in Asia by the end of next year, according to a January forecast by Shanghai Stock Exchange Executive Vice-President Zhou Qinye.

As new regulations come into play concerning foreign investments, Chinese fund managers and securities traders would like to square off against overseas competitors. The lack of financial talent makes this a challenge.

A recent government document on qualified domestic institutional investors (QDII) allows domestic fund management and securities companies to follow commercial banks into the arena of overseas securities.

"We started preparing for QDII products nearly six months ago," said Xu Xiaosong, deputy general manager of China Southern Fund Management Co, Ltd.

"So we are recruiting. Unfortunately, we are not the only ones. A number of big securities companies are looking for people," said a fund manager who asked to remain anonymous. "It's simple. If we want to win the competition we need the best team."

Not surprisingly, foreign banks are also on the lookout for qualified people in China. In 2005, the Bank of East Asia opened personal services, the first to do so in China.

In the China-US Strategic Economic Dialogue held in May, China agreed to allow foreign banks to issue their own yuan-dominated credit and debit cards. The move is seen as a way of allowing more competition between local and foreign financial institutions.

At the Third National Conference on Financial Work in early 2007, Premier Wen Jiabao said China would facilitate fair competition between domestic and foreign financial institutions. As the government opens the banking sector to meet its WTO commitments, the battle for talents in the financial sector has escalated.

HSBC expects to increase its headcount from 3,000 to 4,000 in China this year, and Citigroup plans to hire about 1,000 extra people. Standard Chartered said it did not have a specific target this year but hired 1,000 in 2006. Finding enough experienced staff and training them adequately was the toughest issue confronting the bank, HSBC China chief executive Richard Yorke said earlier this year.

"There is no real finance education in Chinese colleges," noticed Wang Zhao, an economist with Peking University's China Center for Economic Research. A recent survey released by Deloitte Consulting found that two-thirds of the 636 senior finance executives surveyed thought the supply of high-quality talent in Asia was limited or inadequate.

"The crucial but tricky part is that you have to master international practice as well as the local reality," Jane Squires, managing director for Asia Pacific Operations CFA Institute, said.

"This year 10,200 people signed up to take the CFA test in China, up 30 percent from last year," Squires said. "We can reasonably project that there will be 600 more CFA holders at the end of 2007."

"I can't say how many financial experts China needs, but one thing is certain: There is plenty of room for those who have the capacities. The United States currently has 44,220 people who hold CFA qualifications. In comparison there are 3,650 in Hong Kong, 2,133 in Singapore and just 1,086 in the Chinese mainland," she said.

China has outlined its new policies for the financial sector, including deepening the reform of state-owned banks, facilitating rural financial reforms and steadily pushing forward the reform of foreign exchange rate.

The country's financial sector is set to speed up as the market continues to swing open. In that case, Jian Jingtao, the young women with so many traditional Chinese virtues, has an excellent chance of realizing her dream and the dream of her lucky boyfriend, probably with a little help in the shape of a bank loan.

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