Giant on the move
Many Asia bankers and dealmakers are based in Hong Kong but nowadays many of them only stay in the territory for weekends. So where are they during the rest of the week? China, of course.
With deal flow suddenly picking up, it’s getting difficult to fix lunch or dinner appointments with bankers in Hong Kong during the work week, because they spend more time in Beijing, Shanghai and other mainland cities to have food or drinks with the potential China clients.
Last week, one Hong Kong-based private equity dealmaker canceled an appointment in the
former British colony at the last minute, saying he had to remain in Beijing to wait for a Chinese entrepreneur to sign a deal.
In an apology email, he said: “To be honest, Hong Kong to me is purely like a weekend destination these days.”
Another friend who works as a private equity investor once joked he and many others are merely “so-called Hong Kong-based” workers.
The fact is, more and more “Hong Kong-based” financial professionals have started to print
double addresses and telephone numbers — listing Hong Kong and either Shanghai or Beijing contact details — on their name cards.
Hong Kong used to be a focal point in Asia for opportunities in property, telecom, retail and financial sectors, but the epicenter has clearly moved to mainland China in recent years due to the surge in opportunities and cheaper valuations there.
“There are no deals in Hong Kong now. It’s just the so-called Asia headquarters for many banks. The fact is, almost everybody is travelling,” said a financial industry friend.
“Hong Kong is still the financial centre without a doubt, but it remains as the financial centre because of China,” he added.
For many years, Hong Kong called itself “Asia’s World City” to promote its advantage in international trade, but some bloggers have begun to joke in online postings that Hong Kong is now
becoming “Just Another Chinese City”.
Hong Kong’s low tax rate is a key reason why many bankers spend five days a week in China but still want to be officially “based” in Hong Kong. If Shanghai were to allow low tax rates for foreigners, that might quickly change.
Indeed, airlines serving Hong Kong, including Cathay Pacific and Dragon Airlines, must be happy to see the current trend continue — shuttling those executives to work in the mainland and back to Hong Kong for the weekends.
But Hong Kong taxi drivers have started to complain and feel nervous about the rise of Shanghai and Beijing. Twice I have been asked by drivers something to this effect: “So, you are from Shanghai? Then why do you come to Hong Kong to work? Shanghai is the future. People will soon forget Hong Kong.”