A flood of Chinese bankers is changing the social fabric of Hong Kong, as they rapidly expand their footprint in one of the world's premier financial centres, even as Beijing struggles to tame the former British colony politically. Twenty years after Hong Kong's handover to Chinese rule, scores of mainland professionals are filling the elite financial ranks of Hong Kong, while a series of lay-offs at Western banks has led to an exodus of expatriates. The largest increase in mainland staff over the past decade has come in investment banks, with 80 percent seeing an increase of at least 20 percent, according to a 2015 Financial Services Development Council survey.
"It has a much better environment than Beijing where I used to work," said Hong Hao, a managing director at BOCOM International, who has lived in Hong Kong for five years. "The food is good, and the tax rate is also good." Tax rates in Hong Kong are around 15-17 percent, while they can be as much as 45 percent in mainland China. Chinese initial public offerings (IPO) dominate the Hong Kong market, the world's largest IPO market in 2016 when mainland offerings represented 80 percent of all new listings, according to Thomson Reuters data.
Hong Kong's financial services industry accounts for 18 percent of the territory's economy, compared with just 10.4 percent in 1997 when the city returned to Chinese rule. As top banks such as Goldman Sachs, UBS, and Bank of America trim their Asia headcount, businesses across Hong Kong have taken a direct hit. Western companies are also increasingly turning to more affordable locations such as Quarry Bay, at a time when Chinese companies are boosting their presence in the prime Central district, according to Tom Gaffney, a managing director at real estate services firm CBRE.