Seeing China - three Chinese cities compete for talent
Hong Kong, Beijing or Shanghai? Any lawyer looking to make a move within Asia or even looking to relocate to the region will want to compare the pros and cons of working and living in these three major legal hubs. Key points need to be kept in mind when making a decision like this. In this article our Associate Director in China, Shawn Chen, highlights some of the differences between these three vibrant centers.
Tax & income differences
One of the big advantages of Hong Kong (HK) is the extremely low income tax rate – capped at 15%, and paid on an annual basis. In contrast, the salary tax (IIT – individual income tax) in Beijing/Shanghai can be as high as 45% if your salary reaches the highest levels (around RMB100K/month). However, for expatriate lawyers working in China, there are legitimate ways to save a large amount of tax, on the condition that your income is properly structured between the monthly salary, various allowances, bonus and other categories of income.
In order to relocate talent internally from HK to China or to attract international lawyers currently residing abroad, some law firms and employers may provide tax equalization or other types of tax-saving benefits. Anyone considering a move should check and negotiate the best tax treatment. This should form an important part of the decision making rather than just focusing on the pure quantum of the salary.
In recent years lawyers’ remuneration in Beijing and Shanghai has caught up very quickly with their HK peers. In a couple of PRC law firms, a first year qualified PRC lawyer can expect a salary of around RMB20K a month in addition to a very generous year-end bonus (as many as 5-10 months’ salary); while in many international law firms’ China offices, a top quality associate with international experience, could have a salary comparable with their HK, US and UK colleagues – plus some China or global allowances.
The air pollution in Beijing is seriously pushing many lawyers to think about relocating elsewhere – and many of their first choices would be Shanghai or Hong Kong. While Beijing can sometimes be clear, lawyers with children or elderly relatives in their family have to make a serious choice between career opportunities and family health. Going to Shanghai could be easier than HK for many Chinese lawyers, but in Shanghai there are more in-house legal roles and HK is where you find more private practice opportunities. It’s not always the case that you can find the right job opportunity in the city you want to live in. Many lawyers, at both the junior and senior levels, will hold out for Beijing. Those quality and experienced lawyers will be in high demand from the hiring firms in the city.
For expatriate lawyers, Hong Kong and Shanghai are easier places to adjust to, with more manageable traffic, language issues and food etc, while Beijing is more Chinese. You can find many local traditions and local cultures which, once you fall in love with, you will feel reluctant to walk away from.
Visas & logistics
The regulatory changes in China in the past couple of years have made it much more difficult for an expatriate lawyer to obtain or transfer a work visa: only experienced lawyers are qualified to apply and the application process can take as long as nine months (and you may still not be accepted). In addition, all work visas in China must be renewed through the local authority every year. Therefore it is important to consult an expert to properly discuss your options before deciding to move. In contrast, the work visa application and transfer in Hong Kong is pretty straightforward. As long as you can get a valid employment contract from an HK employer and you meet some basic requirements, you are eligible to apply for a HK work visa. If you need to transfer your visa to a new employer, it just takes 2-4 weeks and after the first year when you reach the 7 year mark you can apply for permanent residency.
Some of the other key factors to consider include house rental, schools and international travel. Like salaries, the cost of renting in Beijing/Shanghai is increasing quickly, although rents are still lower than in Hong Kong. Enrolling children in a good school in Beijing/Shanghai is not always easy and can be expensive, mainly because of the large population in these mega cities. Travelling from Shanghai to either the north of China (such as Beijing) or south of the country (such as HK) is easy, but international travelling from HK, particularly to south east Asian countries is more convenient.
Business & career opportunities
The three cities of Beijing, Hong Kong and Shanghai all have their different strengths in terms of business and career opportunities. Beijing has almost all the Chinese regulatory bodies, the most Chinese state owned companies and banks and vibrant private businesses in new industries such as TMT, entertainment, culture and funds. Shanghai remains where most MNCs’ headquarters are and many of these MNCs have established themselves after operating in China for over 10-20 years. Hong Kong is probably the most sophisticated legal hub in Asia, with many large offices of international law firms, and more financial and investment institutions than elsewhere in China.
All locations can offer opportunities at different levels; a junior lawyer who wants to be part of a team and learn from experienced colleagues and be exposed to high quality work may benefit most from working in Hong Kong for a solid period of time, but a senior lawyer aspiring for partnership at a law firm might look more to Beijing, while those wanting a senior in-house role (such as a GC or Legal Head) should look more to the opportunities in Shanghai.
Wherever you are at in your career a move to a new location could offer you a wealth of opportunity. If you are looking for a new challenge please contact our consultant Shawn Chen on +86 21 6103 7331 or via email [email protected].