Chinese Securities Firms Moving Hong Kong Staff to Mainland China as Part of Cost-Cutting Measures

China's largest securities firm, Zhongxin Securities, is relocating a large number of its employees in Hong Kong to the mainland. This move is analyzed as part of recent cost-cutting measures following regulatory crackdowns on the financial industry.

On the 19th, Chinese economic media Caixin, citing multiple sources, reported that Zhongxin CLSA, a wholly-owned subsidiary of Zhongxin Securities, plans to transfer some of its Hong Kong investment banking staff to the mainland and align their salary levels with those on the mainland.

[Image source=Reuters Yonhap News]

Not only Chinese but also foreign investment banks have recently been downsizing their Hong Kong operations. This is due to the zero-COVID policy during the pandemic, the weak Hong Kong stock market, and sluggish initial public offerings (IPOs). A securities industry insider in Hong Kong explained, "For those engaged in corporate finance, it is often necessary to visit the mainland to see project sites."

The market is closely watching the moves of Zhongxin Securities, the market leader. This is because the trend of employee relocation and cost reduction could spread to other local firms. Major foreign media have reported that although the number of Zhongxin CLSA employees to be relocated this time is in the single digits, in the long term, about 30% of the 200 employees in Hong Kong will be sent to the mainland.

As of last year, the average annual salary of Zhongxin Securities employees was 836,400 yuan (approximately 146.81 million KRW), down 11.68% from the previous year. For Hong Kong employees, the salaries of Chinese financial institution staff are known to be lower than those of foreign firms but about twice as high as those on the mainland.

Earlier, the Chinese Communist Party's top disciplinary body reportedly indirectly instructed executives to reduce compensation in the financial industry, citing that pay was excessive compared to other sectors. This followed social outrage after a Chinese woman revealed on social media that her husband, who works in finance, earned 80,000 yuan per month. The investment bank where the man worked, China International Capital Corporation (CICC), took the drastic step of cutting employee wages by nearly 50%.

This content was produced with the assistance of AI translation services.