The million-dollar bonus has arrived in China’s financial services industry.

Fierce competition has forced companies to start offering Wall Street-type compensation, especially in the fund management industry.

Executives report a big increase in CVs received from US-based professionals with a China connection. Peter Alexander, head of fund management consultancy Z-Ben Advisors said, ‘There were several bonuses over a million dollars last year. Retaining assets is no longer the top priority, it is getting and retaining good people.’

The fund management industry has seen an explosion in assets under management from $40 billion in 2005 to around $450 billion by the end of 2007.

A senior executive at a Shanghai-based fund management company who asked not to be named said, ‘I personally know of at least half a dozen managers who made more than a million dollars.’

China has 60 approved asset management companies, almost half of which are joint ventures or have foreign shareholders.

Industry executives complain about the small number of people qualified to manage funds at local fund management companies — one executive said about 300 people had all the required regulatory qualifications.

Perhaps we will see a Chinese equivalent of Tom Wolfe’s The Bonfire of the Vanities. The bonuses are already at the level reached in that amazing novel.
Source: Financial Times

A survey conducted by leading global professional services firm Ernst & Young suggests China is the most attractive destination for foreign investment.

Between February and March 2007, the survey asked 809 managers from various industries in European, American and Asian firms about their investment preferences.

Almost half — 48% — of international investors named China as one of their top three preferred business locations in 2007, up from 41% in the 2006 survey. The attractions are low labor costs, more competitive rates and higher productivity. Those are all pretty obvious. But the country’s infrastructure, quality of research and development, workforce education and political stability were cited as major advantages.

However, the survey revealed that China, while topping the rankings for its favorable labor costs, still lags behind in quality of workforce — only 4% of those surveyed said it is the most attractive country in terms of labor skills.

In addition, only 4%% of respondents said China is the most attractive economy in terms of R&D availability and quality, as opposed to 43% for Europe and 27% for North America.

The survey ranked investment preferences on the basis of market and access, labor and productivity, fiscal, legal, environmental and regional issues.

India’s popularity appears to be increasing fast. While 11% of investors cited it among their top three preferences in 2004, it has risen to 26% in 2007.
Source: China View

The National Bureau of Statistics said China reported a 17.8% year-on-year growth in average wage for urban employees in the first quarter of this year.

In the January-March period, urban employees’ pay averaged RMB5,516 ($716), up 17.8% from the same period of last year. That is one amazing leap.

According to the bureau’s sample survey of 59,000 urban households nationwide, urban residents’ per-capita disposable income stood at RMB3,935 ($511) in the first quarter, up 19.5 percent, or 16.6%.

Spending on consumption averaged RMB2,620 ($340) per capita, up 16.7%, or 13.9% in real terms.

It was not just the city dwellers. The cash income of rural dwellers went up 15.2%, or 12.1% in real terms, to RMB1,260 ($164) in the three-month period. Drawing a parallel between this and England in the Industrial Revolution is irresistible. There are, of course, many, many major differences but the inexorable rise in wages is pretty much the same.
Source: China View