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The start of a new year is always an opportune time to look both forward and back, to review what has taken place in the year gone by and to predict what changes the coming year may hold. From a business and legal perspective, Hong Kong continues in a state of relative flux. With the rapid growth of China economically, the SAR's relationship with the Mainland is constantly developing and it is now hard, if not impossible, to look at Hong Kong in isolation. In terms of recruitment, the majority of recent activity has been related to replacing staff that have moved on or retired. Banking and finance has seen some solid growth with various firms outside the traditional key players taking the practice area more seriously. Corporate finance is showing signs of building up and the demand for property lawyers is stronger than it has been for many years. However, in providing a little analysis, China is inevitably involved; the growth in corporate finance work is in large part a consequence of Mainland businesses choosing to list on the Hong Kong Stock Exchange. Domestically, the recent boom in the Hong Kong property market has predictably led to an increase in work for property lawyers. The drop in work levels since Handover has long since led to many former property specialists retooling or leaving the profession altogether, with the consequence that there is now a relative shortage of suitably qualified candidates. Another consequence of Hong Kong's troubled economy in the recent past is being felt by commercial litigators. Given the limited number of big deals that were concluded during the period between 2001 and 2003, there wasn't much for companies to fall out over. Consequently, now a couple of years have passed there is a shortage of big disputes that would ordinarily have followed on from such deals. Accordingly, the majority of litigation practices are relatively quiet. On a positive note, with an increase in trade and an increasing amount of air traffic, shipping practices tend to be picking up again and demand for aircraft finance lawyers is strong. However, in almost all areas of practice, the need to have Mandarin language skills is increasing, evidencing an appreciation that Mainland considerations, clients and business are now important for virtually everyone practicing in Hong Kong. In general terms, Hong Kong remains a viable market for the firms that are here and we have not heard any recent talk of firms planning to leave. However, save for some Mainland firms such as King & Wood and Jun He, there have not been any major new arrivals and we do not expect any in the near future. In part, that may be down to the fact that concerns as to bird flu and the high price of oil are growing and it would not be unreasonable to believe it could be a bad time to open up in Asia. Nevertheless, there have been a few new arrivals in China, such as Weil Gotshal & Manges, who have by passed Hong Kong and gone straight to the Mainland. The days when firms felt that Hong Kong was a necessary doorway to China now appear to have passed. The story with in-house roles is very similar. Generally, demand for lawyers in Hong Kong remains steady. However, we expect to see a pick up from the investment banks after Chinese New Year, while we have witnessed a recent increase in appointments for private equity and hedge fund roles. In terms of China, some legal teams, such as the one at FedEx, have been relocated to the Mainland. In other cases separate teams have been put together in Beijing and/or Shanghai, taking over work that was previously done in Hong Kong. Therefore, as with practice, there are a limited number of new roles being created in the SAR and the majority of vacancies are replacement roles, although the big property companies are bucking that trend somewhat. In terms of candidates, the days of non-Chinese speaking expats appear to be numbered, as Mandarin language skills are now all but essential. The main exceptions to this are roles in the banking, entertainment and hospitality fields. The change of emphasis towards the Mainland is not lost on Hong Kong candidates with the right kind of skills for the Chinese market and an increasing number of them are expressing interest in moving to the Mainland, in particular to Shanghai. That said, there remain huge differences in salaries in China, with "international" roles paying far better than 'local" ones. The interest of most Hong Kong candidates is exclusively upon the former rather than the latter. Nevertheless, the SAR is starting to lose some significant legal talent to roles over the border and it is a trend that is likely to continue. |
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