Could Google's threat to pull out of China affect banking career prospects? The question isn't nearly as far-fetched as it sounds.
World news media (outside of China) are framing their coverage in terms of human rights and free speech. While those two issues may have driven Google's decision, a different aspect of the story appears more salient for other global corporations doing business in and with China: maintaining the integrity of proprietary corporate information and networks against external attack.
Why It Matters For Banks
That's a particularly urgent concern for financial institutions, which store large amounts of extremely sensitive data about clients, and whose operations are subject to layers of regulatory oversight beyond what most industries face. If top management of a bank or other corporation concludes that ramping up in China means corporate information systems could be compromised, they have little choice but to step back and review growth plans in light of heightened threats from that country.
No other large company is likely to follow Google's example. "Is P&G going to pull out of China? Absolutely not," remarks Dale Winston, chief executive of Battalia Winston International, a New York-based executive search firm.
But even a modest pullback in banks' ambitious multi-year growth targets for China-related business could noticeably alter hiring projections and advancement opportunities for financial services professionals. Many such jobs are based outside China - for instance, helping Chinese companies tap U.S. and European capital markets.
Within China itself, JPMorgan opened a Guangzhou office, its fourth on the mainland, last May. In November, Standard & Poor's announced plans to establish a Greater China headquarters in Shanghai and expand existing teams in Hong Kong and Beijing to meet China's growing capital market needs. Goldman Sachs claims to be the leading underwriter of Chinese equity securities and M&A advisor in China. Morgan Stanley acquired 100 percent ownership of a Chinese domestic bank in 2006.
China Attacked Financial Firms As Well
Google's announcement Tuesday outlined a "highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property." The company says its investigation showed at least 20 other large companies were similarly targeted. While it didn't name any targets, it named five sectors - including finance.
The revelation is likely to furrow brows in many a Fortune 500 C-suite. In the first place, it goes beyond an IT security issue. The Chinese government, which orchestrated the penetration of Google's servers, commands greater resources than the wealthiest or most technologically advanced corporation. The Google incident threatens to reignite a long-running background concern for any Western business in China: the government's overbearing demands for technology transfer combined with a deep disregard for intellectual property rights.
"We'd be naïve to think China is a free-thinking capitalistic society," notes Winston. "They are embracing capitalism to the extent that it serves them."
Finally, surveys show Google is the number one employment brand among new MBA graduates. Because the company is so widely admired, its very public criticism of China might encourage emerging business leaders in other industries - including finance - to similarly forego at least some opportunities there as the price for safeguarding other corporate values.