The market where investment banking hiring is set for a big shake-up

The formerly wide-spread hiring of “princelings”, children of the country’s elite, to secure deals is on the wane in the face of a dour IPO market and the US government’s investigation into the practice at J.P. Morgan.

Other factors, from regulatory change to the rise of M&A, are also affecting hiring. If you’re looking for a job at an international investment bank in China, or a Hong Kong-based job focused on the PRC, here’s what to watch out for.

1) Know entrepreneurs

Client relationships are still vital to getting an investment banking job in China. “But you need a broad network of contacts, which should include entrepreneurs,” said Philip Quinn, managing consultant, banking and finance, at recruitment company Kelly Services in Hong Kong. “This is in contrast to the princeling who may only know one person in one big state-owned enterprise.”

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2) Make a play in M&A

The days of princelings single handedly clinching mega IPO deals are over. “The trend continues downwards in Chinese IPOs and so does the demand for related bankers,” Quinn said. “The shift has been to more mid-cap listings and M&As. The consumer sector has been a primary focus for M&A activity, but further rises in M&A activity between Chinese and US entertainment, digital-media and advertising companies, for example, are likely to increase demand for M&A skills over the coming year.”

3) It’s unpleasant, for now, to work in HR

“Since the JPM investigation, some foreign-bank HR heads, especially at investment banks, are under intense scrutiny by their compliance and audit teams to explain the recruitment process and to make sure past and current hires are compliant,” said Jason Tan, a partner at recruiters Being & Associates in Shanghai. Recruitment processes are likely to come under the spotlight for candidates who went through fewer interview rounds that normal, faced few rival candidates, have below-average academic records, or lack direct work experience.

4) But bankers must soon learn to tow the HR line

The pressure felt by HR professionals right now may ultimately lead to bankers giving them more respect. “The solution to recruitment policies in China lies with the overall firm culture towards HR. Hiring managers must be better educated on the firm’s official way of hiring, so they understand and follow HR policies,” said a recruiter in Shanghai who asked not to be named. “HR people are likely to be retrained and re-empowered to work more closely with hiring managers.”

5) Bankers need better core skills

Client connections in China aren't the only thing that banks are after these days. “Technical banking knowledge is now almost mandatory for most front-office roles,” said Alex Wong, a former banker who’s now a career consultant at EntreNet Careers in Hong Kong. “Candidates must understand that first and foremost they need core investment-banking skills in areas like corporate finance, regulation, structuring and presentation. The coverage area, whether that’s industry or products focused, can be picked up,” Nicholas Johnson, head of real estate investment banking Asia at J.P. Morgan, told us last month.

6) Poaching will get even more manic

As core IB expertise becomes increasingly important, global banks in China will look to find these skills by poaching even more aggressively from their direct competitors. Hiring from a fellow foreign firm, rather than a Chinese bank, also helps ensure that candidates have the required “product knowledge, international mindset, cultural fit, and English-language ability,” said Vivian Ng, managing director at recruitment agency Morgan McKinley in Shanghai. More poaching will, however, only serve to reinforce China’s endemic workplace culture of skill shortages, job hopping and salary spikes.

7) Banks are hiring more from Hong Kong universities

A degree from an elite Western university is beneficial, but no longer essential to clinching a China-coverage job at an investment bank. Banks are now looking closer to home for their graduate talent, with a preference for Chinese nationals (or Hong Kong citizens who speak Mandarin) from universities such as The Chinese University of Hong Kong, The University of Hong Kong, and The Hong Kong University of Science & Technology, Wong said. UBS, for example, runs a three-day Insights Program, to recruit Hong Kong-based students for summer internships.

8) It’s hotter than ever behind the scenes

As China further tightens regulations on foreign banks, compliance professionals with strong relationships with the regulatory authorities are even more sought after than last year, say recruiters. International firms are also seeking product specialists. “We’re seeing more product-related roles as banks try to increase market penetration with existing clients, as opposed to previous years when we had more relationship-manager jobs to gain and increase market shares,” said Fabrice Isnard, associate director, banking and financial services, at recruiters Robert Walters China.