Lang Kwai Fong – the area in Hong Kong where you go to drink before you hit the really seedy bars – used to be a good gauge of how happy and confident expatriates were. According to an Australian banker, in the 1990s it was busy during the good times and quiet during the bad. These days, though, expats have changed their drinking habits.
“In 1998 during the financial crisis you could fire a gun down the street and not hit anybody, it was so quiet,” says the banker. “But it’s different now. Even though times are really tough, the place is packed on Fridays. Everyone is drinking to forget how bad it is.”
That means, of course, that it’s not bad for everyone. Patricio de la Fuenta Saez, a director of Links Concept Company, an importer of wines, spirits and Red Bull, says that business is good. Links’ sales actually rose 65% last year. And he claims some of his most successful months were when the Hang Seng really tanked.
Tastes, like the stock market, have dropped a notch or two. “Before 1998 cognac was the most popular spirit in Hong Kong. Now it’s vodka,” says Fuenta Saez. Specifically cheap vodka. Fuenta Saez says it’s the non-prestige brands that are flying off the shelf. Even mid-range labels, such as Absolut, are suffering. It’s shocking to hear that Hong Kong’s crème de la crème are now propping up the bars in their private clubs knocking back supermarket own-brand vodka. Times, it seems, are tougher than anyone could have imagined.
Total meltdown is perhaps another way of describing the pitiful situation facing Hong Kong’s bankers. As one American banker points out unsmilingly: “Have you noticed that the number of older Porsches and ageing Ferraris on the road is definitely increasing?”
Enhanced clubbability
Another measure of the bad times is the extent to which expats are prepared to mix with people they would have once shunned. Because banks are thinning their ranks, claims one relocation specialist, gaining entry to some of Hong Kong’s most important clubs is getting easier. Aberdeen Marina Club, the Hong Kong Cricket Club, and the Royal Hong Kong Yacht Club, are accepting just about anyone these days. And what used to be a year-long wait for membership anywhere worth joining is now just two or three months.
To the man on the street these probably aren’t the sorts of indicators normally used to measure just how grisly things have become. But for the expat they do just that. When anyone touches down at Hong Kong International Airport and starts living on this crowded island – the world’s largest and richest university campus – the heat of summer rapidly evaporates all sense of perspective.
For the banker who is forced to come to Hong Kong with its expensive restaurants, member-only clubs and designer shops, it’s a hardship posting. And many feel they should be paid for such discomfort. Sadly for them the legendary expat package is being slowly choked to death.
The expat home (with maids’ quarters) once guaranteed to almost any banker is no longer the norm. Only top management get one of those now. “Of course the very top bankers still get one, it just doesn’t work its way down to the junior vice-president level any more,” says a recruitment and relocation specialist.
According to head-hunters, banks now offer cash instead of providing a house. Employees receive lump sums for housing and it is up to them how they spend it. But the wads handed out are, like the fees investment banks can command, being compressed. “A banker the other day managed to squeeze a bank for HK$180,000 [US$23,000]. But that’s one of the highest I have seen for a while,” notes a recruitment consultant. That is of course HK$180,000 a month, not a one-off lump sum.
Another head-hunter says that the highest housing allowance he came across in the past year was HK$150,000. “But that was for a managing director who was head of debt for the entire region.” Apparently the average no-frills managing director will nowadays only be able to pull in around HK$80,000 a month for his bed and board. Two years ago, the MD of a US investment bank could have expected to receive anything between HK$125,000 and HK$250,000 a month.
As if having to squeeze your family and two full-time Filipina maids into a still very large apartment wasn’t bad enough, the salary part of the package is under pressure too, just as it is in London and New York. Two years ago the regional head of banking research at a large European or US bank in Hong Kong could negotiate total packages of $800,000 to $1 million. In 2003, he would be lucky to get $400,000.
And for the banker sacrificing his comfort and possibly his career in the far-off lands of Asia, the news won’t be getting better for some time. In 2002, compensation for the Hong Kong banker was down 20% to 40% on 2000. It’s a trend that will continue. The average package for investment bankers as a whole looks set to fall from the 2002 level of $500,000. It seems that more and more late-1990s’ 911s and Maranellos will be clogging up the already busy Hong Kong streets.
