When star performer Xu Ziwang quit Morgan Stanley for Goldman Sachs, his old firm was badly hurt. Xu was a linchpin of Morgan's China plan - a strategy held in awe by competing bankers. Many freely admit the firm is out front in China and Xu's contribution to building the franchise was second to none. He personally brought in two of Morgan's landmark deals, the IPOs for Shanghai Industrial and Beijing Enterprises.
The single biggest contributor to success in China is having the right mainlander in place. Does this mean future deals go with Xu to his new employer? Superficially, it looks that way. Since Xu's arrival at Goldman in May, the firm has led an IPO for airline China Southern and won the global coordinator's role on the biggest China deal so far, the flotation of China Telecom. Since China International Capital Corporation, in which Morgan Stanley has a 35% stake, is China Telecom's financial adviser, this mandate appeared to have Morgan's name on it.