September China Placements /Asia Expat Packages

Robert here, writing from Miami, working from home base on the beach for a two week stay sandwiched between hectic Europe (London and Warsaw, of all places) and Asia (Hong Kong, Singapore and Beijing) trips. I will return to our Hong Kong offices for a few weeks starting this weekend and will also be in NYC for a couple of days this week.

Robert will be in HK next week as well. It is the third extensive China trip since June for both Robert (who also had a recent Europe trip) and me.  We have a packed schedule of mostly prospective partner candidate and law firm meetings on tap. We are also in town to help close a few placements and help with current interviews. It is probably going to be too busy to take the usual fun side trip (Bali or Thailand) this time around.

Robert Kinney - Kinney RecruitingIt has been a nice couple of weeks for our Asia team, with 5 of the US associate candidates for whom I was responsible being placed in HK / China (3 at firms, 2 in-house). I expect another associate candidate to be placed this week. Further, several of us are very close on partner placements in HK (in addition to successes in our other markets, which has also accelerated of late). Daniel Roark, our newest recruiter to become involved in our Asia business appears likely to close a very nice partner placement in China. Our St. Petersburg, Russia and Miami based recruiter, Yuliya Vinokurova, is close on a couple of associate placements in Tokyo (the Russia biglaw lateral market remains extremely slow, but we remain very committed to that market and Yuliya will be in Russia for most of the next year). Our team-based approach continues to pay dividends and I’m happy to be leading such a good group.

To be sure, the biglaw lateral market in Asia is showing stuttering signs of improvement, but things are still much slower than the sizzling levels of mid ‘06 to mid ‘08. We are seeing a lot more interview activity recently (although the competition for such interviews is fierce, as selectivity remains extremely high), but not many of the top firms are urgently hiring (more are interviewing but moving slow with offer decisions). Some of the most attractive target firms remain on hiring freeze, but if current deal flow is sustained through end year, we expect such freezes to thaw.

The majority of the associate candidates we have placed since June have had 7+ month job searches. All of our placed associates this year have been extremely impressive. For new, similarly qualified associate candidates, we now expect much quicker job searches, but landing in Asia requires a long-term job search for many very solid US associate candidates who would have had multiple quick offers as recently as mid ‘08. We expect the Asia lateral market to continue to show steady improvement for the foreseeable future, but not get back to boom levels until the US biglaw markets fully rebound (and that could be months or years away).

It would be logical to assume generous expat packages have gone the way of expected end-year bonuses in ‘09. However, the US and UK firms in Asia that were paying competitive expat packages in ‘07 and ‘08 continue to do so in ‘09 and with plans to do so for the foreseeable future.

For years we have been helping our law firm clients draft expat policies, as well as survey the market for them. US firms in the Asia markets are mostly tight-lipped about their expat packages (different from some other expat markets, like Moscow for example, where there is more cooperation amongst firms) and it is impossible to know the details and numbers in most firms’ packages without being directly involved with those firms giving offers. Among the top US and UK firms in Asia, it has become well known in recent years that we at Kinney are the go-to source for such information in the market.

It is usually in markets that are in flux re expat packages that we get the most requests (for example, Singapore, mainland China and Dubai in ‘08) for only the basic numbers. In Hong Kong and Japan, where the competitive expat packages basic numbers have been established longer, the established top firms have come to us in recent years mainly for advice on extra benefits, such as private school tuition for associates’ children (still very much in flux and varied among firms in all Asia markets), while the new firms in the market look for the basic numbers.

However, in Hong Kong and Tokyo this year a number of established firms with always competitive expat packages have asked us to assess the market for them and advise on whether they should lower their expat base number, due to the downturn. In Hong Kong, a number of our candidates have had offers this year, notwithstanding the down market, and some of our firm clients have taking a serious look at their expat package number (not just for the offeree, but for the US practice in general) before giving an offer. In each case, the firm decided to either keep the same number or only slightly lower (while remaining in the competitive market range).

In Hong Kong, you can expect US$50,000 to US$80,000 expat package (for an associate without children) at the competitive firms (with vast majority of firms in range being below 70k). This is the same range as ‘07 and ‘08, but some of the few firms in the 70s have dropped to 60s. Only one firm has 80k package, where in ‘08 there were three.

Keep in mind that in ‘07 and ‘08, while the range of competitive expat packages was rising in HK, a number of major US and UK firms had no expat packages, paid expat on case by case basis, and / or were just starting to pay competitive packages in ‘08 (out of necessity in order to compete for candidates). Some, but not all, such firms dropped their efforts to have competitive expat packages as soon as the Asia markets slowed in fall ‘08.

In Tokyo, there has not been nearly as much hiring as in HK this year, but a number of firms have asked us to access that market as well. As in HK, we are finding most firms with competitive expat packages are not lowering. Tokyo, though has always had a much larger range of competitive expat packages than HK, from ‘07 to now being about US$80,000 to US$135,000. As recently as September ‘08, we know of a few firms that substantially raised their expat packages in Tokyo.

In mainland China, the range continues to be US$40,000 to US$65,000. Although taxes are higher in BJ and SHG than HK (even US residents / citizens in HK get to take advantage of the IRS not taxing first 86k of income and up to 114k of housing costs), the cost of living is lower than HK and expat packages are traditionally lower. Some firms pay same package in mainland and HK and others pay about 20% less in mainland.

In Singapore, there have traditionally not been any expat packages. This is because back in the day that most overseas posts were considered hardships for employees of companies and firms (thus the creation of expat packages), Singapore was considered to be too nice of a climate to fall under a category of hardship. In the recent boom market it became very difficult for firms to recruit for their Singapore offices when candidates also had offers from Hong Kong, due to the expat package issue. We were assisting a number of firms drafting new expat policies for Singapore in mid to late ‘08, but when the market crashed most firms in Singapore indefinitely postponed such efforts. As it stands now, in Singapore you can expect expat packages of around US$20,000 to US$40,000, and at most firms it is done on case-by-case basis. A higher percentage of firms in Singapore offer no expat packages than is the case in Hong Kong / China and Japan.

In the UAE, most firms do not have an expat package. Those that do are mostly on a case-by-case basis and not more than US$30,000. As with Singapore, while the market was still red hot in ‘08, US (not so much UK) firms in Dubai asked us to asses the market and help them formulate competitive expat packages. These efforts in Dubai were also put on hold in earlier this year when the Dubai market crashed. In the UAE, keep in mind that non US persons pay zero income tax (even in tax havens like HK and Singapore, there is around 15% income tax) and thus firms can recruit Brits, Canadians, Aussies, Chinese, for example, who are of course thrilled with no income tax and not too concerned with expat packages. Also, in the UAE, similar to Moscow, the majority of complex transactional work is done under UK system, thus another reason that some (but not all) US firms and most UK firms prefer UK associates over US associates (causing less leverage for expat packages).

Please note that in Asia and other overseas markets, the vast majority of US firms that pay expat packages do so for all of their US associates, regardless of whether US citizen or resident (and tax windfalls for non US persons in tax havens such as HK and Singapore).

While we know this information is important to many associates (and that’s why we make it a point to know more about it than anyone else), we firmly believe that the expat package should not be considered as important as the career opportunity and platform obtained. As a general rule, we recommend not putting much weight on expat package number when comparing two offers that are less than US$20,000 apart. I look forward to the chance to talk to candidates considering Asia about these details as well as other factors that might ultimately deserve more weight.


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