Letter from... Hong Kong

It might be lucrative at the top, but it seems high salaries are not enough to ease Hong Kong's accounting shortage.

The CFO Asia 2008 Compensation Survey shows that Hong Kong Chief Financial Officers (CFOs) and financial controllers are the highest paid in the region, earning an average of just over US$169,000 and US$101,000 annually. The survey examined the 2007 salaries of accounting professionals in China, Hong Kong, India, Indonesia, Malaysia and Singapore.

It indicates that Hong Kong's financial department heads earn, on average, four times the salaries of their counterparts in mainland China, and that their bonuses were also far higher. China is catching up, though. To help ease their own accountant shortage, Chinese firms gave an average14% pay rise to their CFOs in 2007, and 13% to financial controllers, compared to 11% and 5% in Hong Kong, according to the survey.

The figures may not compare apples with apples, given the significant cost of living differences and the varying pay scales between China's rural areas and the top tier cities of Beijing and Shanghai. But Caesar Bacani, who conducted this year's survey for CFO Asia, says that, anecdotally, there seems to be a reverse brain drain of Hong Kong accountants moving to the mainland to advance their careers.

To begin with, the talent pool is shallower in Hong Kong, an international financial hub with a high demand for finance executives. Bacani notes that the growing strength of the Chinese currency is also closing the salary gap. 'Besides,' he says, 'China is where the action is. We have seen Hong Kong accountants going back to the mainland just to see what's going on on the other side of the border.'

It's been estimated that Hong Kong and China together need around 350,000 accountants, when just over half that number are qualified at the moment (about 40,000 from Hong Kong and 140,000 from the mainland). China routinely looks to Hong Kong for accountants, and many see this as a good career move - although it doesn't help Hong Kong's situation.

Kelly Chan Yuen-sau, President of ACCA Hong Kong, agrees that opportunities for advancement can seem relatively better in the mainland. In some extreme cases, she explained, a qualified accountant with three to four years' experience in a big CPA firm could be headhunted for a financial controller position with a large Chinese company or multinational corporation. 'It may typically take five to seven years of relevant experience before accountants in Hong Kong are qualified for such a role,' she says.

Andrew Brushfield, director of Robert Half International, Hong Kong, says most accountants keen to go to China are only interested in the major cities of Beijing, Shanghai and Shenzhen. Such candidates 'want to be involved in the development of China, where companies are growing quicker, the economy is growing quicker, and opportunities are greater.' But he says there is an equalising effect: as US and EU economies tighten and Western accountants look for offshore postings, they are more comfortable settling in Hong Kong than China.

Anthony Thompson, managing director, Hong Kong and Southern China, Michael Page International, says firms may offer 'lots of perks and benefits' to entice Hong Kong accountants to the mainland. However, he points out that the tax in China is higher, and the lifestyle different. Some candidates prefer to leave their family in Hong Kong, and commute to jobs in the mainland.

So, how to keep them? The latest Michael Page Finance Salary survey, conducted in 2007, found that 87% of Hong Kong employers received resignation letters from their accounting and finance staff in the previous year. Of them, 68% managed to retain 10% of the resigned staff. Though these accountants may not necessarily have been leaving Hong Kong, and while economic circumstances are tighter this year, Thompson says this still shows it is possible to negotiate with staff who might be planning a move.

In the current market, he suggests that a pay rise of 10 - 15% and an agreed career path for the years ahead could be enough incentive for a valued staff member to stay.

And to ensure future supply, Kelly Chan advocates fast-tracking the professional development of up and coming accountants. Initiatives include mentorship, where senior professionals give trainee accountants practical information from the commercial field, and offering opportunities for part-time work to help them gain relevant experience.

Peta Tomlinson is a freelance journalist who writes for the South China Morning Post and the Hong Kong Trade Development Council.