The financial crisis has some Western experts looking toward Asia for employment opportunities. China’s State Council recently declared that Shanghai will be built into a major international financial center by 2020, an indication of government’s intention to place greater reliance on the city as it refines its strategy for battling the global financial crisis. In any crisis, opportunities arise. With this in mind, China is hoping to turn the global hiring slowdown into an opportunity to attract foreign talent.

Shanghai, China’s financial capital, is currently home to about 70 percent of the overseas banks that now operate in the country with the eastern district of Pudong transforming itself in the past decade into China's Wall Street and is home to big-name financial institutions such as HSBC, Citigroup and MetLife. Figures from the local labor bureau show the financial industry accounts for more than ten percent of the local economy, providing 200,000 jobs.

In recent months, the Chinese government has announced a number of initiatives at both the federal and local level to attract the best and brightest financial minds. In December, a group of Shanghai financial institutions embarked on a hiring drive to the US and the UK and reportedly received ten applications for every job on offer. Financial organizations in Hangzhou, Nanjing, and Shenzhen are working on similar recruiting drives.

Mao Dali, deputy director of the human resources and social security bureau of Shanghai, was quoted by Xinhua as saying, "To recruit high-end financial officials from Western countries is a step intended to meet the demand of building Shanghai up further as an international financial center. Our overseas hiring plan was formed after several months of discussion and consideration."

And in February the Standing Committee of the Shanghai Municipal People's Congress proposed rules that would set up a development fund to nurture innovation, attract talent and boost the financial industry. The draft includes incentives to attract and retain financial professionals by addressing quality-of-life concerns such as health care and education for their children, according to local media reports.

Under a new program to hire 1,000 overseas specialists in a variety of industries, the central government announced in March will offer each specialist 1 million yuan (US$146,000) in subsidies. If employed, they will also be able to enjoy medical care and pensions, according to a China Central Committee spokesman.

Proponents of the government’s recruitment efforts argue that with Western financial workers being laid off or seeing their incomes shrink, now is a good time to recruit them to work in China. At the same time, opponents of the idea claim that such imported staff might not quite understand China's conditions and financial environment, and therefore cannot fully play their roles.

The government’s goal of hiring more foreign experts goes against the trend of localization that is occurring in other industries. “I see companies relocating fewer foreign expatriates to do the job. As an alternative, they are taking initiatives to hire Chinese returnees and enhancing local talent development program,” says Vince Pei, a relocation industry professional based in Shanghai. “Not only to be cost effective, but also in line with the trend of localization.”

Some fear that a large-scale influx of Western financial staff could intensify domestic financial risks and limit the development of local talents. “As with other industries, the financial industry should use local human resources - this would be better solution,” argues John Lin, Chairman of the US-China Federal Association of Business Councils based in Houston, Texas. “Coco Cola and Microsoft will not hire and send many experts to China. In the end, I don’t expect that China will hire many financial staff members from overseas.”

As with any foreign assignment, cultural adaptability and thought-out preparation are necessary. “Recruiting foreign experts can be beneficial if they are familiar with the Chinese culture; the path to China is littered with stories of expatriates being dropped into China and completely failing,” says Zennon Kapron, Managing Director of Kapron Asia, a financial industry consulting company with offices in Shanghai and Hong Kong. “Although a financial industry expert may have knowledge of best practices throughout the world, if he doesn't understand Chinese culture and business, his chances for success adapting those best practices and implementing them in China will be slim to none.”

A key barrier to Shanghai’s goal of becoming a global financial hub is the severe shortage of local talent to fill medium- or high-level management positions who speak fluent English, sufficient financial and legal knowledge and are familiar with international financial services. This is especially true in the areas of overseas investment and risk management. And the fact is that while China needs these professionals now, it takes many years to develop these skills, so it is going to have to go out a recruit them.

Once a foreign expert arrives in China, the question remains how long they will stay. “The long term sustainability of the labor market with a high concentration of foreign expats may be a question,” says Jin Haag, a US-based senior consultant at Towers Perrin. “If they are lured to China as a result of the economic downturn in their home countries, then they are more likely to return to their homes when the economy is turned around.”

Shanghai also faces stiff competition from other financial outposts like Hong Kong and Singapore. Hong Kong’s low corporate and personal income tax rates are big attractions for skilled professionals and companies. Pudong’s efforts have been boosted by district-level tax incentives as well.