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The Asia Chronicles: EXPAT ALLOWANCES ARE GOING UP AT THE TOP END IN HK / CHINA

In just the past few weeks, we have seen a noticeable rise in the expat / cola allowances for US associates at some of the most competitive group of US and UK firms in HK / China. In fact , it appears that for the first time $80,000 may be taking hold as the eventual standard in HK / China. For the past several years, while there were anywhere from zero to four firms paying as much as $80,000 expat / cola for associates with no children, most of the top US and UK firms remained in the $60,000 to $65,000 allowance range.

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[Ed. note: This post is authored by the Asia Recruiting Team at Kinney Recruiting, sponsor of the Asia Chronicles. Kinney has made more placements of U.S. associates and partners in Asia than any other firm in the past four years. You can reach them by email: asia at kinneyrecruiting dot com.]

Please note that our team will be back in Hong Kong all next week for meetings. Although our schedule is tight, we can fit in some meetings with prospective biglaw or in-house candidates. Feel free to reach out to us at asia@kinneyrecruiting.com.

In just the past few weeks, we have seen a noticeable rise in the expat / cola allowances for US associates at some of the most competitive group of US and UK firms in HK / China. In fact , it appears that for the first time $80,000 may be taking hold as the eventual standard in HK / China. For the past several years, while there were anywhere from zero to four firms paying as much as $80,000 expat / cola for associates with no children, most of the top US and UK firms remained in the $60,000 to $65,000 allowance range. The competitive range continues to be $60,000 to $80,000, but more firms are at the top of that range than ever before in HK / China. Further, two top US firms pay $90,000 expat / cola (although one of those has tax equalization on the base).

While there has been already a trend in ‘10 for a number of the US and UK firms with less competitive expat / cola allowances to step it up (see http://www.theasiachronicles.com/archives/2264), there has until very recently not been much movement in the competitive group, most of which have allowances in the mid $60,000’s (keep in mind that many major US and UK firms are still not in that competitive expat allowance range of $60,000 plus, but the size of that group is becoming smaller).

Further, we are seeing a trend this year of the top US and UK firms paying their US associates in mainland China the same expat allowance as their US associates in HK receive (some firms still give a smaller allowance in the mainland than in HK, but we are seeing this much less often than in previous years).

Two of our four placements in HK / China last week received expat / allowance at $80,000 and we are aware of a few firms recently raising their allowance from the mid $60,000’s to $80,000. Further, at firms where expat / cola is determined on a case-by-case basis (up until this year, that has almost always meant a very low allowance or no allowance), we are seeing a surprising trend for top market expat / cola being offered. For example, two of our recent placements in HK received $80,000 and $70,000 expat / cola, respectively, in HK at firms which have only recently started to pay competitive expat / cola consistently and which determine allowances on a case-by-case basis. Sure, there was negotiation involved and those two new hires had leverage due to being extremely marketable, but the allowances offered were well above market.

In only the past couple of weeks two of our firm clients have raised their expat allowances from $65,000 to $80,000 USD in HK / China, near top market, and other firms are considering doing the same. This is not a surprise, considering the competition now for the best US associate candidates on the market is fierce. A number of firms have reached out to us for help keeping up with the changing expat / cola numbers in the market, due to rumors going around that some top firms are raising their allowances.

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As recently as mid ’09, the highest US associate expat allowance in HK / China biglaw lowered to $70,000 (for associates with no children), after the two firms that were paying $80,000 allowances dropped to $65,000. Before the global economic downturn hit China in late ’08, the expat allowances in HK / China had been on a steady rise, with many firms doubling their allowance over a period of just a few years. But in ’09, even as the China IPO market rebounded dramatically in midyear, expat allowances were taking a small step back. It appears now that expat allowances are on the rise again, due to the competition heating up among top US and UK firms for the best US corporate / cap markets associates on the market, both those coming from the US and those already in HK / China.

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