(Bloomberg) — Companies in China are scouring ministries and regulators for officials willing to cross over and help them navigate a sweeping crackdown on the private sector that has upended some of the nation’s most high-profile firms.
Officials at watchdogs in charge of the financial system, and those from ministries overseeing commerce, industry and information are the most sought after, with pay packages in some instances approaching half a million dollars, about 60 times the average for civil servants, according to headhunters.
While always important, hiring people with insight into China’s opaque regulatory system is now perhaps more urgent than ever. Beijing is in the midst of a sweeping regulatory push, most notably targeting its technology giants over data security and anti-trust issues and its private education sector. The moves have roiled investors around the world, leaving many wondering who’s next.
Jacqueline Qin, a Shanghai-based director with recruitment firm Michael Page, said some corporate clients are offering more than 3 million yuan ($463,000), or virtually an “unlimited budget” for the right candidate.
As the ballooning pay shows, it’s not easy to snag a top official in China where there’s close scrutiny over how former regulators behave when joining the private sector. At the same time, the sweeping nature of what promises to be a long-drawn-out campaign has firms aiming high, looking for at least deputy division head level officials, who are in short supply, headhunters say. Such officials at the securities regulator, for example, and at the ministries must wait three years after quitting to take up positions at firms they used to supervise. For lower-ranking civil servants, that shrinks to two years.
The job is also becoming more complex, with deeper knowledge needed to anticipate changes in regulations and skills for lobbying and crisis management. And unlike in the U.S., for example, there’s no revolving door between the public and private sector in China. Once an official jumps to the corporate world, there’s little chance of going back.
“If a government official has reached the division head level, his or her political career is more visible and certain,” said Qin. “It’s not easy for them to give it up for money. They also understand that it’s a very demanding job today and requests from the corporates are sometimes unachievable.”
But given the significant incentives, there has been a steady stream of officials heading into the business world.
Deng Ge, the former spokesperson at the China Securities Regulatory Commission, was named president of Guosen Securities Co. last year. Another CSRC official, Guo Xudong, joined Wuhan Dangdai Science & Technology Industries (Group) Co. last year as vice chairman. A vice president at online market place JD.com Inc., Zeng Chen, is a former Commerce Ministry official, according to People’s Daily.
The average package for a government relation specialist has doubled to about 1.2 million yuan from about 500,000 yuan 2016, according to Jackie Yang, a director of fintech recruitment at Shanghai Brightway Consulting Co. That’s compared to a monthly salary of about 4,000 yuan — or 48,000 yuan a year — for central government civil servants, according to official data from 2019. On top of that though, officials get an array of benefits, such as allowances for field work and help with things like heating expenses.
Finance companies have always been keen to hire former officials. But now there’s growing demand from technology firms, which have been the main targets of the recent crackdown, Yang said. Firms have been especially keen on poaching officials from ministries overseeing technology and transport as Beijing seeks more control over how firms handle data, according to Yang.
Didi Global Inc., for example, is weighing giving up control of its most valuable data to appease Beijing. The car hailing giant forged ahead with its U.S. listing despite objections from officials worried that a foreign listing could leak data and undermine national security, people familiar with the matter told Bloomberg.
Read more: Didi Said to Weigh Giving Up Data Control to Appease Beijing (3)
Cross border e-commerce firms and the entertainment industry such as gaming are also searching for government specialists. Private equity firms that are invested in a broad array of companies are starting to join them in adding such staff, according to Yang.
But there’s also a limit to what these specialists can do — something that’s not lost on the corporate world — which will likely keep a lid on compensation.
“When the storm comes, it falls more on the executives than a person in government affairs to turn the tide,” said Yang. “In some situations, even for the top heads, the room to maneuver is very limited.”
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