How to Defy the Odds and Break Into Private Equity in China as a Foreigner – Even as Everyone Else is Getting Deported

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private equity china foreigner recruitingAll the hype over emerging markets sounds great…

…until you sit back and realize something: you don’t have a shot at breaking in, at least if you’re a foreigner with no connection to the region.

And it’s especially bad in China, where, according to a previous interviewee and plenty of commenters, it’s nearly impossible to break in as a foreigner.

But if you’ve learned anything from the hundreds of articles on this site, it’s that you can’t give up even when the odds are against you.

Our interviewee today took that lesson to heart and did what most would call impossible: he made the move from a Big 4 firm in his home country to a private equity firm in China.

And not a company that’s secretly a front for a drug money laundering operation in central Asia – a real, legitimate European firm that has a significant presence in China.

Here’s how he did it, and how you can do the same:

Prior to Departure…

Q: Let’s start with your background and where you were coming from before moving to China.

A: Sure. I was a lawyer working for a Big 4 firm in their tax and legal team – not the best background for a career change into finance, but not a horrible one either.

I had worked at that firm for a few years in my home country (we’ll label that “a Western country” to indicate that I wasn’t from Asia).

I had a bit of family background in China and was looking to do something different, so I targeted Shanghai and began frantically networking to get into the finance industry there any way I could.

Q: So I’m assuming you also spoke perfect Mandarin and went there in-person to network?

A: No, and no. My Chinese ability was OK, but I needed a lot of work to reach “business-level” proficiency.

And since I was still working full-time, I wasn’t in a position to go network there in-person. Instead, I began contacting firms and found one boutique in China that was headed by a fellow ex-pat from my country.

Q: So when you say, “contacting firms,” how did you actually find the information? Most people struggle with that part, especially in emerging markets where information is more limited.

A: I used LinkedIn extensively and even went through their paid options (InMail, etc.) so that I could contact people directly.

I would search for terms like “China private equity” and “China investment banking” and also look up fellow ex-pats who had indicated they were from my country but were now in China doing business.

I used a bit of random Google searching for those types of terms as well; and, of course, I got some ideas from your networking program.

Q: Right, but I’ve heard mixed reports about responsiveness over LinkedIn. What was your response rate? And do you have any tips for getting more responses?

A: I got around a 30% response rate from the messages I sent there, BUT:

  1. I had a very good profile and made sure to use key buzzwords like “M&A,” “cross-border transactions,” and so on and made it concise and targeted at IB and PE.
  2. I focused on contacting ex-pats rather than native Chinese professionals.
  3. I’m also including rejections of applications / people saying they wouldn’t be able to hire a foreigner as “responses” – there were many of these.

Even though I had been working in tax and legal at the Big 4 firm I had the chance to work on the due diligence aspect of a few deals, including a big coal deal between a foreign company and one in China.

So I made sure to draw attention to that experience in my profile – even though I wasn’t doing actual M&A or valuation work, I was still close to the process and understood the transactions.

On point #2, I found that sometimes I couldn’t connect with local professionals because you have to use Mandarin when networking with them – and at that stage, I wasn’t good enough to make a good first impression. That also made cold calling incredibly difficult.

Q: OK, I see. So you were looking for people with extremely specific backgrounds and filtered out the rest, and that’s how you got such a high response rate.

We’ll jump back into more networking tips later, but let’s move into what happened next after you began finding names of firms in Shanghai.

A: Sure – as I said, I stumbled across one firm owned by an ex-pat from my own country, and we hit it off well.

I got to talking with them, but found they were more interested in my writing skills and ability to produce PowerPoint slides – there was barely any financial modeling with what they did.

As part of the “interview process,” they asked me to send them sanitized versions of PPT’s I had previously worked on, which was weird since confidentiality is normally paramount in finance.

But I said, “Hey, it’s China, maybe things are done differently here” and leapt at the opportunity.

Eventually they gave me a “case study” and asked me to put together a pitch over the weekend, which I used to impress them even further.

They finally said, “You can come work here, but you need to improve your Chinese abilities and get up to speed quickly.”

Q: And I’m guessing you were gullible enough to say “yes” and quit your job to go and do it.

A: You bet! Except I would label myself “adventurous” rather than “gullible.”

Stranger in a Strange Land

Q: OK, so you accepted their offer to go to Shanghai and join this boutique firm.

I’m hoping that no one drugged and kidnapped you on the voyage over there?

A: I woke up with all my organs intact, so no.

At first I was excited to land there and start working – but a few surprises were in store for me after I got off the plane:

  • I discovered that the main reason they needed someone ASAP was because of a big deal that had just kicked off.
  • And there was even less real technical / deal work than I had imagined.

I only spent about 3-4 months there, and during that time I did a ton of due diligence work, PowerPoint slide creation, and administrative stuff like tracking people, potential buyers, and so on.

Q: So when you say, “I only spent about 3-4 months there,” does that mean that they fired you? Or did you leave voluntarily?

A: That deal I was talking about fell apart after a few months, so they “no longer needed me” and told me to go off and improve my language skills.

I felt a bit used at the time, but I still wanted to leave on a good note. So I got a few introductions on the way out, including one person that become essential in the future.

After leaving, I went to a 2nd tier city in China to study the language for 8 months. I did that because I didn’t want to spend time in a city with tons of foreigners where it’s easy to rely on English.

I got to the point where I could speak for an hour, read the finance section of the newspaper and understand 80% of it, and also explain my work experience in detail.

That was good, but I was still nothing compared to a native speaker – I did gain more confidence in the process, though.

Back to Shanghai?

Q: And then you decided to move back to the city and get back into the industry with your newfound skills?

A: Yup. I ended up contacting over 200 people and using many of the same networking tactics as before, including LinkedIn.

But this time I went much broader and also tried channels like the Chamber of Commerce, law firms from my own country that had offices there, and also going out and meeting ex-pats at networking events and even random bars.

Now that I was on the ground, networking was much easier and I found that local ex-pats were more than willing to help me – we all knew how difficult it was to break into business there.

Q: Right, I’ve always said that you need to go there in-person to network if you want to have a good shot at breaking in in another city or country.

I’m curious, though: did you network with any local Chinese professionals rather than ex-pats?

A: I did contact quite a few higher-level people there, but my response rate was extremely low.

A few people in senior positions responded, though, and I even met with a Chinese Managing Director and Chinese-American VP, who were both quite friendly.

We had a few discussions about me joining their firm, but they had a valid objection to me: “98% of our business is domestic M&A. What value can you add over a local graduate from a top-tier university here?”

And that is why it’s so hard to break into finance in China, or any other emerging market: you really can’t add more value than a local graduate unless you have a specific skill or connection they need (knowledge of another language, industry expertise, a Rolodex of CEOs that could be likely acquirers, and so on).

Q: Right, so networking with the local professional population wasn’t going so well, and ex-pats were more responsive but they still couldn’t do much.

Why didn’t you just contact your old boss at the first firm you worked at?

A: Oh, I tried that when I first arrived and they said there was nothing for me even though I had greatly improved my language skills – and to be frank I didn’t really want to work for them again as they weren’t the most professional outfit.

I mentioned that I got a lot of referrals and introductions from them, though, including one ex-pat who was reasonably new to China and who worked at a foreign firm there.

I met up with this guy briefly and gave him some tips on learning the language, also casually asking him about jobs at his private equity firm.

He brushed me off at first and then went dormant for a few months, so I kept networking with other people.

Then one day he finally got back to me and didn’t explicitly offer me a job, but said there might be something for me in the future there.

Q: So you magically “convinced” him to let you work there?

A: Nope. I proposed something that you’ve recommended before: working for free.

I said, “I understand you may not want to hire me right now, but if I can help in the future anyway, why don’t we start with an unpaid trial run? That way there’s no risk to you, and I’ll be more than prepared once you actually need me.”

And they agreed to that, thinking that it would only be an unpaid trial at first. Risk removal is essential when you’re looking for jobs.

Q: I’m really surprised that tactic worked, because I don’t think firms in Western countries would ever let someone with full-time experience work for free.

A: Yeah, I agree with you there. In China it can definitely work well, because things are more dynamic and there aren’t as many “rules” for how businesses are run.

But you need to watch out because people will take advantage of you and make you work for 6 months and then kick you out, unless you know what to look for and you can tell whether or not an operation is legitimate.

Q: We’ll circle back to that point at the end, but for now, what made you so confident that this place wouldn’t just exploit you and then dump you?

A: I had gotten to know the fellow ex-pat who was relatively senior at the firm (the same one I mentioned before), and he had had 10 years of experience at a bulge bracket bank in the West.

I didn’t think he would take advantage of me because we had been speaking off and on for months and I had already given him plenty of tips on getting adjusted to the country, learning the language, and more.

Plus, I didn’t really have a choice – after tons of networking I had made it to final rounds at 3 firms: this European PE firm with an active office in China, an investment firm in Hong Kong, and another boutique in Shanghai.

The latter two ended up saying the same thing: “We like you and we’d hire you, but we need someone who’s native Chinese instead.”

Q: Yup, that seems to be par for the course there.

So what were the interviews at this private equity firm like? And do you have any tips for readers who might be interviewing for similar roles in emerging markets?

A: They were reasonably intense, but nothing like what you see in developed countries where you build financial models and complete LBO case studies.

I went through 3 interviews – the first was with the Director of Investments and was mostly focused on fit and background/industry knowledge.

The second two were tougher and they delved more into industry-specific questions, on-the-spot thinking, and problem-solving questions.

At one point I also had to read an article about finance, in Chinese, and then discuss it for a few minutes, also in Chinese.

Q: Yeah, I think language tests like that are pretty standard in most countries. What exactly do you mean by “industry-specific questions”? And were there no technical questions?

A: There were technical questions but they were not very difficult – it was pretty much just the 3 financial statements, how a DCF works, and the difference between FCFF (Free Cash Flow to Firm) and FCFE (Free Cash Flow to Equity) and related concepts.

The industry-related questions were about clean-tech and renewable energy because my firm makes a lot of investments in those areas.

It wasn’t super-technical, but they did test my understanding of industry trends and the pros and cons of different technologies.

Q: And I’m assuming you did well in these interviews?

A: Yeah, I won the unpaid trial offer and after a few months, convinced them to turn it into a full-time, paid offer with a 2-year contract.

There are very, very few foreigners working in private equity in China so I definitely lucked out winning this offer.

But it was also the result of tons of hard work, networking, and language-learning.

And I probably couldn’t have done it at all if I hadn’t met that new, senior ex-pat and if my firm hadn’t needed someone well-versed with Western companies and culture.

Reflections on Breaking In: The Play-by-Play

Q: That’s a great story, but it sounds pretty risky for other foreigners to follow your path. For one, how can you tell whether or not a firm you’re going to is legitimate?

A: You need to go there and interview in-person.

A lot of firms have great online presences, websites, and so on, but it’s all just a façade – you need to go check it out and see if they have a real office with real people.

Sometimes they’ll try to fool you by meeting in places other than their office, so you have to prevent that from happening.

Go and see how they treat their staff, how many people they actually have, and even something simple like whether they have a kitchen with snacks and water.

All of this may sound trivial, but there are plenty of 2-person firms here that promise you the world and then turn out to be full of it. You don’t want to get worked to death and then kicked out 6 months later with no explanation.

Q: Yeah, it sounds like this theme of not-so-forthcoming firms is common in some regions.

Lots of people and recent interviewees on the site have claimed that it’s impossible to break into finance in China as a foreigner these days, due to the strong preference for natives and because of the fact that IB and PE are hyper-local businesses.

Obviously you defied the odds and got in anyway, but what’s your take on this?

A: Actually, I agree completely. The upside for foreigners in China will be quite limited going forward.

There are very, very few foreigners working in private equity here, and maybe a few more on the investment banking side.

To have any chance at all, you need a strong selling point – a third language (something European, Japanese, etc.), a personal relationship, or a firm that does more internationally-focused investments.

If it’s a firm that invests in Chinese companies in China, it’s nearly impossible.

My fund is traditionally European but has shifted its focus to Asia, and the only reason I had a shot is because they’re expanding beyond China and need people who can work across markets.

So, bottom-line: unless you’re 100% set on getting into China at any cost and you have a really strong selling point and a good connection to the region, I wouldn’t bother.

Q: Any other tips for foreigners who are crazy enough to want to do what you did?

A: Aside from what I said above, I would consider internships if you really want to work here.

They are easier to get than full-time jobs, but the pay is very low and you’ll have to last 3-6 months on a minimal salary.

I met quite a few people here doing internships during university break, so that’s definitely a possibility. And you could still spin it into experience that sounds good even if you don’t end up working full-time here.

Q: So what are your future plans? Are you going stick around in PE for a while, or are you thinking of moving somewhere else?

A: I’m definitely going to stay for the full 2 years of my contract. It’s a great mix of foreigners and Chinese professionals here, it’s a well-run firm, and they treat us well.

I’m not too optimistic about my long-term plans here because the government is actively discouraging companies from hiring foreigners, including introducing an “ex-pat tax” that makes it more expensive to hire us.

Eventually I do want to move back home, and I’m hoping that my skill set continues to prove valuable since we’re doing so much business with China these days.

Q: Any final parting words of wisdom?

A: The only point I would add is that you need to stay in touch with your network.

I had 200+ contacts and had spoken with over 50 people, so by the time I landed my offer I was tempted to just say, “I’m done! No more networking!”

But I resisted that temptation and still kept everyone in the loop, which has proven very helpful as I’ve been on the job.

If you stay in touch, you not only position yourself for other opportunities but you also start bringing in your own deals as bankers and lawyers start to tell you about what’s out there.

Q: That’s great advice. I think lots of people just stop networking once they begin working, either because they’re too busy or because they lose interest.

But even an hour or two per week can make a big difference.

Thanks for the chat – you have a great story!

A: Sure thing, enjoyed speaking with you.

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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35 Comments to “How to Defy the Odds and Break Into Private Equity in China as a Foreigner – Even as Everyone Else is Getting Deported”

Comments

  1. Kurt says

    Hi,

    I was wondering if someone could comment on the whole “it’s getting harder for companies to hire foreigners in China” deal – specifically with regards to work visas.

    I’m an ABC who is graduating from a top 30 university in the US and interned at a boutique in shanghai last summer. My plan has always been to go back to China after graduating but, given my language limitations (am so-so at Mandarin), lack of experience,and the prospects of low pay, am beginning to re-think my decision as I’ve heard it’s gotten even more difficult for recently graduated expats to find jobs within finance/consulting.

    That being said, I’ve been invited to interviews at a few small consulting firms and am passionate about China.

    Any tips would be appreciated.

    Best,
    Kurt

    • says

      It really depends on how well-acquainted you are with the language and culture. If you only have average ability in the language, it’s going to be really, really tough to land IB/PE offers there full-time unless you go for funds that invest a lot outside of China. The better bet is to do an internship there and go work elsewhere full-time. I’m not sure about how easy/difficult it is for foreigners to get into consulting, but I would think it’s about the same because there’s even more client interaction and language/cultural knowledge required.

    • Tim says

      Hi Kurt, re: the work visas, it’s especially bad for recent graduates, because to even be eligible for a work (Z) visa you need at least 2 years of post-undergraduate FULL-TIME work experience. It’s pretty easy to get away with making something up in terms of the job, but they’ll need to see that it’s been at least 2 years since you graduated. There are ways around this but it does involve some legal risk for the company, so they’ll have to think of you as worth the risk.

      If you’ve got any family in China that might have business contacts, then definitely use those. Otherwise, if you’re still interested I’d recommend working in not-China for a few years for experience and using that time to brush up on your business Mandarin.

  2. Blaine says

    Hi,

    As always these interviews are not just informative but rather entertaining. Keep up the good work.

    I was wondering if I could get your thoughts on a branding issue. I am about to graduate from a top 5 US public university, but screwed around in my early college years and was unable to land anything IB related, though I did have a private wealth management internship with a BB last summer.
    Anyway, I know that though it is tough if you miss out on the undergrad recruiting frenzy, there are ways to transition into the IB even before an MBA. At this point I’m pretty deep into interviews with an expert network firm (think Gerson Lehrman; Alphasights). Would one of these firms offer me the opportunity to transition into IB or have the requisite firepower to push me into a top 10 MBA program in a couple of years? I have 760 GMAT, but those early college years really hurt leaving me with a 2.9 GPA despite a 3.65 over the last 3 semesters. Anyway, love the site and thanks again for all you do.

    • says

      I think they would be more likely to help with MBA admissions than with getting into IB. But even with MBA admissions generally you want either something prestigious or something completely off the beaten path, at least for the top schools. So if you’re set on getting into IB after graduation, I would aim for other options besides the expert network firms if possible.

      • Adam says

        GMAT is good and GPA is ok too (admin staff will like your improvement) but working at Gerson Lehrman et al will be a non-starter in terms of getting in to a top MBA. They’d be a non-starter in terms of getting into IB as well. Only take the job if it’s that or unemployment.

  3. Lloyd says

    Great article. But is the interviewee working for a well known PE shop like Blackstone/KKR/TPG? Or a local one in China right now?

    And I am also wondering, what is the range of salary for a PE associate in China? Just a rough estimation would be great.

    Thanks

      • Lloyd says

        So are most of the PE professionals in China are ex-bankers just like in US? Or they are coming from other background such as accounting/consulting?

        • says

          You do see a more diverse mix there, as is the case in many emerging markets. From the other interview on China PE:

          “Q: Are there any differences they should be aware of with recruiting, CVs/resumes, and interviews?

          A: The main difference is that you don’t need investment banking experience to get into private equity here.

          Technically this is not true in developed countries, either, but let’s be honest: the majority of people who break into PE have done banking or something similar like management consulting or Big 4 Transaction Advisory Services.

          But in China, most PE professionals are not from an investment banking background, so they don’t expect you to have that experience either.

          It’s really about networking, meeting the right people at conferences, following up with them and being persistent until they give you interviews.”

  4. David says

    Thanks for the great post.
    Do you think the particular difficulty of breaking in is limited to China? What about Hong Kong, which is much more international compare to other Chinese cities (i.e. Shanghai, Beijing..)?

    • M&I - Nicole says

      In terms of language/culture…In HK, most PE funds still require candidates to speak/know the Chinese language/culture because a lot of the business is related to China. The requirement may be different for firms who have a focus in Australia/SEA. You may want to look at these roles if you don’t speak the language..

  5. Adam says

    Don’t mean to be critical but why did the author bother? He (She?) admits here that even though he has a 2yr contract, staying in PE in China won’t be a long term thing. He’ll come to the end of the contract and then what? He might think that working in PE in China, even at a well-known firm, will build a profile that will be transferable to other markets but I wouldn’t agree.

    • says

      I generally don’t like to criticize interviewees’ plans, especially if they’re taking the time out to speak and/or are also customers.

      Given that he’s working at a fund that’s known in other markets, I think he is still building a profile that’s transferable elsewhere. And he is mostly working with investors and companies in other countries.

  6. Paulo says

    I am considering a distance learning degree from penn state, i am from england and dont really know about american schools is it good?

    • M&I - Nicole says

      I’m not from that school so I can’t comment on its curriculum. Can only say that it isn’t a target school for finance and your distance learning degree might not necessarily be helpful to you breaking into the industry

  7. couchy says

    PE analysts make only 30-40k USD at local shops but being an associate with a top US MBA and good work experience can put you up to 200k USD so the pay in China is highly variable.

    • says

      Thanks for sharing – I think the interviewer last year quoted a higher number for local shops, but I’m sure some places do pay in that range with int’l ones paying more.

  8. Jaime says

    Is Chinese essential even at international firms and banks? Where do they recruit from? US MBAs? Or is there any local university?

    • Adam says

      Umm, yes, it’s essential. Remember that their business in China is with Chinese companies, and for Chinese companies. They don’t do non-China stuff in China.

    • says

      As Adam said, it’s essential… but there are firms that work with non-China companies there. The interviewee, for example, works at a firm that invests across Asia and is based on China. But he actually spends a lot of time on non-China investments. In the general case, though, yes, you are mostly dealing with Chinese companies. Local firms recruit from the top schools there, also from events like Super Return.

  9. Frank says

    Hi,

    Another great post! I seems Clean Energy and Renewable Tech has been a hot topic for a while now. Is there any chance we can do an introductory session on this? Or is there any website/source we can read about the things mentioned in this interview? i.e. various techs and industry trends etc.

    Thanks!

  10. Patrick says

    Hi,

    I just had a few questions about the interviewee’s background.

    1. How long was he at the Big4 and what industry/practice group was he in (Financial Services/Healthcare/a mix/etc.)?

    2. What was his undergraduate degree in (i.e. was it finance/accounting/econ)?

    3. Did he have any professional certifications (e.g. CPA/CFA) that he thought were relevant in his job search?

    Thanks!

    • says

      1. 2-3 years and a mix of groups with a focus on tax and legal work.

      2. I believe so but we didn’t really discuss that as he was well beyond undergraduate.

      3. I didn’t ask him explicitly about that but he did not mention any of those as being helpful in breaking in in China. They are likely more helpful in other emerging markets such as South Africa and India (see the interviews for those).

  11. Eric says

    Hi Brian,

    Thanks for another article. How would you suggest someone with my background trying to break in China?

    Native Mandarin Speaker, can speak and write fluently
    Top 25 School in the US
    Banking in the US for 1 year
    Hedge fund for another year

    I am just trying to contact as many headhunters as possible but is there other ways of trying to get a job in China/HK?

    Thanks

    • says

      Really, your best bet is to go there in person to conferences like AVCJ and Super Return. See if you can take a few days or a week off from work to do that when the time comes and meet as many people as possible there.

      Personally, I would aim for HK rather than mainland China because HK tends to accept more internationals and there are lots of HFS there but almost no traditional HFs in mainland China. And Mandarin skills are still required / very useful there. Headhunters might be relatively useless for HK / China unless they’re based there and you can meet them in-person, so those conferences and maybe contacting alumni in the region are better bets.

    • M&I - Nicole says

      I’d build a database of contacts, who are in the areas you are interested in in HK. Contacts who have the hiring power. You can do your research online and through your network. I’d then email/call each one of them individually. I’d also arrange informational meetings and plan a trip down to HK to meet them

  12. JKim says

    Hi,

    I worked in Hong Kong for few years in IB and didsome China deals. My mandarin is so-so and I am not a local. If I improved my mandarin, what are my chances of getting a PE job in Shanghai? Also what about other areas of finance? PE is not a must for me, I am open to S&W sales and trading, investor relations, etc.

    Thanks

    • M&I - Nicole says

      Improving your Mandarin (ideally to a fluent level) will increase your chances of landing a PE role in Shanghai and other areas in finance, esp for sales related roles because a lot of firms are looking to tap into Chinese clients, be it in IR or sales.

      Please refer to http://www.mergersandinquisitions.com/china-private-equity/ on PE in China – Yes, Mandarin, in most cases, is a must, esp if you are in PE because most m’gmt teams of Chinese companies only speak Mandarin.

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