At 8pm on a Tuesday, currency expert Michael Image sits in a 3m-by-3m room near Hong Kong's bustling bar district, gnawing on a pen and discussing financial terms -- in Chinese.
"Say `tong ji' (
"Tong ji," repeats Image, inadvertently altering the tones to mean "fugitive" and drawing a correction from Jiang.
The parry-and-blow is part of an hour-long class Image, 30, has been taking every week since 2004, six months after London-based Standard Chartered Plc transferred him to Hong Kong to advise clients on ways to reduce their foreign-exchange risk.
In China, the era when overseas executives could rely on translators is ending. Authorities now require top executives at securities firms to pass written and oral exams in Mandarin and Chinese managers expect meetings to be conducted in their own language.
"An executive can probably get by without speaking Mandarin, but the one who does will have a much better chance of succeeding," said Helen Cheung, a director at Executive Mandarin, the language school where Image studies. "It makes you seem more intelligent, more involved than the foreigner who just sits there and smiles."
Goldman Sachs Group Inc is learning that lesson. The firm's plan to appoint Richard Ong, a Malaysian-born Chinese, to head its venture in China was derailed by concerns he wouldn't be able to pass the test, required of all "senior managers, directors and supervisors" since November. Instead, New York-based Goldman promoted Zha Xiangyang (
Goldman spokesman Edward Naylor declined to comment on how the bank is responding to the test. Ong, who holds an MBA from the University of Chicago, also declined to comment, Naylor said.
"If the boss of a securities company in China doesn't know the language, how could we expect him to communicate effectively with the staff, the government and investors?" said Xu Weijuan, who heads the department that preps bankers for the test at the Securities Association of China. "He wouldn't even understand the notices we post on policy changes."
Goldman and UBS AG are the only global investment banks that have management control of ventures allowed to underwrite share sales in China, and so are most affected by the exam requirement. Firms including Citigroup Inc and JPMorgan Chase & Co are seeking to create similar ventures after China's benchmark stock index rose fivefold in the past two years.
Philip Partnow, a managing director at UBS's Beijing venture, is the only Western banker who's passed. He declined to comment for this story.
Most overseas managers are learning Chinese voluntarily.
Image, who studied psychology at Oxford University and heads Standard Chartered's currency-product team, said his language skills helped him break the ice at a recent meeting where Chinese executives spoke to each other in their own language. When Image introduced himself in Mandarin, they were stunned.
"Just knowing what's going on during meetings, being able to nod at the right time and interject makes a big difference," Image said. "They're more open and willing to deal with me."
At Executive Mandarin, the number of investment bankers studying Chinese has risen 30 percent in the past year, said Cheung, 39.
Chinese is one of the toughest languages to learn, said Qing Zhang, a professor of linguistics at the University of Texas.
Cheung estimates a non-native would have to study Mandarin full-time for five years to pass the securities exam. Since the test began in 2005, fewer than 10 foreigners have passed, according to a list of successful candidates posted on the Securities Association's Web site.
China's approach is unusual. Neither Japan nor Hong Kong test top managers at securities firms. In both places, specialists such as analysts and fund salesmen must pass job-specific tests that can be taken in English.
"The government may be trying to raise the status of spoken and written Chinese as an international business language," said Zhang, 38. "The message is: If you want to do business here, you have to learn our language."
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