Recruiting in China

As chief executive of China's third-biggest online recruitment company, Liu Hao makes a living off the demand for talented people eager to prosper in the nation's dynamic economy.

Zhaopin.com Ltd. has 18 offices across the country and more than 1,000 employees. At any given time it typically posts 200,000 to 300,000 jobs, ranging from drivers to salespeople to senior executives. Mr. Liu says that is 10 times the number of offerings in 2002, when he took over Zhaopin, in which he was a major investor.

Both the company, whose name means "recruitment" in Chinese, and the industry are still small. Market-research firm iResearch estimates that China's online job-recruitment market was worth about 800 million yuan, or about $100 million, last year, and puts Zhaopin's 2005 revenue at 70 million yuan and its market share by registered users that year at 9.8%. Mr. Liu puts its market share by revenue at 20% to 25%.

But the industry is growing fast. And Zhaopin, which started up in 1994 and now counts such regular clients as the China units of Microsoft, Unilever, Alcatel, BMW and Hitachi, is growing with it. The online recruitment market was up 46% from 2004, iResearch reckons, and Mr. Liu says earnings, which he won't disclose, are, like his job postings, 10 times what they were in 2002. In April of last year, Monster.com, a major U.S. online recruitment company, spent $50 million to buy 40% of ChinaHR.com, one of Zhaopin's two larger rivals. (The other is 51job.com.)

Mr. Liu, 37 years old, takes pride in having propelled the company to its current position. His co-investors include the venture-capital arms of computer maker Lenovo Group and Taiwan's Acer Group. He says Zhaopin could go public, perhaps next year.

But Mr. Liu also takes pride in his own metamorphosis, from Beijing University physics major to Yale University law-school graduate and attorney at New York-based multinational law firm Davis Polk & Wardwell to California venture capitalist to entrepreneur, believing that in the end it's better to commit to one vision than to make a run at many projects.

Mr. Liu spoke from Beijing with Juying Qin in Hong Kong about that principle and about connecting China's leaders and workers with jobs in a fast-changing economy.

WSJ: How does Zhaopin.com mediate between prospective employer and job hunter?

Mr. Liu: We usually sign contracts with our clients or the employers. We check the veracity of the company as well as the job positions they want to post. Job hunters can put their own information into our database .

WSJ: Have you ever found your jobs online?

Mr. Liu: Well, no.

WSJ: What was your first job and what was the most important lesson you learned from it?

Mr. Liu: Practicing tax law. I was extremely impressed. The law firm is like a university or a learning machine, passing along knowledge to junior associate lawyers like me. Law students still tend to be less practical, especially Yale law students.

WSJ: Why did you turn from physics student to lawyer to venture capitalist and then to corporate executive?

Mr. Liu: Being a physicist was my childhood dream. But after a few years, I had a lot more discoveries about myself. I call this process rediscovery.

I went to law school not because I wanted to be a professional lawyer but because in law school, students could be exposed a lot more extensively to society. From a venture capitalist to the manager of this company was quite a natural choice for me. I was managing the company at the time as an investor, the company was not doing well, and I thought it was kind of an obligation for me to go in.

Most of my friends were against my choice, in part because they thought the risk was so high. Being a venture capitalist or being a lawyer is really kind of a cushy job. Lawyers do not really take that much risk. You do give advice to your clients, and you do have to make judgment calls, but those judgment calls do not eventually affect you.

To be a lawyer, you need to restrain your passion and be unemotional. To be a manager, you have to have some passion. If you don't have it, you can't do it.

Fundamentally I felt like were all kind of passive. In my life, I have always wanted to point to something that I really built.

WSJ: You didn't go to business school and had no real managing experience before. What made you so confident you could turn this company around?

Mr. Liu: I actually asked myself the same question when I took this position. But I think personality is the most important thing that leads to success. I was always able to manage the transitions well, from physicist to lawyer and then to venture capitalist, so I should be able to manage another transition well.

WSJ: In your industry, are there big differences between China and the rest of the world?

Mr. Liu: The American job market is more like a seller's market, while China, with a larger labor base, is more like a buyer's market. But the job market in China is nascent. Fundamentally, its problems reflect the problems stemming from the educational system.

Many fresh college graduates don't have the skills to cope with real work. They don't have enough career training. So it can be quite hard for them to find their niches in the first couple of years after graduation.

There are two main problems. First, some people, especially fresh college graduates, make fake résumés by exaggerating their experiences. Second, people change jobs very frequently.

WSJ: Can you describe China's leadership potential?

Mr. Liu: The quality of managers in China has been improving quite obviously in recent years, but there are still far fewer experienced managers than the market demands. Back in 2000 to 2002, people without much management experience could easily get around by carrying some master-of-business-administration degree from some big-name university like Harvard, although some were really not very capable.

WSJ: What is the most important piece of technology you use?

Mr. Liu: Basically I talk on the cellphone 24 hours a day. Sometimes people call me at 3 a.m., and they don't even ask whether I was asleep. If I didn't have a cellphone with me, I would start to worry about what I am missing. This really has become part of my body.