Recruiting in China

US-based online recruitment service provider Monster yesterday secured complete control of ChinaHR.com, paying $174 million for the remaining 55 percent stake in the Chinese recruitment site.

Monster had said in its financial report for the second quarter of 2008 that it would pay $200 million to $225 million in cash to ChinaHR.com shareholders.

Monster said in 2005 that it would take the remainder if ChinaHR.com was unable to get listed within three years.

Analysts said the failure of the IPO was due to problems with ChinaHR.com's profitability. The company suffered a loss of 150 million yuan in 2007, according to Monster's financial statements for the year.

"The acquisition will give Monster a stronger presence in the Chinese online recruitment market," said Edward Lo, executive vice-president of Monster China, who takes over as the interim CEO of ChinaHR.com while maintaining his current Monster post.

China's online recruitment market is led by NASDAQ-listed 51Job with a 29 percent share, followed by ChinaHR.com with 24 percent, according to Beijing-based consulting firm Analysys International.

Although Monster's acquisition comes amid a slump in US online labor demand due to the global financial crisis, Lo said it is an opportune time for Monster to invest in the Chinese market.

"The economic situation which has ups and downs is a cycle," he said. "The merger is not a short-term investment but a long-term strategic partnership to create the best global recruitment platform."

Liu Tong, an online industry analyst from Analysys International, said it is a good deal for Monster from a long-term perspective as China's online recruitment market is growing rapidly. It grew 36 percent year-on-year in the first quarter of 2008.

In addition, ChinaHR.com's loss does not mean it has operational problems, he said. In 2007, it achieved a revenue of 281 million yuan.

The merger with Monster means there will be enough cash flow to enhance its brands, he added.

More than 90 percent of ChinaHR.com's revenue comes from the online recruitment compared to 33 percent of its rival 51job's, Liu said, adding it means there is plenty of space for Monster to diversify ChinaHR.com's future revenue structure.