Recruiting in China

China's manufacturing activity was stable last month but production increased at its slowest rate in four months, a report released yesterday showed.

The Caixin China General Manufacturing Purchase Managers' Index stood at 51 for October, the same as September, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd.

A reading above 50 indicates expansion, while a reading below reflects contraction.

Sub-indices showed that new orders rose slightly faster, while output growth fell for the third straight month.

At the same time, companies continued to shed staff amid company-downsizing and efficiency-raising efforts, the report said.

The sub-indices for input costs and output prices both eased from the previous month but remained rather high.

"China's manufacturing sector expanded steadily in October," Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group said. "But the stringent production curbs imposed by the government to reduce pollution and relatively low inventory levels have added to cost pressures on companies in midstream and downstream industries, which could have a negative impact on production in the coming months."

Released yesterday, the official PMI in October fell to a three-month low of 51.6.

Divergence of the official data from Caixin data is common as the official manufacturing PMI survey covers 3,000 large and small companies, while the Caixin PMI covers 500, with a focus on small and medium sized businesses.

Wang Tao, chief China economist of UBS, said she expected October data to show softer activity with weaker industrial production and property investment, lower export growth, and largely stable overall fixed asset investment growth.

She said consumer inflation may be warmer last month but factory gate inflation was likely to be cooler.

The Tesla logo is pictured on Feb 5, 2014 in its first Chinese mainland show room in Beijing.

Tesla Inc is conducting a nationwide campus recruitment drive in China as part of its efforts to get better established in the world's largest new energy car market.

The United States-based electric carmaker has been conducting job fairs at four universities in Beijing, Shanghai, Guangzhou and Chengdu to recruit forthcoming graduates to work in about a dozen tier-1 and-2 cities in the country.

"We conducted campus recruitment just as we did last year, with a focus on finding potential recruits for sales, service, IT and intern positions. We have not determined how many people will be hired yet," said Tesla in a statement. The Tesla job fairs run until this Friday.

There are eight posts available for new graduates, according to Tesla's page on popular recruitment website 51job. In total, Tesla is hiring people for 79 posts for its business in China.

It has 32 experience centers and eight service stores in the country but did not disclose the number of current employees.

This campus recruitment drive is unlikely to have any direct connection with Tesla's localization efforts, as most jobs available are sales and service-related instead of engineering and production.

Tesla had confirmed earlier that it was in talks with the Shanghai city government to establish a manufacturing facility.

The company has been growing steadily in China, with its revenue more than tripling from 2015 to 2016. It delivered 13,500 cars in the first nine months of 2017, more than double from a year earlier, according to statistics from the China Passenger Car Association.

The company is now looking to build on its current success in China, home to about 1 million new energy cars by the end of 2016.

On Monday, the carmaker unveiled in Shanghai its largest charging station in the world, which can accommodate 50 Tesla cars at the same time.

To date, Tesla has 700 charging posts in 170 cities in the country, with the number expected to rise to 1,000 by the end of the year.

Earlier this month, Tesla announced that it has modified the charging hardware for Tesla vehicles built for the Chinese market so that they can make use of the public charging infrastructure.

China has made better-than-expected progress in cutting overcapacity in the steel and coal sectors amid steadfast government efforts to push economic restructuring.

In Hebei Province, where the task in cutting overcapacity is tough, 15.72 million tons of steel production capacity and 14.08 million tonnes of iron were cut in the first half of this year, progressing faster than the same period last year, according to local authorities.

China's steel industry has long been plagued by overcapacity. The government aims to slash steel production capacity by around 50 million tonnes this year.

Nationwide, 85 percent of the target for excess steel capacity had been met by the end of May, through phasing out substandard steel bars and zombie companies, with Guangdong, Sichuan and Yunnan provinces already meeting the annual target, data from the National Development and Reform Commission (NDRC) showed.

About 128 million tons of backward coal production capacity was forced out of the market by the end of July, reaching 85 percent of the annual target, with seven provincial-level regions exceeding the annual target.

As a large number of zombie companies withdrew from the market, companies in the steel and coal sectors have improved their business performance and market expectations.

Lifted by improved demand and lower supply due to government policies to cut steel overcapacity and enhance environmental protection, steel prices continued to pick up, with the domestic steel price index gaining 7.9 points from July to 112.77 in August, and increasing 37.51 points from a year earlier, according to China Iron and Steel Association (CISA).

"It is unprecedented, showing that overcapacity cuts have prompted the healthy and sustainable development of the sector and improved business conditions of steel companies," said Jin Wei, head of CISA.

Companies in the coal sector also gained profits. In the first half, the country's large coal companies registered total profits of 147.48 billion yuan (about 22.4 billion U.S. dollars), 140.31 billion yuan more than the same period last year, according to the NDRC.

Lincoln, the luxury unit of Ford Motor Co, said on Monday that it plans to build a luxury sport utility vehicle in China in partnership with the Chang'an Automobile Group.

The as-yet unnamed vehicle will be built at a plant in the city of Chongqing. It is scheduled to go on sale in late 2019 only in China, the world's largest auto market, according to Lincoln spokesman Said Deep.

Building in China will help Lincoln meet growing customer demand and enable the company to become more responsive to changing customer preferences, Deep wrote in an email. "As Lincoln grows in China it makes sense to produce this new SUV in China," he added.

Lincoln exports its vehicles from North America to China, and reported sales of 32,558 in 2016, three times more than it sold in 2015.

Ford and its joint venture partners sold a record 1.27 million vehicles in China last year. Lincoln isn't the only US luxury brand taking aim at China. General Motors said its Cadillac volume in China rose 46 percent in 2016 to 116,406 , the first time it passed 100,000 vehicles in China in a single year.

German automaker Volkswagen plans to provide more than 400,000 new energy cars for the Chinese market by 2020, according to Professor Jochem Heizmann, CEO of Volkswagen Group China, Monday.

According to the plan, the number will increase to 1.5 million by 2025.

The company announced earlier that it would introduce 15 models of new energy vehicles in China in the next three or four years, to address the environmental protection needs of the Chinese market, as well as 10 models worldwide in the next decade.

New energy vehicles sales of the company are expected to reach 2 million to 3 million in 2025, 20 to 25 percent of its total sales.

China is Volkswagen's largest market. Volkswagen Group China and its two joint ventures delivered 3.98 million automobiles to the Chinese mainland and Hong Kong in 2016, up 12.2 percent year on year.

China's manufacturing purchasing managers index continued rising in November to the highest level in two years, which indicates the country's economic performance is gradually improving, new data showed on Thursday.

The PMI stood at 51.7 in November, up from 51.2 in October, according to the National Bureau of Statistics.

This is the fourth consecutive month that the manufacturing PMI, a key gauge that monitors the activity of large and medium-sized enterprises in the manufacturing sector, stayed above the 50-point mark that distinguishes expansion from contraction in the sector.

Among the five major subindexes, production and new orders stayed in the expansionary range. In November, the production subindex increased to 53.9 from October's 53.3, while the new orders subindex increased to 53.2 from October's 52.8. Both were at the highest level so far this year.

Zhao Qinghe, senior statistician of the NBS, said that production and market demand both rebounded in November, and enterprises showed stronger desire to purchase.

Zhao said the increased costs of raw materials and transportation, which have reached the highest level in three years, are a major challenge for enterprises.

"Fluctuations of the RMB exchange rate have resulted in the increased cost of imported raw materials, which has a significant impact on electronic equipment manufacturing industries such as computers and telecommunication," Zhao added.

The Caixin/Markit Manufacturing PMI, which mainly monitors the market performance of small and medium-sized enterprises, was at 50.9 in November. Although the index stayed in the expansionary range, it declined from 51.2 in October, which shows a slowing expansion pace in the manufacturing sector.

"Caixin/Markit Index readings for both output and new orders declined, but those tracking input and output prices rose at a faster pace to hit their highest levels in five years, pointing to further intensification of inflationary pressure", said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.

"The November PMI indicates that China's domestic economic operation is stable and the positive effect of supply side structural reform is gradually appearing," said Zhang Yiping, an economist with China Merchants Securities. "The quality of China's economic growth is gradually improving."

China's top steelmakers will merge to create the world's second-largest steel entity, it was announced yesterday.

Baoshan Iron and Steel Co, Baosteel's listed company, will issue new stocks to the shareholders of Wuhan Iron and Steel Group to complete the merger, the two state-owned companies said.

Baoshan is ranked fifth in terms of world production capacity. Wuhan is 11th. After the takeover, Wuhan Steel will delist from the A-share market on the Shanghai Stock Exchange.

Baosteel Group is China's second-largest steelmaker, and along with Wuhan Steel will have a joint annual production capacity of more than 60 million tons, making it the second-biggest producer behind ArcelorMittal.

The new entity will be called China Baowu Iron and Steel Group. China Business News reported yesterday that the state asset watchdog had given its nod and submitted the merger plan to the State Council for final approval. Once approved, the market value of the new group will surpass 108.5 billion yuan (US$16.3 billion), and its total assets will be worth 700 billion yuan.

The merger is in line with Chinese government's efforts to overhaul its steel sector, upgrade quality and cut overcapacity. Chi Jingdong, deputy director of China Iron and Steel Association, said the central government wants to consolidate 60-70 percent of the nation's steel output into 10 giant groups to enhance their competitiveness.

Chinese steel demand slumped as the global industry has been battling overcapacity. The crisis has seen manufacturers in Asia, Europe and the US suffer huge losses and led to accusations of dumping.

Shanghai-based Baosteel's net profit plummeted 83 percent to 1 billion yuan last year, while Wuhan Steel lost 7.5 billion yuan, compared with a 1.3 billion yuan net profit in 2014.

An analyst said the merger between Baosteel and Wuhan Steel was "merely the beginning" of more such acquisitions in China's steel industry.

"Restructuring in China's steel industry is the trend and it's an unstoppable one," Chen Bingkun, an analyst at Minmetals and Jingyi Futures, told AFP.

Restructuring of another two Chinese steel giants, both based in northeastern province of Liaoning, Ansteel and Benxi Steel Group, is next on the agenda, Shanghai Securities News reported yesterday.

Ansteel is the world's seventh biggest mill, and Benxi Steel ranks 21st. The listed arms of the two groups suspended trading in Shenzhen yesterday pending statements on the report. Investors in Hong Kong cheered the news, with Ansteel shares jumping 2.81 percent yesterday afternoon.

"China is now trying to cut down its steel production through policy. Restructuring is another way. Once the merged giants form a monopoly, it will start to control production," said Minmetals' Chen.

"The result of this restructuring is to integrate China's steel industry and pave the way for China to export its steel capacity."

However, another analyst did not see China having an edge over global competitors like ArcelorMittal and US Steel.

"I don't think these mergers will be able to change the current market status of the world's steel industry," said Qin Jiawei, a Hangzhou-based analyst with Xinhu Futures. "China's high-end steel products don't have the competitiveness in the international markets. It's not the size of the company that counts. You cannot change the global steel market by just adding them up."

CHINA’S manufacturing sector weakened in July as heavy floods hit output, but private manufacturers did better than market expectations to record their first activity growth in 17 months, data showed yesterday.

The manufacturing Purchasing Managers’ Index fell to 49.9 last month, below June’s 50, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

The weaker pace of manufacturing growth reflected the impact from the recent massive floods along the Yangtze River Economic Belt, Australia and New Zealand Banking Group said in a research note yesterday.

It added that industrial production will be sluggish in the near term as the area’s output has been disrupted.

Factory output fell to 52.1 in July from 52.5 in June, and total new orders hovered just inside the expansionary territory at 50.4, but a dip from June’s 50.5, the PMI showed.

Meanwhile, the Caixin China General Manufacturing PMI, which reflects private and export-oriented manufacturing conditions, rose to 50.6, a better-than-expected performance and was up significantly by 2 points from its June reading.

This was the first growth in activities since February 2015, with sub-indexes of output, new orders and inventory all surging past the 50-point mark that separates growth from decline.

“The Chinese economy has begun to show signs of stability due to the gradual implementation of proactive fiscal policies,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note after the PMI report. China said last week that industrial profits rose at the fastest pace in three months in June, though gains were seen in electronics, steel and oil processing.

Economic data for the second quarter were slightly stronger than expected due to a housing boom and government infrastructure spending that boosted demand for materials from cement to steel.

“But the pressure on economic growth remains,” Zhong warned.

Analysts also viewed that July’s data “do not bode well for GDP growth” in the second half of this year, as the real estate sector which fueled growth in the first half may have peaked.

China remains the most competitive country in the manufacturing sector, but it will be replaced by the U.S. by 2020 because of shortcomings in human resources, innovation, resources policies and infrastructure, a report released on Saturday noted.

Considering its relatively low labor costs and strong infrastructure policy, China was ranked No.1 in manufacturing competitiveness, according to a global survey of more than 500 companies, Guangzhou-based newspaper 21st Century Business Herald reported during the weekend.

The survey was part of a report released jointly by Chinese think tank ChinaInfo100 and multinational professional services provider Deloitte.

The report said China has established an ecosystem to encourage innovation, partially because research and development spending has increased significantly in recent years, according to the media report.

In some areas, China has already surpassed the U.S. -- for example, the Tianhe-2, a supercomputer developed by China's National University of Defense Technology, is the world's fastest supercomputer, it said.

However, global economic growth will continue to slow in 2016, which will depress industrial output. China is lagging behind the U.S. in several aspects such as human resources, innovation and the legal environment, the report said.

By 2020, the U.S. will become the most competitive country in manufacturing, followed by China, the report predicted. Germany will remain No.3.

In China, labor costs have increased about 150 percent in the past decade, which has become a major concern for manufacturers, the report said, adding China's aging society also worries many investors.

ZD's fully-electric two-seaters roll off the production line in the Lanzhou plant in Gansu province, Jan 11, 2015.

Geely Automobile Holding has opted to sell its interests in micro-sized electric carmaker Zhidou, to enable the company to operate as an independent entity as a prerequisite to get listed in the nation's new energy vehicle catalog.

The Hongkong-listed Geely Automobile said in the news release on Friday that getting its products listed under the brand ZD is imperative for Zhidou's future, and will allow it to compete independently in the market. Under current regulations and conditions, the product can only be referred to as Geely ZD.

Geely Automobile announced a framework agreement on June 22 to sell part or all of its 45 percent interests held by two subsidiaries, Zhejiang Jirun Automobile Co and Shanghai Maple Guorun Automobile Co, in Ninghai Zhidou Electric Vehicles Co to a China-listed company. Detailed terms of the agreement have yet to be determined.

Jia Xinguang, senior analyst with the China Automobile Dealers Association, said: "The move could be a strategic adjustment made when Geely found the mini-sized electric car project might not be in line with its long-term plan. Another possibility is that Zhidou is growing stronger and seeking independence."

Zhejiang Geely Holding Group Co planned for new-energy vehicles to make up 90 percent of its sales by 2020, and about two-thirds of Geely's new-energy vehicle sales will come from plug-in hybrids and gasoline-electric hybrids by the end of the decade, with the rest coming from battery-electric vehicles.

Geely Automobile joined with Taizhou Xindayang Group Co to establish Xindayang Electric Vehicle Technology Co in January 2015 to manufacture ZD-branded electric cars in Lanzhou, capital of Gansu province in northwestern China.

Local media reports cited industrial data which indicated that the ZD brand failed to close a single deal in the first four months of this year, after registering 25,300-unit sales in 2015.

The ZD brand was expected to achieve an annual sales volume of at least 500,000 by 2020, 20 times that of ZD's 2015 sales, according to Hu Hesong, a partner in the venture capital fund GSR Ventures, one of the investors in Xindayang EV.

There are now two mini-sized two-seater models being offered by the ZD brand, the D1 and D2, with prices ranging from around 30,000 to 50,000 yuan ($4,600 -$7,700) taking national and local subsidies into consideration. The ZD car models are eligible for an NEV plate in cities where gasoline car sales and usage are restricted.

ZD brand's annual production capacity totaled 300,000 units, a figure that also accounts for the integration of Xindayang Electric Vehicle Technology Co and the earlier establishing of Shandong Xindayang, according to the company.

Xindayang EV took over Geely Automobile's Lanzhou plant after a 300 million yuan-plus upgrade in 2014, with the aim of obtaining a permit to manufacture passenger vehicles.

Fuyao Group boss says firm has long aimed at smart production

Industry 4.0 can only be successful when an enterprise has a solid manufacturing capacity, said Cao Dewang, chairman of Fuyao Group, the largest automotive glass supplier in China.

"Industry 4.0 is quite a popular concept at the moment. But my concern is that manufacturers may face the risk of failure if they don't have a strong manufacturing capacity. China's manufacturing industry is still not very advanced," said Cao.

The vision of Industry 4.0 is for "cyber-physical production systems" in which smart embedded devices work together wirelessly directly or through the internet of things. It is seen as the Fourth Industrial Revolution following the first three driven by steam engine, electricity and the personal computer.

Fuyao has adopted a slogan of "Make Industry 4.0 Take Root in Fuyao". The reason that Fuyao is ready for Industry 4.0 is because it has more than 20 years of developing strong manufacturing competence under a vision on intelligent production, according to Cao.

"I first came to the realization that intelligence is the future when one of my engineers reminded me that software would one day be more valuable than human power in 1988 when I first bought equipment from overseas," said Cao. "I have been aiming at a smart production process ever since."

Founded in Fuzhou in the eastern part of China in 1987, Fuyao Group (Fuyao Glass Industry Group Co Ltd) now has a 65 percent share of the domestic market. The company has manufacturing bases in nine countries, including the United States, Russia, and Germany.

Cao was named as manufacturing pioneer in China by Forbes magazine in 2015. It was the first on the 14-member list, followed by Dong Mingzhu, chairwoman of Gree Electric Appliances Inc, Liang Wengen, chairman of Sany Group, and Zhang Ruimin, chairman of Haier Group.

Fuyao's information technology and automation system have taken the lead among its counterparts in the world, according to Forbes.

It has formulated a sophisticated data system in purchasing, logistics, services and other value-added production links.

Fuyao's average use of robots is more than 200 robots per 10,000 workers. The level is 300 in Japan and 100 in the U.S. in automotive glass manufacturers, according to Cao.

"The key to success for Industry 4.0 is to design a system that suits the enterprise' production process. If you don't know the details in production like the back of your hand, how can you design the system that works the best?" said Cao.

Other factors for the success of Industry 4.0 include large production capacity, good management, the employees' quality, and high demand for the product. The demand for high value added automotive glass that is more environment-friendly, energy saving, intelligent and integrated is rising fast.

Fuyao is moving up along the value chain by developing intelligent glass of sound proof rate of 90 percent, heat insulating, low energy consumption and auto light adjustment.

It is also developing a windshield that can function as a dash board.

Fuyao realized revenue of 13.6 billion yuan ($2.1 billion) in 2015, a 5 percent increase from the same period in 2014. Its net profit stood at 2.6 billion yuan in 2015, up 17 percent from the end of 2014.

Shanghai Zhenhua Heavy Industries Co Ltd's booth at the China International Offshore Oil and Gas Exhibition in Shanghai.

ZPMC sees high-tech port terminals as the key to its long-term growth prospects

In less than 24 years, Shanghai Zhenhua Heavy Industry Co Ltd has developed into the world's largest port machinery manufacturer. Its plan for the next decade is to make automated container terminals a new growth engine of the company.

"ZPMC is now trying to focus a great amount of resources on automatic terminals, and we expect this sector to bolster our development in the coming decade," said Song Hailiang, chairman of ZPMC and vice-president of China Communications Construction Co Ltd.

According to Song, the future of terminals lies in unmanned technology. Through remote control, intelligent container terminals will have better performance and lower operational costs than traditional ones.

"ZPMC won't miss this great revolution. The development of automated terminals will be able to combine ZPMC's existing core business of steel cranes and related services with more diversified development," he said.

The Shanghai-listed company has already made its mark in the automated terminal sector as it is currently constructing the automated terminal project of Qingdao Port and the fourth phase of the Yangshan Deep-water Port in Shanghai.

In addition, the nation's first automated container terminal built by ZPMC at Xiamen Ocean Gate Container Terminal is under trial operation.

Furthermore, the company also received orders for automated terminals from Rotterdam World Gateway in the Netherlands and the Italian port of Vado Ligure, while 36 sets of port equipment went into service at the automated Long Beach Container Terminal in California in the United States in April.

"All the lifting equipment of the $1.2 billion investment LBCT automated port, including 14 quay cranes (shore bridges), 70 automated rail cranes, and five automated railway crane, will be delivered by ZPMC around 2019," said Song.

The firm's first order from Hamburg terminal CTA in 2000 for four cranes is regarded by Song as a landmark of the company.

All the achievements were made through persistent research and development. For more than two decades, ZPMC has kept allotting more than 3 percent of its revenue to its R&D department which now has expanded to more than 2,000.

ZPMC's reputation hit a peak during Premier Li Keqiang's trip to the China (Shanghai) Pilot Free Trade Zone in November 2015. The premier encouraged the group to realize breakthroughs and marketing promotion in automated port technology and grasp the opportunity of the national plan "Made in China 2025" issued to upgrade the country's industry.

In 1992, ZPMC was founded in Shanghai as a heavy-duty equipment manufacturer.

China's manufacturing activity rebounded to the highest level since last August in March, thanks to the government's continued structural reforms, official data showed on Friday.

The purchasing managers' index (PMI) came in at 50.2 in March, up from February's 49, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

NBS statistician Zhao Qinghe attributed the rebound to the government's pro-growth measures, as well as the rising demand of manufacturing imports and exports.

The price rebound of major international commodities spurred purchases. Technology upgrades also contributed to improvement of manufacturing sectors, said Zhao.

The sub-index measuring production stood at 52.3, up 2.1 points from a month earlier, with that for new orders settling at 51.4, up 2.8 points.

The sub-index for imports came in at 50.1, up 4.3 points from February, the highest reading since December, 2013.

An iron and steel company in Lianyungang, Jiangsu province. E-commerce is expected to help steel firms avoid overcapacity and address low profitability concerns.

The China Steel and Iron Association and several industry partners joined hands to set up the Steel E-commerce Research Center on Monday, with an eye on upgrading and transforming the industry reeling from low profits.

The research center, initiated by the China Metallurgical Industry Planning and Research Institute, will conduct preliminary research for steel companies taking the e-commerce route and also provide suggestions to policymakers to help the industry develop in a healthy and regulated manner.

Li Xinchuang, head of the institute, said existing problems for the industry include vicious competition, inaccurate trading data and improper disclosure of customer information, all of which need to be solved and regulated urgently.

According to industry data, there are 178 steel e-commerce trading platforms at present in China, accounting for about 27.6 percent of the domestic online commodity trading platforms.

Last year, steel e-commerce platforms reported total trading volume of more than 60 million metric tons and transaction value of over 200 billion yuan ($32.34 billion), accounting for about 10 percent of the total steel traded in the country.

Wang Changhui, co-founder of Zhaogang.com, one of the leading steel e-commerce platforms in China, said his platform has about 40,000 monthly active users and they have created a huge database that can be used by other steel companies.

"The logistics cost of steel trading in China is much higher than in other countries," he said. "The platform will effectively cut logistics cost for steel traders by reducing intermediate links."

According to Wang, the platform had an average trading volume of about 3 million tons of steel every month. "We will provide reliable storage, processing, logistics and financing services for small steel traders, which will help them survive in the sluggish market," he said.

Nie Linhai, deputy director-general of the department of electronic commerce and information at the Ministry of Commerce, said China's e-commerce sector had embraced rapid growth in the past few years and it is time to consolidate the gains.

"E-commerce transactions have seen a 40 percent year-on-year growth from last year during the first quarter of this year. However, medium and small-scale steel companies still should do proper due diligence before they take the e-commerce route to avoid risks because innovation is easy to talk about but difficult to achieve," Nie said.

Gan Yong, vice-president of the Chinese Academy of Engineering, said taking the e-commerce route will help steel firms avoid the overcapacity situation and address low profitability concerns.

Closures, overseas investments illustrate plight facing local factories

Now is not a good time to be a Chinese factory owner. According to recent media reports, a growing number of local manufacturers are opening plants in the US as they seek to avoid the badge that comes with selling "Made in China" products.

Meanwhile, many other local factories are struggling with labor shortages, rising costs, overcapacity problems and thinning demand. In response to such pressures, low-end manufacturers are increasingly investing in Southeast Asia, where production costs are more competitive.

Both of these trends signal the need for change in China's manufacturing sector. Over recent decades, Chinese factories have become synonymous with low-quality, low-value-added products. Local manufacturers need to shake off this image by moving up the production chain. And with China's GDP slowdown weighing on the country's industrial sector, the need to advance is more pressing than ever.

According to reports, several of China's largest and historically most successful manufacturing enterprises have not been immune to the challenges brought by changing times. Silitech Technology Co, a major supplier for Nokia, has suspended production since November. At its peak, the Suzhou-based company had more than 10,000 employees, but has reportedly struggled since Nokia sold off its handset division to Microsoft last year.

In December, United Win Technology Co, also in Suzhou, Jiangsu Province, announced its closure due to a financial crisis. It had previously been a major supplier for Apple Inc and had also cooperated with Chinese smartphone brand Xiaomi. The company's closure is said to have left more than 2,000 workers unemployed.

Similar shutdowns are also said to be plaguing many of China's traditional manufacturing hubs - including Dongguan, Guangdong Province, and Wenzhou, Zhejiang Province.

Of course, not all of the worries facing factory bosses are bad. Improvements in Chinese labor laws have made workers more willing to fight for better pay and conditions. For instance, upwards of 2,000 workers at Yue Yuen, a shoe factory in Dongguan, reportedly protested recently in front of the company's gate for greater social security benefits. Yue Yuen is an assembler and producer for a host of big-name global brands, including Reebok, New Balance, Puma and Timberland.

But while China's manufacturing sector has been expanding at a rapid clip for decades, most local factories remain at the bottom of the technological food chain, where they subsist on rock-bottom unit pricing and outdated technologies. Without upgrades and reforms, producers will become even more marginalized. Those who cannot adapt will be weeded out by the market.

Chinese planners have suggested that the country's path toward a "new normal" pattern of development will necessitate greater innovation in the manufacturing sector. In a report issued Tuesday, research firm IDC described the agonies facing Chinese factory owners, while also putting forward predictions for the year ahead. During 2015, analysts at IDC foresee - among other things - the rise of intelligent factories, cloud computing and industrial robots (the latter of which could soon put many low-skilled Chinese workers out of jobs).

Chinese manufacturers will have to pursue these and other technological innovations if they want to stay in business. Fortunately, China is rapidly emerging as a research powerhouse. In 2012, the country overtook the European Union in terms of research spending as a percentage of GDP, according to a report issued in 2014 by the Organization for Economic Co-operation and Development.

The need to transform through innovation and research is particularly great among manufacturers focused on the highly competitive consumer market. If given the choice, many Chinese will purchase Japanese or South Korean-made goods. Such products typically carry high-price tags but are widely seen as being of higher quality than Chinese-made equivalents.

Chinese manufacturers need to focus especially on technologies that will help them become more specialized. They must also build brand value through higher-grade products. Ultimately, companies will have to choose development models that conform to their own conditions. Finding the right path forward won't be easy, but sitting still in changing times is a surefire way to fail.

China's machinery industry continued to expand in 2014 but at a softer pace due to sluggish domestic demands and piling inventories, new data showed on Wednesday.

The added value of the sector increased 10 percent year on year in the last year, slightly down from 10.9 percent in 2013, data from the China Machinery Industry Federation (CMIF) said.

Chinese machinery enterprises posted combined revenues from main businesses at 22.2 trillion yuan (3.62 trillion U.S. dollars), up 9.4 percent from a year ago. The revenues grew 13.8 percent in 2013.

Chen Bin, executive vice president of the CMIF, said the industry, still plagued by overcapacity, will likely continue to slow as they are confronted with weakening demands and fierce competition at home.

Haixin Iron and Steel Group, the largest private iron and steel enterprise in Shanxi Province, has started bankruptcy reorganization procedures, according to a local court on Monday.

The company, located in Wenxi county, had an annual steel output of five million tonnes and was ranked second only to Shougang Changzhi Iron and Steel Company, another state-owned enterprise, within the province. It is also the largest privately-owned company in Shanxi.

According to public data, the company recorded 10.46 billion yuan (1.71 billion U.S. dollars) in debt compared with 10.07 billion yuan in its account.

Production was suspended on March 18, due to industry overcapacity, a stagnant market, tightened credit and management issues.

In August, four lenders to Haixin filed bankruptcy plans to the Yuncheng Intermediate People's Court, aiming to reorganizing five companies within the group.

The remaking of China's manufacturing sector hinges on production with a higher degree of automation and artificial intelligence, experts said at a two-day manufacturing forum ended Saturday.

China's factory sector needs to undergo a gradual process of shifting away from its extensive reliance on labor, Luo Jun, CEO of the Asian Manufacturing Association, said on Friday at the Seventh Annual Conference of Asian Manufacturing Forum held in Weifang, East China's Shandong Province, as he advocated the modeling of Germany's implementation of "Industry 4.0."

The term Industry 4.0, first introduced at Hanover Fair in 2011, has since become the cornerstone of Germany's industrial strategy pushing for computerization of traditional industries including manufacturing.

With the application of new technologies in manufacturing, the Chinese economy will experience a new round of restructuring and recovery, Luo believes.

His comments mirror rising concerns over China's vast manufacturing sector, with recent data revealing worrisome prospects.

The official Purchasing Managers' Index (PMI), covering mainly big State-owned enterprises, edged down to 51.1 for August from 51.7 the month before, while the HSBC PMI, focusing on smaller private enterprises, shrank to a three-month low of 50.2 in August.

Experts also downplayed concerns about the replacement of manpower by automation and robots in the world's most populous country.

Speaking in an interview with the Global Times during the forum on Friday, Bernhard Thies, chairman of the Board of Directors of the DKE, the official German expertise center for electro-technical standardization, also said the application of automation and artificial intelligence that will be seen in China's industry sector will not cause big job losses.

A robotized factory sector expected in the future may weigh on the unemployment rate during a specific period of time, but it is unlikely to be a cause of sustained unemployment as new ideas and professions would be created to tackle job losses due to the prevalence of automation, according to Thies.

"I don't think it could really be a problem, because for the time being I believe that these new trends will still be [happening in] niche industries," Bernardo Calzadilla-Sarmiento, director of Trade Capacity Building Branch at the United Nations Industrial Development Organization, told the Global Times in an interview Friday, trying to allay fears of the predominance of machine over man.

But he noted that in the meantime the government should be responsible for designing policies and measures that would foster job-creating activities as well as sustainable and inclusive development of the factory sector.

China will close more steel and cement plants this year than originally planned to deal with overcapacity, the industry ministry said.

The nation decided to eliminate 28.7 million tons of annual steel capacity and 50.5 million tons of cement capacity this year, the Ministry of Industry and Information Technology said in a statement today.

That compared with an initial target of 27 million tons for steel and 42 million tons for cement as outlined by Premier Li Keqiang in his government report earlier this year.

The country's crude steel output rose to a record high of 779 million tons last year.

China has been phasing out old and inefficient capacity in its industrial sector as part of efforts to revamp its growth model and fight pollution.

The ministry also said 420,000 tons of annual aluminum capacity and 115,000 tons of lead smelting will be eliminated this year.

China's manufacturers had a mixed performance in March with state-owned companies reporting the first rebound in four months while private firms saw their business plunge to an eight-month low, two separate surveys showed Tuesday.

It was not a surprise that the survey results were divergent, analysts said, generalizing that China's economy remained on the soft side since the rebound was so limited in scale.

The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in China's state-owned industrial companies, ticked up to 50.3 in March from 50.2 a month earlier, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

A reading above 50 means expansion, and the latest rate was the first increase since November.

The components showed that production edged up to 52.7 in March from February's 52.6, while new orders rose 0.1 point to 50.6, and employment gained 0.3 points to 48.3. Input prices lost 3.3 points to 44.4, indicating little inflationary pressure for the future.

Zhao Qinghe, an analyst with the bureau, said the indices indicated a stabilizing industrial sector in the world's second-largest economy.

"Chinese manufacturers resumed their businesses after the Spring Festival holiday, which helped push up the official PMI," Zhao said. "The warming-up demand in external markets also bolstered the headline index, with new export orders returning to growth for the first time since December."

However, the HSBC PMI, which gauges conditions at mostly private and export-oriented manufacturers, fell to 48 in March, an eight-month low that was down from 48.5 in February.

It marked the third straight month that the HSBC PMI pointed to contracting activities.

Qu Hongbin, chief economist for China at HSBC Holdings Plc, said the latest deterioration was the strongest since July 2013.

"It confirmed the weakness of domestic demand conditions," Qu said. "This implies that the first-quarter economic growth is likely to fall below the annual target of 7.5 percent."

Li Maoyu, an analyst at Changjiang Securities Co, said China's activities were on the soft side even through the official PMI staged a slight rebound. "The increase in the official PMI was so weak that it can't defy the economic slowdown which was evident in many sectors."

Employees who toil long hours for low wages at the Chinese factories that assemble the iPhone are part of the dark side of the country's rush to urbanization.

“Apple City,” where the Foxconn factories build the iPhone and other products for California-based Apple, is a strange new town, a patchwork of defaced countryside and overpopulated urban areas on the outskirts of southern Zhengzhou.

When the Taiwanese company Foxconn’s factories and their 300,000 workers established themselves here in the capital of the Henan province two years ago, the area was deeply disrupted by a chaotic urban boom. Some villages were destroyed, others were pierced by four-lane avenues, and corn fields are still surrounded by contruction sites.

In Dazhai, one of the villages at the edge of the immense square factory buildings, farmers just finished hastily building three-story, cube-shaped brick towers that offer “standard rooms, with hot water and Internet.” The little streets between them, paved with poor-quality concrete or simply covered with clay, are swarming with young people.

Needless to say, the village landlords are very happy. “Business is running smoothly,” murmurs a slightly stout woman whose family rents 62 rooms, each for for 600 yuan ($100) a month.

Apart from the few workers unwilling to stay in the dormitory or who live with their partners, these slumlords put up the thousands of employees and students attracted by this sweat economy with tiny profit margins and fierce competition. Though they are underpaid, Foxconn employees do spend in the local economy. But already, the barracks are in a pitiful state.

Apple City is in the early stages of urbanization, where nothing is made to last, with inadequate infrastructure and poor-quality material. “It seems like a joyful place after work with lots of young people,” says Liu Yang, a 27-year-old man from Sanmexia, a town bordering the Yellow River west of Zhengzhou. “Everybody has fun, but don’t go by appearances.”

Liu is distraught by this incredible concentration of young proletarians left to their own devices. He himself had become a supervisor at Foxconn and had managed to save a little nest egg, but he tried to start a business and lost everything. He’s now back at square one as an unqualified worker.

Inside the factory, discipline is sacred. But off duty, the law of the jungle prevails. In other words, the workers can’t rely on the police or on security forces to help them if they have a problem. A small mafia network is sucking the lifeblood out of the most fragile ones.

What, you don’t want to work here?

Perhaps unsurprisingly, Foxconn is having trouble recruiting workers. Xiao Bing, a former employee who owns a small recruitment agency, complains about how difficult it is to find “clients.” At best, he finds one or two per day. To interview, applicants need only an ID card. The maximum age of candidates was raised from 35 to 40, because people “are in constant transit,” he says.

One worker, 36-year-old Wang, a strong man with short graying hair, says he initially wanted his wife and son to come here and join him. “But it’s unthinkable,” he says. He comes from a rural area in the north of the province, where he left a steel mill job he found was too “hard” and “dirty.”

It didn’t take him long to become disillusioned at Foxconn. For starters, the dormitory is an hour away by bus and costs him 900 yuan ($150) a month, food included. Without extra hours, he is left with 1,000 yuan ($165 dollars) after tax per month, less than at the steel mill, where he earned 3,000 yuan monthly for eight-hour workdays. “They’re robbers,” he says of his new employer.

Wang’s crushed hope is telling. By bringing factories closer to pools of workers — such as in Henan, a poor province with close to 95 million inhabitants — industrial relocations were supposed to facilitate the urbanization of local migrants. But for these young workers, ending up in a dormitory in their region of origin tastes more like defeat than social promotion.

“I earn less here than I did working in electronics in Shanghai in 2008,” Xiadeng says angrily as he sits on the upper mattress of a bunk bed in the room he shares with five other workers. And these living conditions don’t exactly encourage job retention.

And yet, the airport economic zone in which Foxconn is located is undergoing a massive administrative reorganization. Established in 2013 as a new district of Zhengzhou, its population is expected to rise from 600,000 to four million.

Citizens in transit

The goal for the zone is to “avoid being too dependent on Foxconn and to vary the types of industries,” explains Liu Shaojun, professor of urbanism at Zhengzhou University. Five years from now, some villages will have been razed and absorbed by the suburbs. Their population will have been relocated. There will also be social housing, but not for those who work at Foxconn. “For that, they would need to have the same rights as people who live in the city, but they move too much,” he explains.

Indeed, Foxconn employees are officially still living in their hometowns because none of the numerous localities situated around the factories would be able to legally integrate that many new inhabitants in one go. Besides, those villages, where the land is owned collectively, are self-managed. The inhabitants, who are responsible for the infrastructures, don’t care about urban rationality or the environment. Only profits matter.

This ecosystem enables Foxconn to build iPhones at an enviable cost. “Quality” urbanization promoted by Chinese leaders is not a consideration for Foxconn or for the local authorities. “The dominant approach in China is very pragmatic,” explains Chinese studies expert Chloé Froissard. “Big cities integrate those they’re interested in, who have qualifications or take care of themselves. There is no logic of welfare state or of equal rights.”

In the karaoke rooms set up in the cellars of the dormitories, the young workers maintain that they have no intention to rot in Apple City. Of course, they would like to live in Zhengzhou, but their priority is to save money before trying to obtain an urban “hukou” (China’s domestic passport and household registration system). They are frightened of unemployment.

“If there’s no more work, I'll have nothing left,” says Liu Yang, the former supervisor. “At least with my hukou, I’ll always have a piece of land.” In the meantime, like hundreds of thousands of others, he will have to make do with being a citizen in transit.

Philips has officially opened its center for the development and production of advanced lighting technologies in Chengdu, providing it with a second regional base of operations in China.

The Philips LED Lighting Demonstration Park was opened in the Chengdu Hi-Tech Development Zone in the Sichuan provincial capital city, with the formal opening ceremony taking place on Dec 20.

Covering an area of about 40,000 square meters and with an investment of about $34 million, the park includes a manufacturing center for LED lights and a lighting application center.

The manufacturing center will mostly produce professional outdoor and indoor lights and be focused on providing local and global customers with highly customized lighting solutions.

The lighting application center covers 7,000 square meters and boasts Philips' most advanced lighting technologies and solutions.

It is modeled on "a mini smart city", exhibiting the effects of lighting through real-life scenarios, both outdoor and indoor. It recreates urban environments such as the home, office, hotel, supermarket, clothing store, street and urban landscape.

All lighting systems in the center can be smartly controlled and managed with an advanced lighting control system, with the aim of simultaneously achieving optimal visual effects and energy efficiency.

"The park reflects our commitment to Chengdu as the second regional headquarters of Philips in China. It is also a part of the execution of our 'home market' strategy — establishing China as one of the key innovation and operation hubs for Philips' global value creation," said Patrick Kung, CEO of Philips Greater China, at the opening ceremony.

In June 2011, Philips signed a memorandum of understanding for strategic cooperation with the Chengdu Hi-Tech Development Zone management committee, agreeing the establishment of the company's second regional headquarters in Chengdu.

The company's aim was partly to extend its operations further into central and western China, part of a plan to implement a localization strategy in China, including the deployment of talent and the creation of marketing channels.

In 2011, when the deal was signed, Yuan Zongyong, deputy director of the Chengdu High-Tech Development Zone's management committee, praised the decision to establish an operations center in Chengdu.

"Against the backdrop of China's Go-West Strategy and global industrial restructuring, the Chengdu High-Tech Development Zone is attracting increasingly more internationally famous companies with its advantage in technology, skilled workers, its regional position, market, transportation and costs," Yuan said.

Philips, which has its international headquarters in the Netherlands, opened its first regional headquarters in China in Hong Kong, but later moved operations to Shanghai.

Workers assemble heavy equipment at a factory in Qingzhou, Shandong province. A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged down to 50.5 in December from 50.8 in November, the lowest level since October, HSBC Holdings Plc said in a report.

Preliminary manufacturing PMI shows weaker growth in December

China's manufacturing sector will likely see the slowest expansion in three months in December because of lower output growth, HSBC Holdings Plc said on Monday.

A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged down to 50.5 in December from 50.8 in November, the lowest level since October, the bank said in a report.

The production output sub-index slipped to 51.8 in December from 52.2 in November, pressuring the index.

Meanwhile, the new orders sub-index hit a nine-month high of 51.8 in December, compared with 51.7 in November, while the new export orders sub-index rose to 50.3 from 50.2 last month, suggesting stable market demand.

A reading above 50 indicates expansion, while one below that level signals contraction.

The official PMI data for December will be released on Jan 1 by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. HSBC will release its final PMI data on Jan 2.

Qu Hongbin, chief economist in China at HSBC, said that although December's preliminary manufacturing PMI reading slowed marginally from November's final reading, it still stands above the third quarter's average reading of 49.7.

The latest reading implies that the manufacturing sector's recovery, which started in July, is still holding up, Qu said.

He believes that China's GDP growth will stabilize at about 7.8 percent year-on-year in the fourth quarter.

Zhang Zhiwei, chief economist in China at Nomura Securities Co Ltd, said that the slowdown in the PMI data "suggests that growth momentum has started to weaken".

"This trend is likely to continue in the first half of 2014, as market interest rates keep rising and pushing up financing costs for enterprises," said Zhang.

Figures from the central bank showed that new loans came in at 625 billion yuan ($103 billion) in November due to stronger retail and short-term corporate loans, rebounding from 506 billion yuan in October. Off-balance sheet lending saw a broad-based recovery to 377.9 billion yuan in November from 184 billion yuan in October but was still below the August-September levels.

A report from Barclays Capital said that short-term bill issuance has increased, as rising funding costs have probably led companies to rely more on short-term financing.

According to the NBS, industrial output growth in November slowed to 10 percent year-on-year from 10.3 percent in October, which may indicate that the GDP growth rate in the last quarter may be at 7.6 to 7.8 percent, compared with 7.8 percent in the third quarter and 7.5 percent in the second, analysts said.

Electronics giant Apple Inc said on Thursday it has sent independent medical experts to one of its major contractors in China amid accusations that bad working conditions led to several workers' deaths.

"We are deeply sad about the deaths of laborers at Pegatron and have commissioned independent medical professionals from the United States and China to conduct probes since last month," Apple said in a statement.

"While they have found no evidence of any link between the deaths and working conditions there, we realize that is of little comfort to the families who have lost their loved ones."

It added that Apple has a "long-standing commitment to providing a safe and healthy workplace for every worker in our supply chain", and the company has formed a team to work with Pegatron Technology Co at the contractor's plants to ensure that "conditions meet our high standards".

Pegatron, a Taiwan-based manufacturing company that supplies Apple, Sony and Dell, confirmed on Wednesday that four workers at its Shanghai factory, which has nearly 100,000 employees, had died of diseases.

The announcement came after New York-based advocacy group China Labor Watch said on Monday that several workers at Pegatron's Shanghai plant "passed away in a short period of time", Bloomberg reported on Thursday.

Bloomberg cited a statement from the labor rights group as saying that among the dead was a 15-year-old worker who died of pneumonia on Oct 9 at a Shanghai hospital.

The Taiwan company said in a statement that "Pegatron has strict measures in place to verify workers' ages before and after they are hired, and we work with health and safety experts to provide a safe working environment for each and every worker".

The young worker who died in October used his 21-year-old cousin's identification to apply for the job, Pegatron said, adding that the factory did not know he was underage.

This is not the first time Pegatron has been targeted by China Labor Watch.

In July, the organization said it found at least 86 violations at the Pegatron factories in Shanghai and the neighboring city of Suzhou.

The violations included demanding employees work 66-69 hours a week, beyond the legally required 49-hour maximum, without overtime being paid.

Pegatron was also accused of using underage workers as interns who worked the same long hours at the factories.

However, Feng Xiliang, a labor rights expert at Capital University of Economics and Business, told China Daily that many workers at electronics companies are willing to work overtime because they want to earn more money.

"Regular wages at most plants that manufacture electronics products are usually low so those young workers must work longer to earn more," Feng said, adding that the younger generation of migrant workers has stronger awareness of its rights and is calling for a more powerful labor union to protect its interests.

"Consequently, Apple and its suppliers have been improving their performance in the labor rights field because they don't want to project a negative image to consumers."

Wang Kan, a researcher in labor rights at the China Institute of Industrial Relations in Beijing, added that working conditions at Apple's contractors are much better than those at many other electronics factories.

"Compared to the time when Steve Jobs managed the company, Apply now is paying more attention to its image in consumers' eyes when it comes to labor rights," Wang said. "I am not saying it is perfect, but it is fair to say that the company has improved substantially in this regard."

Wang said most underage young people working at manufacturing plants are students sent by vocational schools as interns, and are prone to working with hazards due to loopholes in laws.

"Education laws and regulations do not cover their internships at factories, while labor codes do not categorize them as employees," Wang said.

Manufacturing on the mainland grew more last month than analysts estimated, indicating the economic recovery is sustaining momentum amid government efforts to rein in credit growth.

The purchasing managers' index was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday.

The reading was the same as in October, which was an 18-month high, and exceeded 24 out of 26 estimates in a survey.

Stability in manufacturing growth in the world's second-biggest economy may give Premier Li Keqiang more room to implement policy changes laid out after a key meeting of top Communist Party leaders last month.

While industrial investment is picking up and retail sales have increased 13 per cent so far this year, the mainland faces headwinds that include industrial overcapacity, excessive corporate debt and slower export demand.

"This is good news for policymakers, as the expected slowdown in growth appears pretty mild," said Shen Jianguang, the chief Asia economist at Mizuho Securities Asia in Hong Kong.

"As policymakers can be assured of growth over 7.5 per cent, the attention is now firmly on reform."

The stock market's Shanghai Composite Index rose 3.7 per cent last month, the biggest monthly gain since August, on optimism that the reform package outlined on November 15 will bolster the economy and corporate earnings.

Economists estimate growth in gross domestic product will slow to 7.5 per cent next year from 7.6 per cent this year. The government set a target for 7.5 per cent expansion this year, and Li said in October annual growth of 7.2 per cent was needed to keep unemployment stable.

The PMI figure contrasts with a decline to 50.4 from October's 50.9 in the preliminary reading of a separate gauge from HSBC and Markit Economics released on November 21, the final number for which is due tomorrow.

Numbers above 50 signal expansion in manufacturing, while those below point to a contraction.

The PMI for large companies in the official report rose to 52.4 from 52.3 in October, the highest level in 19 months, while the gauge for small companies slid to 48.3 from 48.5, the statistics bureau said.

"It's clear that the improvements are coming from the big enterprises, and there's little improvement in the structure" of demand, said Hu Yifan, the chief economist at Haitong International Securities in Hong Kong.

"Small companies will only recover when the overall macroeconomic situation recovers, once the economy starts to push from the bottom."

The PMI survey from the statistics bureau is based on responses from purchasing managers in 3,000 manufacturing companies. The HSBC survey is based on responses from managers at more than 420 businesses, and is weighted towards smaller private companies.

A gauge of output in the official survey rose to 54.5 from 54.4 in October, and an index of employment rose for a second month to 49.6, the highest level since March.

A measure of new orders declined to 52.3 from 52.5, and a gauge of new export orders increased to 50.6 from 50.4.

The education authority in Shaanxi province has ordered a college that sent student interns to Foxconn to revise its cooperation agreement with the company to better protect students.

Hui Chaoyang, director of the provincial education department, said the department has found problems with the management of the work experience activities of Xi'an Technological University's North Institute of Information Engineering.

They alleged the college forced students to take internships in one of the Taiwan-based electronics giant's factories in Yantai, Shandong province. Some interns were made to work overtime on the assembly line.

Hui said the college did not offer other work experience options for students.

Some of the work was not in line with the objectives of the students' professional training, Hui said. For instance, students majoring in finance and accounting were also put to work on assembly lines.

The official added that some students were also required to work much harder than expected.

The college decided on Sunday to suspend its cooperation agreement with Foxconn and around 1,000 students working for the factory will return to school by Wednesday, said Zhang Jun'an, president of the college.

Zhang said the school started cooperating with Foxconn's Yantai plant in 2010 and has sent students there every summer vacation.

Zhang acknowledged the school received 100 yuan ($16) per student from Foxconn as a management fee if the student worked in the factory for two months.

"The amount of the management fee in 2012 was some 70,000 to 80,000 yuan and in 2013 reached more than 100,000 yuan. Our school used the money for student activities such as teaching contests and sports games," Zhang said.

Students also earned some wages for their work.

In the past three years of cooperation with Foxconn, the school also received financial support from the company to establish scholarships and teaching awards to encourage excellent students and teachers, and for the construction of a laboratory. The financial support totaled more than 300,000 yuan, Zhang said.

This summer vacation, more than 5,000 students from the institute were sent to Foxconn's Yantai factory from late July to late September.

A student surnamed Li told China Daily she had to work more than 10 hours a day on the assembly line pasting labels on recording pens.

"The work was hard and boring, and we do not think such so-called work experience made any sense," the student said.

Another student surnamed Wang said they were required to take part in the work experience activities as this gained them six academic credits toward their diplomas.

Foxconn admitted last week that its Yantai factory forced the students to work overtime and on night shift, which broke the company's rules, and vowed to resolve the problem.

From 2009, cases of students from Chongqing and Jiangsu, Shanxi and Shaanxi forced to work in Foxconn have been reported regularly and people suspected the students are used to tackle the company's labor shortage.

Shi Ying, deputy director of Shaanxi provincial academy of social sciences, said such work experience for students was justified and essential but arranging overtime for the students broke Chinese labor law.

The HSBC China Composite PMI data, which covers both manufacturing and service sectors in the country, signaled a further expansion of output in September, and the rate of expansion remained modest, with the index posting at 51.2 in September, easing from 51.8 in August, HSBC said in an emailed press release here on Tuesday.

Manufacturers reported a further increase in order book volumes last month, however, the rate of increase was unchanged from August's marginal pace, the report said. Meanwhile, at service providers, new order growth slowed from August, but was nonetheless marked.

Employment levels at Chinese manufacturers declined for the sixth month in a row in September, and the rate of job shedding was moderate and broadly unchanged from August. In contrast, staffing levels increased at service providers, following a reduction one month previously.

The input costs faced by manufacturers increased at the fastest rate since February. Service providers also reported higher input costs, though the rate of inflation was modest and below-trend. Both manufacturers and service providers passed on higher input costs to clients by raising their output prices in September. The rates of increase were modest across both sectors.

Service sector firms operating in China expected activity levels to be higher in one year's time. However, the degree of positive sentiment was the second-weakest in the series history.

Qu Hongbin, Chief Economist, China and Co-Head of Asian Economic Research at HSBC said China's services activity growth appears to be stabilizing at a faster pace than in the second quarter and this led to a renewed expansion of employment from the contraction in August.

"Combined with the gradual improvement of the manufacturing PMI, the Chinese economy is still on the way to a modest recovery. But a more consolidated and sustainable recovery requires structural reforms," he said.

Foxconn, the electronics contract manufacturing firm that supplies products to Apple Inc. (NASDAQ: AAPL) and many other companies, is facing yet another controversy over its labor practices.

The Taiwan-based company has recently admitted to violating its own rules by employing student interns for overtime and night shifts at their factories.

Students from a university in Yantai, located in the northern coastal province of Shandong, have come forward to Chinese media claiming that more than a thousand of their classmates have been working illegal overtime hours at a nearby Foxconn factory helping in the production and packaging of the soon-to-be debuted Sony (NYSE: SNE) PlayStation 4 gaming console. Sony has confirmed that Foxconn is manufacturing the PlayStation 4, but did not confirm if they were made at the Yantai location.

“There have been a few instances where our polices pertaining to overtime and night shift work were not enforced,” Foxconn said in a statement. “Immediate actions have not been taken to bring that campus into full compliance with our code and policies.”

The students were essentially forced to work at the factory in order to fulfill their credit requirements to graduate. According to a report by Hong Kong’s Oriental Daily newspaper, the class of engineering students at the Xi’an Institute of Technology was told that participation in the internship at Foxconn was “necessary” if they wanted to receive six credits that would make them eligible to graduate on time. Foxconn said that the company has internship programs set up in various locations in China, but insisted that the experience is intended to give students an “opportunity to gain practical work experience and on-the-job training that will support their efforts to find employment following their graduation.” According to Quartz, the “internships” included performing such tasks as gluing parts together, applying stickers and boxing up accessories, earning students the same wage as entry-level employees.

Foxconn has a long and troubling history of labor woes. Just last year, the same factory that the university students have come forward about admitted to temporarily hiring under-age interns, some of whom were as young as 14 years old.

In 2010 Foxconn was under investigation after a string of factory-worker suicides (largely due to overwork and poor working conditions) drew attention from labor rights activists and the global media.

The latest allegations came just days after Foxconn CEO Terry Gou made a statement about the lack of young people interested in factory jobs. Talking to a delegation at the Asia-Pacific Economic Cooperation (APEC) Forum in Bali, Indonesia, Gou lamented on how China’s young workers were no longer lining up to work on an assembly line and instead were more interested in finding jobs in the technology or service sectors.

Taiwanese electronics giant Foxconn, which assembles products for companies such as Apple, Sony and Nokia, admitted Friday that student interns had worked night shifts and overtime at one of its plants in China in breach of its owns labor rules.

The embarrassing admission came after Chinese media reported last year that students from a university in the central city of Xian were allegedly forced to join Foxconn’s internship program at its Yantai plant in the eastern province of Shandong.

Instead of doing work related to their major, the information engineering students claimed they were assigned to assembly lines to make Sony’s PlayStation game consoles and were forced to toil for up to 11 hours a day.

More from GlobalPost: Foxconn to open American factories?

They were allegedly told they wouldn't graduate if they quit.

"Regarding the internship program at our Yantai campus, we have determined that there have been a few instances where our policy pertaining to overtime and night shift work were not enforced," the company said Friday.

"Our priority is to protect the rights of all workers and interns, and we will continue to monitor the program closely to ensure that such infractions are not repeated.”

Foxconn, which has been under the spotlight after a series of suicides and labor unrest at its Chinese plants in recent years, previously admitted employing underage interns at the Yantai factory.

Electronics manufacturer Foxconn, which became notorious after a string of workers’ suicides in 2010, has admitted that student interns worked overtime and night shifts at a factory in northeast China in violation of company policy.

Students told Chinese media that more than a thousand of their classmates worked on basic tasks such as putting together and packaging parts for Sony’s forthcoming PlayStation 4 consoles. The college programme at the factory in Yantai, Shandong province, was a graduation requirement, they said.

The admission is a blow to the Taiwanese company most famous for assembling Apple products, and comes in the same week as Terry Gou, its founder and chairman lamented that young Chinese are shunning monotonous, low-paid assembly line jobs.

The same factory last year admitted to having temporarily hired underage interns.

“There have been a few instances where our policies pertaining to overtime and night shift work were not enforced. Immediate actions have been taken to bring that campus into full compliance with our code and policies,” said Foxconn in a statement.

Foxconn have not confirmed or denied that they make the PlayStation 4 at Yantai. Last year, it said the factory did not produce Apple products. Sony confirmed that Foxconn is assembling the PlayStation 4, but did not specify at which factory.

The Taiwanese company, listed in Taipei under the name Hon Hai Precision Industries, last year found that students as young as 14 had been working at the Yantai campus for a few weeks. It pledged at the time to investigate how workers younger than the minimum age of 16 came to be working at the plant.

Foxconn and other contract manufacturers regularly employ students as temporary workers to give the students a chance to gain skills. The programmes are sometimes criticised by labour activists, who say the students often make up for staff shortages and are not offered meaningful training.

Under Foxconn’s policies, interns are not allowed to work overtime or nights and have the right to leave the programme at any time.

As part of its work with the Fair Labor Association – independent inspectors brought in by Apple to audit some Foxconn factories, not including the Yantai facilities – Foxconn has also pledged to ensure that interns’ work matched their educational programmes, according to FLA’s report on its work.

Analysts and news reports in Taiwan and mainland China indicate that other electronics manufacturing companies have been facing staffing shortages as production on new popular products such as the iPhone 5c and 5s ramp up and distributors stock up ahead of the winter holiday season.

Pegatron, which manufactures for groups including Apple and Sony, has been facing “severe” staffing shortages near its Shanghai factories, said analysts at Nomura in a recent note.

Foxconn may not be in the news like it once was, but not for lack of woes, it seems. The company revealed that a major fight erupted Thursday at a Foxconn campus in eastern China, and the firm says 11 people were injured. The fighting reportedly started as workers drank to mark a public holiday, the Mid-Autumn Festival. Pictures on social media show dozens of shirtless men carrying pipes and sticks, the Wall Street Journal reports. Unconfirmed reports say three people died, and ZDNet puts the number of those injured badly enough to require hospitalization at 27.

The company characterized the feud as "of a personal nature," but ZDNet reports a conflict between provinces. The tech site says more than 200 armed workers from Guizhou province targeted dormitories at the Yantai campus, in Shandong province; they reportedly chanted, "Beat all that are from Shandong." Either way, labor activists are speaking out after a summer that, the Journal notes, saw 183 strikes and protests at Chinese factories in general; that's double last year's tally. "Large-scale fights simply do not break out at well-run factories with a contented and well-paid workforce," says one activist. The fight comes nearly a year to the day after a massive riot at another Foxconn factory.

Innolux Corp aims to increase the penetration rate of its touch panels used in notebooks and all-in-one PCs to 50 percent next year, a company executive said yesterday.

Only a very small portion of PCs worldwide are currently equipped with touch panels because of their high price and unattractive Windows 8 operating system, Innolux said.

It believes about 10 percent to 15 percent of notebook computers around the world will have touch screens at the end of this year, Innolux said.

To boost the penetration rate, the world’s No.4 LCD panel maker has developed low-cost touch screens by integrating touch sensors and LCD glasses, Jeffrey Yang, an associate vice president, told reporters during a touch screen trade show in Taipei.

Innolux plans to begin shipping the new low-cost touch screens later this quarter and expand its monthly output to around 200,000 units next quarter, Yang said. The low-cost screens are made on one-glass-solution technology, he said.

Innolux installed a new production line in a Chinese factory to produce the screens and is working to overcome a labor shortage problem to increase the factory’s output, Yang said. The company plans to recruit 3,000 workers, he said.

However, Harris Po, an analyst with local research firm Topology Research Institute, is less optimistic, saying Innolux’s target was “too aggressive.”

“It could only be reached after touch screens become standard products, which can help drive the cost of touch screens to an affordable level,” Po said.

Local rival AU Optronics Corp, which is showcasing 19.5 inch and 21.5 inch touch screens at the touch screen show, has predicted that about 20 percent of its notebook computer panels will be touch screens at the end of this year.

Yang said the company is also set to ship new energy-saving touch screens using Indium Gallium Zinc Oxide (IGZO) technology by the end of this year.

As an IGZO screen only consumes one-third the power that average LCD screens consume, an “IGZO [panel] is important for tablets,” he said.

IGZO panels have been under the spotlight amid growing speculation that Apple Inc will have its new-generation iPhone, iPad and Macbook laptops equipped with the screens.

Japan’s Sharp Corp is the major IGZO panel manufacturer.

Innolux, which holds a 70 percent global share of the 4K2K TV panel market, expected 50 percent of its TV panels would be such ultra-high-definition panels next year, up from 10 percent estimated for this quarter, Yang said.

The company plans to more than double its output of 4K2K TV panels to 500,000 units a month by the end of this year, from 200,000 units currently.

Separately, Innolux and AUO yesterday said they did not plan to lower factory utilization because they expected demand to return soon, driven by the holiday shopping season in October in China, shopping for Christmas shopping in the US and Europe and then the Lunar New Year demand from Asia.

Innolux has seen demand recover this month and expects customers’ inventories to return to normal next month.

“We hope to keep our equipment loading rate at a stable and reasonable level,” Innolux spokesman Lin Chen-hui said. “The fourth quarter will be a better period than the third quarter.”

The company plans to maintain a factory utilization rate of more than 90 percent this quarter and next quarter, Lin said.

The plan to import 330 labourers for the Mai Po railway tunnel has come under fire by the unions who charge that the move would help bosses suppress the wages of local workers.

The Labour Department recently approved an application by the contractors of the high-speed rail link between West Kowloon and Shenzhen to bring in 330 people who have been working on the mainland section of the line to fill the job vacancies.

The chief executive of the Confederation of Trade Unions Mung Siu-tat said the "so-called" vacancies were created by the contractors suppressing the wages for the jobs.

"The job vacancy was such a lie," said Mung, adding that data from the Census and Statistics Department showed the unemployment rate in the construction industry was 6 per cent in the first quarter of 2013, which was almost double the city's overall unemployment rate of 3.4 per cent.

A department spokesman said the government would consult relevant unions before it decided whether or not to approve the import of non-local workers.

But Mung said his union was not consulted or informed until the authority officially approved the plan earlier this month.

Another unionist said the contractors had failed to recruit local workers for the project because they were offering a salary much lower than the average rate in Hong Kong.

Wong Wai-man, chairman of the Bar-bending Industry Workers Solidarity Union said employers were offering bar benders and steel fixers HK$1,076 a day, which is about 30 per cent less than the average of HK$1,514.

Wong said he was worried that importing the non-local workers would create a vicious cycle in the industry.

"The wages will stay low. Young people will then be reluctant to become a construction worker. In the end there will seem to be more job vacancies, and the employers will have more excuses to import workers."

Foxconn reportedly is looking to recruit more than 90,000 workers for its Shenzhen factory, putting more question marks on the company's previous plan to deploy 1 million robots by 2014.

According to a Yi Cai report Friday, the Taiwanese electronics manufacturer is beefing up its pool of skilled workers. It cited a staff at Foxconn's Shenzhen recruitment center who declined to be named: "We are keeping things very low-key during this recruitment drive."

The latest development follows another massive recruitment exercise for its inland factory in Zhengzhou earlier this year, which seems to contradict Foxconn CEO Guo Taiming's plan to replace manpower by installing 1 million robots across its factories.

"There are huge hurdles if Foxconn wants to push forward its 1 million robot plan," a robotics technology provider for Foxconn noted in the Yi Cai report. He estimated Foxconn probably installed fewer than 100,000 robotic pieces since Guo shared his vision for factory automation in 2011, with plans to increase the company's robot count by 100-fold from 10,000 to 1 million by 2014.

The source from Foxconn said the company needed more time to push forward the automation process and, for the time being, would choose the comparatively cheap labor in mainland China as its first choice.

Apple is reported to be hiring over 200 people in China and the hiring will be across environmental affairs, security and in its retail segment.

On its LinkedIn page for China the iDevice giant is ramping up its employee base, writes Wall Street Journal’s Digits Blog. In past few years the iPhone and iPad maker has been hit hard. Environmental activists have filed complaints frequently claiming its China-based manufacturing facility harms the environment. Foxconn is the largest manufacturing partner of Apple in the country and has suffered such complaints too.

Apple has lately come forward in improving the environmental-friendliness at its manufacturing partners including Foxconn and has regularly updated them of the efforts taken in those areas.

Digits blog writes further the environmental affairs program manager of Apple would be working out in Beijing to “ensure that Apple’s products and processes meet and surpass regional and national environmental regulatory requirements.”

The iDevice giant wants to recruit reliable and perfect employees in those positions to the earliest. About the other disciplines there are no words from either Apple or its manufacturing partners as of now.

Chinese manufacturing remained weak last month with SME businesses suffering a bigger share of the pain, two surveys showed today.

The official China Federation of Logistics and Purchasing's manufacturing index strengthened slightly to 50.3 from June's 50.1.

Separately, the private HSBC purchasing managers' index fell to an 11-month low of 47.7 from 48.2 in June.

Any reading over 50 signals expansion in a sector, while a figure under 50 signals contraction.

The unexpected rebound in the official survey offered a glimmer of hope that China's slowdown is stabilising. But analysts warned that it was still too early to conclude a decisive growth rebound because the pickup "is still far too modest.

The results also reflect how China's small and medium-sized private enterprises, which analysts say make up a bigger share of HSBC's survey, are more vulnerable to efforts to tighten up lending as well as to slumping global export demand for toys, clothing, electronics and other manufactured goods.

China's big state-owned companies have easier access to bank loans and hardly compete in export markets.

The HSBC report, covering 420 companies, said output at Chinese manufacturers fell as total new orders dropped at the sharpest rate in 11 months because of a decline in new business in both China and overseas. Export orders fell for the fourth month in a row, though at a slower pace.

Exporters said that new sales to Europe, Southeast Asia and the US fell from June. Chinese manufacturers also shed jobs at the fastest pace in four years.

The federation's survey of 3,000 businesses, meanwhile, found production, new orders and most other sub-indicators moved higher. New export orders improved but remained below an index reading of 50 last month.

Fallout from China's manufacturing slump may be felt globally, as declining orders result in less demand for commodities from countries such as Australia and Brazil and for industrial components from Southeast Asia, Taiwan and South Korea.

China has recorded five quarters of growth below 8% in a row - a substantial economic cooling for a country that previously grew at double-digit rates. Analysts said the survey results indicate smaller private companies may still be feeling the effects of a credit shortage that began in June as Chinese regulators try to rein in a lending boom over fears it could race out of control.

The credit crunch caused interest rates on loans between banks to spike to a record high. China's central bank wants to tighten lending standards, which should reduce risk but is likely to reduce financing for private businesses that generate China's new jobs and wealth.

Trading in shares of China Rongsheng Heavy Industries Group Holdings Ltd (1101.HK), China's largest private shipbuilder, was suspended on Thursday in the wake of media reports that said it had laid off 8,000 workers in recent months.

The company, suffering from a downturn in the global shipping industry as well as China's own economic slowdown, said it had sought the suspension pending clarification of the news articles, according to a filing to the Hong Kong stock exchange.

No further details were available and China Rongsheng declined to comment, but analysts said the company's balance sheet was under pressure. On Wednesday, its shares closed down 10 percent at HK$1.06.

China's shipbuilding sector has struggled and consolidated since a major shipping market slump in 2008 that saw shipping orders shrivel.

Local media reports said a large number of small to mid-sized shipping firms went bankrupt during the past year due to major overcapacity in Chinese shipyards and the economic slump.

The holding orders of Chinese shipyards dropped 23 percent in the first five months of this year compared with a year earlier, according to the China Association of the National Shipbuilding Industry. New orders meanwhile dropped to a seven-year low in 2012.

"The problem is that their order-books are now running down, creating massive over-capacity," said Singapore-based Vincent Fernando, an analyst with Religare Capital.

"Moreover, Rongsheng has been suffering due to a major receivables past due problem, thus liquidity is a major concern. I think they are being forced to slash their workforce due to the extreme circumstances the company finds itself in."

The Wall Street Journal said the job cuts at China Rongsheng represented some 40 percent of the firm's workforce. The cuts sparked protests by workers earlier this week, according to media reports.

A company executive told The Wall Street Journal the layoffs were not a sign of financial distress but the result of a restructuring aimed at making more specialized vessels used in the offshore oil-and-gas industry.

China Rongsheng is a major supplier of bulk carriers that ship iron ore from producer nations such as Brazil to China. Brazil's Vale (VALE5.SA) is one of its customers.

"We expect a continuing deterioration in the balance sheet given weak overall demand growth for bulk vessels, Rongsheng's core product," Barclays analyst Jon Windham said in a report.

ECONOMIC DOWNTURN

China's economic downturn is shaping up to be the worst in at least 14 years, with growth possibly missing Beijing's 7.5 percent target this year.

And an unprecedented cash crunch in China's financial markets last month, which saw interest rates briefly spike to record highs, may further drag on the economy.

According to its December 2012 annual report, issued on March 26, China Rongsheng's cash and cash equivalents fell to 2.1 billion yuan ($342.53 million) from 6.3 billion yuan a year ago. It had borrowings of 16.26 billion yuan that were due in less than a year, said the report, the latest financial statistics available on the company's website.

In the annual report, the company said it had "significant" cash outflows since some customers had sought to delay the delivery of new vessels.

Indeed, receivables pending for more than six months rose to 83 percent from 21 percent a year ago, the annual report said.

The industry slowdown was also taking its toll on sales, with inventory turnover up to 136 days from 73 days.

"Short term debt is seven times cash resources. That to me is a liquidity red flag. Industry conditions are terrible, freight rates have been low for the past 2-3 years and ship owners are behind on payments," said a Hong Kong based analyst who declined to be identified as he is not authorized to speak to media.

China Rongsheng is the country's largest private shipbuilder by accumulated order books. It is based in eastern Jiangsu province, near Shanghai, and went public in Hong Kong in 2010.

It posted a net loss of 572.6 million yuan ($92 million) in 2012, its worst-ever, despite receiving government subsidies of 1.27 billion yuan.

WILL GOVERNMENT HELP?

The Chinese government has been trying to support the domestic shipping industry since the 2008 financial crisis, and local media reports said this week Beijing was considering policies to revive the shipbuilding business.

The shipping industry downturn cut new ship orders for Chinese builders by about half last year.

Underscoring China's employment challenge, growth in the country's vast factory sector slowed to multi-month lows in June on faltering new orders.

The official purchasing managers' index (PMI) showed a sub-index measuring employment dropped slightly to 48.7 in June from 48.8 in May. A HSBC survey showed factories shed jobs last month at the quickest pace since August.

China's Sany Heavy Industry (600031.SS) laid off more than 10,000 people in the first half of 2012, although China's overall job market has been fairly robust so far, explaining in part Beijing's ease with the country's slowing economic growth.

($1 = 6.1308 Chinese yuan)

General Motors has chosen the world’s second-largest luxury car market — China — to pit itself against automakers from Japan and Germany, despite the industry's lagging fortunes there.

The US-based carmaker said on Wednesday that it would invest $11 billion in the country in hopes of grabbing a larger share of the lucrative sector as it broke ground on new facilities.

“We are also sending a strong message about the important role of Shanghai and China in GM’s global operations,” GM chairman and CEO Dan Akerson said in a news release.

The Detroit manufacturer made the announcement as it broke ground on a new Cadillac plant and a new research facility. The structures represent a total investment of $1.3 billion and will occupy a total area of about 8 million square feet.

More from GlobalPost: Why China will implode

Cadillac has set goals of tripling its annual sales in China to 100,000 units by 2015 and increasing its share of China’s luxury car market to 10 percent by 2020.

To achieve its goals, it will introduce new models every year until 2016. GM now has about 2.5 percent of luxury sales in China.

GM sold about 30,000 Cadillac vehicles in China last year, but that's still a small number compared to brands like BMW and Audi, Agence France-Presse noted.

“There are generous profits in the luxury car market,” industry analyst Cui Dongshu told AFP.

“GM has to make an investment targeted at the segment and build this plant in Shanghai to localize its products, in order to effectively seize a place in the high-end segment.”

China’s market will continue to grow, with AFP reporting it will climb about 2.5 percent annually to 30 million vehicle sales by 2020.

Only Americans buy more luxury cars and SUVs than the Chinese.

GM’s projections come despite slower growth in the luxury segment, the Wall Street Journal reported.

Audi, for example, enjoyed 41 percent growth during the first quarter of last year, but just 14 percent this year.

“The luxury market right now looks like it’s going to grow at about 4 percent this year. At the beginning of the year, I think it was much higher,” GM China president Bob Socia told The Journal.

China’s migrant workers exceeded 260 million at the end of 2012, with an average monthly salary of 2,290 yuan ($374.09), according to a report by the National Bureau of Statistics of China.

The bureau published the 2012 Investigational and Monitoring Report of Chinese Migrant Workers on Sunday, according to Xinhua News, China’s state-owned news agency. At the end of 2012, the number of migrant workers in China increased by 3.9 percent to 262.61 million, and the average salary of migrant workers rose 241 yuan ($39.37) to 2,290 yuan per month.

Migrant workers were previously farmers or were farmers ancestrally, and as China has modernized have chosen to seek more profitable, most often industrial work, in urban centers across the country. Many – 160 million in 2012 – choose to migrate to metropolitan cities farther away from their home regions.

In terms of income, average monthly salary rose 11.8 percent to 2,290 yuan for Chinese migrant workers in 2012. Workers in Hong Kong, Taiwan and Macau as well as foreign countries make significantly more – 5,550 yuan ($906.63) per month. Workers engaged in transportation and construction work have higher-than-average monthly salaries, 2,735 yuan ($446.78) and 2,654 yuan ($433.55), respectively.

Most migrant workers have not completed more than middle school- level education. In 2012, 1.5 percent of migrant workers were illiterate, 14.3 percent completed elementary school, 60.5 percent middle school, 13.3 percent high school, and 10.4 percent completed higher education. Younger workers and workers who went abroad have relatively higher education levels.

Migrant workers’ average age is increasing as well. In 2008, 70 percent of all migrant workers were below 40 years of age, and in 2012, only 59.3 percent were below 40. Accordingly, the average age increased from 34 to 37.3.

Significantly, many of these migrant workers were not working under contract, and were therefore not entitled to any form of social security. In 2012, 43.9 percent of migrant workers signed employment contracts, a similar percentage compared to previous years.

Meanwhile, 0.5 percent of migrant workers were not paid on time or at all, due to the lack of contracts. Only 14.3 percent received retirement benefits, 24 percent work-related injury insurance, 16.9 medical insurance, 8.4 percent unemployment and 6.1 percent maternity benefits. More than 40 percent of employers of migrant workers did not provide housing or housing subsidies, Xinhua News reported.

It’s a well known fact that Chinese labor is somewhat cheaper than what is available in the West, however in recent years Chinese salaries have sky rocketed at a rapid pace for the average white collar worker. Entry level jobs for a recent graduate in Shanghai will net around 5000RMB (812USD) per month at the minimum, post grads can look forward to around 8000RMB per month (13,000USD), even more if they have previous work experience and international experience.

So how much does a CEO take in, specifically the CEO of major Chinese automotive companies? Those that are listed on the HK stock exchange have to reveal the director level payment packages so investors can clearly see where their money is going. Of course, some Western CEO’s take a token 1USD salary but have decent stock options instead and we’re sure the situation in China is largely the same in China as well. If they lead the company well their stock returns will be much higher than their salaries and of course have lower tax on them as well.

In 2012 BYD’s billionaire chairman netted a 2.77 million RMB salary (438,525USD), but that was down from his 4 million RMB salary in 2011, of course BYD’s total income was down by around 800 million over the same period so its nice to know that even CEO’s are taking austerity seriously. Wang Chuan Fu nets the highest salary in the Chinese auto business, but the gentlemen is also China’s richest man so his BYD salary is likely chump change to him.

Li Shu Fu, the Chairman of Geely and the brains behind the Volvo saw profit rise 32.2% at the Hangzhou based company, but his salary is just 327,000RMB per year ($53,122USD), probably on par with some of his own mid level white collar staff.

JMC’s GM Chen Yuan Qing hasn’t seen a payrise in three years on his 238,240RMB per year salary (37,500USD), his salary is reportedly paid in USD so he is losing money whilst the RMB appreciates against the USD.

Geely’s CEO Gui Xian Rui brings in just over 2 million RMB with his salary approaching 2.36 million RMB per year, a nice increase over 2011?s salary where he netted 1.96 million, a further 3.41 million RMB was given to him in stocks, bring a total of 5.77 million into Mr. Gui’s bank account. nice.

Great Wall’s Board Chairman Wei Jian Ping’s salary rocketed from 1.74 million RMB to 2.47 million RMB over the course of 2011 to 2012.

Four companies are offering salaries between one million and two million RMB per year: Foton, SAIC, Ningtong and GAC. Ningtong Coach didn’t see any major salary upgrades in 2011, with CEO salary staying at 1.2 million RMB. SAIC’s CEO Chen Hong’s salary jumped from 917,000RMB in 2011 to 1.36 million RMB in 2012.

Foton and GAC saw a salary drop in 2012, probably due to a poor financial show in 2011. Foton’s General Manager Wang Jin Yu saw a salary decrease of 3.1% with a net salary of 1.88 million, Foton’s total income dropped 20.7% in 2012 with profit increasing 17.4%.

Taiwan technology giant Foxconn has been increasing its assembly-line workforce in central China in preparation for the manufacture of a new iPhone, the company and media said Tuesday.

Foxconn has been hiring workers in its Zhengzhou plant and will continue to do so to “meet operational demands”, spokesman Simon Hsing said, without elaborating.

The Taiwanese company said Monday that it has added about 10,000 assembly-line workers a week in Zhengzhou, its major production facility for iPhones, since the last week of March.

A spokesman for Foxconn declined to elaborate about production plans, saying only that the company would continue to expand its workforce in Zhengzhou, where it currently employs some 300,000 people, to meet seasonal demand from clients.

The Wall Street Journal said the resumption of hiring in Zhengzhou, the company’s major production facility for iPhones, indicated that Apple is gearing up for production of a new device.

The newspaper quoted unnamed Foxconn executives as saying the company had increased workforce numbers at the plant to cater for a new iPhone launch.

Foxconn, the trade name for Taiwan-based Hon Hai Precision Industry Co., is the world’s largest contract electronics maker and assembles products for Apple, Sony and Nokia, among others, in huge plants in China where it employs more than one million workers.

In February, Foxconn said it had decided to temporarily slow down the recruitment process due to an unprecedented rate of returning employees following the Chinese New Year holiday compared to previous years.

The Financial Times newspaper reported at the time that Foxconn had frozen hiring in China due to reduced orders for Apple’s iPhone 5, although the company denied such decisions were made based on any one customer.

China’s migrant workers go home for the annual Lunar New Year holiday and immediately after the long break companies typically report labour shortages as employees delay their return or fail to go back to their previous jobs.

Recruitment for general laborers has become tight for factories in East China’s coastal areas, according to a report by Economic Information Daily.

Visits to industrial parks in Shanghai and recruitment sites in Baoshan, Jiading and Zhabei district found that the market demand for skilled workers can be satisfied after the Spring Festival, but it is very difficult to get general laborers.

“We need about 20 workers, and the salary we offer is quite competitive even for low-level workers. Not until the recruitment is half through, we have got all the technical workers we need, while over half of the general workers we need are still lacking,” said Jin Tao from the Human Resources Department of Shanghai Shuanggang Warehouse Co. “Low requirements in skills and harder work for assembly-line positions make it less attractive to the new generation of migrant workers.”

Demand for proficient workers at production lines is highest for enterprises, according to a survey by local labor and human resource departments.

“In order to get people, companies had to give intermediaries 500 yuan in fees every time they introduced a worker,” said Xu Jiangao, director of labor and social security center at Shanghai Xinzhuang Industrial Park.

New generations of migrant workers in pursuit of decent employment, the narrowing wage gap between east coast and the central and west regions, and the soaring commodity prices on the east coast all contribute to recruitment difficulties.
Compared with the first generation of migrant workers, employment expectations of the new generation have increased. In addition to remuneration, they pay more attention to the quality of employment, life experience and the realization of life values.

Wang Yong, of Guizhou, who came to Shanghai, wants to find a job that is technological, challenging and promising. “My first choice is administration work, and then technological work. General workers have no prospect for my career, I won’t be such a worker anymore.”

Due to the higher cost of living in economically developed areas, performance ratio of income and expenditure compared to the central and western regions seems lower, which makes it less attractive to low-skilled workers.

In addition, because of the higher level of social security in developed areas, labor cost is actually higher, which makes it difficult for some companies to give raises to general workers.

Zeng Xiangquan, dean of the School of Labor and Human Resources at Renmin University of China, said that the Lewis turning point has come to China’s labor market.

The Lewis turning point is a concept by economist William Arthur Lewis. After surplus rural labor transfer is completed, the employment population will not be able to keep up with labor demand.

According to estimates, 16- to 24-year-old youth labor in China will decrease from 120 million in 2006 to 60 million in 2020, and the “golden” working population of 25 to 55 would fall significantly starting in 2015, which determines the labor market, especially the low-end labor market.

Experts believe that, after the Lewis turning point, China's demographic dividend will gradually subside, and structural imbalance of the labor market will further be highlighted.

It will effectively increase the labor supply if the country can lower the household registration threshold and provide the same health care, pension and children’s education to migrant workers, said Cai Fang, director of the Institute of Population and Labor Economics, Chinese Academy of Social Sciences.

As for the demand for "decent employment" by migrant workers, the government should promote concepts and values for different professions and reduce unnecessary labor mismatches, said Zhao Dejian, who is in charge of the Joint Meeting Office of Shanghai Migrant Workers.

China's nonmanufacturing industries gained stronger growth momentum in March, supported by an accelerating economic recovery.

The nonmanufacturing purchasing managers' index, an indicator that reflects the business activities in the construction and service sectors, bounced back to 55.6 in March, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Wednesday. It was 54.5 in February and 56.2 in January.

A PMI above 50 means expansion, as opposed to contraction. The survey covers 1,200 enterprises.

Overall new orders increased 0.2 points to 52 percent month-on-month, and new export orders improved to 51.7 from 51.6, indicating stronger demand from both domestic and overseas markets, said Cai Jin, vice-chairman of the CFLP.

Input prices dropped to 55.3, 0.9 points less than in February, suggesting an easing of inflation pressure, the analyst said.

It is a signal of a strengthened growth impetus for the whole economy, along with the raised manufacturing PMI released on Monday, he said.

The March manufacturing PMI, which reflects factory production, rebounded to 50.9 from 50.1 in February.

The construction industry PMI rose to 62.5, up by 4.5 points from a month earlier and a 12-month high, as most migrant workers returned to cities to resume construction projects after the Spring Festival holiday in February.

"It suggests that construction enterprises have more positive expectations for the market situation this year," Cai said.
The service industry PMI slightly declined to 53.6 from February's 54.9. Business volumes for catering, retail, air transport and road transport industries shrank in March, said an NBS statement.

HSBC Holdings PLC reported a service industry PMI on Wednesday based on a separate survey. It registered a six-month high of 54.3 in March, up from 52.1 in February, because of the rebound of new business orders and employment.

At least one employee at Foxconn, the manufacturing giant best known for making Apple products, has reportedly jumped from a factory roof in Shenzhen, China due to concerns over job security.

According to AppleInsider, which cited reports from Chinese micro-blogging website Sina Weibo, a female worker jumped from the roof at Foxconn's Shenzhen factory this past Friday at 9 a.m. local time but survived. By noon, three other employees had also climbed to the roof of the building and were threatening to jump, the blog said.

According to other reports, a second person jumped off the roof, though there is no word about their condition.

In a statement to PCMag on Monday, Foxconn confirmed that a worker dispute occurred, but did not address whether anyone had jumped from the building.

"We can confirm that on March 29, three employees at our campus in Longhua, Shenzhen were involved in a workplace dispute over the company's decision to offer them an opportunity to relocate to another Foxconn China facility as part of a shift in production linked to their business group," the statement reads. "As a result of that dispute, the employees in question gathered at the top of a campus building and stayed there until local law enforcement authorities arrived at the scene. The dispute was resolved peacefully and no one was injured. Any reports to the contrary are totally inaccurate."

Unfortunately, suicide at Foxconn is not a new phenomenon. At least 14 Foxconn workers in Shenzen and Chengdu have taken their own lives in a string of worker suicides since early 2010. Foxconn has since forced employees to sign a pledge promising that they won't commit suicide and installed nets outside factory dormitories to deter potential jumpers.

The most recent wave of employee discontent reportedly stems from recent job cuts, lowered wages, and the end of some free amenities. Foxconn is said to have been encouraging some employees to leave the company as part of an effort to cut employee costs.

The electronics maker last month suspended recruitment of new hires, but denied that the hiring freeze was related to slowing iPhone 5 demand.

As of December, working conditions seemed to be improving at Foxconn's mainland China factories. A New York Times article detailed positive changes at Foxconn's China-based plants, which have been criticized by global labor rights groups and were audited last year by the Fair Labor Association (FLA), at Apple's behest.

Editor's Note: This story was updated on Monday at 4:00 p.m. Eastern with comment from Foxconn.

The manufacturing sector in China grew faster pace in March 2013, indicating that Asia’s largest economy and the second largest in the world, is recovering modestly. The Purchasing Managers’ Index (PMI) was 50.9 last month, according to data from the National Bureau of Statistics and China Federation of Logistics and Purchasing released on April 1. The March PMI is the highest in 11 months an improvement from its 50.1 level in February.

A separate PMI released independently by HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4.

After adjusting for seasonal factors, the HSBC Purchasing Managers’ IndexTM (PMITM) – a composite indicator designed to provide a single figure snapshot of operating conditions in the manufacturing economy posted 51.6 in March, up from 50.4 in February, signalling a modest improvement. Operating conditions in the Chinese manufacturing sector have now improved for five consecutive months.

Production levels increased for the fifth month in a row in March. The rate of expansion accelerated from February to a solid pace, the second-fastest in two years. Behind the rise in output, total new orders rose solidly, and for the sixth month in a row. A number of respondents attributed growth to strengthened client demand. Meanwhile, new export orders also increased, albeit marginally, according to an HSBC press release.

Volumes of outstanding business declined for the second successive month in March. The rate of backlog depletion was broadly unchanged from February, and remained slight overall. Staffing levels, however, were relatively unchanged from the previous month.

Suppliers’ delivery times lengthened in March, following a slight improvement in February. That said, the rate at which vendor performance deteriorated was slight, with just over 6% of panellists recording longer lead times. A number of respondents linked the deterioration to increased orders placed at vendors.

Average input costs faced by manufacturers decreased, following a five-month period of inflation. However, the rate of reduction was marginal, with a number of respondents citing lower raw material costs. Output charges set by manufacturers also declined in March, and for the first time in since last November. The rate of discounting was modest, with approximately 10% of panellists lowering tariffs. A number of respondents attributed the fall to a combination of passing on lower input costs to clients and competitive market pressures.

Purchasing activity in the manufacturing sector rose for the sixth successive month. Growth quickened from February to a solid pace that was the third-strongest in two years. Meanwhile, stocks of purchases fell modestly for the second month in a row. Increased input buying and the depletion of stocks were both associated with increased production at plants.

Finally, inventories of finished goods increased for the first time in six months, albeit marginally. A number of respondents attributed the rise to increased production on the back of stronger client demand.

In China, working at a multinational company (MNC) used to be seen as an ideal choice, offering job stability as well as a high salary and decent benefits.

But in recent months many MNC workers have become victims of layoff plans by their well-known foreign employers.

US-based Motorola Mobility, a hardware unit acquired by Google Inc in May 2012, announced a cut of 1,200 jobs worldwide earlier this month, and the cuts will be mainly in China, the US and India, media reports said.

Motorola Mobility China said on March 8 that "the new job cuts are a continuation of the reductions announced last summer," but did not reveal how many employees will be laid off in China.

A previous round of business restructuring at the company in August 2012 resulted in 4,000 layoffs globally, and an engineer at the Beijing office said that the company had closed all its other operations in China apart from the Beijing office, which currently has 700 employees. The firm has around 12,000 employees worldwide.

Media reports said that after the new round of job cuts, only 200 jobs will be saved in China, mainly in the areas of marketing and sales.

However, Motorola Mobility is not the only overseas firm downsizing its China workforce.

Who is firing?

Finnish mobile phone producer Nokia Corp cut about 100 staff at its Dongguan factory in South China's Guangdong Province in October, following job cuts at its Beijing-based research center and consolidation of its Chinese distribution centers in July.

US chip producer AMD laid off 15 percent of the staff at its Shanghai branch in November.

Also in November, Japanese electronics firm Panasonic Corp merged its Shanghai plasma display panel television plant with its liquid crystal display television factory in East China's Shandong Province, and shut down the Shanghai factory.

Some foreign supermarket chains such as Wal-Mart and CP Lotus have also reportedly cut jobs recently.

Past layoffs by large foreign firms have tended to focus on other countries, but the recent job cuts have been taking place in China too, and affecting higher-level positions such as in research and development (R&D) rather than sales and administrative jobs, Xing Zhiming, a business director of Beijing-based recruitment firm Career International Consulting Ltd, told the Global Times Friday.

"The mobile phone and chip firms decided to cut jobs because their industries have seen faster transformation cycles and more intense competition, resulting in losses at firms that are slower in adjusting to the market," Xing said.

Supermarket chains cut jobs due to excessively rapid expansion in China, but job cuts are a normal phenomenon and a way to adjust strategy for the market, he noted.

Most of the laid-off employees at these MNCs have been reemployed either at their competitors or at domestic private firms, which are aiming to learn standardized management from the MNCs, Xing said. "For example, some employees laid off from a foreign chip producer's server department now work at Chinese server providers or downstream producers."

Motorola Mobility closed its Nanjing R&D center in August, and some of the laid-off employees from the center have relocated to Shanghai or to Motorola's headquarters in the US, but most now still work in Nanjing at other software enterprises such as Lenovo and Samsung, a former employee at the center told the Global Times Saturday.

Who is hiring?

According to a survey of more than 1,000 firms in 12 key industries in China released by Career International on January 15, 2013, 58.8 percent of respondents said they would be hiring new staff in 2013, with only 26.1 percent planning for job cuts.

Owing to high costs and falling profits, just 46.5 percent of companies in the energy and chemical sectors said they would hire more staff in 2013, while 47.1 percent of machinery manufacturing firms planned for job increases in 2013 due to the sluggish global economy, the lowest two among the 12 industries, the survey found.

In contrast, 75.7 percent of the country's auto firms have plans to hire more staff, thanks to expanded production capacity and the need for more production and R&D staff, the survey said.

Foreign auto producers have strong confidence in the Chinese market and are also expanding and recruiting. German auto firm Volkswagen announced in November it would invest 14 billion euros ($18.3 billion) in China by 2016.

Domestic auto brands are also expanding into overseas markets, which will offer opportunities for marketing and sales personnel in these areas in 2013, the report said.

The second most confident industry in the survey was real estate, with 70.4 percent of respondents planning to recruit more employees this year, thanks to a rebound in the property sector in the second half of 2012 and good expectations for the sector in 2013, especially for commercial property projects, the report said.

Although the survey found that companies in first-tier cities are more willing to recruit new staff than those in smaller cities, some manufacturing enterprises have relocated to or expanded their recruitment in smaller cities such as Wuhan in Central China's Hubei Province, Chengdu in Southwest China's Sichuan Province and Xi'an in Northwest China's Shaanxi Province, Xing said, as a result of rising labor costs in coastal cities and production workers' increasing desire to work near home.

As China's State-owned enterprises and private firms have gained a more solid foundation in the market, their hiring is also increasing, Xing noted.

MNCs in China plan to recruit fewer employees than their Chinese peers, according to the Career International report, which found that 54.1 percent of MNCs have plans to increase jobs, compared with 61.7 percent of private Chinese firms and 62.4 percent of State-owned enterprises.

The hiring market in China is still strong, Jonathan Edwards, a partner at the Shanghai office of recruitment firm Antal International, told the Global Times Friday. Around 65 percent of Antal's clients are planning to hire staff in 2013, Edwards said.

"Occasionally companies might have a hiring freeze, but this tends to be short-term and due to organizational restructuring rather than other reasons. Most MNCs have a long-term plan for their business in China and the hiring of key staff remains an important component of this plan," Edwards said.

"We see strong pockets of demand in many industries, as diverse as healthcare and retail," he noted, predicting that consumer-led industries such as autos would continue to grow.

TAIPEI -- Taiwan's tech giant Foxconn will hire 5,000 technicians locally this year, many of them to work on factory robots to build its gadgets, officials said Monday, in a sign the firm is refocusing operations to its home island.

The announcement — one of the group's largest talent recruitment drives in Taiwan in recent years — comes as the conglomerate is slowing new hiring at its sprawling factories in China.

Foxconn said the move was due to increasing automation of manufacturing and assembly lines in China, where rising labour costs have squeezed profit margins.

Some of the new employees are to work at a software complex in Kaohsiung, in Southern Taiwan, spokeswoman Laura Liu said, while others will staff a robot research unit in the centre of the island, and a development unit at the company's headquarters outside Taipei.

Chairman Terry Gou told media that Foxconn — the world's largest maker of computer components, which assembles products for Apple, Sony and Nokia — plans to use one million robots to do “simple” manufacturing work by 2014.

Foxconn already has 10,000 robots for painting, welding and other assembly tasks.

The company employs the vast majority of its workers in China, where it employs more than one million people, roughly half of them based in its main facility in Shenzhen, which borders Hong Kong.

Foxconn has come under the spotlight in recent years over worker suicides, labour unrest and the use of underage interns at its Chinese plants.

It has taken steps such as raising salaries, improving working conditions and enforcing age restrictions to address concerns raised by an independent audit of conditions mandated by Apple.

The Chinese Apple manufacturer is finding it hard to find enough staff.

New reports suggest that Foxconn, the Chinese tech manufacturer that's perhaps the most famous member of Apple's Eastern supply chain, is having a tough time finding enough workers for its many plants. Now Foxconn is opening plants deeper in China in an effort to find more staff. Despite the widely publicized plan to implement a million robots on its production line, it now seems that Foxconn's expansion plans are placing it in a tricky recruitment position. The company has doubled its workforce over the last two years to over 1.2 million souls, and has been said to be planning expansion into the U.S., and recently revealed it has big plans to expand into Taiwan.

Recently a report that Foxconn had temporarily frozen hiring, allegedly due to weak iPhone sales, hit Apple's share price. Since then it's been argued that Foxconn, a firm that has a very dynamic recruitment cycle, was merely reacting to a glut of employees returning to work after the Chinese New Year.

Chinese low-cost manufacturers are trying various ways to retain workers and attract new ones after the Lunar New Year holiday, as the country's economic recovery brings in more orders.

Factory workers, mostly rural migrants, usually go home for family reunions during the traditional holiday. But many take advantage of the break to find better jobs and therefore do not return to their former employers.

Companies have raised salaries or offered financial incentives in an attempt to retain workers.

"Although the whole industry is still mired in gloom, we still plan to raise the workers' salary by 10 percent this year," said Tian Chengjie, vice president of Silverman Holdings Ltd., a textile company in Zibo of eastern Shandong Province.

In a bid to get workers back, many companies reportedly chose to pay year-end bonuses after the holiday. Some promised to offer a reward of 1,000 yuan for each year of their service.

Amid efforts to recruit enough workers, some companies promised to reward staff hundreds of yuan if they brought along new workers. Some even offered hundreds of yuan to workers' parents.

However, for many employees higher pay is not enough.

Increasingly, migrants, especially the younger generation, demand respect and good working conditions.

Executives at Orans Co. Ltd., in Taizhou in the eastern coastal province of Zhejiang, lined up at its factory gates and bowed when staff returned to work Monday, the first day after the Lantern Festival.

The respect the executives showed won praise from netizens.

"This should not be seen as a mere show. You can only make fortunes by showing respect to the labor force," wrote a netizen under the name of "Yunjianwei" on Sina Weibo, a popular Twitter-like microblogging service.

Other netizens also called for better conditions rather than just higher pay or bonuses.

"A friend called me today saying only a low proportion of their workers had returned after the holiday and they also had difficulty in recruiting new ones," said a weibo user under the name of "Liang Yong."

"This does not come as a surprise if the employers do not show care towards the employees' life and psychological needs. Please do not see the workers as machines," "Liang Yong" added.

The labor shortage has attracted more media attention as the economic recovery looks like it will worsen the problem.

It comes as China's labor force between the age of 15 and 59 shrank by 3.5 million last year. It is the first time the country has recorded an absolute drop in the working-age population in "a considerable period of time," Ma Jiantang, National Bureau of Statistics director, said last month.

Hundreds of companies in Dongguan, dubbed "factory of the world" in the booming southern province of Guangdong, reportedly set up booths along a street to recruit workers Monday, but only a few migrants showed up and made inquires.

Many employees have chosen to work near their hometowns in the central and western regions as many companies have relocated there in response to the country's industrial restructuring in coastal areas.

Also many young migrants now do not wish to work for low-cost manufacturers where work conditions are not good even though they offer higher pay. For them, the routine work offers no excitement or career prospects.

Wan Zhong, president of Wanjia Shengshi Human Resources Co. Ltd., in Jinan, capital of Shandong said, "The labor shortage could prompt low-cost manufacturers to accelerate industrial restructuring and upgrading as well as offer workers better conditions."

JINAN - Migrant workers who used to demand unpaid wages from their bosses before traveling home for a family reunion may find their positions reversed after the Spring Festival.

After the week-long national holiday, Wang Jiwan, board chairman of Qingdao Hengda Co., a shoe manufacturer based in eastern China's Shandong Province lined up with 50 senior executives at the factory gate, bowing to welcome returning workers.

It may seem odd, but he is not alone. Many companies are trying every trick in the book to attract workers and make them feel wanted. Some distributed cash ranging from 200 yuan (31.85 U.S. dollars) to 500 yuan to parents of employees who promised to come back after the holiday. Others offered a 15-percent pay rise in the new year.

Due to a lack of fixed employment contracts and rising living costs, each year after the Spring Festival, a traditional family holiday, it is common that migrant workers default on their jobs to settle back down again in their hometowns.

Labor shortage, a concern that has long plagued Chinese business owners, is an old problem and as the economy picks it will only get worse.

This year, manufacturers are suffering from shortages. However, it is not due to staff leaving but the warming economy, which has meant more orders on the books.

Labor shortages become particularly acute after the Spring Festival. However, this year is somewhat different, said Wan Zhong, manager of Wanjiashengshi, a human resource company based in Jinan, Shandong Province.

Enterprises have not lost a significant number of staff. Instead, they need more employees to fulfill rising orders, according to Wan.

"The 40 companies that had outsourced a recruitment process to us reported a lower staff turnover compared with previous years. They want more workers simply because the economy has survived the crisis and they would like to expand production," he said.

China's economic growth quickened to 7.9 percent in the final three months of 2012 after hitting a three-year low in the third quarter, according to data from the National Bureau of Statistics.

Official data also showed that the purchasing managers' index (PMI) for China's manufacturing sector has been kept above 50 percent for four straight months since October. The January figure fell slightly by 0.2 percentage point from December to 50.4 percent.

A PMI reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

Manufacturing is regaining momentum, boosted by domestic and global recoveries, said Zhang Weiguo, an economic expert with the Shandong Academy of Social Sciences. He forecast that manufacturers will do much better than last year.

"This year the company has plenty of orders. Workers can soon start work once they are in place," Wang Jiwan said, adding that Hengda, which ships 40 percent of products overseas, will see sales up about 30 percent in 2013 as international demand rebounds.

Meanwhile, Shandong Haosheng Group, a home textile manufacturer, is short of about 500 workers due to increasing orders from the domestic market.

The company has seized orders from seven upstream firms in Jiangsu and Zhejiang provinces after the Spring Festival, according to the company's human resource manager, Sun Luguang.

Most employers will scale up hiring in the first quarter this year, especially the post-Spring Festival period, as the economy rebounded in last quarter, said Feng Lijuan, a human resource expert with 51job.com, China's leading online job-hunting service provider.

Labor-intensive industries including real estate, automobile parts manufacturing and pharmaceutical companies posted a high number of recruitment requests, according to a survey conducted by 51job.com.

Meanwhile, experts said China's economy will pick up steam this year. A report compiled by Xiamen University forecast that the country's economic growth will rise by 0.43 percentage points from last year to reach 8.23 percent in 2013.

Foxconn says a recruitment freeze is not due to slowing production of the iPhone5.

Foxconn, the huge company that makes high-tech products including the iPhone, said Wednesday that a recruitment freeze at its vast facilities in China was not due to slowing production of the iPhone5.

"Due to an unprecedented rate of return of employees following the Chinese New Year holiday compared to years past, our company has decided to temporarily slow down our recruitment process," said a Foxconn statement Wednesday.

"This action is not related to any single customer and any speculation to the contrary is false and inaccurate," the firm said.

Some dispute that explanation. A story Wednesday by the Financial Times based in London said the hiring freeze comes amid poor iPhone5 sales.

The Chinese website yicai.com, a financial news site based in Shanghai, reported that Foxconn facilities in central China's Zhengzhou and southern China's Shenzhen have stopped recruiting new workers, but will employ more robots in the future.

Boosted by global demand for Apple's electronic, the Taiwanese manufacturer Foxconn has grown into mainland China's largest private-sector employer, with 1.5 million workers. So news of hiccups in its operations can spark market concerns worldwide.

Apple shares were down slightly to $452.60 Wednesday morning.

Many employees are not at work this week due to Chinese Lunar New Year. The annual New Year festival, falling this year Feb. 9 to 24, is a time when almost all Chinese factory workers head back for once-a-year visits to often distant hometowns.

The Shenzhen Evening News said that Foxconn had decided to stop recruiting three months ago. The recruitment center website for Foxconn in central China's Henan province carries a banner headline advising that the firm will not hire for the next half year.

With China's Spring Festival holiday winding to end, many migrant workers have already returned to their cities of work. But a large number of them are staying put at home for a while longer. It's posing a challenge for employers, who are acting fast to bring in more workers.

For many companies in China's east Zhejiang province, recruitment has to be done at train stations.

Here in Shaoxing city, migrant workers are stuffed with job ads the moment they step off the train.

Zhu Xiaofeng, recruitment staff of Jingdongfang Display Tech. Company, said, "Our production scale is expanding and we need an additional 50 workers urgently."

Wei Haifeng, recruitment staff of Zhende Medical Co, ltd., said, "We've been here twice and also the bus station. We hand out our advertisements and if they would like to work with us, we drive them to our company directly."

But many of these workers are coming back with a signed contract already waiting.

Employers have also been shouldering the rising cost of labour.

In southern city Shenzhen, the minimum wage for full time work has risen from 1500 yuan to 1600 yuan per month, a record high in the country. The new policy has drawn many workers to the city.

A browse through Shenzhen's recruitment sites shows employers often clearly lay out workers' welfares. And typical salaries vary from 2000 yuan to 4000 a month.

"There were fewer companies who recruited in the past years. But this year, there are more out there offering much better pay than before."

"We pay every worker 3 thousand to 4 thousand yuan a month. This is a huge burden for small companies."

But there are also optimistic voices from employers, saying the pressure of rising costs is driving industrial reform, which will benefit companies in their long run.

Hewlett-Packard has issued new guidelines to its Chinese suppliers aimed at reducing the long hours worked by temporary student workers and ensuring that their recruitment process complies with local regulations.

The exploitation of students has been rife across the electronics supplier industry in China, as companies resort to hiring large numbers of temporary workers when orders for electronic gadgets spike, because of a product launch or seasonal demand.

HP’s supplier guidelines, issued on Friday, stipulated that all work must be voluntary, and local regulations regarding minimum working age and work environments must be adhered to. In addition, HP said it would ask suppliers to ensure that students would be asked to work only if working at the supplier “complemented the primary area of study” of the student.

Investigations into temporary work by labour activists in China have revealed a pattern of municipal governments requiring students to work at factories in the local area, as well as students frequently working long hours at companies that had little relevance to their studies.

HP said it had developed the guidelines in tandem with China’s Center for Child Rights and Corporate Social Responsibility. The group’s executive director, Sanna Johnson, said the guidelines were a “clear recognition” of the company’s commitment to its workforce.

Geoff Crothall, communications director at China Labour Bulletin, a lobby group in Hong Kong, was sceptical that the guidelines and proposed audits by the company, which has more than 1,000 production suppliers spanning 45 countries and territories, would be effective.

“How are they going to follow through,” said Mr Crothall. “It’s not up to them how a supplier factory recruits, it is up to the factory.” Mr Crothall said that it was the demands by the electronics industry for flexibility and lean inventories that “created the problem [of a temporary student workforce] in the first place”.

Mr Crothall said that revision to China’s laws with regard to labour contracts made late last year, which were intended to crackdown on the widespread use of temporary contract labour, meant that all companies would have to be more vigilant on this issue. As many as 60m workers in China were employed by labour agencies across the country, he said. Numbers of temporary workers surged after China put in place new labour laws in 2008.

Mr Crothall said that the only way to ensure compliance was not by sending in auditors and periodically collecting information, but by allowing independent unions in factories and ensuring there was collective bargaining. “You can’t send in auditors a few times a year. Workers get bonuses for giving the right answers and penalised for giving the wrong ones,” he said.

Foxconn, which is under pressure from Apple to improve its workplace conditions, said on Monday that it would allow genuinely representative union elections for its 1.2m workers in China from next year.

Firm expects to hire around 80 people

CONOVER, NC — Folks in these parts are used to jobs connected to the textile industry moving overseas but a Chinese company is locating here and creating nearly 80 jobs.

Catawba County Economic Development Corporation announced on Thursday that Wuxi Taiji Paper Industry Company Ltd. is putting its first US manufacturing location in Conover and will hire 78 workers over the next four years. The company is buying the former Prestige Pillow 50,000-square-foot building, located at 405 Wortha Herman Road SW in Conover. It plans to invest $3 million, say EDC officials.

The company makes spiral-wound cardboard tubes and cores used in multiple industries, including the textile industry, according to information from the county EDC.

Julie Pruett, director of business recruitment for Catawba County Economic Development Corporation, said the jobs will include administration, sales and production. The first phase of hiring will start soon, according to information from the county EDC.

While salaries will vary according to the job, the overall average annual salary is more than $31,000, not including the additional benefits package, according to information from Catawba EDC.

The company is not receiving any incentives from the county or state, Pruett said. But it will get tax credits for the jobs it creates, she said.

Pruett said the company wants to have its equipment moved into its new building by February and be up and running by March.

“We are determined to be a respected tube and core supplier in North America,” says Mr. Meizong Yin, the company president.

The company is following what appears to be a trend to localize manufacturing. In other words, if a company sells in the US, it makes its products in the US, say officials.

“We are honored that Mr. Meizong Yin selected Conover as their first manufacturing footprint in America,” said Conover Mayor Lee Moritz Jr. “Our citizens are appreciative for this opportunity to become a member of the TAIJA Group team. It is exciting to see visionary international companies like TAIJI Group recognize the value of American manufacturing.”

Conover was competing against areas throughout the state, as well as locations in Virginia, Pruett said. County EDC and the state Department of Commerce officials have been working with the company since September, she said.

“It makes good business sense to locate their US operation in Catawba County which is the most specialized area for manufacturing in North and South Carolina,” Pruett said. “We were fortunate to have an available building with adequate ceiling heights and square footage that would meet the client’s needs.”

The company also chose Conover because it is centrally located near its customers, Pruett said.

The Taiji Group was established in China in 1994. In addition to the Chinese market, the company also has customers who are leading multinational companies in South East Asia, Europe and North and South America, according to information from Catawba County EDC.

“We welcome TAIJI Group(USA) Inc. to Catawba County and applaud their commitment to grow their business in the United States by investing in the people of Catawba County,” said Kitty Barnes, chair of the Catawba County Board of Commissioners.

To apply for a job with Wuxi Taiji Paper Industry Company, contact the Catawba County office of the NC Department of Commerce Division of Employment Security at 466-5535. The employment office is located at 3301 US 70 SE, Newton.

The war for talent in China has led Nike Sports to introduce the Lumese TalentLink technology platform on which to base its recruitment strategy for the country. In the first phase of the initiative 11 recruiters in Greater China and over 15 agencies will work with a complete Software as a Service system which will enhance the screening and selection process as well as creating a standardised workflow for the task ahead. The company hope this will bring transparency and a high level of reporting to the process which will benefit recruitment across the Asia region.

"Demand for the best candidates, which far exceeds supply, is becoming a serious problem in recruitment management in China," said Rishi Dadlani, Nike’s Talent Acquisition Sourcing Manager in Greater China. "Our recruiting processes have been working well in recent years, but now with aggressive market growth plans in place, our recruiters absolutely need to deal with and manage a higher and more effective workload.

While supporting the company’s overall objectives in the region Nike hopes to bring some of it brand strength to talent acquisition work. They also intend to connect Lumesse TalentLink to Nike external and internal career sites for a much better and richer candidate experience in the direct application process.

"This is a perfect example of our philosophy of being the only global company making talent management work locally," said Lumesse CEO, Matthew Parker. "China is an absolutely unique market today, with a high growth economy, a shortage of skilled talent, and very specific requirements for languages and local support."

"While job-boards is certainly a channel that has been around for a long time, we don't particularly focus on it. We have an excellent toolkit, coupled with the strength of our consumer brand, and our dream is to convert all our consumers into potential candidates," said Rishi Dadlani. "There are a number of social media platforms/networks we will certainly leverage to market our employment brand. Through these channels we will build and engage talent communities and eventually stimulate direct applications."

In order to keep up with its rivals in China, Hyundai also has plans to establish a new research and development center in the country. According to a report appearing in the International Finance News, the center may be located in the Economic and Technological Development Zone of Shandong's eastern city of Yantai.

Earlier in May, Hyundai Motor Group Vice Chairman Xue Rongxing had announced that the manufacturer will construct a Chinese R&D center. Then, earlier this month, posts looking for talent to work at the 'Hyundai Motor (China) R&D center' begun appearing on several famous employment websites. According to the post, the center's address is in Yantai, Shandong. When contacted by telephone, sources from the company confirmed that the posts were made on behalf by Hyundai.
Meanwhile, representatives from the Yantai Investment and Employment Agency announced that preliminary work on the Hyundai R&D center has begun in the city's Economic and Technological Development Zone. The source added that Hyundai has yet to announce when the center will be officially established.

Hyundai's Chinese offices have yet to comment on any of the above reports.

Hyundai currently possesses five global R&D centers, located in its native South Korea, Germany, the US, India and Japan, respectively. Due to the lack of such a center in China, the Beijing Hyundai joint venture has obtained new vehicles, such as the new ix35 and eight generation Sonata, from Europe and the US. Mr. Xue has stated his desire to see Beijing Hyundai begin exporting vehicles following establishment of the Chinese R&D center.

Yingli Group in Baoding of Hebei Province announced in the end of November that it would recruit 2000 workshop operators. A photovoltaic enterprise with 26,000 staff recruits 2000, which is not a message worthy of reporting. However, on the background that there are a lot of negative messages in the whole photovoltaic industry like loss, shutdown and downsizing, recruitment at this moment indicates that the photovoltaic industry in the "severe winter" is changing positively.

After learning such a message, the reporter decides to go to Hebei. When entering the workshop of Yingli Group, the reporter felt it was in 2010 when the workshop was in full capacity. "2000 is only a conservative number and the number of recruits may increase as required." Zhao Zhiheng, vice chairman of Yingli Group discloses that the photovoltaic market demand has begun to change from the fourth quarter and Yingli is making preparation for the "coming of spring".

According to the financial statement for the third quarter, all photovoltaic enterprises still makes a poor achievement and the photovoltaic industry is still in a cold winter, so where does the spring come? Yingli views that the demand is changing.

Quick increase of trading volume in the rising markets represented by China is the brightest spot in the market in the second half of this year. It is estimated that the delivery volume of Yingli will reach 2.2 gigawatts this year, which will top other photovoltaic enterprises in the world this year. Among the sales volume, the Chinese market will account for 22.63 percent and other rising markets will also rise to 4.03 percent.

Wang Yiyu, chief strategy officer of Yingli predicts that China is expected to surpass Germany and become the largest photovoltaic market in the world next year, which is mainly due to the series of encouragement policies issued by the state in the second half of this year. 21- gigawatt installed capacity, roadmap of distributed power generation and quickly-issued measures for the implementation not only offer a clear development prospect for the domestic market, but also stimulate the enterprises?? passion for the market and strengthen their confidence in development.

There are also new opportunities in the traditional European and US market. With deep industrial adjustment, the photovoltaic power generation cost reduces quickly and the generation efficiency increases constantly. European Photovoltaic Industry Association made estimation in the end of 2011 that the total installation cost of photovoltaic system would be $2 per watt in 2015. However, to the end of November this year, the cost had been less than $2. Due to such a change, the cost of photovoltaic power paid by some users in the market such as Spain begins to be equivalent to the one of traditional power generation with no need for government subsidy, which is commonly called grid parity in the user end. Wang Yiyu reveals that presently some investors have begun to plan for the projects next year with the aim of selling electricity to users or electric power company through direct supply. It will be the coming of times with huge demand for the photovoltaic industry behind such kind of change.

Yingli predicts that the global market demand will be about 40 gigawatts next year. Among them, the European market will increase a little, which is mainly due to the rising markets in the Europe and those projects with no need for government subsidy; the total amount in the US will continue increasing; the Chinese market will be about 7 to 10 gigawatts.

"The spring is coming slowly but not all photovoltaic enterprises will enjoy it." Zhang Tianze, general manager of Dalian Liancheng CNC Mechanic Co., Ltd., a photovoltaic equipment supplier, views that for enterprises in the whole industrial chain of photovoltaic production, only those enterprises whose brand, quality, technology, cost, etc. can satisfy the market requirement will not lag behind after such a round of adjustment and integration. The incoming spring for the photovoltaic industry is one with threshold.

In September, the largest factory in the northeastern Chinese coastal city of Yantai called on the local government with a problem – a shortage of 19,000 workers as the deadline on a big order approached.

Yantai officials came to the rescue, ordering vocational high schools to send students to the plant run by Foxconn Technology Group, a Taiwanese maker of smartphones, computers and gaming equipment.

As firms like Foxconn shift factories away from higher-cost centres in the Pearl River Delta in southern Guangdong province, they are discovering that workers in new locations across China are not as abundant as they had expected.

That has prompted multinationals and their suppliers to use millions of teenage students from vocational and technical schools on assembly lines. The schools teach a variety of trades and include mandatory work experience, which in practice means students must accept work assignments to graduate.

In any given year, at least 8 million vocational students man China’s assembly lines and workshops, according to Ministry of Education estimates – or one in eight Chinese aged 16 to 18. In 2010, the ministry ordered vocational schools to fill any shortages in the work force. The minimum legal working age is 16.

Foxconn, the trading name of Hon Hai Precision Industry, employs 1.2 million workers across China. Nearly 3 per cent are student interns.

The company “has a huge appetite for workers,” Wang Weihui, vice-director of the Yantai Fushan Polytechnic School, told Reuters during a recent visit to the city.

“It tightens the labour market,” said Mr. Wang, whose school sends its students to work at Foxconn and other firms.

Local governments eager to please new investors lean on schools to meet any worker shortfall. That’s what Yantai, in Shandong province, did in September when Foxconn had trouble filling Christmas orders for Nintendo Co. Ltd. Wii game consoles.

“It has been easier to recruit workers in the Pearl River Delta than some inland locations,” Foxconn told Reuters in written comments in late December.

Some companies cite rising wages in southern China for the shift elsewhere. Wages are a growing component of manufacturing costs in China, making up to 30 per cent of the total depending on the industry, according to the Boston Consulting Group.

Wages began to rise around 2006 as the migration of rural workers to Guangdong ebbed. China’s one-child policy, plus a jump in higher education enrolment, further depleted the number of new entrants to the work force, forcing up wages.

That prompted American car makers, Korean electronics manufacturers and private Chinese firms to look for new sites. Cheaper electricity, land and tax incentives as well as a growing consumer class in regions beyond the booming southern coastal provinces were other reasons to relocate.

Minimum wages in Yantai can be as low as 1,100 yuan ($180 U.S.) a month compared to 1,500 yuan in Shenzhen, a city near Hong Kong.

What makes vocational students attractive is they can be paid less than full-time workers, although some firms – including Foxconn – pay the same base wages.

Even if they pay the same base salary, employers can save 10 to 40 per cent per person because legally they do not have to pay health insurance or social security benefits for student interns.

Yantai was not the only local government to help Foxconn.

Two months earlier, Foxconn’s 100,000-worker factory near the city of Zhengzhou in Henan Province was racing to meet a deadline for Apple Inc.’s iPhone 5.

Henan authorities told its cities to find 30,000 more workers for Foxconn, according to a Zhengzhou city government notice reprinted by the Hong Kong-based labour rights group, Students & Scholars Against Corporate Misbehaviour, or SACOM.

Yantai shows how much China’s labour market has changed.

Zhang Weifang, head of human resources at the Yantai factory of LG Innotek estimates the city’s employable 16- to 18-year-olds has halved since her firm began production in 2004. LG Innotek is the components unit of South Korea’s LG Electronics Inc.

“It’s really hard to find people nowadays,” she said.

About 2,400 young workers staff Mr. Zhang’s factory, of which one-third are vocational students or workers contracted through agencies.

Students are sought after by plants which need extra workers during peak production periods, especially since China’s 2008 Labour Law makes firing employees cumbersome.

And students are plentiful. Vocational school graduation has surged 26 per cent in the past five years, to 6.6 million students in 2011. Parents whose children cannot compete in China’s exam-driven high schools look to vocational schools.

Such students made up such a large percentage of a Honda Motor Co. Ltd. plant in southern China that, when they went on strike for better pay in 2010, crippled Honda’s production chain. A Honda spokeswoman said the ratio of students to regular employees had significantly declined, but would not give a figure.

About 2.7 per cent of Foxconn’s workforce in China comprises vocational students, the company said in October. That works out to 32,400 teenagers.

“This program gives Foxconn an opportunity to identify participants who have the potential to be excellent full-time employees should they wish to join our company upon graduation,” Foxconn said in a statement at the time.

That month, Chinese state media said 56 minors under the legal working age were among students sent to work at Foxconn in Yantai. Foxconn removed the underage students from the plant after the reports.

Chinese law limits students to eight hours of work a day, with no night shifts. Vocational students in Yantai told Reuters they had worked up to 12 hours a day, and routinely did night shifts at Chinese and foreign-invested factories.

Foxconn has a program with Apple, one of its main customers, to pay interns the same wages as other workers, limit their work to eight hours a day, five days a week and allow them to quit if they want.

More than a dozen students interviewed by Reuters in Yantai had a mixed view of their internships, ranging from relatively positive to outraged. Many said it taught them to look for something other than assembly line work after graduation.

Most three-year vocational programs require a two-month internship in the second year, while the third is spent entirely at work. Even though students know they need factory experience to graduate, the assembly line comes as a shock to some.

“At the beginning I was really excited. I thought I could get experience and help out my family with some money,” said Yu, 17, an intern in Yantai. She asked that her full name not be used.

“To suddenly encounter 12-hour work shifts, standing, with only 40 minutes to rest and eat, our legs can’t stand it.”

Some students said they hoped the work would improve their prospects.

“Electronics is our major and so this will help in finding jobs,” said vocational student Sun Chuangjiao, a former Foxconn intern.

Companies defend the internships as educational as well as a useful recruitment strategy.

“The vast majority of our interns and the schools that sponsor them find their experience with us relevant and meaningful, and an important first step in their career development,” Emerson Electronic told Reuters.

It employs 40 interns for eight-month stints, out of a work force of 1,063 at its air conditioner compressor plant in the Yangtze Delta city of Suzhou. All are over 18, it said.

The shortage of labour means companies often search far and wide for vocational schools to supply workers.

Mr. Zhang of LG Innotek said she had contacted schools across China to find interns while Mok Jangkyun, an auditor with Samsung Electronics Co. Ltd., told Reuters he drove a full day after flying to Guizhou province in southwest China to vet a vocational school sending interns to its supplier factories.

Samsung did an audit of factories after activists found underage workers with fake IDs at one of the electronics giant’s 250 supplier factories in China. The South Korean company said it did not find underage workers at any of its suppliers.

Supplying vocational students can be lucrative.

Some students in Yantai said their school took 500 yuan from their monthly wage. Their school declined an interview request.

Some companies pay teachers directly to keep students in line in dormitories and on the factory floor, SACOM has found. In other cases, companies pay management fees or set up extra facilities at schools.

Foxconn says while it pays teachers who supervise students, it usually does not compensate schools.

“However, in some cases, we do provide compensation to meet their overall administrative costs,” it said.

(Reuters) - In September, the largest factory in the northeastern Chinese coastal city of Yantai called on the local government with a problem - a shortage of 19,000 workers as the deadline on a big order approached.

Yantai officials came to the rescue, ordering vocational high schools to send students to the plant run by Foxconn Technology Group, a Taiwanese maker of smartphones, computers and gaming equipment.

As firms like Foxconn shift factories away from higher-cost centers in the Pearl River Delta in southern Guangdong province, they are discovering that workers in new locations across China are not as abundant as they had expected.

That has prompted multinationals and their suppliers to use millions of teenage students from vocational and technical schools on assembly lines. The schools teach a variety of trades and include mandatory work experience, which in practice means students must accept work assignments to graduate.

In any given year, at least 8 million vocational students man China's assembly lines and workshops, according to Ministry of Education estimates - or one in eight Chinese aged 16 to 18. In 2010, the ministry ordered vocational schools to fill any shortages in the workforce. The minimum legal working age is 16.

Foxconn, the trading name of Hon Hai Precision Industry, employs 1.2 million workers across China. Nearly 3 percent are student interns.

The company "has a huge appetite for workers", Wang Weihui, vice director of the Yantai Fushan Polytechnic School, told Reuters during a recent visit to the city.

"It tightens the labor market," said Wang, whose school sends its students to work at Foxconn and other firms.

Local governments eager to please new investors lean on schools to meet any worker shortfall. That's what Yantai, in Shandong province, did in September when Foxconn had trouble filling Christmas orders for Nintendo Co Ltd Wii game consoles.

"It has been easier to recruit workers in the Pearl River Delta than some inland locations," Foxconn told Reuters in written comments in late December.

Some companies cite rising wages in southern China for the shift elsewhere. Wages are a growing component of manufacturing costs in China, making up to 30 percent of the total depending on the industry, according to the Boston Consulting Group.

Wages began to rise around 2006 as the migration of rural workers to Guangdong ebbed. China's one-child policy, plus a jump in higher education enrollment, further depleted the number of new entrants to the workforce, forcing up wages.

That prompted American carmakers, Korean electronics manufacturers and private Chinese firms to look for new sites. Cheaper electricity, land and tax incentives as well as a growing consumer class in regions beyond the booming southern coastal provinces were other reasons to relocate.

Minimum wages in Yantai can be as low as 1,100 yuan ($180) a month compared to 1,500 yuan in Shenzhen, a city near Hong Kong.

What makes vocational students attractive is they can be paid less than full-time workers, although some firms - including Foxconn - pay the same base wages.

Even if they pay the same base salary, employers can save 10-40 percent per person because legally they do not have to pay health insurance or social security benefits for student interns.

Yantai was not the only local government to help Foxconn.

Two months earlier, Foxconn's 100,000-worker factory near the city of Zhengzhou in Henan Province was racing to meet a deadline for Apple Inc's iPhone 5.

Henan authorities told its cities to find 30,000 more workers for Foxconn, according to a Zhengzhou city government notice reprinted by the Hong Kong-based labor rights group, Students & Scholars Against Corporate Misbehaviour, or SACOM.

THE YANTAI MICROCOSM

Yantai shows how much China's labor market has changed.

Zhang Weifang, head of human resources at the Yantai factory of LG Innotek estimates the city's employable 16- to 18-year-olds has halved since her firm began production in 2004. LG Innotek is the components unit of South Korea's LG Electronics Inc.

"It's really hard to find people nowadays," she said.

About 2,400 young workers staff Zhang's factory, of which one-third are vocational students or workers contracted through agencies.

Students are sought after by plants which need extra workers during peak production periods, especially since China's 2008 Labor Law makes firing employees cumbersome.

And students are plentiful. Vocational school graduation has surged 26 percent in the last five years, to 6.6 million students in 2011. Parents whose children cannot compete in China's exam-driven high schools look to vocational schools.

Such students made up such a large percentage of a Honda Motor plant in southern China that when they went on strike for better pay in 2010, they crippled Honda's production chain. A Honda spokeswoman said the ratio of students to regular employees had significantly declined, but would not give a figure.

About 2.7 percent of Foxconn's workforce in China comprises vocational students, the company said in October. That works out to 32,400 teenagers.

"This program gives Foxconn an opportunity to identify participants who have the potential to be excellent full-time employees should they wish to join our company upon graduation," Foxconn said in a statement at the time.

That month, Chinese state media said 56 minors under the legal working age were among students sent to work at Foxconn in Yantai. Foxconn removed the underage students from the plant after the reports.

Chinese law limits students to eight hours of work a day, with no night shifts. Vocational students in Yantai told Reuters they had worked up to 12 hours a day, and routinely did night shifts at Chinese and foreign-invested factories.

Foxconn has a program with Apple, one of its main customers, to pay interns the same wages as other workers, limit their work to eight hours a day, five days a week and allow them to quit if they want.

More than a dozen students interviewed by Reuters in Yantai had a mixed view of their internships, ranging from relatively positive to outraged. Many said it taught them to look for something other than assembly line work after graduation.

Most three-year vocational programs require a two-month internship in the second year, while the third is spent entirely at work. Even though students know they need factory experience to graduate, the assembly line comes as a shock to some.

"At the beginning I was really excited. I thought I could get experience and help out my family with some money," said Yu, 17, an intern in Yantai. She asked that her full name not be used.

"To suddenly encounter 12-hour work shifts, standing, with only 40 minutes to rest and eat, our legs can't stand it."

Some students said they hoped the work would improve their prospects.

"Electronics is our major and so this will help in finding jobs," said vocational student Sun Chuangjiao, a former Foxconn intern.

Companies defend the internships as educational as well as a useful recruitment strategy.

"The vast majority of our interns and the schools that sponsor them find their experience with us relevant and meaningful, and an important first step in their career development," Emerson Electronic told Reuters.

It employs 40 interns for eight-month stints, out of a workforce of 1,063 at its air conditioner compressor plant in the Yangtze Delta city of Suzhou. All are over 18, it said.

LOOKING FARTHER AFIELD

The shortage of labor means companies often search far and wide for vocational schools to supply workers.

Zhang of LG Innotek said she had contacted schools across China to find interns while Mok Jangkyun, an auditor with Samsung Electronics, told Reuters he drove a full day after flying to Guizhou province in southwest China to vet a vocational school sending interns to its supplier factories.

Samsung did an audit of factories after activists found underage workers with fake IDs at one of the electronics giant's 250 supplier factories in China. The South Korean company said it did not find underage workers at any of its suppliers.

Supplying vocational students can be lucrative.

Some students in Yantai said their school took 500 yuan from their monthly wage. Their school declined an interview request.

Some companies pay teachers directly to keep students in line in dormitories and on the factory floor, SACOM has found. In other cases, companies pay management fees or set up extra facilities at schools.

Foxconn says while it pays teachers who supervise students, it usually does not compensate schools.

"However, in some cases, we do provide compensation to meet their overall administrative costs," it said. ($1 = 6.2335 Chinese yuan)

Foxconn, one of China's biggest electronics manufacturers and the maker of most Apple products, has been at the center of a number of labor scandals in recent years. However, employees at factories are hoping to work even more hours than they already do as they seek to make a decent wage.

According to the Wall Street Journal, last year the Fair Labor Association went to Foxconn factories to take an audit of the manufacturing giant's work shifts and found that employees there were working 12-hour shifts, and sometimes even longer. According to the Atlantic, the regular work days of employees exceeded the legal limit in China of 40 hours per week and a maximum of 36 hours of overtime per month. As a result, Foxconn pledged to reduce available hours for workers to a maximum of 49 hours per week, including overtime.

Now, Foxconn employees are asking to be allowed to work more overtime hours because they claim they are not making enough money, even when working the new maximum number of hours. More than 15 Foxconn workers were interviewed, and they all claimed they already work between 10 and 15 overtime hours a week, exceeding the legal limit, and would work even more if given the opportunity.

Many of the employees at Foxconn are originally from rural areas and have come to the factory located in southern China, near Hong Kong, to earn and save money quickly to send back home. However, limiting the amount of hours they can work also limits the amount of money they can bring home.

The best solution to prevent overworking employees, and thus hopefully avoid another spate of employee suicides, would to be raise hourly wages. Foxconn has reportedly increased hourly pay three times this year. Now, the base pay of an employee is around 2,200-2,500 yuan a month ($350-$400), up from the previous 2,000 yuan ($321). At that rate, working regular hours does not satisfy employees who end up still working brutal 15-hour shifts. The pay increases do not equal the potential earnings that employees used to have.

One worker identified only as Ma was quoted by the Wall Street Journal as saying that by working overtime, he was able to double his monthly wage to about 5,000 yuan ($800), exceeding the legally prescribed limit.

Now, the problem may become Foxconn's. The electronics manufacturing company may have a tough time retaining its 1.5 million employees once the new hour restrictions are rolled out next year.

Ma is one of those people who does not think his increased regular pay will make up for the cut hours.

"We don't know how much our salary will go up. But after being here three years, I don't have much incentive to stay, since my wage probably won't rise much," Ma said in the report.

And Ma is not the only one who may leave. After all, the goal for many is to make as much money in a day they physically can, not necessarily having job security. Foxconn did not comment on what it planned to do to retain its employees, but Bernstein Research estimated that the base salary of employees would have to be increased by 50 percent to compensate for cut overtime hours.

For now, Foxconn has improved the facilities' working and living conditions. With dormitories that room friends together, recreational facilities and mental-health professionals on-site to counsel employees, and even high school and college education courses on-site as well, the company hopes that these other benefits will be appealing enough to retain employees.

The manufacturing industry's demand for new employees shrunk by more than 20 percent year-on-year in the first three quarters of this year, according to a recent survey released by the Seebon Human Resources Research Institute.

Among industries, shipping showed the greatest hiring demand, as the need for more employees in transportation, warehousing and postal services increased steadily in the first nine months of 2012, the report said.

Contributing to that result has been the success of e-commerce and the ever-tenser competition among online shopping malls. Industrial restructuring has also led to the disparities in hiring demand, said analysts at the Seebon Human Resources Research Institute.

The survey also said the reduction in job opportunities has resulted in part from the international market's declining interest in products manufactured in China, and the greater number of robots now performing jobs formerly done by people.

It predicted that rising labor costs, the incessant appreciation of the yuan and shrinking overseas demand will force small and medium-sized manufacturers, which once were the source of many job opportunities, to exit the market.

The survey also found that the number of people hired in the first three quarters of the year was up by 5 percent year-on-year. The demand for employees was the strongest in Beijing, Changsha, Kunming, Shenyang and Tianjin during that period.

Most workers saw their incomes rise by 15.1 percent year-on-year in the first three quarters of this year, the report said.

"The average monthly salary for a worker at our factory has increased by at least 15 percent to more than 3,000 yuan ($481) from the beginning of the year," said Gu Zhongwei, general manager of the Wuxi-based Handa Enterprise Fabric Department.

"In the entire textile industry, nobody is talking about profits now. We are only thinking of making it through our current difficulties.

"There is literally no order. Our former partners are now turning to manufacturers in Vietnam and Cambodia, where they offer salaries of only $60 a month."

Shen Xiangjun, manager of Ningbo Jinfan Toy Co Ltd, agreed that labor costs are much higher in China than in other countries.

"I have investigated the Indian market recently," he said. "It turns out that labor costs there are 70 percent cheaper than in China."

He said the average monthly salary at his company exceeds 3,000 yuan.

"Soaring labor cost and rapidly increasing salaries are partly the results of government policies," said Pu Yonghao, Hong Kong-based regional chief investment officer for Asia Pacific at UBS Wealth Management.

"On the other hand, the profit margins of companies have been greatly impaired, especially in labor-intensive industries such as manufacturing. It is very likely that Chinese companies of this kind will lose their edge."

L'Oreal China on Thursday opened an academy in Shanghai for training and developing talent in the cosmetics industry in order to promote sustained business growth in the world's most populous country.

Occupying a total area of 3,300 square meters of a seven-story building in the city center, the training center has 20 classrooms that can accommodate a total of 600 students taking classes at the same time.

The center integrates training with education, and it is devoted to the development of talent in all cosmetics-related jobs, including beauty advisors, hair stylists, skin care advisors, salespersons and managers.

The center will serve all four business divisions and 20 of L'Oreal China's best-known brands. The center plans to train 17,000 hairdressers in the coming year, according to an initial company estimate.

L'Oreal has a history of commitment to talent development. The company's leadership said it hopes to maintain high-quality human resources via various types of training, which will lay a solid foundation for the company's future growth.

Alexis Perakis-Valat, CEO of L'Oreal China, said it is important to not only focus on market share and other metrics of business success but to also pay close attention to talent development.

"Talent is a valuable asset to us. The establishment of this training center is one of the most important steps we have taken in China. It caters to the need of business development and is evidence of our confidence and promise of sustainable development in the Chinese market," he said.

The establishment of the center is one more piece of the puzzle for L'Oreal as it continues to grow its China business.

Since it entered the Chinese market in 1997, L'Oreal has managed to achieve steady double-digit growth for 11 consecutive years. It generated more than 10 billion yuan ($1.6 billion) in total sales in China last year, further consolidating the country's role as one of the three most important markets for the entire group.

L'Oreal has about 3,000 employees in China. With two plants, one management development center, an Asia-Pacific operation center and a state-of-the-art research and innovation center dedicated to Chinese and other Asian consumers, it is one of the few multinational companies possessing R&D, production, logistics and human resources development facilities in the country.

iPhone 5 factory in a bad way

Claims by Apple and Foxconn that they had fixed the labour problems have turned out to be spin, according to a French expose by Envoyé Spécial.

Journalists from the public TV station France 2 went undercover at the Zhengzhou iPhone 5 Foxconn factory.

The programme, which is sort of a French Panorama, found many of the same problems the Chinese manufacturer and Apple promised to fix earlier this year.

According to Engadget, the report uncovers a nightmare of working conditions. Workers were forced to stay in partly built dorm rooms that had no elevators, electricity or running water.

A Foxconn manager was filmed warning workers not to plug devices into dorms that did have electricity, saying that eight workers were killed in a fire after overloading circuits.

Hacks interviewed lower-paid student employees who were of legal age to work there but were essentially slave labour. Corrupt school administrators told them they'd lose their diplomas if they didn't take a job at the plant.

Regular workers also claimed that much of their upgraded $290 monthly salary was still being absorbed by the company through housing, insurance and food charges.

Envoyé Spécial found that Foxconn had methods of clawing back wages from employees. These included a $7 for a psychological test supposed to weed out suicidal candidates. Foxconn does not pay, but workers did.

Foxconn is under pressure from Apple to turn out shedloads of the shiny toys to keep the wealthy and clueless of the world happy.

One employee said it is so difficult to meet the quota, the company has to recruit all the time to stem the turnover of frustrated workers.

Foxconn didn't discuss the above findings with French reporters on camera but has since admitted that it was not perfect.

It said that the company was making progress and was a market leader in meeting the needs of the new generation of workers in China.

Apple told Envoyé Spécial that its subcontractors were required to provide safe working conditions, dignity and respect to employees.

Apple said that it insisted all of its suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever its products are made.

However, neither Apple nor Foxconn seemed keen to have another round of investigations at the new plant.

Ford Motor Co. (F) will hire 1,200 new employees in China by 2015, doubling its workforce as it seeks market share in the world?s largest auto market.

?In China we?re going to significantly increase our resources here,? Joe Hinrichs, chief of the automaker?s Asia- Pacific and African operations, said today in Shanghai. ?We?re committed to it, we have the capital, we have the products.?

Ford is banking on emerging markets to help it maintain profits after posting $6.56 billion in net income last year, the most since 1999. The Dearborn, Michigan-based company expects 70 percent of its growth in the next 10 years to come from the Asia-Pacific region and Africa, it said in September.

The automaker introduced its Mondeo sedan in China last month and also sells Focus compact cars and Fiesta subcompacts in the world?s second-largest economy. Its deliveries in China surged 40 percent to a record 582,467 vehicles last year as rising incomes and economic growth spurred auto demand. Sales rose 20 percent last month, the company said April 7.

The hiring in China -- in departments including engineering, manufacturing and marketing sales -- adds to the more than 7,000 workers Ford plans to employ in the next two years in North America.

Ford is building a new vehicle plant with its China joint venture Changan Ford Mazda Automobile Co. in Chongqing and has plans for a new engine plant in the southwestern city.

STOCKHOLM: Volvo Cars, owned by China's Geely, said on Tuesday it planned to hire 1,200 new employees in Sweden and Belgium as it invests to meet new global demand.

Volvo Chief Executive Stefan Jacoby said the carmaker expected to sell "significantly more cars in 2011" compared with the previous year and that it had seen good demand in the past month in the United States, Europe and also China.

Demand in Japan also remained surprisingly strong, he said. "We are investing in our future. There is no free ticket for a bright future," Jacoby said, adding that the firm was also investing in capacity at its plants.

The carmaker has said it plans to invest up to $11 billion in new product development and facilities over the next 5 years.

Geely, parent of Geely Automobile Holdings, took over Ford Motor's Volvo car unit in August 2010, in China's largest acquisition of a foreign car maker.

SHANGHAI — General Motors Co. says its first-half sales of vehicles in China overtook the U.S. for the first time amid a fitful recovery in American demand.

The 1.21 million GM-brand vehicles sold in China in January to June — a near 50 percent gain over a year earlier — compared with 1.07 million sold in the U.S. market, according to figures released separately by GM's U.S. and international headquarters.

The shift reflects GM's growing reliance on stronger growth in emerging markets, especially China, to offset sluggish sales back home.

The recovery in U.S. auto sales this year has been fitful, with month-to-month sales falling as many times as they rose. Sales of GM's four core brands rose 36 percent in the first half of the year over a year earlier in the U.S., but were down 12 percent in June from the month before, at 195,000, the company said.

In China, where first half auto sales figures for the entire industry are not due until next week, demand has begun to moderate but remains strong. Passenger car sales rose 55 percent in January-May to 5.7 million vehicles, while total vehicle sales rose 53 percent to 7.6 million.

Last year, China sped past the U.S. to become the world's largest auto market, with 13.6 million vehicles sold, as consumers with rising incomes responded to government tax cuts and subsidies aimed at encouraging purchases of small, energy efficient vehicles.

By contrast, U.S. sales of cars and light trucks plunged 21 percent in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms.

Last year, GM's global sales overtook the home market as U.S. demand languished. Sales in China by GM and its partners surged 67 percent over a year earlier to a record 1.8 million vehicles. But while GM's U.S. sales fell 30 percent from a year earlier, they still exceeded its China sales at 2.08 million units.

By HIROKO TABUCHI

TOKYO — The strike that has crippled production at Honda Motor’s factories in China has come as a wake-up call to Japan’s flagship exporters as they seek to remain competitive and push into China’s burgeoning market with the help of low-wage workers.
Related

The strike by Chinese workers to protest pay and working conditions has cost Honda, Japan’s second-largest carmaker after Toyota, thousands of units in lost production in the world’s biggest auto market. The walkout began on May 17 at a Honda transmission factory in Foshan, in the southeast, and has shut down all four of Honda’s factories on the mainland.

“Honda takes the situation very seriously,” said Yasuko Matsuura, a spokeswoman for Honda in Tokyo. The company “is working toward reaching a resolution as soon as possible.” On Tuesday, there were conflicting accounts by the company and Chinese employees about how soon workers might return to their jobs.

In Tokyo, the strike has driven home a salient point: as Chinese incomes and expectations rise in line with the country’s rapid growth, while Japan’s own economy falters, the two countries face a realignment that could permanently alter the way their economies interact.

To complicate the picture, Japanese companies see the Chinese as crucial consumers of their goods to make up for a shrinking and aging market at home. Some of the most profitable Japanese companies, like Fast Retailing, which runs the budget clothing line Uniqlo, have relied on production in China since the 1990s to keep prices low.

“Japan is starting to realize that the age of cheap wages in China is coming to an end, and companies that looked to China only for lower costs need to change course,” said Tomoo Marukawa, a specialist on the Chinese economy at Tokyo University.

Despite the consequences for production costs, a rise in wages and standards of living in China would be welcomed by many Japanese exporters. The same companies that produce in China have also moved to sell their wares there, moving factories to the mainland to reduce costs further and meet the needs of local customers.

In Uniqlo’s case, as incomes in China rose, it followed up with local stores in 2002; the company has opened 64 outlets in China and aims to open 1,000 stores there in the next decade.

And yet, for Honda, prices of its cars in China may have to drop considerably before the company can truly tap into the market.

The strike by 1,900 workers at Honda’s Foshan factory came as a particularly big shock to Honda, which had announced just days before that it would increase production in China to meet demand.

Honda’s chief executive, Takanobu Ito, had said the automaker would begin major expansions at two joint ventures in China, Guangqi Honda and Dongfeng Honda, increasing capacity by 30 percent to 830,000 cars and minivans by 2012.

In April alone, Honda made 58,814 cars in China, a 28.7 percent increase from the same month the previous year and a monthly record.

Five of six Japanese car manufacturers with factories in China broke production records in April.

“The wave of motorization in China will not abate for the foreseeable future,” Mr. Ito said last week. He said that Guangqi Honda would introduce a compact car intended especially for the Chinese market that would be produced there in 2011.

The rise in output in China has been driven by a strong economic recovery in that country, which is buoying auto sales more than in any other major market. The rebound has been good news for Japanese automakers, hard-pressed to cut costs as they seek to return to profit after a collapse in car sales because of the global economic crisis.

Auto sales in Japan have remained sluggish, and sales in the United States and Europe have not rebounded to precrisis levels.

In China, Japanese carmakers are also racing to catch up with rivals after arriving relatively late in the market. The first Honda rolled out of a plant in Guangzhou in 1999, while Toyota did not produce in China until 2002.

Though sales have grown rapidly since then, Japanese carmakers are still struggling against local rivals because of a dearth of small, low-cost models, which are driving market growth in China.

Honda’s least expensive model sold in China, the Fit compact car with a 1.3-liter engine, is priced at about 83,000 renminbi, or about $12,500. A Chery QQ 1.3-liter minicar from the Chinese carmaker Chery Auto sells for about half the price of the Fit.

Given that the average monthly income in China s is 2,050 renminbi, about $300, the price of a Chery QQ is around 19 months’ salary, while the Honda Fit requires more than 40 months. The Honda Accord 2.4-liter sedan, meanwhile, sells in China for about $35,000, far beyond the reach of most workers.

For Honda, the promise of access to a huge, growing market in China was as much a factor as cheaper labor in luring it to open factories there. A 25 percent import tariff on foreign cars is also a major incentive for foreign automakers to produce in China.

More quickly than any other major Japanese automaker, Honda has started exporting cars made in China to third countries. A small plant in Guangdong makes its Jazz model for export.

Besides complaining about their pay, Honda’s striking workers complain about a wage gap: the company’s Japanese employees in China are paid about 50 times what local Chinese workers receive.

Experts say that at the factory level, Japanese companies will need to start changing the way they work with employees — giving them fair pay, benefits and a chance for promotion in line with those accorded to employees from headquarters in Japan.

“Japanese manufacturers need to raise morale by making sure that local staff can also climb within the company,” said Tatsuo Matsumoto, Asia researcher at the Japan Center for International Finance.

EMS-giant Foxconn is said to hire for its PC manufacturing factory in the Chongqing Xiyong Microelectronic Industrial Park in China.

EMS Foxconn is reportedly set to hire a further 6'000 staff over the next half year for the facility, with plans to reach a total work force of about 10'000 next year, reports CENS.

The EMS-provider currently employs around 1'000 staff at the Chongqing facility, which manufactures PC for various customers. The company aims for an annual production output of 10 million notebook.

Chinese officials say the country's exports surged in December to edge out Germany as the world's biggest exporter.

The official Xinhua news agency reported Sunday that figures from the General Administration for Customs showed that exports jumped 17.7 percent in December from a year earlier.

Huang Guohua, a statistics official with the customs administration, said the December exports rebound was an important turning point for China's export sector.

Huang added that the jump was an indication that exporters have emerged from their downslide.

However, although China overtook Germany in exports, China's total foreign trade -- both exports and imports -- fell 13.9 percent in 2009.

SHANGHAI, Jan 6 (Reuters) - Toyota Motor Corp (7203.T) said on Wednesday it sold 21 percent more cars in China in 2009 compared with a year earlier, lagging rival General Motors' [GM.UL] 67 percent gain.

Toyota, which competes with Honda Motor (7267.T) and others, sold 709,000 cars in China in 2009, up from 585,000 units a year earlier, it said in a statement.

That compared with 1.83 million vehicles GM sold in China last year, which also includes 1.06 million mostly mini vans, pick-up trucks made at SAIC-GM-Wuling, its three-way venture with SAIC Motor Corp (600104.SS) and Liuzhou Wuling Automobile.

Volkswagen AG (VOWG.DE) has yet to release its annual sales in China, but Winfried Vahland, president and CEO for its China operations said in November he expected the automaker to sell about 1.4 million vehicles in mainland China and Hong Kong last year, up more than 35 percent from 2008. [ID:nHKG261968]

Analysts attributed Toyota's slower growth to its lack of small cars whose sales have soared this year thanks to government tax incentives.

"GM and Volkswagen are a major beneficiary of the policy incentives favouring small cars, while Toyota's portfolio in China is not as broad," said Zhang Xin, an analyst with Guotai Junan Securities.

Still, Toyota's full-year sales marked an acceleration from 13 percent annual growth in the first nine months of 2009 and 17 percent growth in 2008.

The company originally said in a statement that sales were up 121 percent in 2009, but a company official later clarified that the rise was actually 21 percent.

Masahiro Kato, president of Toyota's China operations, said in November that the Japanese automaker was expected to sell about 800,000 cars in China next year. [ID:nHKG295551]

Earlier last year, Toyota rolled out revamped version of Vios and Yaris compact cars -- both eligible for Beijing's tax incentives.

It also launched RAV4, a sport utility vehicle produced by its venture with FAW Group in April 2009, followed by Highlander SUV, made at its tie-up with Guangzhou Automobile, the next month.

It did not say how many new models it will roll out in China this year.

Auto sales in China, the world's largest market, surged last year, boosted by government incentives aimed at bolstering domestic demand. (Reporting by Fang Yan and Jason Subler; Editing by Jacqueline Wong)

HONG KONG (MarketWatch) -- China's largest automobile manufacturer by sales, SAIC Motor Corp., said Wednesday it expects to post 10 times as much net profit in 2009 as it did in the previous year on the back of a robust jump in sales.

The passenger car and commercial vehicle maker said it expected an increase of more than 900% in 2009 net profit after a 57% jump in vehicle sales to 2.72 million units during the year, according to a filing with the Shanghai Stock Exchange.

SAIC, which operates joint ventures with General Motors Co. and Volkswagen AG (VLKA.Y 21.70, +0.05, +0.23%) , said earnings per share was expected above 1 yuan in 2009, up from about 0.1 yuan in 2008. That compares with analysts' median estimate of 0.93 yuan a share, according to FactSet Research.

The company's strong sales growth in 2009 was aided by government incentives to new car buyers aimed at boosting domestic consumption in the face of the global economic downturn.

However, SAIC (CN:600104 25.24, -0.41, -1.60%) shares were down 2% by mid-morning in a choppy trading session in Shanghai Wednesday, giving up early gains in spite of the performance.

Simon Rabinovitch and Aileen Wang

China's manufacturing sector steamed ahead in December as strong rises in new orders and output drove a key economic survey to a 20-month high.

The official purchasing managers' index (PMI) jumped to 56.6 in December from 55.2 in the previous month, the China Federation of Logistics and Purchasing (CFLP) said on Friday.

It was the tenth straight month that the index has stood above the watershed mark of 50, indicating an expansion of activity.

As the biggest month-on-month rise since March, it also suggested that the Chinese manufacturing sector, far from plateauing after its recovery, has actually gathered momentum.

“December's PMI reading suggests sustained expansion in industrial activity,” Jing Ulrich, chairman of China equities at J.P. Morgan, said in a research note. “The forward-looking components of PMI indicate continued expansion in both domestic and external demand.”

But a slower expansion of new export orders for the second straight month may offer pause to officials who have been extremely cautious in winding down loose, pro-growth policies, believing that domestic stimulus is still needed to counteract sluggish external demand.

“The fall in the indicator for new export orders warrants attention, as it shows we must avoid undue optimism about the improvement in the international marketplace,” said Zhang Liqun, a researcher at the State Council's Development Research Centre who comments on the PMI for the logistics federation.

Another mildly discordant note among the otherwise rosy survey was the reading for input prices, which climbed to a 17-month high of 66.7 in December, up from 63.4 in November.

“The input price rise shows that the production cost of enterprises are climbing. Enterprises should work to increase their capability to withstand rising costs,” Zhang said.

Worries about price rises have emerged again in China after deflation for much of 2009, with top leaders saying that controlling inflationary expectations will be one of their priorities this year.

The dominant theme of the PMI, though, was the broadening strength of China's recovery. Seventeen of 20 industries surveyed reported an expansion in activity, with metal products the strongest and tobacco at the low end.

China's economy shot back to nearly double-digit growth in 2009 after nearly standing still at the end of 2008, giving a lift to Asia and countries that have been able to feed its voracious appetite for commodities.

An unexpected surge in South Korean exports in December was the latest evidence of how economies that are intertwined with China have benefited.

China's PMI also showed that the country's job market has continued to improve. The employment sub-index hit 52.2 in December, up from 51.1 in the previous month, as 12 of 20 industries reported increases in hiring.

Many analysts believe that two crucial preconditions for China to begin tightening policy more aggressively are a recovery in employment and a sustained increase in exports.

At the height of the global financial crisis, China's central planners worried the country would be unable to reach the 8 per cent growth deemed necessary to maintain employment and avert social instability.

The country's 4 trillion yuan stimulus package, complemented by a record surge in bank lending, propelled the economy to 8.9 per cent year-on-year growth in the third quarter of 2009 and put it on track for even faster expansion this year.

“We expect China's strong economic growth momentum to continue in 2010, with the major source of growth coming from a broad-based improvement in private consumption, and further strengthening in private housing investment, and a solid recovery in exports,” Ulrich said.

MACAO, Dec. 10 (Xinhua) -- A total of 16,321 persons were employed in Macao's manufacturing sector at the end of the third quarter of 2009, dropping significantly by 31.8 percent year-on-year, according to the figures released on Thursday by the city's Statistics and Census Service (DSEC).

The average earnings of full time employees in the manufacturing sector rose by 4.8 percent year-on-year to 5,630 patacas (713 U.S. dollars) in the third quarter this year, the DSEC figures indicated.

As for the hotels and restaurants sector, there were a total of47,345 paid employees in the period, dropping by 4.4 percent over last year, and the average earnings also decreased by 1.4 percent to 9,960 patacas (1,261 dollars).

Meanwhile, the local financial sector employed 5,475 persons in the third quarter, dropping by three percent year-on-year, with 4,640 working in local banks. The average earnings for full-time employees in the period rose marginally by 0.1 percent year-on-year to 17,470 patacas (2,211 U.S. dollars).

At the end of September this year, the Manufacturing, Hotels and restaurants and Financial sectors reported 1,534, 3,790 and 163 vacancies respectively, down 15.8 percent, 5.7 percent and 8.9percent year-on-year, according to the DSEC.?

Wuxi, a picturesque city that lies along the Taihu Lake resort, is planning to build a "little India" in years to come.

Wuxi is traditionally a manufacturing city. But with more focus on environmental protection, especially after a serious blue-green algae outbreak in Taihu Lake that triggered a clean water crisis in mid-2007, city leaders started to study how to transform the city's development.

Wuxi decided to replace manufacturing with the service outsourcing industry, which has far less pollution and consumes much less energy.

According to its ambitious development plan, the city is expected to attract $30 billion to $40 billion in service outsourcing business and help create service outsourcing jobs for 1 million people by 2020 - equivalent to that of India as a whole in 2007.

The advancement of the service outsourcing industry cannot survive without a large talent pool.

But the city three years ago learned that fewer than 2,000 students in the city were studying software and information technology fields.

As a result, Wuxi established a goal to build a total area of 6 million sq m for software service outsourcing within three years, and encouraged enterprises to cultivate and import skilled workers.

These policies were well received. In 2008, Wuxi's service outsourcing business accounted for 39.2 percent of companies in Jiangsu province, and the city employed 28.5 percent of Jiangsu province's service industry employees, according to Fang Wei, deputy mayor of Wuxi.

Growing jobs

This year, the Wuxi government launched a new program to train university graduates. Outsourcing companies will receive a rebate of 4,000 yuan ($586) for hiring a graduate, and every graduate of the training program will receive 1,000 yuan as a subsidy.

The city's financial sector is also actively providing financial support to enterprises in the service outsourcing industry.

In February, Wuxi became one of 20 cities approved by the General Office of the State Council to build a service outsourcing demonstration city.

In June, 15 banks provided a credit line of more than 4 billion yuan for the city's 115 service outsourcing enterprises.

The local government joined India's National Institute of Information Technologies (NIIT), the world's second-largest educational institution, to establish the NIIT (China) Outsourcing College in Wuxi as a training base for the city's outsourcing businesses.

While the domestic macro-economy continues to be affected by the global financial crisis, outsourcing is maintaining robust growth in Wuxi.

The city signed $1.14 billion in contracts from January to July, up 110 percent year-on-year.

Experts estimated that by 2010, there will be as many as 100 international service outsourcing and software exports enterprises with annual export values of as much as $30 million.

So far, Wuxi has attracted 22 investment projects from leading multinational service outsourcing corporations and 50 domestic industry heavyweights. Half of China's top 10 industry heavyweights have established headquarters in Wuxi.

But Fang is looking at bigger goals. "Wuxi is on its way to becoming a 'little India'," he said.

After India matured as the world's largest service-outsourcing base, many East Asian countries - including the Philippines, Singapore and Vietnam - began competing for more market share.

"Enterprises from the Chinese mainland haven't had much advantage in competing with these countries, but the cooperation across the Straits should bring some opportunities," said Zhou Ming, deputy director of the China Council for International Investment Promotion (CCIIP).

The service sector accounts for more than 70 percent of the island province's total GDP.

Zhou said Taiwan's industrial development experience, technology and branding, along with a massive market and substantial human resources on the Chinese mainland, will greatly enhance the international competitiveness of both regions.

In spite of the financial crisis, the global service outsourcing industry posted a growth rate of 6.3 percent in 2008 - a strong performance in comparison to the world's average GDP of 2.5 percent.

Many developing countries see the outsourcing industry as an opportunity to survive the international economic downturn, experts said.

SHANGHAI — China's manufacturing activity continued to expand at a steady rate in September, as domestic and overseas demand continued to improve, an independent survey published Wednesday indicated.

The HSBC China Manufacturing PMI, or purchasing managers index, fell slightly to 55.0 in September, from 55.1 in August.

A reading above 50 nevertheless means the sector is expanding, while a reading below 50 indicates an overall decline.

"Although the headline PMI remained broadly unchanged from the previous month, there was a marked expansion of manufacturing employment in September," the bank's chief China economist Hongbin Qu said.

Manufacturers were hiring in September at the fastest rate in 25 months to keep up with rising sales volumes, HSBC said in a research note.

Foreign order levels rose for a fourth straight month, but the increase in total new orders outpaced export sales, suggesting domestic demand was driving the overall improvement, the bank said.

China's economy expanded by 7.9 percent in the second quarter of the year, up from 6.1 percent in the first quarter, mainly as a result of massive government spending amid the global downturn.

Beijing announced a four-trillion-yuan (585-billion-dollar) stimulus package last year in a bid to prop up growth in the country by boosting investment in infrastructure and other government-backed projects.

The PMI sank to a record low of 38.8 in November as the global financial crisis took hold, but improved continuously in the following months, moving above 50 in March.

Manufacturing accounted for more than 40 percent of China's economic output last year, which has been hit hard by evaporating demand for its products in key export markets such as the United States and Europe.

HONG KONG - ELECTRONICS manufacturing giant Flextronics International said on Tuesday it will hire more than 6,000 migrant workers in mainland China this month because of a rise in demand ahead of Christmas.

The company will also take on an additional 1,000 workers in the next two months, Valerie Kurniawan, senior communications director for Flextronics Asia, told AFP.

'The demand is coming from all over the group, it's all segments and industries,' Ms Kurniawan said.

Flextronics makes parts and equipment for the automotive and mobile phone industries among others and its clients include Hewlett-Packard, Motorola and Microsoft Corp. The company's latest hiring spree has focused on its Zhuhai Industrial Park in the Pearl River Delta in the south of the country.

Chinese factories have been rushing to hire migrant workers laid off during the global crisis as they ramp up production but analysts have warned that the labour shortage stems from a short-term rise in demand from Christmas orders rather than a recovery in China's key export sector.

Nearly 20 million migrant workers lost their jobs at the start of the year as factories closed or slashed production in response to plummeting export orders from key markets in Europe and the United States.

China’s car makers are increasingly ambitious, as illustrated by plans to grow at home and, in some cases, expand abroad. One big impediment they face in taking on their foreign rivals: design.

Big global companies spend years, and millions of dollars, designing new cars. But many home-grown Chinese auto makers actually do very little of that.

A senior executive of one small auto maker in Hebei recently laid it out for us over a cup of tea: the reason his company can sell cars much cheaper than foreign auto makers who also produce cars in China, he said, is that his company does no engineering or design work whatsoever. Instead, they tell an outside engineering consultant which existing model they want to copy, and ask them to come up with a product counterfeited in a way that it won’t attract intellectual property lawsuits. In some cases that means companies combining styling ideas from two separate cars into one.

The problem isn’t a lack of talent — as China Journal found one recent day on a visit to the China Central Academy of Fine Arts in Beijing. There we met Phoenix Wang and Jackie Lin, two students whose edgy car designs have put them near the top of their class. Both Wang, a 22 year old from Sichuan, and Lin, a 23 year old from Guangdong, have long been determined to pursue car design professionally. But they and their peers have dim prospects in a domestic industry that doesn’t value their skills.

Their instructor is trying to change that. Ed Wong is a former General Motors Corp. designer who over the past five years also has worked off and on as an outside design consultant for Beijing Automotive Industry Holding Corp., helping the company come up with uniquely-designed and –styled cars of its own, which it aims to launch over the next few years. Wong — a 1987 graduate of the Art Center College of Design, the Harvard of car design, in Pasadena, Calif. — went to work at GM’s main design studio near Detroit before becoming a car-design instructor in the mid-90s, teaching car design in California and Hong Kong.

Since arriving in Beijing, he has designed, among other cars, the Beijing Warrior, the rugged vehicle China’s army now uses as its main jeep, and the Beijing 800 sedan and several other concept cars Beijing Auto showed at the Beijing auto show in 2008.

Wong joined the Central Academy of Fine Arts last September as director of the school’s transportation design department, and he is helping change the outlook of students like Wang and Lin.

Wang says she was planning to continue her design studies in the U.S., but Wong brought with him a car-styling curriculum similar to that used at Art Center, and now she no longer feels she needs to go abroad to pursue her dream. Initially an industrial design student learning to design cell phones and bicycles, Lin says Wong “changed my life and outlook.”

Wang and Lin have it better than many of their fellow aspiring car designers. They plan, for now, to work with Wong after graduation, consulting for Beijing Auto. But until Chinese auto makers start taking design more seriously, theirs will remain a challenging job market, and a lot of talent will go to waste.

TAIPEI, March 4 (Reuters) - Taiwan electronics giant Hon Hai (2317.TW) said on Wednesday it had recently increased its number of employees in China by 5 percent despite the global downturn.

"In the short term, things are not as bad as they are made out to be," Chairman Terry Gou said at a signing ceremony between the company and IBM (IBM.N) on using green technology.

Gou did not specify when the company had increased its China workforce.

Hon Hai is a contract manufacturer that makes some of the world's most famous gadgets, including Apple's (AAPL.O) iPhone, Nokia (NOK1V.HE) cellphones and Nintendo's (7974.OS) Wii game console.

(Reporting by Kelvin Soh; Editing by Jonathan Hopfner)

Since the days when Henry Ford set up his first factory, the United States of America has been the single largest market for automobiles in the world. With America facing a deep recession, US auto sales have fallen by as much as 37% this past month compared to year ago numbers resulting in the US, for the first time, losing its position as the world's number one car market. For the month of January, more cars were sold in China than in the United States. Japan's auto market ranks third in size behind the US and China.

In part that's due to the Chinese government cutting the tax rate on new car purchases, previously at 10%, in half. Although still lower than China's January 2008 sales totals, January 2009 saw relatively strong auto sales performance once the tax cut was announced. The Associated Press reports that General Motors (GM) expects Chinese auto sales for all of 2009 to eclipse US sales by more than a million vehicles. If those numbers prove accurate, it is not likely that the US will ever regain the lead since the market penetration of automobiles in China is still very small.

China, of course, has a total population that is more than four times greater than the population of the US and has been executing a long term economic policy encouraging domestic consumption. China would like to rely less on its foreign exports for its continued economic growth and more on its own domestic markets. Yet its auto industry is still largely reliant on technology borrowed from western companies. General Motors has invested heavily in China and sold over a million vehicles in that country in 2008. The Chinese government is, however, intent upon developing its own auto technology infrastructure and is committing billions of Yuan toward technology modernization efforts in the industry this year.

China has also made huge investments in roads and highways in its major industrial areas in the last decade and modern highways, even by US standards, now lay waiting for increased traffic. A visit to the industrial areas in the countries south, however, finds a mish mash of old and new, with overloaded bicycles and scooters weaving in and out between compact cars, large trucks, and stripped down tractors as the agrarian economy gives way to industry.

BEIJING, Aug. 10 -- The world's leading auto parts maker Bosch said China would represent some 40 percent of its total workforce in the Asia-Pacific by the end of 2008, placing the region's workforce second only to Germany in terms of numbers.

"China is a main contributor to the increase of the Bosch business in Asia. We attach a special importance to the recruiting, training and retaining of skilled associates," said Uwe Raschke, who has just taken charge of Bosch's Asia-Pacific business.

Raschke is the successor to Rudolf Colm, who has taken up a new role within the Bosch board of management, steering the worldwide activities in the consumer goods and building technology business sectors.

The Stuttgart-based company announced that it would invest 1.9 billion euros ($2.85 billion) in the Asia-Pacific region from 2008 to 2010.

By the end of 2007, Bosch had invested around 1 billion euros in China, and it will invest a further 850 million euros in the country between 2008 and 2010.

"We see great growth potential in Asia for all our business sectors especially as it relates to green technologies to conserve resources and protect the environment," said Rudolf Colm.

He said Bosch drive systems for the car are geared to lower consumption and emissions, both in the diesel and the gasoline engines. The company continues to develop automotive technologies that are safe, clean and economical with a special focus on innovation and localized solutions for Asian manufacturers, including low price vehicle applications.

Though it is troubled by the financial crisis, U.S. auto giant Chrysler LLC has not stopped looking for new partners in China since its dropped out of Daimler AG's joint venture (BBDC) with Beijing Auto. However, Chrysler keeps its potential new Chinese partner(s) "highly confidential" for the moment, said sina.com today citing Chrylser's China sales unit.

Chrysler has proceeded with production of the Chrysler 300C and Sebring in Beijing Auto, and Chrysler's some Dodge-brand models will be made in Southeast Motor, a Chinese partner of Mitsubishi Motors. Chrysler's Jeep-brand Compass, Grand Cherokee, and Commander have been sold in China as imported cars. Since it withdrew from BBDC a few months ago, Chrysler has talked with several Chinese automakers, including Chery Auto, for the partnership.

However, Chrysler LLC has not decided yet on which local automaker to team up with in China, the world's second largest auto market. Recently the U.S. auto company announced that its deal with Chery Auto has been put on hold until the two sides sort out their individual financial futures. And Chery has said that its talks and discussions with Chrysler are still going according to plan.

Great Wall Motor is developing an A-class car along with Chrysler. In mid-August, Great Wall revealed that the company's cooperation with Chrysler was making progress. Since then, Chrysler has sent dozens of technicians to assist Great Wall Motor in developing the new car model. The latter's former designs have been given up or totally changed.

Sooner or later, Chrysler will form its joint venture in China for its expansion in this fast-growing market. The company has been recruiting auto professionals in the country for this purpose. Chrysler has planned an extensive product lineup for the Chinese buyers and more positive operation pattern for its recovery in the China market by 2010.

By George Gao

China's domestic automobile sales are expected to grow 15 percent to hit 10 million units this year, backed by strong demand for passenger cars, an official with the China Association of Automobile Manufacturers said on Saturday.

China's fast-growing economy has created a sound environment for the development of the automobile industry, Dong Yang, vice chairman of the association, said at an industry meeting held in the coastal city of Yantai in eastern Shandong Province.

Despite slower growth in business vehicles sales, demand for passenger cars remained robust, he said.

The government will speed up restructuring the industry by detailing standards on security, environment protection and energy saving, Dong said.

He noted the declining trend in auto prices will be reversed as a result of the sharp rise in prices of raw materials such as iron and steel.

The association's latest data showed that more than 4.3 million vehicles were sold in the first five months of this year, a jump of 17 percent from the same period last year.

China Solar & Clean Energy Solutions has announced the appointment of Yihai Yang to the position of acting CFO.

Mr Yang replaces Gary Lam, who resigned from the position of CFO to pursue other interests. Mr Yang has prior experience working for several China-based companies in accountant, controller and CFO positions.

From September 2006, Mr Yang served as the financial controller of China Diagnostics Medical Corporation, a company engaged in the business of pharmaceutical research and development.

From April 2005 to August 2006, he served as the CFO of Beijing Tanglewood Tour Development, a company engaged in the business of real estate investment and development.

Deli Du, CEO, said: "We are very pleased to have Mr Yang join as our acting CFO. We are confident that his experience in several industries will provide our management team a valuable perspective on how to grow our business."

Higher costs and new labour laws are forcing plants in Guangdong to close or relocate farther inland, leaving previously bustling factory compounds empty like ghost towns with little investment interest or prospective buyers.

At its height, the Changdeng Shoe Company employed 7,000 workers in the eastern district of Dongguan, a manufacturing centre in China's southern Guangdong province. Today the company's factory compound is a ghost town, populated by only a few dozen bored security guards, ground keepers and technical personnel overseeing the dismemberment of its assembly lines.

In a communal area surrounded by Changdeng's abandoned worker dormitories, a beauty salon, table-tennis room and medical clinic have been stripped bare. A notice for an auction, held last December, invites anyone interested in the factory's five cars to come and bid.

"The Taiwan boss was in his 70s and wanted to get out of the business," said Pang Wei, as he gave the Financial Times a tour of the compound. "He has gone back to Taiwan."

Mr Pang, an entrepreneur based in the nearby provincial capital of Guangzhou, paid Rmb10m (EUR943,000) for Changdeng's capital equipment and is re-selling it to other manufacturers. At the factory, technicians supervised the removal of sewing tables and other machinery from upper floors to ground level, for easier inspection by potential buyers.

Equipment is not the only thing to have been scavenged at Changdeng. "Most of the workers here were hired by other factories in the area," says Chen Qingwen, who also runs a business selling shoe manufacturing equipment. "They were very happy to take them."

Basic monthly salaries have doubled

According to Zhang Huarong, chairman of both the Asia Footwear Association and the Huajian group, one of China's largest shoe companies, basic monthly salaries in the industry have doubled to $200 since 2006.

However, the difficulties encountered by Changdeng and thousands of other factories across the Pearl River Delta, where Guangdong's manufacturing industries are concentrated, do not suggest that China's export engine is facing crisis. Guangdong's exports grew 22.3 per cent to $369.3bn last year, accounting for 30 per cent of the national total.

The indistrial struggle in Guangdong has been compared to survival of the fittestWhat is happening is a survival-of-the-fittest struggle affecting primarily smaller factories in relatively low-tech, labour-intensive industries. In other cases, companies are redistributing some lower value, less time-sensitive tasks to new production facilities in cheaper inland areas. Reflecting China's resilience, in January the country's national trade surplus surged 23 per cent year on year to $19.5bn.

Large factories that have shifted some of their operations to China's interior, as Huajian has done, usually retain sizeable facilities in Guangdong, which are better at turning around higher value orders with shorter lead times. "I never think about closing our factories in Dongguan," Mr Zhang said. "We want to upgrade them by focusing more on research and development, new fabrics and new manufacturing techniques."

Mr Pang's buyers provide a glimpse into the industrial migration that is occurring as higher costs take their toll on factories such as Changdeng. One of them, Chi Shiqing, runs a small, 300-worker shoe factory in Shaoguan, a city in northern Guangdong near the border with Hunan province.

Another factor behind recent company closures in Guangdong has been the implementation of a new contract labour law"It's not easy to get workers in Shaoguan either," Mr Chi says. "Nobody wants to move there so I have to hire the locals."

He adds: "Wages in Shaoguan are not much lower than those in Dongguan now."His workers earn Rmb1,200 ($170) a month.

Mr Chi can take some comfort from the fact that he manufactures for the domestic market only. That means he is not exposed to another key cost pressure - the rising value of the renminbi, which has appreciated about 15 per cent against the dollar since mid-2005.

Another factor behind recent company closures in Guangdong has been the implementation of China's new contract labour law. By closing before January 1, factory owners could avoid having to pay higher compensation costs mandated by the new law.

Changdeng at least did the right thing, folding up its operations in an orderly manner and in compliance with Chinese law before the end of 2007. According to local media reports, the company paid some Rmb40m in worker compensation.

Across town, Lu Yongyuan, a 32-year-old migrant labourer from Guizhou province, was not so lucky. The Taiwanese head of his company, Dongguan Hongsheng Mould Factory, simply absconded. The factory's 300 workers returned from the traditional Chinese New Year holiday to find the factory gates locked and their salaries unpaid.

"Most of us found out on February 14," said Mr Lu, who had worked for Hong-sheng for 10 years. "The government will auction the assets. Costs were just too high."

A notice posted on Hongsheng's gate instructs workers to contact the local village government office to collect one month's basic salary. Under the new contract labour law, Mr Lu should have received the equivalent of 10 months' wages in compensation.

Atkins has started recruiting in Mandarin to attract Chinese engineering undergraduates studying in the UK

The country's biggest consultant takes on nearly 400 graduates a year - a third of them civil engineers.

Now Atkins head of recruitment Karen Wallbridge said the company had hit on the idea of recruiting directly in Mandarin to make sure it was reaching the widest possible audience.

Atkins has decided to use native Mandarin-speaking recent graduates within the company to address students from China who are studying for engineering degrees in the UK.

Wallbridge told a skills conference organised by Construction News: "Many people in India and China view engineering as a blue riband qualification, the way it used to be viewed in the UK. There are a lot of good young people coming to this country that we would like to bring on board."

She said the events had been extremely popular among Chinese students pleased to be addressed in their first language and that rooms had been filled with undergraduates keen to find a high-profile job.

She said: "It's made us review our policy on communication altogether. We look at recruiting good communicators.

"But now we are re-thinking whether this is the same thing as being able to speak good English."

The firm has already held a number of events at UCL in London and one in Manchester, the largest centre for Chinese students in the UK. It is planning more events at other universities.

Wallbridge said the Chinese recruits would be used not just in the UK but back in their native China where Atkins employs several hundred consultants.

She added the company had not ruled out expanding the plan to cover speakers of other languages.

Sourced from Construction News

New Chinese employment legislation, the Labor Contract Law (LCL), is due to be promulgated on January 1st 2008.

The response to the law so far has been a kind of fearful anticipation but all of this hand wringing is not going to change the fact of the law’s promulgation. The best way to deal with any new issue is to make decisions about responses, and start implementing now. The key question centres on the specific things HR should be doing to keep itself on the right side of the new law.

Here are a few suggestions:

Employee Handbook or Policy Manual - Regardless of your company size, this needs to be set up now, as it is mandated in the new law. It should set out the internal rules and regulations that deal with employee relations, and specify procedures for dealing with conflict situations like termination. Under the new law you would be best advised to have a paper trail to deal with difficult situations, such as firing staff, and the end of the line for this paper trail is your Employee Handbook.

Salary Ranges - If your policy is to specify salary ranges to job applicants then review your advertising and make sure to state the range very clearly in advertisements. In addition to the new labor law, there is also the Employment Promotion Law which also takes effect on January 1st. It specifies that recruitment information in advertisements published by employers should be the same as that mentioned in job interviews. Again you have the paper trail issue.

Overtime - As an exercise, calculate the cost of overtime to your company. The logic is that you may be required to pay amounts that you had not considered before. Under the new law employees in China cannot work longer than forty hours a week. Any time worked over that is liable for overtime pay and the new law makes this enforceable.

Discrimination - Look for a new trap: discrimination. The new Employment Promotion Law says that applicants for employment will be entitled to sue employers for discrimination. This is based on ethnicity, age, gender, race, religious belief or physical disability. Although multinational companies have tended to be on the right side of this issue for a long time, it is still worth reviewing your current advertising and hiring procedure. You don’t know what lurks under rocks until you turn them over. (Oddly, the government will issue a list of ‘jobs unsuitable for women’ to assist companies stay on the right side of the law.)

Job Descriptions - Review your process, if you have one, for creating Job Descriptions. If you don’t have one, create one. The new law says that employees cannot be sacked at will anymore. You have to have well-defined reasons with a paper trail back to documents that the employee has signed, along with measures that support your claim that they are incompetent.

Documentation - Review every document that you sign with an employee, including NDAs and non-compete agreements. The new law makes you liable for any negative outcome because the assumption (mine) is that you hold all the cards, and have superior power within the employer/employee relationship. Any slip-ups will cost your company money, not the employee or the job candidate. (Note: Under the new law employees cannot be forced to sign non-competitive agreements. This belongs only to the realm of senior management.)

Temporary Staff - Deal with all and any temporaray staff that you have in your office or factory. You need to either hire them on a contract or let them go. You may have some leeway on this but any delay is at your own risk. Employees, backed by willing and well-prepared employment lawyers, will be able to claim double salary for months worked without a contract. The limit is 12 months’ salary but that’s not much comfort.

Permanent Staff - The use of employment contracts in China has been the norm for multinationals in China. At the end of the contract they have often been renewed without much thought because the impact of that decision was low.

Under the new law the employer is permitted to enter into only two employment contracts with the employee. After that they are on an open-term contract, which means they leave or stay largely at their own discretion, and of course excepting breach of contract. So every permanent employee needs to be reviewed. Or not. (This should have been dealt with some time ago and can only be seen as a legal loophole. One that you might not want to go through. Chinese professional staff have choices, and under the new law they also have power.)

Employee Council - The new rulings on the issue of unions is still not clear, but what is clear is that companies cannot bar employees from setting up unions.

An alternative is to set up an employee council that represents the employees and solicits their opinions. This body does have a say on issues like your Employee Manual, and it is advisable to have one because it can make the approval of this kind of document easier. If you don’t have an Employee Council you have to get every-single-staff-member to agree to each issue one by one. (The jury is still out on this one.)

It would also be advisable to create an Employee Council as a way of beginning a new kind of conversation with employees. Not having had previous experience of this issue, most Chinese employees do not have the language of employer/employee cooperation, and this council would give them the breathing space to develop that ability.

Public Relations - This may not seem like an obvious department to be involved in anything to do with the new labor law, but according to Image Thief the underlying narrative in China is “Chinese employee vs. callous multinational employer or foreign boss”.

Foreign companies are easy targets, with deep pockets and an aversion to negative publicity. He suggests that you consider the various possible negative PR scenarios that could happen, and prepare a response. It’s all about managing risk.

Clearly the power has shifted in favor of the employee in China. This is not to be feared, as fear tends to be immobilizing. The new labor law really only brings China in line with many other countries around the world. The bonus is that the establishment of the rule of law is an absolute good in itself.

That doesn’t mean you shouldn’t be prepared for the change because the new law may overreach on behalf of employees for a period of time, until employers push back.

Yahoo! Inc's secret weapon in its effort to squeeze a higher offer out of Microsoft Corp resides in Asia's surging Internet market.

Yahoo has investments worth US$13.8 billion in Alibaba.com Corp, parent of China's largest online trading site, and Yahoo Japan Corp. That accounts for almost one-third of the US$31 a share Microsoft is offering, Bloomberg News reported.

In one year, the value of those stakes may balloon 15 percent to US$15.9 billion, according to analyst estimates.

Unlike the United States search market, where Microsoft and Yahoo have been beaten down by Google Inc in text advertisements, Asia is geared more toward graphical banner ads where Google has less of a presence.

In China, the world's second-largest Web market, online trading between companies may almost quadruple to the equivalent of US$1.05 trillion by 2010.

Yahoo investors may benefit as Microsoft pays more to gain access to this growth.

"Alibaba is a good franchise in the fastest-growing Internet market," said Kevin Landis at Firsthand Capital Management in California.

"Stubbornly, these Yahoo shares didn't respond to that.

''I think if you gave it time, they would."

In rejecting Microsoft last week, Yahoo Chief Executive Officer Jerry Yang cited investments in Alibaba and Yahoo Japan as reasons the offer "substantially undervalues" Yahoo.

No competing bid has yet emerged.

Yahoo is in talks to combine Internet operations with those of Rupert Murdoch's News Corp, sources said.

However, Yahoo spokeswoman Tracy Schmaler and News Corp spokeswoman Julie Henderson declined to comment.

Alibaba stake

Yahoo in 2005 swapped US$1 billion and its China units for 39 percent of privately held Alibaba.com Corp in Hangzhou.

The initial public offering last year of its Alibaba.com Ltd unit raised HK$13.1 billion (US$1.68 billion), the biggest IPO for an Internet company since Google in 2004.

Alibaba.com Corp also owns Web-auction site Taobao and online payment unit Alipay.

Sales from Taobao's site more than doubled last year as rising incomes in China lifted the number of Internet users by 53 percent.

The amount of goods and services traded on the Web by Chinese companies may increase to 7.54 trillion yuan (US$1.05 trillion) in 2010, from 2.1 trillion yuan last year, according to Ping An Securities Co.

Stifel Nicolaus analyst George Askew in Baltimore valued Yahoo's holdings in Alibaba.com Corp at US$4.93 billion as of a week ago.

With 33 percent control of Yahoo Japan and a 10-percent stake in South Korea's GMarket Inc, Yahoo's Asian investments equals US$13.6 billion, or US$9.74 a share, Askew said.

"Yahoo's stronger position in Asia is one of the rationales for Microsoft's takeover bid," said Ivan Li, an analyst at Kim Eng Securities (HK) Ltd in Hong Kong.

Microsoft is pursuing Yahoo to bolster competition with Google in an online ad market that may double to US$80 billion by 2011.

Yahoo Japan, the country's most popular Website, attracted 88 percent of local users in December, compared with 56 percent for Google.

It also offers access to a mobile-phone market where more than half of subscribers surf the Web.

China key

The Asian properties would be a boon for Microsoft, whose Internet business there lags behind competitors, said Claus Mortensen, a Hong Kong-based analyst.

Microsoft handled 1.2 percent of search queries in Asia in December, compared with Google's 38.2 percent and 24.9 percent for Yahoo.

Display ads are 52 percent of the online market in Asia, compared with 20 percent for search.

In the US, search accounts for 40 percent, versus 31 percent for display and video.

Almost all of Google's US$16.6 billion in sales last year came from search.

Microsoft faces challenges retaining Alibaba and Yahoo Japan clients wary of the world's biggest software maker, said JupiterResearch analyst Neil Strother.

"On paper it gives Microsoft a bit of a leg up," Strother said.

"Can they hold onto customers or do the customers decide that Yahoo Japan or Alibaba have just become the same as Microsoft?"

General Motors Corporation has announced that they will be offering buyouts and early retirements to all of their 74,000 hourly workers in the United States who are members of the United Auto Workers union. Is this a good idea, or a very bad one? While it will increase profit for a great American auto manufacturer, it also leaves us wondering if: more of the jobs will be sent overseas; working for GM will no longer be an enviable position; the Union will die off.

The deal does reportedly come with more favorable terms than the 2006 offer that General Motors extended to service and parts workers in 2006. More terms of the buyout are here. We have to ask GM employees to respond here, because we're clueless on this one. When we posted this article asking the FedEx to support unions, many FedEx workers weighed in that it was possibly not such a good idea (though others said direly needed).

GM hasn't had the best history with union workers recently, though, and in September 2007 the UAW famously went on strike for the first time in 37 years. It's also pretty hard to comprehend that they cannot afford to pay our American workers, but they can invest millions in a research center in Shanghai, China.

With U.S. auto sales forecast to hit a 10-year low in 2008, Detroit's Big Three carmakers are aiming to rev up sales in emerging markets.

Developing nations will account for more than 75% of the auto industry's unit sales growth over the next decade, says market research firm CSM Worldwide. Most will come from the BRIC countries: Brazil, Russia, India and China.

General Motors GM, Ford F and, to a lesser extent, Chrysler hope to grab a big slice. But they're in for a battle with other global giants as well as local firms like India's Tata Motors TTM, which is close to buying Ford's Jaguar and Land Rover brands.

Competition is fiercest in developing countries with their own local producers, says Maryann Keller, head of a Greenwich Conn.-based auto consultancy. China and India are examples.

But emerging markets without local automakers -- Brazil, Thailand and Poland -- also make attractive targets for global giants and newcomers.

"It isn't going to be just the Japanese, Americans and Europeans competing for (developing world) sales, it's going to be Korean, Chinese and Indian carmakers as well," Keller said. "The automotive world is opening up to greater competition from new emerging companies we've never heard of. And there's no reason to assume foreign companies are going to dominate in Russia, China or India."

GM has a top-three market share position in China, Russia and Brazil. In 2007, GM's sales increased 74% in India, 18% in China, 19% in Latin America and the Middle East, and 9% in Europe.

Toyota and GM were neck-and-neck in 2007 global sales. Toyota has been gaining ground in China. Toyota also opened a factory in St. Petersburg, Russia, late last year. The plant will produce 50,000 cars a year, Toyota says.

"The debate going forward is whether GM's lead over Toyota in BRIC countries is sustainable," said Lehman Bros. analyst Brian Johnson.

Toyota TM has forecast combined sales of 900,000 vehicles in China and Russia for 2008, a jump of almost 40% from last year.

In BRIC countries, Ford only ranks among the top three foreign companies in Russia.

GM and Ford are well-positioned for global growth, says Michael Robinet, CSM's VP of global vehicle forecasts.

"GM is doing well in the BRIC countries. It's focusing more assets on Russia and India," he said. "Ford is getting stronger in China and it's well-established in Brazil."

Chrysler has yet to make a dent in emerging markets. But it's announced a goal to double overseas sales over the next four years.

"Chrysler is trying to catch up," said Bruce Belzowski, auto analyst at the University of Michigan's Transportation Research Institute.

He points out that Chrysler largely lost its global reach when parent Daimler sold more than 80% of its stake in Chrysler to private equity firm Cerberus Capital Management.

"Daimler is gone now," Belzowski said. "Chrysler is trying to build a B-size (subcompact) car with Chery (Automobile) for China's market."

It's a large and growing market. CSM estimates China's auto sales will grow 60% to 10.9 million by 2013, up from 6.8 million last year.

Among foreign suppliers in China, Volkswagen leads with 18% market share, followed by GM at 10%.

Toyota overtook Korea's Hyundai for third in 2007, says Tim Dunne, analyst at J.D. Power & Associates.

Japanese automakers have gained share in China, Dunne says, while European firms have held steady. The combined share of U.S. automakers slipped in 2007, he says.

Chinese firms such as Chery had almost 30% of the market last year, with Japanese companies at 28%.

Chasing The Nano

CSM forecasts India's auto market will more than double from current levels to 4.16 million cars by 2013.

Korea's Hyundai leads foreign automakers with about 14% market share in India. GM and Ford trail with 4% and 3%, respectively.

Ford on Jan. 8 said it would spend $500 million to set up a small car factory in southern India. Overall, it's investing $875 million in the country.

GM is spending $350 million to set up its second factory in India.

Both GM and Ford face an uphill battle vs. India's Tata, which holds 23% of the market. Tata rolled out the world's cheapest car -- the $2,500 Nano -- in early January. The Nano is said to get 50 miles per gallon but lacks power steering and power brakes.

Tata expects to sell 250,000 Nanos a year in its home market. Within three years, Tata plans to export its low-cost, no-frills car to other developing countries.

Analysts say Ford is aiming to produce a car for India's market with a $7,500 sticker price. GM is said to be working on a sub-$5,000 car intended for emerging markets.

What About Profits?

Ultracheap cars might win Detroit's Big Three market share, but their profitability is questionable, Keller says. "The growth is in small vehicles, but nobody is going to make money on these (ultracheap) cars."

Meanwhile, Chinese consumers are already trading up. The average car in China costs about $15,000 vs. $27,000 in the U.S., Dunne says.

Aside from BRIC countries, other fast-growing auto markets include Thailand, Indonesia, Mexico, Poland and Ukraine. Sales also are rising fast in Africa and the Mideast.

While overseas markets beckon, GM and Ford will stay under attack in the U.S.

"Every carmaker still wants to come into the U.S.," Keller said. "Why? Because we buy big expensive cars."