Category: "News of China"
FDA to Increase Staffing in China as Grassley Considers Factory Registration Fees
April 8th, 2008The Food and Drug Administration announced on 14 March that it has received approval from the State Department to establish eight full-time permanent positions at U.S. diplomatic posts in China, pending authorisation from the Chinese government. The FDA plans to hire and place these employees at the U.S. embassy in Beijing and the U.S. consulates general in Shanghai and Guangzhou over the next 18 months. An agency official characterised the establishment of a permanent FDA presence in China as a "significant step toward ensuring access to safe food, drugs, and medical devices in the global market." Among other things, these offices will allow greater access for inspections and greater interactions with manufacturers to help assure that products shipped to the U.S. meet the applicable safety and manufacturing quality standards.
The safety of imported food and drug products, especially from the mainland, continues to be a significant concern among U.S. lawmakers. The most recent incident that has caught their attention is the importation from a Chinese drug plant that went uninspected by the FDA of a contaminated ingredient that was used in the production of a blood-thinning drug in the U.S.
In response, Senator Charles Grassley, the senior Republican on the Senate Finance Committee, wrote to the FDA recently to inquire about the possibility of imposing registration fees on foreign manufacturers of drugs and active pharmaceutical ingredients. Grassley pointed out that many such companies register with the FDA "as a means to bolster their own standing and with no intention of exporting products to the United States market" and that this slows the FDA inspection system. At the same time, he said, other factories send these products to the U.S. without registering at all. Imposing registration fees could not only increase the funding available to conduct inspections but could also reduce the number of companies that register and thus the number of inspections that must be done. Grassley noted that foreign medical device makers are already subject to such fees, which are currently set at US$1,706 and will rise to US$2,364 in 2012.
Use of foreign investment in west China increases
April 8th, 2008The increase of actual use of foreign investment in China's western regions exceeded the nation's average by 128 percentage points in the first two months this year, said an official of the ministry of commerce on Sunday.
During the first two months, the western regions' actual use of foreign investment was 1.393 billion U.S. dollars, more than double over the same period of 2007. A total of 254 foreign companies were approved to invest in the region, said Ji Xiaofeng,a ministry official in charge of foreign investment management at the ongoing 12th Investment & Trade Forum for Cooperation between East and West China.
Ji attributed the increase to the nation's encouraging policy for foreign investment to the middle and western regions. She said the ministry was advocating a transfer of foreign investment from the eastern regions to the western areas and encouraging local governments to use the investment in an innovative way.
She said the ministry would continue improving regulations on foreign acquisition and merger and establish an anti-dumping investigation mechanism. Foreign investors would be welcome to participate in reforms of state-owned companies.
According to statistics available, a quarter of the nation's tax revenue came from foreign invested companies at present. By the end of Feb., the number of foreign invested companies accumulated to 637,000 nationwide and the amount of the actual use of foreign investment reached 781.1 billion U.S. dollars.
During the first two months, 4,372 foreign investors came to China and the actual use of foreign investment rose 75 percent to 18.1 billion U.S. dollars.
Report: Financial jobs get highest pay in China
April 7th, 2008BEIJING, April 7 -- Chinese graduates engaged in the financial industry were the best paid last year, according to ChinaHR.com, the country's leading job-hunting Web site.
The financial industry tops the best paid list for university graduates, with an average annual income of 58,388 yuan (8,322 U.S. dollars) in 2007, followed by the IT and the medical industries. Insiders say that although the phenomenon is linked to last year's stock market boom, it largely stems from the financial and information industry's traditional place as high-salaried industries.
According to the report's regional breakdown, the annual income for Shanghai graduates fell to 37,007 yuan (5,275 dollars) in 2007, but this was not enough to topple Shanghai from the number one spot for high paying cities, followed by Beijing, Shenzhen and Guangzhou.
Salaries for graduates from junior colleges sustained a marked decline from 2006 to 2007, decreasing by 23.86 percent. On the up side, salaries for graduates with doctor's degree rose by 18.93 percent. Analysts say that the increasing corporate demand for doctoral graduates has driven the increase in salary.
Average salary increase of urban workers rises to six-year high
April 3rd, 2008Sound corporate performances and raised lowest salary levels lifted the average salary of China's employees working in cities and towns approach 25,000 yuan (3,561.3 U.S. dollars) in 2007, up 18.72 percent over the previous year, the biggest rise in the past six years.
According to the year's No. 1 statement released by the National Bureau of Statistics (NBS) on Tuesday, the average salary increase hovered around 14 percent from 2001 to 2006. The 2007 average salary of urban workers was 24,932 yuan and the daily average was 99.31 yuan (14.15 U.S. dollars). Taking into account price rises, the average salary increase hit a six-year-high.
The average salary comprises the basic wage, bonus and all allowances and subsidies. It is often used as a reference by the government for nailing down the lowest salary standards and calculating social insurance premiums.
Analysts attributed the rise to strong corporate revenues and raised lowest salary levels across the nation.
According to statistics available, large state-owned enterprises chalked up an accumulative profit up to 2.3 trillion yuan (327.6 billion U.S. dollars) from January to November last year, up 36.7 percent over the corresponding period of 2006. Private enterprises enjoyed an even larger profit growth of 50.9 percent.
The average of the nation's lowest salary standards, which vary between provinces, rose by 30 to 64 percent in 2006 from two years earlier.
Last year, the average salary in Beijing reached 39,867 yuan (5,679.1 U.S. dollars), trailing those in Shanghai, Guangzhou and Shenzhen which all exceeded 30,000 (4,273.5 U.S. dollars).
Salary gaps still existed. In Beijing, people working in industries such as securities, banking and air transport obtained more than 100,000 yuan (14,245 U.S. dollars). While workers in the textile and agriculture industries had less than 20,000 yuan (2,849 U.S. dollars).
Even in the same industry, salaries are widely divergent. For instance, the highest average salary of employees in Beijing's securities companies exceeded one million yuan (142,450 U.S. dollars) while the lowest was less than 40,000 yuan (5,698 U.S. dollars).
Analysts said the nation's average salary pattern among industries was similar to that of developed countries. Transfer of human resources promoted by market forces would help reduce salary gaps but the current corporate governance and personnel management policies had crippled the market's role.
Key Datang Mobile Employees Migrate to China Mobile
April 2nd, 2008Datang Mobile VP Yang Guiliang has handed in his resignation and will soon leave the company. He is the third executive to leave the firm, with former president Yang Ru'an having quit last November.
A number of executives and key employees have left the firm, including VP Cai Luwu, VP and Chief Engineer Li Feng, Strategy Department GM Ge Sijing and Partnership Department GM Zhao Sen. One reason for the departures is changes in IPO plans for the Datang Group, which means these employees will not receive incentives.
A source close to Datang Mobile said that Zhao has moved to the TD-SCDMA Alliance, while most of the other departed employees will go to China Mobile's (NYSE: CHL; 0941.HK) TD-SCMDA department, saying that "China Mobile is currently recruiting TD-SCDMA personnel, with twenty employees from Datang Mobile's Beijing office alone moving to China Mobile."
HSBC plans more staff and growth in China
April 1st, 2008HSBC Bank does not see its business on the Chinese mainland being affected by the United States subprime credit crisis as it will increase staff numbers by up to 50 percent and has eyes set on expansion.
"There won't be any lessening of commitment to grow our business here in China," said Richard Yorke, president and chief executive officer of HSBC Bank (China) Co, yesterday in Shanghai. "We have been here for 143 years, and I expect that we will be here for another 143 years but significantly longer beyond that."
The bank targets to hire 2,000 to 2,500 new employees this year to add to its current 4,900, he said.
HSBC Group Chairman Stephen Green was on a five-day trip to China last week, and he encouraged Yorke's team to continue to grow the business quickly, Yorke said.
He also said the bank "will continue to grow very, very strongly in this business," declining to be more specific.
The bank yesterday announced the launch of its private banking business in Shanghai, Beijing and Guangzhou to woo the growing number of millionaires on the mainland.
The bank targets high net worth clients with assets of more than US$10 million and with investable assets of US$3 million. To open accounts, a minimum deposit of US$1 million is required.
The bank got the go-ahead from the regulator to open the business in Guangzhou on February 4 and for the Beijing and Shanghai operations on March 18.
The bank is "comfortable" with the lending growth amid the current tight monetary policy in China, Yorke said.
HSBC China posted strong growth in 2007 on the country's booming economy and the opening up of the banking market to overseas players. The bank's operating income grew 44.2 percent to US$451 million. Its pre-tax profit grew 28.7 percent to US$165 million.
HSBC, Citigroup, Standard Chartered Bank and Bank of East Asia, locally incorporated in April 2007 so as to be able to offer unlimited yuan services to mainland residents.
Dongfang issue for wind power
March 31st, 2008DONGFANG Electric Corp says it proposes to sell up to 65 million new shares in China to raise funds to invest in energy-related infrastructure projects.
China's third-biggest maker of power-generation equipment said it intends to use the funds make total investments of up to 3.96 billion yuan (US$565 million) on wind power projects in Hangzhou, eastern China, and Tianjin in northern China, and a nuclear power renovation project in Sichuan Province.
Dongfang said it proposed to sell not more than 65 million new A shares, representing 7.96 percent of the total shares of the company currently in issue.
The sale will be subject to approval by shareholders and relevant Chinese authorities, Dongfang said in a statement to the Hong Kong Stock Exchange.
The company also said profit for 2007 fell 1.9 percent to 2.41 billion yuan, from 2.46 billion yuan in 2006. Earnings per share dropped to 2.723 yuan from 2.777 yuan the previous year, the Deyang, Sichuan-based company said.
The directors proposed a final cash dividend of 0.24 yuan per share for 2007, compared with 0.20 yuan a year earlier.
Nestle opens ice cream plant in south China
March 28th, 2008GUANGZHOU, March 27 (Xinhua) -- Nestle opened a new ice cream plant in south China on Wednesday, demonstrating its aim to further develop the Chinese market.
The 22,000-sq-m factory, in Guangzhou, capital of Guangdong Province, will increase the food and drink giant's annual ice cream productivity to 64 million liters, three times the output from its old facilities.
The plant, involving 250 million yuan (about 35.6 million U.S. dollars) in investment, will help Nestle to promote its high-end ice cream brand in south China and meet the growing consumer desire for ice cream products, said Peter Brabeck-Letmathe, Chairman and CEO of the Nestle Group worldwide at the opening ceremony.
Nestle, the world's largest food company, has opened 20 factories in 17 regions across China since it entered the market two decades ago, employing more than 13,000 people.
The Swiss-headquartered group said earlier this month that it expected underlying sales to rise in 2008 at a similar rate to 7.4percent last year, a big jump from its long-term growth target of between 5 and 6 percent.
Boo hoo for Yahoo! workers
March 27th, 2008YAHOO! Inc's China unit will cut workers after the Internet search site failed to narrow the gap with the country's market leader, Baidu.com Inc.
The Yahoo! unit will dismiss "fewer than 100" employees, Porter Erisman, a spokesman for Alibaba.com Corp, which operates the search site in China, said yesterday.
Yahoo! has lost share in China's Internet market, the world's second biggest, as Baidu and Google Inc introduced services including online map searches and spreadsheets.
Sunnyvale, California-based Yahoo!, which has reported seven straight quarters of declining profit, said in a statement on January 21 that it will "eliminate some areas of the business."
Baidu's market share in China rose to 60 percent in the fourth quarter from 58 percent a year earlier, while Google's climbed to 26 percent from 17 percent, according to researcher Analysys International.
Yahoo's share fell to 9.6 percent from 13 percent, Analysys said.
Lowest earners get 14% rise
March 26th, 2008The Shanghai municipal government yesterday announced a 14-percent increase to the minimum wage in a bid to help those on low incomes better cope with the rising cost of living.
The monthly rate will be increased from 840 yuan ($120) to 960 yuan, with effect from Tuesday.
This is the second increase in five months in Shanghai, whose minimum wage is now the highest in the country.
"Inflation has had a big impact on people on low incomes in Shanghai," Bao Danru, director of the municipal labor and social security bureau, said.
"That's why we have introduced the largest increase for several years."
Shanghai's unemployed will also get up to 70 yuan more a month, taking the average payment to between 410 yuan and 550 yuan. The actual amount depends on the person's age and number of unemployment insurance contributions they have paid, Bao said.
City dwellers living below the poverty line, or unable to work, will be given an additional 50 yuan a month, he said. Government aid for people in urban areas will rise from 350 yuan to 400 yuan a month, while non-urban dwellers will get 3,200 yuan per year, up from 2,800 yuan.
Currently, 339,400 people who work in the city and 118,300 non-urban workers receive aid from the Shanghai government, Bao said.
All of the wage and benefit increases will come into effect on Tuesday, he said.
Over the past year, inflation in China has risen steadily.
Zhang Zheren, deputy director of the municipal civil affairs bureau, said: "Since April, the price of food, especially pork, has risen considerably."
Alibaba.com gives UK route to China
March 24th, 2008For years, the glut of cheap imports flowing from the huge manufacturing zones of southern China on to shop shelves across the world has resembled an irreversible tide.
The result? An escalating trade deficit which has come to underline China's role as the West's factory floor.
Now, the largest internet company in China is attempting to help swing the pendulum back in the other direction.
Alibaba.com, the e-commerce firm headed by Jack Ma, the man dubbed China's "internet godfather", is to launch an online platform which will encourage the owners of British small and medium-sized enterprises (SMEs) to export their products to the world's most populous country.
Called Export to China, Export to the World, the new service, which will be launched in the second half of this year, will target the 268,000 Britons who are already members of Alibaba.com.
The website is currently recruiting new members in this country at a rate of 2,000 every week.
David Wei, chief executive of Alibaba.com and a former executive at B&Q in China, said that the new platform would appeal to British SMEs operating in industries in which Britain retained a prominent international role.
"In high-technology engineering products, where the UK is still very competitive, and in areas such as patents and intellectual property, there is a major opportunity for UK SMEs to export to China," said Wei.
Alibaba.com is the Hong Kong-listed unit of Alibaba Group, which also includes one of China's biggest consumer websites and a substantial online auction business.
Wei said the company continued to keep an open mind about stock market listings for other divisions of the group.
"We are keeping all options on the table," said Wei.
Last week, Alibaba.com reported its maiden results as a public company, unveiling a 200 per cent rise in operating profit to RMB804m.
The Chinese company may play a significant role in the ongoing takeover battle between Microsoft and Yahoo!, which owns a 39 per cent stake in Alibaba Group.
Ma is understood to have appointed Deutsche Bank to advise him on the situation and is in talks with potential investors who may be interested in co-funding a buyout of the Yahoo! stake.
On Friday, Ma was one of a number of senior Chinese businessmen who attended a discussion in London with government ministers about the future of the internet.
Recruitment agencies tap new markets to hire staff
March 21st, 2008Recruitment agencies in the GCC are tapping into new labour markets, including Bangladesh, Nepal and Vietnam, in an effort to solve the acute labour shortages in the construction industry.
Recruitment of workers from Bangladesh, in particular, has increased by more than 100 per cent compared to previous years, with more workers from the country coming to the UAE during the first two months of 2008 than the whole of 2007.
With the construction industry witnessing a boom in several Asian countries, especially India, the shortage of workers in the GCC has driven labour sourcing companies to look towards untapped markets.
As a result, expat workers’ contribution to the Bangladesh economy rose by more than 25 per cent in the first eight months of the current fiscal year, compared to the same period the previous year, according to reports quoting statistics released by Bangladesh Bank.
And the staffing problem is unlikely to be resolved soon. According to a new study by the Project Management Institute (PMI), the construction sector in the GCC will experience an alarming shortage of workers during the next five years.
Majeed Al Gassab, President of the Bahrain Society of Engineers and the Vice-President of the Bahrain’s PMI chapter, told Emirates Business the movement of workers away from the GCC has already started and immediate measures have to be put in place to retain remaining staff and find new sources for recruitment.
A recent PMI study, Resource Challenges, said construction projects in the GCC planned for the next two years would require five million workers.
“Our findings were based on a market study conducted by the Middle East Economic Digest (MEED). Based on the expected project workload, it was estimated construction activities in the Gulf may reach the peak at about 12 billion man hours in 2010. This is equivalent to about five million labourers,” said Al Gassab.
“It is evident skilled workers are already moving out of the Gulf for better opportunities and it will be a great risk to carry on with inexperienced labourers,” he added.
While the shortage is more intense in the semi and unskilled labour sectors, agencies are also finding it difficult to recruit experienced engineers, project managers and architects.
Phil Edmondson, general manager for EDARA, a Union Properties-owned project management company, yesterday said he has been short of 20 employees for almost two years.
“Ever since I joined the company 22 months ago, I have been looking for at least 20 staff, mostly project managers for different fields. The only problem in going for young guys is that they lack experience,” said Edmondson.
Meanwhile, as a result of the crunch, the average salary of a project manager in the UAE has increased from Dh35,000 to Dh45,000, while it has become difficult to find commercial and development managers for even Dh50,000.
“Amid all this confusion is the poaching menace. Companies are willing to simply buy employees by offering a 100 per cent salary increase,” said Edmondson.
“One of my staff, whose salary was Dh27,000, was brought over by another company for Dh43,000. The government should introduce a new three-year fixed visa where the employees should not be allowed to move jobs.”
The shortage is so severe that several companies are settling for candidates who do not meet the required criteria and, in some cases, have only half the required years of experience.
Phil Starr, recruitment director at Real HR, said companies no longer have the time to wait for ideal candidates.
“Several projects are already delayed and companies cannot afford to wait further for their ideal candidates,” said Starr.
The GCC’s construction industry is valued at more than Dh1.9 trillion and according to news reports more than 160 construction projects in the UAE alone are delayed because of labour shortages.
While in previous years, the majority of the semi and unskilled construction workers were from India, the number is dwindling. With construction industry in India growing rapidly and the increasing value of rupee against the dirham, companies are finding it difficult to convince recruits from India to take jobs in the Gulf.
Mohammad Jindran of Sharjah-based Overseas Labour Supply said there has been a severe drop of interest from Indian construction workers.
“We do not like to go to India for selection anymore as we only manage to get 30 per cent of our requirement. Bangladesh, Nepal and even Vietnam have emerged as the new recruiting areas.
“In Bangladesh, we are able to get quantity and we are trying our best to train them and improve their quality. The problem with hiring semi-skilled workers from the Phillipines and China is that their salary structure is way too high,” said Jindran.
While a qualified worker from the Phillipines can charge almost 50 per cent more in wages compared to Bangladeshis, recruits from China often expect three times more, Jindran said.
The Gulf’s shortage has turned into a boom for labour exporters Bangladesh and Nepal. Total remittance receipts to Bangladesh from migrant workers hit a record $4.8 billion (Dh17.6bn) in the first eight months of the current fiscal year, marking a 26.23 per cent growth over the same period last year, according to figures from Bangladesh Bank.
Battling the labour shortage
Companies in the GCC are devising innovative methods to handle the labour shortage problem, including renting out their staff, industry experts said.
As part of the new trend, sub-contracting companies have begun renting out their workers for short period of time from one to three months to other companies.
“If I do not need some of my workers for one or two months, there is no harm in renting out their services to companies that are in need of manpower,” said Mohammad Jindran of Overseas Labour Supply.
While unskilled employees are generally paid Dh3 per hour in the UAE, their companies are renting them out for almost Dh12 per hour.
“The cost of sub-contracting a semi-skilled worker goes as high as Dh18 per hour. Such is the demand,” added Jindran.
Meanwhile, Majeed Al Gassab, President of the Bahrain Society of Engineers, suggested owners and contractors align their business plans by working together to examine the feasibility and timing of projects.
“Just by deferring some projects we can eliminate redundancy and duplication of efforts. This will not only benefit local economies but will also eliminate competition between overloaded contractors, and manufacturers. Maximum benefit could be achieved by concentrating efforts and by using the best expertise on projects.”
OmniaLuo to Exhibit Summer Line at Largest Trade Show in China
March 20th, 2008OmniaLuo, Inc. ("OmniaLuo" or the "Company") (OTCBB: OLOU), a China-based company engaged in the business of designing, developing, marketing and distributing fine women's apparel under the brand name OMNIALUO, announced today that it will attend the 16th annual China International Clothing and Accessories Fair ("CHIC 2008") in Beijing from March 28 - 31, 2008. CHIC 2008 is the largest international trade show in China and second largest in the world, attracting more than 120,000 visitors from around the globe. The Company will exhibit its new summer line, recruit new distributors and gain international exposure for the OMNIALUO brand.
"As part of our domestic expansion strategy, attendance at CHIC 2008 presents a tremendous opportunity for us to recruit prospective distributors and move closer to our goal of more than 250 retail stores," stated Cindy Luo, OmniaLuo Chairwoman and CEO. "We anticipate recruiting at least 10-15 new distributors, contributing up to 10% of total 2008 revenue," added Ms. Luo.
Hong Kong's Jobless Rate Fell to 3.3%, Lowest in 10 Years
March 19th, 2008Hong Kong's unemployment rate unexpectedly fell to the lowest in a decade, aiding household consumption in a city where overseas sales are weakening.
The seasonally adjusted jobless rate for the three months ended Feb. 29 was 3.3 percent, the lowest since March 1998, the government said today on its Web site. The median forecast of 13 economists surveyed by Bloomberg News was for the rate to be unchanged from January's 3.4 percent.
Banks, retailers and accounting firms are hiring workers as Hong Kong benefits from its proximity to China, the world's fastest-growing major economy. Low unemployment, tax cuts and falling interest rates may boost consumer spending and help the city weather an export slowdown led by weaker U.S. demand.
``A strong labor market, stimulating fiscal policy environment and negative real interest rates will support domestic consumption, putting it on a solid, upward trend,'' said Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong.
Among 802 employers in Hong Kong, 33 percent said they plan to add workers in the second quarter of 2008, up from 27 percent in the previous three months, according to a survey by U.S. recruitment company Manpower Inc.
Yuanta Securities, Taiwan's largest brokerage, will increase staff at its Hong Kong unit by four times this year, President Alex Lee said last month.
Hong Kong's economy expanded 6.7 percent in the fourth quarter from a year earlier, the 18th quarter of uninterrupted growth and the longest expansion since 1997. Household spending jumped 10 percent on rising wages and lower borrowing costs.
Economic growth will slow to between 4 percent and 5 percent this year from a 6.3 percent expansion in 2007 as external demand weakens, Financial Secretary John Tsang forecast last month. The government cut profit and salary taxes, waived property rates and scrapped wine and beer duties to encourage consumption.
An improved job market may escalate inflation as companies pass on higher labor costs to consumers.
Consumer prices rose 3.2 percent in January from a year earlier. Eliminating the temporary effect of the property rate waiver, inflation accelerated to 4.3 percent, the highest level since May 1998.
Foreign investments, hot money come to China
March 18th, 2008Foreign investments and international hedge funds, some of which are speculative hot money, are now elbowing into the China market. They're lured by the Chinese people's emerging consumption power, and expectations of the Chinese yuan appreciating higher.
The Ministry of Commerce said on Wednesday that China drew $18.13 billion in overseas investments in January and February, shooting 75.2 percent year-on-year.
Chinese Commerce Minister Chen Deming, who was promoted to the post late last year, said at a news conference in Beijing that the reason for the big increase of overseas capital in the first two months was due to the big increase in large-scale investing projects and a stronger yuan.
Chen's ministry, which oversees foreign trade and domestic consumption, said that during the first two months, investments from the European Union countries rose a whopping 109 percent, while investments from the United States increased 44 percent.
Wild expectations abroad that the yuan will continue to rise in value against major world currencies has led to money coming to China.
"When you bring US dollars to invest in China, you need to change it into the yuan. Naturally you would like your funds to enter China at an earlier date. Because, if you are late, the same amount of dollars will turn out to be less yuan bills," Chen told reporters.
China's foreign exchange administration, under the auspices of the People's Bank of China, the central bank, said in its latest report that the country's total foreign exchange reserve has reached nearly $1.59 trillion by the end of January, the world's largest.
China's currency, also called the renminbi, has been constantly rising in value. The People's Bank of China, set the medium parity trading price at 7.0970 against one US dollar on Thursday, a new record high. The yuan has gained 3 percent against the dollar in value since the beginning of 2008.
The sharp increase in the stock of hard currencies has triggered another round of concern on speculative hot money flowing into China, posing potential risks to China's financial system stability.
Wu Xiaoling, deputy head of the National People's Congress's Finance Committee, who was a former central banker, said that the American subprime crisis and the rising trend of the yuan's value will make world speculative funds come to the China market to seek profits.
When asked by reporters whether the hot money has arrived in the name of foreign direct investments, Minister Chen Deming said: "I can hardly tell their entering channels, and their volume. It belongs to the management of the foreign exchange administration."
Economist Suggests Quick Appreciation
Liang Hong, economist at the Goldman Sachs, argued in a written article published by a major Chinese financial newspaper on Thursday that Chinese monetary authorities should consider quickening the appreciation pace of the yuan, to fight domestic inflation, which approached to 8.7 percent in February.
Others have suggested another "one-off" big rise of the value of the yuan, possibly 5 percent against the greenback by the central bank, to block more hot money from flooding in.
Liang said in her article that "allowing a marked rise in the yuan value is the most opportune policy instrument to curb inflation, as well as rectify the foreign trade imbalance".
She also argued for immediate interest rate hikes to thwart inflation, otherwise the Chinese economy faces an increasing risk of a hard-landing.
China’s Baidu To Offer Instant-Messaging Service
March 5th, 2008Beijing -- Baidu.com, the most popular search engine in China, is throwing its hat into a new instant messaging (IM) service designed to let Internet users in the country communicate with one another, a fast-growing market dominated by Tencent’s QQ and Microsoft, with this morning’s introduction of Baidu Hi.
Baidu said in a statement released on Friday that it has started testing the service internally of its IM product “Baidu Hi,” which only Baidu employees who have submitted applications through internal networks can get approval to download.
“IM is one of Baidu’s few ‘strategic’ products and it has been developing it for over a year,” a company statement said.
Baidu is currently recruiting new developers and engineers to help develop the software, but the company refused to disclose the scale of the test, and stopped short of saying when the instant-messaging service would be offered to the general public.
The move makes perfect sense. Baidu has used its search engine prowess to launch sticky community sites devoted to everything from discussion boards to social networking. It is the perfect pivot point. If folks are text chatting in real-time online, why would not Baidu want a piece of that?
It is also a booming market. According to Web information company Alexa, QQ.com is the second most popular website in China, trailing only Baidu. Yes, the hot IM platform is getting more traffic than SINA and Google. It is not as easy to monetize an IM application as it is with search, but it is more about keeping up with the trends and eyeballs than the pocketbooks.
Since last year, rumors have been rife that Baidu has been eyeing the IM market in the hope of finding another revenue generator outside its online search business, in order to maintain rapid growth.
The Beijing-based company stated that all aspects of Baidu Hi development will be done completely in-house, eliminating the need for jobs to be contracted out to other companies.
“The statement did not say whether Baidu Hi will offer features besides messaging, such as the ability to make voice over IP (Internet Protocol), or VoIP, calls.”
Baidu may dominate Internet search in China and routinely trounce Google in market-share surveys there, but that is unlikely to translate into dominance of the instant-messaging market in China.
“That market is currently dominated by Tencent, a Shenzhen-based company that runs the popular QQ instant-messaging service.”
The company has 580 million registered users and earned 1 billion yuan in the third quarter of last year, mainly through providing Internet value added services.
“Microsoft’s MSN is a distant second and attracts many white-collar workers.”
Liu Bin, an analyst at research firm BDA China, said Baidu’s entry into China’s IM market will not trigger direct competition with Tencent and Microsoft in the short term because it will be difficult for Baidu to attract users from other providers.
“Baidu’s IM software will have a significant impact on Tencent and Microsoft in the next two to three years,” he said.
Many search engines, facing an increased level of competition, have been forced to adapt and launch complimentary services to keep users coming back to the site for more than basic Internet searches.
The key to success comes from paddling into new revenue streams without diminishing the brand as a search engine workhorse. Yahoo! did not necessarily fall behind Google in search usage because it dove into things like job listings, dating personals, and instant messaging, but the lack of focus probably did not help.
Baidu stormed on the Internet search engine scene with its “MP3 Search” feature, which made it fast and easy for users to locate and download free music from Chinese and other artists. Another example is Google; the top search engine in the United States has a full range of software and services in development and available to users.
Baidu also branched out by launching a Japanese language search engine, though it does not appear the Chinese search giant has plans to launch a site for the US market.
The good news is that Baidu has not slipped despite launching dozens of similar forays in the past. Even more recent moves like launching its search engine in Japan and developing an eBay clone have not diluted the brand’s popularity. New initiatives also have not materially weighed down the company’s earnings power, going by this month’s fourth-quarter report, which found earnings soaring 79% despite the Japanese expansion.
Since 2005, Baidu has posted annual growth rates of over 100 percent. But Liu said the company's growth rate may decline to 30 percent within five years due to a larger revenue base.
“Although IM may not bring direct revenue for Baidu in the short term, it will be lucrative if Baidu can combine it with other services.”
“Baidu declined to comment when asked about Baidu Hi and its future endeavors in the instant messaging space.”
All hail China's new job-seekers
March 4th, 2008BEIJING, Feb. 27 -- Guangzhou, capital of Guangdong province, held its first labor fair of the lunar new year a few days ago, but the job-seekers gathered there appeared not to be as enthusiastic as their counterparts of years past. For the first time, the number of job-hunters fell far short of the number of vacancies advertised at the fair: 4,000 versus 7,000.?
The employers could only raise their salary standards - on average, to 1,160 yuan (155 U.S.dollars) a month, representing an increase of 13 percent compared with previous years.
Similar phenomena also appeared in other cities in the Pearl River Delta area, one of China's major manufacturing centers. The area has for years been the largest employer of migrant laborers from the country's rural areas.
The changes sweeping over the job-seeking public have prompted some economic commentators to cry out in alarm that China is losing its advantage in cheap labor. But some others have argued against such worries, saying that on the whole, the country's labor supply still exceeds the demand.
Though they contradict each other, the two sides share a common concern: the impact of changing labor costs on China's exports, which have been a major engine driving the nation's economic growth.
In my opinion, we should be pleased rather than worried about the situation. Manual laborers can now expect better wages, which is good for both social justice and the wellbeing of the economy.
Most of the manual workers employed by manufacturers in coastal regions are migrants from the country's impoverished rural provinces. In the past two decades or so, they have contributed greatly to our nation's economic development by working diligently, for whatever their employers would like to pay.
Their pay has been capped at too low a level for too long a time. An investigation in 2004 found that the average monthly wage for migrant workers in the Pearl River Delta region had risen only 68 yuan in 12 years.
In the past few years, that level has risen at a comparatively faster rate. The national average monthly wage for rural migrant workers rose from the 539 yuan in 2004 to 946 yuan in 2006.
The rises in pay and laborers' wage expectations can be attributed to a number of reasons. Two of them merit our notice. One is that rural residents' incomes have increased significantly in the past few years thanks to the strong economic growth and favorable government policies (the annulment of the agricultural tax, for instance). A survey by the statistics authorities late last year indicated that rural residents' per capita cash income had hit 3,321 yuan in the first three quarters of last year, up 14.8 percent year-on-year.
The low wages at manufacturing plants are no longer enough to attract rural migrant workers.
The second reason is that rural migrant workers themselves have changed. The new generation is more knowledgeable and modern-minded than their parents and less tolerant of harsh working conditions and low pay. They are more ready to change jobs. And their consumption habits inspire them to seek higher pay.
These changes are encouraging signs of the progress our society has made. Rising living standards benefit our economy because they will bolster the population's buying power, which is the most essential contributor to the growth of the economy.
Encouragingly, consumption has shown signs of growing. China's GDP grew a hefty 11.4 percent last year, with consumption contributing 4.4 percentage points, investment 4.3 percentage points and exports 2.7 percentage points. Consumption surpassed investment for the first time in several years.
Responding to the New Labor Law
February 28th, 2008New 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.
Largest Russian bank opens first China branch in Shanghai
February 27th, 2008SHANGHAI, Feb. 26 (Xinhua) -- Venshtorgbank, Russia's biggest bank, opened its first Chinese branch in Shanghai on Tuesday, marking the start of a new era in Sino-Russian finance.
"China's banking service industry is the fastest-growing and most promising in the world economy. I believe the Shanghai branch will grow as energetically as China's economy," said Andrei Kostin, Venshtorgbank Group (VTB) chairman and president.
VTB has entered into credit granting agreements with a number of Chinese banks and the China Export and Credit Insurance Corporation to provide Russian importers with long-term financing and insurance services when purchasing Chinese goods and services.
Clients can receive up to 1.3 billion U.S. dollars in financing from Chinese banks.
According to Kostin, the Shanghai branch will cooperate with China UnionPay system to provide banking card services to both domestic and Russian clients. It also plans to apply for offering RMB services within three years, and will broaden the business scope of the branch for a larger operating scale "very soon".
VTB even plans to issue its own union cards in China.
The lender is the largest international banking group in Russia. It has branches and financial firms in 17 countries, with assets of 80 billion U.S. dollars.
While it established a Beijing office 20 years ago, VTB is a latecomer to China's lucrative banking sector, now crowded with more than 300 foreign banks.
Robert Walters opens headhunting in China
February 26th, 2008Robert Walters, the recruitment specialist, is buying its first business in China, a headhunter that provides a range of jobs in the commercial sector.
Walters, which also today announced operating profits up by a third to £26.1 million, is paying RMB 20 million (£1.4 million) for a 70 per cent stake in Talent Spotter, a consultancy with 49 staff and a head office in Shanghai and another in Suzhou, a city with a population of ten million, 75 miles inland from Shanghai.
Robert Walters, the chief executive, said that 62 per cent of fee income was generated outside the UK last year.
The company has a growing presence in the Far East and an office in Hong Kong. Alan Bannatyne, the finance director, told Times Online that the Chinese market was especially lucrative, paying fees representing 25 per cent of annual salary. "Shanghai is a very strong and growing market."
Talent Spotter typically provides a variety of commercial jobs such as sales and marketing and human resources, with a small involvement in accountancy.
During 2007 Walters opened offices in Madrid and Osaka, and an office in Kowloon was opened this year.
The trading statement for 2007 said that activity levels remained strong, with a healthy balance between permanent and contract recruitment.
A final dividend of 3.35p makes a total raised from 4p to 4.7p.
New individual tax threshold to go into effect March 1
February 25th, 2008China's amended individual income tax law, which raises the tax levy threshold from 1,600 yuan (about US$220) a month to 2,000 yuan, will go into effect on March 1, accompanied by some regulations on its implementation.
Individuals who earn money from contractual operations and contract to lease businesses will also enjoy a raised tax threshold from 1,600 yuan to 2,000 yuan, according to the regulations.
This was out of consideration that the living costs of those individuals and their family members had increased, said a joint explanation on the regulations made by the Legislative Affairs Office of the State Council, Ministry of Finance and the State Administration of Taxation.
Individual tax payers who have housing in China but work overseas, or live overseas but earn income in China, will keep their tax threshold of 4,800 yuan a month unchanged, according to the regulations.
This will help reduce the gap between tax thresholds of different taxpayers, the joint explanation said.
The raised individual tax threshold will reduce government revenues by 30 billion yuan annually, according to official statistics. It will also mean that 70 percent of income earners will be exempt from income tax, against 50 percent now.
The individual income tax cutoff point was raised from 800 yuan a month to 1,600 yuan starting in 2006. This was based on consumption expenditures for basic living costs at the time.
However, the consumer price index rose several times last year, further burdening low- and medium-income earners.
20% university graduates fail to find jobs in 2007
February 22nd, 2008About 20 percent of university students in China, who graduated in 2007, have so far failed to find jobs, according to a blue paper issued by the Chinese Academy of Social Sciences.
Nearly five million university students graduated in 2007, but one million of them have still not found jobs, according to the blue paper released earlier this month.
"This is not because China's policy to expand university enrollment has resulted in labor supply outweighing demand on the labor market," Yang Weiguo, associate professor of Beijing-based Renmin University said.
"In fact, the gap between supply and demand reaches 13 to 14 million people annually in recent years," said Yang, also the deputy director of the Employment Research Institute of Renmin University.
Only 270,000 students were admitted to study in universities when China resumed its university entrance exams in 1977. Thirty years later, the number of undergraduates and postgraduates surged to 5.7 million and 424,000 respectively.
However, official statistics show only five percent of China's total population have the opportunity to receive higher education,
"One of the reasons for the difficulty in university graduates finding employment is that they are unable to satisfy the needs of employers," he said.
"The other reason is that university graduates are unwilling to go to backward or remote areas, yet are unable to find jobs in metropolises such as Beijing and Shanghai," he said.
He said the universities need to adjust their teaching methods and content quickly to conform to social development and demand.
He also called on the social security, educational and personnel departments to adopt more favorable policies or offer subsidies for university graduates working in relatively backward regions.
Salary for new graduates edges up
February 21st, 2008The average starting salary for new graduates in 2007 was 1,798 yuan per month ($250), 210 yuan more than that of 2005, a survey conducted by Peking University shows.
The Beijing News reported on Tuesday that the survey on postgraduate employment shows 50 percent of graduates received a starting salary of over 1,500 yuan, with higher salaries for more advanced degrees.
According to the survey, male graduates receive higher salaries than females. The median starting salary for male graduates was 1,500 yuan, while that of female graduates was 1,300 yuan.
Research institutions, foreign-funded companies and government departments offer higher salaries to graduates. Administration management, business management and professional technical work were ranked as the top three fields, in terms of entry-level salaries.
The survey also shows that each graduate submits an average of nine applications when searching for a job, and receives an average of 4.3 interviews and 2.3 offers.
The results of the survey are based on 16,388 questionnaires collected from students at 28 universities and colleges in eastern, central and western China.
Policies to actively promote employment
February 20th, 2008China is stepping up its policy support to promote employment, said a circular released on Tuesday on the official government website.
The circular allowed localities to raise the ceiling of the amount of small loans - a policy partly designed to help the unemployed open their own businesses - and lower the threshold for qualified borrowers when necessary.
The preferential tax policies, which reduce or exempt the tax burden on the unemployed and the disabled, should continue to be carried out till the end of this year. New policies would be introduced in 2009.
The government has been taking measures to encourage companies to recruit those who have had difficulty in finding employment. It was also creating more public service jobs.
China has implemented active employment policies since 2002. It has increased the number of the newly employed in cities from 8.4 million in 2002 to 12.04 million people last year.
Employers boost wages in bid to attract workers
February 19th, 2008SHENZHEN: Companies in the Pearl River Delta area, the country's manufacturing powerhouse, are raising wages to attract migrant workers amid fears of a worsening labor shortage, a survey has shown.
The survey was conducted by the service center of Guangzhou human resources markets, which looked at 252 companies with at least 200 employees each.
The poll found out that the average monthly salary offered to new staff was up 13 percent from last year at 1,160 yuan ($162).
The survey also showed that nearly 70 percent of the companies said they will hire new employees this year, up 20 percent from the same period of last year.
Still, the number of job-hunters has decreased and are said to be more picky, the Guangzhou Daily reported.
The first job fair in Guangzhou after the Spring Festival break on Friday reportedly offered about 7,000 vacancies, but attracted only 4,000 job-seekers.
Figures from the Guangzhou labor authority showed that sectors such as the textile, toy-making, construction, catering, electronics and service industries were top of the list for workers.
It was particularly difficult for the textile and toy-making industries to hire workers since such companies could offer an average monthly salary of just 960 yuan, far below what is available across the board, the labor authority said.
The situation was said to be similar in other cities in the Pearl River Delta region, such as Shenzhen and Dongguan, which has seen industrial restructuring and experienced the impact of the new labor law, researchers said.
However, research by the Asian Footwear Association showed that close to 1,000 shoemaking factories closed or moved out of the Pearl River Delta region last year, with 25 percent setting up in Southeast Asian countries, 50 percent in other mainland cities and about 25 percent adopting a wait-and-see approach.
"The industrial repositioning of the Pearl River Delta region has forced some of the companies in the region, especially those with less competitive edge in the market, to close or move out," Ding Li, a researcher with Guangdong Academy of Social Sciences, said.
"The flow of migrant labor has been a clear indication of that."
The appreciation of the yuan, raw material price hikes and adjustment of export policies have also seen many private firms and companies funded by businesses from Hong Kong, Macao and Taiwan slowing down demand for migrant workers, the Guangdong labor authority said.
Asia holds Yahoo's secret weapon
February 18th, 2008Yahoo! 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?"
New Labor Contract Law Raises China's Labor Costs
February 17th, 2008As millions of migrant workers are about to return to factories across costal provinces in Southeast China after the lunar new year, a report from China’s most high profile domestic investment bank, the China International Capital Corporation Ltd. (CICC) concludes that many small and medium-sized labor-intensive enterprises believe the new Labor Contract Law will increase labor costs and affect their recruitment plans.
CICC’s investigation in Jiangsu and Zhejiang provinces reveals that in most areas there is little room left for further rural labor transfer. Due to a relatively insufficient labor supply, wages for migrant workers in recent years have been growing at an annual average rate of 10-15%. Meanwhile, the productivity of private enterprises has been increasing at the same speed, if not faster.
The Yangtze Delta, in which Jiangsu and Zhejiang are located, is one of China’s most important export-oriented economic zones. Most of the private enterprises in these two provinces are in labor-intensive industries, areas that have a great need of migrant and technical workers. The report indicates that the diminishing supply of workers has added to the difficulty in recruiting new workers. To retain workers, private enterprises have had to increase wages, resulting in wages maintaining an annual growth rate of 10-15%. However, most of the companies looked at as part of the investigation claimed they could afford such growth because the productivity of the businesses had also increased. They also predict that wages in 2008 will continue to grow by at least 10%. However, the New Labor Contract Law will have little impact on large enterprises and high-tech enterprises.
The kind of small and medium-sized labor-intensive enterprises surveyed in Jiangsu and Zhejiang province did not pay social security premiums for all their employees. The new law, which forces them to pay the premium, will raise labor costs in these companies. Regulations about overtime wages in the new law will also add to these costs. Most companies investigated believe the new Labor Contract Law will significantly increase potential risks for labor-capital disputes and could therefore influence the company’s recruitment plans.
Many companies are unsatisfied with the new law. They claim that unequal rights and duties in the new law could be easily abused by employees and will add to the implicit costs of companies. The new law aims to provide migrant workers with endowment insurance, but this isn’t suitable for China’s current situation and can’t be enacted anyway because of the high mobility of the rural labor force and the current social security system which has yet be unified nationwide. Meanwhile, most migrant workers are unwilling to pay the social security premium, as they would prefer to receive more cash in their pay packet. So neither companies nor workers welcome the new law. Some entrepreneurs even believe the government is attempting to shift its social responsibility onto private businesses.
Another concern about the new law lies in the inflation problem that is likely to worsen due to raised labor costs. The investigation shows that incremental labor costs may not be completely shifted to the product price. Because of the low technical content and low threshold, there is fierce competition in labor-intensive industries. Despite the constant increase in raw materials and labor costs, most small and medium-sized private enterprises have not shifted incremental costs onto consumers. Instead, they have offset these costs by improving productivity. In fact, the majority of these companies are operating within meager profit margins.
A clothing company based in Wenzhou, a city in Zhejiang province famous for highly developed private sector economy, estimates the new Labor Contract Law may add an extra 15% in labor costs to companies. But because of the acute competition they are unable to offset these costs by lifting prices, but may rather have to reduce prices in order to promote sales.
The report concluded that while the new law may not cause apparent inflation pressures in the short-term, it would possibly affect companies’ income and employment prospects. Large enterprises and state-owned enterprises will basically remain unaffected as they have long been paying social security for all their employees; High-tech companies, benefiting from a high added-value, small number of employees and regular social security payments, are also unlikely to be influenced. But for those small and medium-sized enterprises with low added value, the new law will undoubtedly raise labor costs. And fierce competition among them makes it difficult to shift cost pressures by lifting product prices. Seen from a mid and long-term perspective, the negative influence on the income of small and medium-sized enterprises may promote purchases and mergers among such industries. This will lead to an increased degree of concentration within the sector and ultimately see labor cost increases reflected in higher product prices. Therefore, pressures on commodity prices brought about by the new Labor Contract Law can’t be ignored
Baidu profit beats estimates as company wins users
February 15th, 2008Baidu.com Inc, operator of China's most used Internet search site, reported profit and sales that topped analysts' estimates after services to find celebrity news and videos helped attract users from Yahoo! Inc.
Fourth-quarter net income rose 79 percent to 219.8 million yuan ($30.5 million), or 6.32 yuan per American depositary receipt, from 122.8 million yuan, or 3.54 yuan per ADR, a year earlier, Baidu said in a statement. Sales more than doubled to 571.1 million yuan.
Chief executive officer (CEO) Robin Li lured visitors away from Yahoo and Sohu.com Inc, extending Baidu's lead in a market that's home to 210 million online users. The company today forecast sales this quarter may double as user gains counter Web traffic disrupted by the country's worst snowstorms in 50 years.
"People tend to travel during the Chinese New Year holiday and that will cut Internet traffic," JPMorgan Securities Inc analyst Dick Wei, who called the fourth-quarter results "respectable." The snowstorm "also hurt traffic as a result of power failure or infrastructure damage."
Wei rates Baidu stock "overweight."
Analysts had estimated its fourth-quarter profit of 184.1 million yuan, according to the average of seven estimates compiled by Bloomberg. They projected sales of 548.3 million yuan, based on 12 estimates.
Baidu rose as much as 7.2 percent to $280 in US after-hours trading following the earnings announcement. The ADRs, which each represent one Class A share, climbed $15.66 to $261.09 today in regular Nasdaq Stock Market trading.
Baidu predicted first-quarter sales of 533 million yuan to 548 million yuan, which would mean an increase of as much as 99 percent from a year earlier. The forecast missed the average estimate of seven analysts surveyed for revenue of 566.7 million yuan.
"First-quarter sales will be affected by the snowstorms and the holidays," CEO Li said on a conference call today. Internet "traffic typically goes down quite a lot during the Chinese New Year holidays."
China's worst snowstorms in half a century clogged travel in the nation before the Lunar New Year. More than three weeks of storms knocked out power to half the country's provinces and closed road, rail and air routes.
"There's a little bit of concern on the forward outlook," Colin Gillis, an analyst with Canaccord Adams Inc. in New York, said in a Bloomberg Television interview today. Gillis rates Baidu "sell."Market Share
Baidu's share of the Chinese search market rose to 60 percent in the fourth quarter from 58 percent a year earlier, according to Analysys International. Google Inc's share climbed to 26 percent from 17 percent, while Yahoo's fell to 9.6 percent from 13 percent. Sohu's share dropped to 1.2 percent from five percent, the Beijing-based research firm said.
"Baidu is the dominant search company in China, and no rival is near to overtaking them," Eric Wen, an analyst at BNP Paribas in Shanghai, said before the announcement. He advises investors to buy the shares.
Shen Haoyu, vice president of business operations, will oversee the company's financial operations until a replacement for Chief Financial Officer Shawn Wang is found, Li said. Wang died on Dec. 27 in an accident in China.
China added 73 million Internet users in 2007, making the nation the world's second-largest Internet market after the U.S. according to the government-backed China Network Information Center.
Fourth-quarter development spending at Baidu more than doubled to 46.5 million yuan after the company added workers. Sales and administrative expenses rose 86 percent to 132.2 million yuan as Baidu expanded its direct sales staff.
The Web company has started a service in Japan and plans to open a consumer trading site this year to compete with Alibaba.com Corp.
Yahoo, which rejected a takeover bid from Microsoft Corp. this week, became Alibaba's single biggest shareholder in 2005. Alibaba owns China's biggest trading Web sites for individuals and businesses.
Baidu plans to introduce a service in 2008 that will compete for users with Alibaba's Taobao.com, a Web site where individuals sell goods to one another. Alibaba.com Corp is the parent of Hong Kong-listed Alibaba.com Ltd.
Baidu's Li said the company is "open to all kinds" of share-listing options, though it's "unlikely" the company will sell stock in Hong Kong in 2008.
Migrants are China's 'factories without smoke'
February 5th, 2008By Alexandra Harney
For CNN
Editor's note: Alexandra Harney is a Hong Kong-based writer and the author of the forthcoming book "The China Price: The True Cost of Chinese Competitive Advantage" (Penguin Press, 2008).
HONG KONG, China (CNN) -- In the crowds still stranded by snow at train stations around China stand some of the country's most valuable economic assets: migrant workers.
A migrant worker, right, joins a queue waiting to board trains this past week in Shanghai, China.
more photos » This group of 150 million to 200 million farmers -- more than the population of the United Kingdom, France and Australia combined -- account for the majority of employees in China's world-beating manufacturing sector, the bulk of its coal miners and most of its construction workers.
During the past two decades, according to a conservative estimate from UNESCO and the Chinese Academy of Social Sciences, migrants have contributed 16 percent of gross domestic product growth.
Living for years at a time in coastal cities, China's migrant workers have built the country's skyscrapers and assembled its exports, sending tens of billions of dollars in earnings home to their families in poor inland provinces. For the workers known as "factories without smoke," the Chinese New Year holiday is often their only annual vacation.
The forces that brought these smokeless factories to the cities took shape in the early 1980s, when Beijing, as part of an easing of central controls on the economy, loosened internal mobility regulations. Farmers have been pouring out of the countryside ever since, in what is believed to be the world's largest internal migration.
They leave for mostly economic reasons: wages in the cities are higher than what workers could earn at home. And life there, many find, is more exciting than back on the farm.
Today, migrants dominate the Chinese labor force in dirty and dangerous trades: 70 percent of construction workers, 68 percent of manufacturing employees, and 80 percent of coal miners are migrant workers. But not all are on their hands and knees. More than 60 percent of staff in the service trade, according to state media, are migrants as well.
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On average, migrants tend to be among the best educated people in their villages. Still, many have little more than a junior high school diploma. Many migrate as teenagers, often with friends or neighbors, leaving behind their family in the countryside. More than half are men, but the toy and shoe factories of southern China prefer women -- they are easier to control, managers say, and their fingers more nimble.
Wages vary by city and company, but many migrants in export factories in the south take home about Rmb1,000 a month ($139) -- or even more. They sleep 12 to a room in bunkbed dormitories furnished by their employers, working six and sometimes seven days a week for months at a time. Wages are not always paid on time, occasionally not at all. Watch more about migrant workers' living conditions in dormitories »
Victims of occupational disease, lacking of insurance
As little as a fifth of migrant workers in southern China's Guangdong province, according to one Hong Kong non-governmental organization, have medical insurance. China's household registration or hukou system links social benefits to the place where one is registered, and most migrants are still registered in their rural hometowns, hundreds of miles away from where they work. About 90 percent of the victims of occupational disease in China are migrants.
These migrants' schedules are dictated by the fluctuations of demand from their foreign customers: winter is peak season for lawn furniture factories, for example. But most of the factories in southern China are busiest in summer, as they fill orders for the Christmas season.
Many of these plants close for the first months of the year and take the Chinese New Year holiday off, triggering an exodus of migrants as those who can afford the train and bus tickets travel home to see their families. Watch a migrant worker's 1,000-mile journey home »
Much has changed since Chinese farmers began arriving in the cities two decades ago. Some of today's migrant workers are "second generation" -- the sons and daughters of the first generation of migrant workers. Most were born after China introduced a family planning policy in 1979, so they come from smaller families. Second generation migrants tend to be more demanding employees: they are pickier about where they work, preferring factories with better facilities and wages.
Their preferences, along with a rapid growth in factories in the Yangtze River Delta around Shanghai and a rise in rural incomes, have contributed to labor shortages in Guangdong province in the last several years. In response, the government is raising the minimum wage and strengthening labor laws. Forced to compete for workers for the first time in more than a decade, factory managers are building basketball courts and libraries, installing air conditioners and improving their cafeteria menus.
Beijing, too, is realizing the importance of migrant workers as a political constituency. The state-controlled labor union, the All-China Federation of Trade Unions, is targeting migrants in a recruitment drive. The government is expanding insurance coverage for migrant workers.
State media cover their hardships regularly. "Migrant Workers: We Need Them Just Like They Need Us," read one headline in the China Daily last March. As the recent appearance of premier Wen Jiabao at the packed Guangzhou train station illustrated, migrants are crucial to keeping China's economic development on track.
Nation top draw for FDI in 2007
February 5th, 2008China received $74.7 billion in foreign direct investment in non-financial sectors last year, ahead of all developing countries for the 15th successive year.
The figure reflects a year-on-year increase of 13.59 percent, the Ministry of Commerce said yesterday.
Total foreign direct investment, including capital flows to the financial sector, hit $82.7 billion in 2007, up 13.8 percent from a year earlier.
"The growth is higher than my expectation," said Wang Zhile, director of the Multinational Enterprise Research Center affiliated to the Ministry of Commerce. "It shows China's role as a crucial link for multinationals' global manufacturing, purchases and research."
There could be some adverse influences on foreign investment in China this year.
Income tax rates for domestic and foreign companies have been unified at 25 percent from the beginning of 2008. Before this, domestic companies paid a 33 percent income tax while foreign companies, which benefited from tax waivers and incentives, would pay an average of 15 percent.
But foreign enterprises registered before the date of implementation will benefit from the favorable tax rates for another five years.
Foreign investors also have to pay more for labor and material costs, such as oil, plastics and steel, as well as face tighter policies on polluting and resource-intensive industries.
But experts believe China will continue to be a magnet for FDI as Beijing's policies on foreign investment and opening up will not falter.
FDI in non-financial sectors is expected to increase four to six percent year-on-year in 2008 to hit $69 to $72 billion, according to a report released by the center of forecasting science under the Chinese Academy of Sciences.
The report said FDI in the service sectors, including banking, insurance and retail, is expected to accelerate this year as China opens up these sectors to foreign investors further.
The ministry last year approved 37,888 foreign-invested enterprises in China, including in financial sectors, down 8.69 percent from a year ago.
Although the ministry did not give a breakdown of the countries from where the FDI originated, FDI from both the US and the 15 original members of the EU dropped in the first 11 months of last year.
Employment top of agenda in Jiangsu
February 4th, 2008Providing jobs for the unemployed and university graduates will be this year's top priority for authorities in Jiangsu province, acting governor Luo Zhijun said in his report to the first session of the 11th provincial people's congress yesterday.
Luo said the government will create more than 850,000 jobs and re-employ 250,000 laid-off workers to ensure all urban families have at least one person in work.
creating jobs has been high on the government's agenda over the past five years, he said.
According to official figures, over the past five years, the provincial government has spent 5.16 billion yuan ($717 million) on employment and re-employment. Some 4.9 million new jobs have been created and 2.11 million laid-off workers have been reemployed.
But despite the government's efforts, 600,000 to 800,000 people lose their jobs in Jiangsu every year, and some 600,000 join the labor force, official figures show.
"This puts great pressure on the government, but we will take an active approach and continue to carry out a positive employment policy to improve the situation," Luo said.
As in the past, the government will provide free job training for laid-off workers to equip them with necessary skills for new positions, Chen Zhengning, director of the provincial labor and social security department, said.
"We will also take advantage of the rich vocational training resources in the province to organize skills training for high school graduates and unskilled workers," he said.
The measures will be welcome news for Zhang Xin, a Japanese-language major who graduated in July from the Jiangsu Food Vocational School.
The 22-year-old has been out of work ever since.
"I have submitted job applications to dozens of companies and have gone for a few interviews, but they all said they had nothing for me," Zhang said.
His mother, who earns 850 yuan ($118) a month, is the family's sole breadwinner. His 49-year-old father was made redundant when the factory he worked for went through restructuring in 2001. He has held a number of part-time jobs but nothing since the end of last year.
Chen said the authorities are working hard to ease the financial burden on families like Zhang's.
By the end of last year, 98 percent of retirees in cities and counties were covered by the pension system and 88 percent of people had medical insurance, according to the government's work report.
Luo said the government will this year spend 200 million yuan ($27.8 million) on upgrading facilities at rural and community health clinics.
Follow-up: Foxconn Promises To Pay Security Guards Before Spring Festival
February 1st, 2008February 1, 2008
Foxconn has told local media that with the coordination of the Shenzhen Labor Department, it has reached an agreement with the security guards who asked for more pay and will pay them before the Spring Festival holiday.
Foxconn says that the security guards' request for back-pay was caused by some misunderstandings. A rumor that Foxconn will dismiss all securities guards had made the guards uneasy, and the salary the guards are receiving right now has already included the back-pay, but the security guards were unaware of this, according to the company. Foxconn says that it is reviewing its salary structure and revising it according to the Labor Contract Law in China.
Foxconn claims that it has signed an intercession letter with the security guards and will compensate them for the extra work hours before the Spring Festival based on the business accounting of the labor department. However, Foxconn has not disclosed the accounting results of the labor department.
Foxconn has also made a response to the report that it has put one of the security guards under house arrest, saying that the person was actually transferred to work at another factory of Foxconn under his own decision.
On January 29, more than 200 security guards of Foxconn gathered at the gate of company to ask for more payment for their extra work and another 40 went to Shenzhen Municipal Labor Department to appeal for help.
Beijing 'recruiting households' for Olympics
February 1st, 2008The city of Beijing is 'recruiting' households to provide rooms for visitors for the 2008 Olympic Games in China, reports claim.
Local tourism authorities are looking for about 1,000 welcoming homes that can boost the level of accommodation available for the event, which is expected to bring a massive influx of visitors into the Asian country.
More than 500,000 overseas visitors are expected during the Games, with the largest daily inflow expected to be around the 300,000 mark, the Xinhua news agency reports.
Beijing currently has just over 800 star-ranked hotels offering 220,000 beds, while other accommodation providers have some 640,000 beds, but Xiong Yumei of the Beijing Tourist Bureau said that this may not be enough.
'The guest room supply may still fall short of demand, especially for hotels close to the sports venues,' she said.
The homestay concept, which is popular in many western countries, is relatively new to China and its use indicates the anticipated level of interest in this year's Olympic Games.
ZTE profit forecast looks rosy for 2008
January 28th, 2008ZTE Corp, China's second-biggest telephone-equipment maker, said 2007 profit increased 50 percent to 70 percent, fueled by rising sales overseas.
The company posted a profit of 807 million yuan (US$112 million) in 2006, or 0.84 yuan a share, ZTE said in a statement to the Hong Kong Stock Exchange. It didn't give a figure for 2007 profit.
ZTE won contracts from carriers in Tunisia, India, and Portugal last year by selling equipment for as much as 30 percent less than rival Ericsson AB, Steven Liu, an analyst at DBS Vickers Ltd, told Bloomberg News. Sales from outside China would surpass its domestic revenue for the first time in 2007, the Shenzhen, south China-based company said in June.
The company's Hong Kong-listed shares rose 5.4 percent to HK$37.20 (US$4.76) at the end of trading on Friday. The Shenzhen-listed shares fell 0.1 percent to 79.55 yuan.
ZTE is scheduled to announce its earnings for 2007 on March 20 in Shenzhen.
Employers in China face worst staffing turnover level
January 25th, 2008China's employers have dual problems on the hiring front as they face the biggest salary increases in Asia needed to attract talent and the region's highest turnover, according to a survey.
The findings appeared in the Friday edition of the China Youth Daily.
Nearly one-third, or 32 percent, of the employers surveyed planned to raise salaries by at least 20 percent to attract badly-need talent, said the survey by human resources company Hudson.
The survey covered employers' first-quarter plans and expectations.
Year-end bonuses are expected to rise significantly, with 66 percent of the respondents planning to increase year-end bonuses at least 10 percent and almost one-fourth planning raises of more than 20 percent.
But despite significant increases in compensation, staffing turnover has been heavy.
Across all industries, 47 percent of companies surveyed had turnover rates of more than 10 percent in the past 12 months, and 13 percent said that the rate was more than 20 percent.
China's staff turnover rate was highest in Asia, more than twice that of Japan, the Youth Daily report said. Unsatisfactory compensation and limited career progression were blamed for China's high turnover level.
Among respondents, 22 percent agreed that limited career progression was a major cause of high turnover, while 18 percent believed it resulted from dissatisfaction over money.
The report predicted a persistent increase in salary levels in China because of limited talent resources.
China Yahoo said to be cutting staff
January 23rd, 2008CHINA Yahoo, a subsidiary under the nation's largest e-commerce firm Alibaba.com Corp, is trimming its workforce and sending staff back to the parent company, sources close to the company said.
"Dozens of people," including mid level managers and directors, are returning to Alibaba while others are asked to leave with compensation for their service, they said, asking for anonymity.
Tao Ran, a spokesman for Hangzhou-based Alibaba, refused to comment yesterday.
Alibaba took over Yahoo China - which was later changed to China Yahoo - in 2005 and was paid an additional US$1 billion from Yahoo Inc, which in return gained a 35-percent stake in Alibaba.
Since the deal, a revamp of the acquired business has been going on as Jack Ma, founder of Alibaba, is trying to integrate it into their e-commerce platform, with ideas like launching shopping search functions. The business was renamed China Yahoo last year.
China Yahoo had about 800 staff as of September 2006. It was still recruiting sales and marketing staff in October and November. The latest figure on its employee number was not known.
China's army turns to schools for recruitment, modernization
January 17th, 2008By Maureen Fan
The Washington Post
ZHOU HAO
Zhou Hao, left, and Tan Zhenwen are juniors at Beijing's Tsinghua University who have signed up for the army. Zhou, who wants to work in government after college, said, "I think my experience in the army will help me to get a position."
BEIJING — The fliers circulating last month on the campuses of China's most prestigious universities showed three soldiers positioned against a Chinese flag and an appeal that read in part: "Carry Your Pen to the Army to Become More Accomplished."
In ancient times, the phrase was "Throw Away Your Pen and Join the Army," a challenge to China's intellectuals to stop wasting time and help defend the country. Now, the People's Liberation Army is recruiting college students in an ambitious modernization program designed to attract smart soldiers who can handle sophisticated equipment and transform the 2.3-million-strong force into a high-tech adversary.
"With the rise of China, China needs a powerful army," said Tan Zhenwen, a junior at Tsinghua University in Beijing who recently headed to Guangdong province to join the South China Sea Fleet. "... I don't worry about the low social status of soldiers. With more and more college students joining the army, the situation is changing and getting better."
While China's rising diplomatic power has helped fuel a desire for a more professional army, military commanders also need highly educated soldiers to maintain the "information-based" military power that has become increasingly important — both internationally and as a means to dissuade Taiwan from declaring independence.
Domestically, the army already has come a long way. A military that 18 years ago was most readily associated with the shooting of protesters in Tiananmen Square is increasingly helping in relief efforts after floods and other natural disasters. The army has also been the driving force behind recent achievements in space exploration.
In a speech in August marking the 80th anniversary of the army, President Hu Jintao called for accelerated modernization of weapons and equipment, enhanced personnel training and strengthening of combat capabilities through technology.
One of the most important aspects of the modernization is a huge effort to shed the impoverished farmhands who have traditionally signed on as a way to ensure three solid meals a day. The once-bloated force had 4.2 million people two decades ago but has gradually reduced its infantry. It has, however, increased the number of personnel who serve in the navy, air force and Second Artillery Corps, which maintains China's nuclear missiles.
The army now advertises itself as an opportunity for young people to acquire technical skills and experience not easily attained in the private sector. This year, for the first time, the army took out full-page advertisements in newspapers. The ads featured an astronaut, a naval college professor and Peking University's first recruit since its students began signing up in 2005.
Six years ago, 26 universities produced roughly 1,400 army recruits through a special government program similar to the U.S. military's Reserve Officers' Training Corps, or ROTC. This year, the program has grown to include 110 universities, and officials hope to recruit 11,000 students, including some majoring in philosophy, law and medicine.
"Compared with the private sector, army salaries are not very high. But in recent years, the army has increased the salary for soldiers and officers," said Li Shengqiang, an officer at the army's Beijing Recruitment Office. "Because the army is trying to equip itself with advanced weapons and equipment, the quality and knowledge of soldiers has become correspondingly higher. ... In the 1980s, primary-school graduates could join the army. But now, no way."
Recruits are lured by financial incentives and programs that allow students to return to university after two years in the army with preferential standing for graduate school. Officials have introduced psychological tests to weed out unsuitable candidates and imposed penalties for ineligible applicants who try to bribe their way in. Also this year, for the first time candidates who want to be air force pilots must pass a language test in English or Russian.
Undergraduates from outside Beijing may be offered Beijing residency, an important perk, in exchange for two years of service, according to a new policy under discussion, said another recruitment official who spoke on condition of anonymity because a decision has not been announced.
For Zhou Hao, 20, a third-year journalism student at Tsinghua University, joining the army had been a childhood dream. He was unaware that university students were eligible until he spotted a recruitment poster and discovered financial rewards for signing up. Last week he headed off to join the Second Artillery Group in Chuxiong city, Yunnan province.
"I prefer to work for the government after I graduate, and I think my experience in the army will help me to get a position," Zhou said. "I don't think I really give up anything for the army. But one thing is that more eyes will look at you. So, there must be more pressure, which will force me to do my best."
China's growing military budget has generated intense debate in Washington, where some analysts believe China's defense spending is much higher than the $45.3 billion officially earmarked.
Whatever the amount, one Beijing-based military expert added that some of that money is going toward China's military-education system.
"We didn't use all those funds just for missiles or defense" but also for "better welfare" for troops, the expert said, noting that more than $1 million has been spent recently on uniforms.
"Maybe five years ago IBM had the most advantage. Most students wouldn't have joined the army. But now the situation is different," he said. "The army now offers higher salaries, higher status than before and more opportunities for advancement. If you wore the uniform before, maybe you couldn't get a girlfriend. Now, even that's different."
Jobs tough to find for women
December 3rd, 2007MORE than 31 percent of women have faced gender discrimination while job hunting, a recent survey of 1,600 people by Shanghai Women's Federation shows.
The survey also found 70 percent of women are unhappy with re-employment projects in the city, saying they didn't help at all. And nearly 10 percent of women who lost their jobs want to find work as a domestic worker.
Among the interviewees, 41 percent of women are unemployed. They said increasing age and the lack of skills were the greatest hindrance to finding a job.
Yet 66 percent of those surveyed said they are more likely to hire a local woman as a domestic helper rather than a woman from outside the city, indicating a huge market demand.
Meanwhile, more than 96 percent of women interviewed thought they had good skills in housework and 62 percent had some basic knowledge of nursing.
Shanghai Women's Federation said it will offer more training to women to help them find a job. The federation also encourages women, either those laid off or university graduates, to start their own business. It has recently issued 200,000 yuan (US$27,027) in awards to some women to help start their businesses.
Headhunter sets sights on growth
December 2nd, 2007SHANGHAI: Randstad Group, a human resource solution provider based in the Netherlands, is seeking to expand its foothold in China through its new headhunting channel.
The company, which acquired a controlling stake in Shanghai Talent Co last May, also has a Beijing office with more than 20 consultants tackling the North China market.
"We are seriously considering opening an office in Hong Kong and expanding into second-tier cities in the foreseeable future," Randstad's Managing Director Paul van de Kerkhof said.
Unlike conventional recruitment companies and headhunters, which usually find candidates through job fairs or telephone interviews on a random basis, Randstad offers a sector-based recruiting mechanism to meet clients' specific needs. The company assigns two of its consultants to form a unit focusing on a specific market segment - engineering, automotive, finance, sales and marketing - and to work for clients with vacancies in these sectors. Each unit would manage an active database for both clients and candidates.
"When a client comes to us with a vacancy, we can screen in our databases to find out whether there are such candidates matching their requirements," van de Kerkhof said. "Such upfront databases and working units will greatly shorten the time cycle of recruiting, which usually costs three to four weeks."
Van de Kerkhof, an HR specialist with more than 20 years' experience, explained that jobseekers in China often consider higher pay their first priority, and some ignore factors such as career development and employer competency.
To address this dilemma, Randstad uses its own unique criteria, namely "5C" - CV, character, company click, competence and career plan - in selecting potential candidates from its database.
Randstad holds that soft skills, such as character and competencies, are as important as hard skills. "We often explain to our clients that they should be open to candidates with different backgrounds. If the criteria are only based on hard skills, the potential development will be limited," van de Kerkhof said.
Headquartered in the Netherlands, the Randstad Group entered the Chinese market three years ago, becoming the only foreign recruitment firm to hold both staffing and recruitment licenses in Shanghai.
Upon buying into Shanghai Talent Co last May, the company obtained Shanghai Temporary Staffing Services, which focuses on HR outsourcing and payroll systems within and outside of Shanghai.
Van de Kerkhof agreed that working with local companies is of vital importance for foreign HR firms in China.
"Teaming up with Shanghai Talent first of all provided us with a broad knowledge of the local market," he added.
Source:China Daily
Job search about more than sending out CVs, report says
November 21st, 2007JOB seekers should adjust their goals rather than continuing to send resumes blindly if they do not receive an employment offer after applying for more than three positions, officials at the Shanghai Employment Promotion Center said yesterday.
According to a report released yesterday by the Shanghai Labor and Social Security Bureau, job offers do not rise proportionately to the number of resumes sent.
A survey conducted by the Shanghai Job Placement Center's Website, the city's only government job placement organization, showed the success rate reaches 38.6 percent, the highest, when job seekers apply for three posts, followed by 36.9 percent for two positions.
However, those who apply for more than three positions have less of a chance at receiving a job offer, with the success rate dropping to 26.6 percent when applying for four posts, and 22.5 percent for those applying for more than five jobs.
"Applicants who register for only two or three positions tend to be successful because they usually have a clear objective and they know what kind of jobs are most suitable to their skills," said Huang He, an analyst in the bureau's service center.
"In comparison, those who send resumes to more employers are often blind in seeking jobs," he said. "So if they fail after more than three tries, they should pause and set a career goal for themselves."
In order to guide applicants, the bureau organized a series of lectures in communities for unemployed individuals. The lectures will continue for one month.
Yesterday's lecture showed applicants how to obtain more job opportunities.
Lu Danmeng, a senior consultant at the job service center, gave the first lecture to unemployed young people in Hongkou District.
Lu said most people want to become white-collar workers, but that more blue-collar opportunities are available.
She said there are some great job opportunities in Shanghai's suburbs.
According to the report, a record 501,300 people applied for jobs at the Shanghai Job Placement Center's Website (jobs.12333sh.gov.cn) during the third quarter this year. About 168,800 succeeded in finding work.
Risky job at Citigroup
November 19th, 2007CITIGROUP Inc replaced David Bushnell as chief risk officer, two weeks after the largest United States bank said writedowns on mortgage-related investments may lead to its first quarterly loss since at least 1998.
Jorge Bermudez, 56, whose 30-year career at Citigroup includes experience in risk management and operations, takes over for Bushnell effective immediately, the New York-based bank said in a statement. Bushnell, 53, a 22-year veteran who also serves as chief administrative officer, will retire on December 31.
Bushnell is at least the fifth executive to be forced out or reassigned at Citigroup as this year's credit-market turmoil in the US ravaged the bank's investments in subprime mortgages and related bonds. The company's board ousted Chief Executive Officer Charles Prince on November 4, three weeks after Prince himself replaced three top trading executives.
"They're addressing a situation that should have been addressed two years ago," William Smith, who manages about US$80 million, including 71,000 Citigroup shares as president of Smith Asset Management, told Bloomberg News. "Heads have to roll, and Bushnell's head was next to roll."
The company's stock has tumbled 39 percent this year.
Citigroup said earlier this month bad subprime investments might result in as much as US$11 billion of writedowns this quarter. The losses are on top of US$3.15 billion of writedowns on subprime mortgages and leveraged loans reported for the fourth quarter.
More highly qualified teachers attracted to work in China's rural areas
November 9th, 2007BEIJING, Oct. 27 (Xinhua) -- China has recruited nearly 17,000 new teachers to serve in rural areas teaching children for their nine years' compulsory education, according to Wang Xumin, Chinese Ministry of Education spokesman.
Of those 17,000, a total of 68.4 percent are university graduates, said Wang Xuming at a regular press conference on Oct. 25. This represents an increase in graduate recruitment of 86 percent over the previous year.
China launched a special teaching program last year to encourage Chinese university graduates to act as teachers in the rural areas for compulsory education including education at primary school and junior high school levels.
The program, co-funded by central and local governments, recruits college graduates to serve a three-year term in rural schools and also offer them favorable policies for their future careers after they leave their teaching posts.
Under this program, the central government allocated 15,000 yuan (around 2,000 U.S. dollars) for each teacher recruited, and if the average yearly income in certain areas is higher than 15,000 yuan, the local government must allocate money to subsidize these teachers. And this year, the central government input has been increased to 18,960 yuan per person annually.
By now, 32,700 teachers have been recruited for the program, including 23,500 in junior high schools and 9,200 in primary schools.
"The quality of the teachers is crucial to education in rural areas and this program not only provides lots of qualified teachers for rural schools, but is also an innovative way of recruiting teachers," Wang said.
The Party and central government has attached great importance to education in rural areas, he said.
"Since 2006, the central government has exempted rural studentsfrom tuition and miscellaneous fees for compulsory education in central and western regions. This year, this policy has been expanded to all rural areas in the country," he noted.
Tuition fees range from 140 Yuan to 180 Yuan a year for primaryschools, to 180 Yuan to 230 Yuan for junior high schools.
Microsoft inks with Chinese PC maker to pre-install Windows
November 7th, 2007MICROSOFT Corp, and China's No. 2 personal computer maker signed an agreement today to pre-install Microsoft's Windows operating system in PCs in a move to combat widespread Chinese product piracy.
The agreement with Founder Technology Group Corp shows "the commitment of both companies to protect intellectual property rights" and promote the growth of China's information technology market, the companies said in a joint statement.
Founder will also sell Microsoft keyboards, Webcams and other hardware in more than 500 stores across China, the companies said.
Microsoft suffers from widespread piracy of its software in China and has been pursing tie-ups with Chinese equipment makers to discourage use of unlicensed copies of its products.
In March, Microsoft and China's biggest personal computer maker, Lenovo Group. agreed to pre-load Microsoft Corp.'s tool bar and Web search software on its computers.
Lenovo, the world's third-largest PC maker, was to load Microsoft's Windows Live on laptop and desktop computers, the companies said at the time.
The package included Microsoft's search service Live Search, which could help the Redmond, Washington-based company compete with search leader Google Inc for traffic.
China Career Builder Corp's Subsidiary Asian Career Company Ltd. Signed an Executive Search Service Agreement With Octopus Holdings Ltd
November 2nd, 2007China Career Builder Corp., ("The Company") (OTCBB: CCBX) a Delaware Corporation, is focused on outsourcing human resource services and staffing services in Hong Kong, China. The company is pleased to announce Asian Career Company Ltd has signed an executive search service agreement with Octopus Holdings Ltd. Under the term of agreement, Asian Career Company Ltd will provide the services of Senior Executive Assignment and Contingency File Search to Octopus Holdings Ltd.
China Career Builder Corp. CEO Mona Yim stated "We are honored to have earned this partnership. This is a very significant milestone for the growth of our company. Our company intends to deliver the best in service to Octopus Holdings Ltd as we do all our valuable clients".
ABOUT OCTOPUS HOLDINGS LTD
Launched in 1997, Hong Kong's Octopus is the world's leading and most extensive smartcard payment system, with over 450 service providers across different businesses including public transport, parking, retail, vending and kiosks, schools and leisure facilities, as well as access control for residential and commercial buildings. Merchants and Octopus holders embrace Octopus for both its simplicity and its convenience. Today, more than 15 million Octopus are in circulation, and the system handles over 10 million transactions a day, with transaction value exceeding HK$80.4 million. For more information, please visit the Octopus website www.octopus.com.hk.
ABOUT THE COMPANY
China Career Builder Corp. (The Company) through its subsidiary Asian Career Company Ltd. provides outsourcing human resource services and staffing services in Hong Kong, China. The company provides recruitment services focusing on the professional, management, clerical, administrative, IT and industrial market. Its services include screening, recruiting, training, workforce deployment, loss prevention and safety training, pre-employment testing and assessment, background searches, compensation program design, customized personnel management reports, job profiling, description, application, turnover tracking and analysis, opinion surveys and follow-up analysis, exit interviews and follow-up analysis, and management development skills workshops. The company markets its recruitment services through a combination of direct sales, telemarketing, trade shows, and advertising. The company incorporated in Delaware, headquartered in Hong Kong, China.
For further information please refer to the Company's website at www.ChinaCareerBuilder.com.
If you would like to receive regular updates on China Career Builder Corp. please send your email request to info@ChinaCareerBuilder.com or contact the company's Investor and Public relations at ir@ChinaCareerBuilder.com .
SAFE HARBOR STATEMENT
Certain of the statements set forth in this press release constitute "forward-looking statements." Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words "estimate," "project," "intend," "forecast," "anticipate," "plan," "planning," "expect," "believe," "will likely," "should," "could," "would," "may" or words or expressions of similar meaning. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the company's actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to grow its business. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company's limited financial resources, domestic or global economic conditions -- especially those relating to China, activities of competitors and the presence of new or additional competition, and changes in Federal or State laws, restrictions and regulations on doing business in a foreign country, in particular China, and conditions of equity markets. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Executive hiring in Asia to accelerate in Q4 -Hudson
October 23rd, 2007HONG KONG: Hiring by multinationals in major Asian markets is likely to accelerate in the fourth quarter, notably in Japan, a survey by executive recruitment firm Hudson shows.
Sixty-five per cent of managers at multinationals in Japan said they expected to increase recruitment in the fourth quarter, according to the survey released on Thursday, up from 60 per cent in a survey taken three months earlier.
In China, 64 per cent of respondents plan to increase headcount this quarter, up from 60 per cent in the previous quarter; in Hong Kong 54 per cent of managers expect to add staff, compared with 49 per cent in the last survey.
The survey by Chicago-based Hudson Highland Group Inc covered responses from 2,500 managers at multinational companies across industry sectors in China, Hong Kong, Japan and Singapore.
Expectations in Singapore remained unchanged from the previous survey, with 54 percent of managers seeing a need to hire more staff.
Fast economic growth has led to a shortage of executive talent in Asia. More than a third of employees in Hong Kong and Singapore leave a company within two years, according to the Hudson report.
In China, 52 per cent of staff leaves within two years, and 30 per cent of job candidates there are demanding salaries of more than 20 per cent above what employers are willing to pay, the survey shows.
Workers go for quick turnover
October 22nd, 2007CHINESE Mainland employees spend the shortest time in employment with employers than other workers in major Asian job markets, a survey released yesterday reveals.
Among the 673 respondents surveyed on the Chinese mainland, about 52 people said that they had worked for each employer for less than two years, most of them spending between 19 to 24 months.
Workers who spent less than two years in a position accounted for only 28 percent of those surveyed in Japan and 35 percent in Hong Kong and Singapore.
The survey, conducted by Hudson Recruitment, asked nearly 2,500 decision makers in multinational corporations in Chinese mainland, Hong Kong, Japan and Singapore about their hiring and staff retention.
Media, public relations and advertising firms reported the shortest average staff tenure with 84 percent of their employees leaving the job in two years or less, while only two percent stayed in the one place for more than three years.
Other sectors such as banking, consumer, information technology and manufacturing followed, the report said.
Angie Eagan, Hudson's general manager in Shanghai, said that the high turnover was brought by a continuous shortage of skills in Chinese mainland.
"People always want a bigger salary and they will keep looking for opportunities," Eagan said, adding that the high level of head hunting made it easy for employees to hop from job to job.
A reader's toolbox:
Adequate financial planning does not imply heavy foreign exchange or getting buried in stock trading. An individual should know about mutual funds and the edge of hedge funds over them. Keeping information about stock brokerage is totally up to an individual.
Hong Kong struggles to halt exodus
October 20th, 2007By Paul Wiseman, USA TODAY
HONG KONG — Americans and other Westerners have been leaving Hong Kong by the thousands, raising questions about the city's future as the commercial gateway to China and Southeast Asia.
Since the end of 1997 — the year the former British colony returned to Chinese rule — the number of Americans living here has dropped by 7,680, or 21%, to 28,320. Other nationalities have departed in even greater numbers, although a change in the way the statistics are calculated may explain some of the decline.
For almost two centuries, Western firms have used Hong Kong as a base for doing business in China, taking advantage of first-rate infrastructure, world-class banks and even-handed, transparent courts. But China's booming economy is drawing firms directly to the mainland.
"China is sucking in a lot of expatriate talent," says Mike Bekins, managing director for executive recruiter Korn/Ferry International in Hong Kong. Multinational companies "are moving to Shanghai lock, stock and barrel."
"The benefits of being directly in the China market are overriding the benefits of Hong Kong's history," says Laurie Underwood, who interviewed foreign executives in China for her book China CEO.
Other factors:
•Multinational firms are hiring locals for top jobs. "The local talent has improved greatly," Bekins says. "All companies would rather put a local person in a key role. The locals are here for the long term."
They also bring Chinese-language skills and don't require compensation packages that include housing allowances and tuition for kids at expensive international schools, Bekins says.
•Hong Kong's smoggy skies are making it tougher for the city to attract foreign executives. Thirty-five percent of Hong Kong businesses reported having trouble getting employees to move to Hong Kong "as a direct result of the city's air pollution," according to a 2006 survey by recruiting firm Hudson.
The American Chamber of Commerce in Hong Kong has warned that "a deteriorating environment will erode Hong Kong's edge over competing Asian cities." Super-clean Singapore, in particular, has been gaining from Hong Kong's reputation for pollution, says Brenda Wilson, business leader of human capital for Mercer, Hong Kong.
•Dual citizenships might make the exodus look bigger than it is. Under a Chinese law in effect here since 1997, ethnic Chinese born in Hong Kong or the mainland are officially counted as "Chinese," even if they hold passports from other countries and were once counted as foreigners.
Other evidence suggests that the drop in Westerners might not be so big. International schools are packed — though that partly reflects rising demand among locals for English-language education, says Peter Craughwell, spokesman for the English Schools Foundation.
InvestHK, a government agency that promotes foreign investment in Hong Kong, says the number of U.S. companies with regional headquarters in Hong Kong has risen steadily — from 256 in 2004 to 262 in 2005 and 295 in 2006.
Still, the perception remains among some foreigners that the city's fortunes have peaked. When Underwood finished her Chinese-language studies five years ago, she didn't even consider looking for work in Hong Kong. "I just wanted to skip it," she says.
Underwood moved to Shanghai and works as director of external communications at the China Europe International Business School there. "It seemed like (Hong Kong) was over," she says. "I wanted to work in the China market, not the Hong Kong market."
A reader's toolbox:
Attempting156-215 as well as 640-863 do not require much experience. However for 642-382 or even 642-901, every credit matters. That means those 70-528 and N10-003 under your belt do matter after all.
Manpower first to land China approval to provide temporary-staffing help
October 19th, 2007After 13 years of building its business recruiting permanent workers in China, Manpower Inc. announced Wednesday that it is the first multinational corporation to receive a license to provide temporary-staffing services in the nation.
Milwaukee-based Manpower said that it, along with six Chinese firms, has been granted a license to supply temporary help to employers as part of a pilot program organized by the Shanghai Personnel Bureau.
Interns rate their jobs only so-so in survey
October 9th, 2007DESPITE tough battles to win an internship position, most university students turn out to be unsatisfied with their part-time work experience, a recent Internet survey found.
The most common problems for students were feelings of disrespect, unsuitable tasks and low payment, according to 51job.com, a Nasdaq-listed human resources service provider in China.
The company surveyed 10,663 university students and 1,800 employers in major Chinese cities about their attitudes to internships.
The survey found that the 1,800 employers filled 7,587 internships so far this year, with an average of 43 people applying for each.
However, nearly 39 percent of students surveyed said that they were not satisfied with their internship experience, a figure that is seven percentage points higher than last year's survey result.
About 43 percent of students said their internships were "so-so," while only 18 percent of respondents considered the part-time work satisfying, the survey reported.
Lack of respect was the focus of students' discontent, as more than two-thirds of students said they couldn't bear their employers' attitude to their work.
"Our manager took all our sales as his own and simply treated us as cheap labor," said You Tingting, a student who interned as a sales representative for a local ticket agency.
Unsuitable positions that have nothing to do with students' majors were another drawback.
The survey reported that only 1.4 percent of students surveyed took up internships that enhanced their professional knowledge, mostly designers, computer programmers and educational majors.
"It's nothing for students to be a delivery boy or distributing fliers. You can't expect to take a comfortable position immediately, as everybody has to start from scratch," said a human resources manager of a logistics company, who asked to remain anonymous.
Surprise results show US labor market firm
September 30th, 2007THE number of US workers filing first-time claims for unemployment benefits unexpectedly fell to a four-month low, helping to allay concerns about a weakening labor market.
Initial jobless claims declined by 15,000 to 298,000 in the week that ended Saturday, from a revised 313,000 a week earlier, the Labor Department said yesterday in Washington. The four-week moving average, a less volatile measure, dropped to 311,500 from 321,250.
Companies are holding on to employees, even while limiting hiring plans, as they wait to see whether the effects of rising mortgage defaults spread to other parts of the economy. Labor market health is closely linked to the outlook for consumer spending and confidence, which show signs of flagging.
"Labor market conditions overall are not deteriorating and remain pretty steady," said Julia Coronado, a senior US economist at Barclays Capital Inc in New York, before the report. "So far we're not seeing the losses spread beyond housing and finance."
Fastest growth
Another government report showed the US economy grew in the second quarter at the fastest pace in more than a year before last month's credit-market turmoil heightened concern the expansion might be cut short.
Gross domestic product rose at a revised 3.8 percent annual rate from April though to June, propelled by a surge in exports, figures from the Commerce Department showed in Washington. The economy advanced at a 0.6-percent rate in the first quarter.
After the reports, the benchmark 10-year US Treasury note yielded 4.61 percent, down one basis point from Wednesday.
Economists had forecast claims would rise to 316,000, from a previously reported 311,000 for the prior week, according to the median of 40 projections in a Bloomberg News survey. Estimates ranged from 305,000 to 330,000. Last week's claims were the lowest since the week ended May 12.
The number of people continuing to collect state unemployment benefits rose to 2.551 million in the week that ended September 15. The prior week's 2.540 million was the lowest since July 21.
Last month's payrolls report unexpectedly showed a loss of 4,000 jobs, the first decline in four years.
The unemployment rate among people eligible to collect state jobless benefits, which tends to track the national unemployment rate, held at 1.9 percent in the week ended September 15.
Methane JVs lure foreigners
September 28th, 2007CHINA has issued new rules to allow more companies to cooperate with foreign partners to explore for methane trapped in coal seams to boost energy output.
Companies designated by the State Council, China's Cabinet, will be allowed to set up the ventures with foreign businesses, according to a revised regulation posted on the Chinese government's Website yesterday. China United Coalbed Methane Corp used to be the only company allowed to enter such ventures based on a 2001 regulation.
The central government aims to boost the share of its energy produced from natural gas to 5.3 percent by 2010 from about three percent now to cut pollution and reduce reliance on coal and oil, Bloomberg News reported. China has 10 trillion cubic meters of extractable coal-bed methane reserves, according to the National Development and Reform Commission, the nation's top economic planner.
Asia American Gas Inc and China United Coalbed Methane won government approval to produce 500 million cubic meters of the fuel annually in northern China's Shanxi Province.
Cisco joins Haier in home networks
September 26th, 2007CISCO Systems Inc announced yesterday a partnership with Haier Group to explore home network markets in China, relatively new territory for both companies.
Cisco's cooperation with Haier, China's largest appliance manufacturer, helps them to expand consumer business, and Haier aims to profit from the growing integration of the Internet with home entertainment, industry insiders said.
Under the terms of the cooperation, Cisco and Haier announced their intention to explore sharing practices in group management and processes, financial management and controls, strategic investments and capitalization cooperation, construction of information infrastructure and home networking systems, Cisco said in a statement.
Qingdao-based Haier, with a global revenue of 107.5 billion yuan (US$14.3 billion) last year and 50,000 employees, is expanding its brand in international markets and the partnership with Cisco will help that.
Haier is also a large Cisco customer in China, and uses Cisco's network equipment.
"We are a market leader in China, but are working to establish a strong brand presence in overseas markets. We believe it is necessary to take advantage of Cisco's business practices as a model for efficient international expansion," said Zhang Ruimin, Haier's chief executive.
China's digital TV market revenue is expected to hit 150 billion yuan in 2007, 19 percent of the global market size, according to Gartner Inc, an IT research firm.
Engineers have lost their shine for youth
September 25th, 2007ENGINEERING, once a highly rated job in China, has lost its appeal for young Chinese, Xu Kuangdi, the ex-mayor of Shanghai and President of the Chinese Academy of Engineering, said yesterday.
Xu said this in his opening remarks to a forum in Shanghai to promote the reform and development of engineering education in China.
"The profession of an engineer is far less reputable today than it was in the 1950s," said Xu, who was the city mayor from 1995 to 2001.
He said most Chinese university students now hoped to make a lot of money by working for banks or scrambling to become Masters of Business Administration.
Xu said the hardships involved in becoming an engineer has also led to the decline - people who wanted to be engineers had to begin in workshops instead of sitting in offices.
Engineering has a special status in China where many of its leaders have had a background in engineering.
However the number of qualified engineers is failing to meet the demands of the country's rapid economic growth.
According to a 2004 statistic, engineers only accounted for four percent of the overall staff in Chinese businesses.
Intern hunt goes ahead
September 21st, 2007ONE of China's leading Web-based headhunters, 51job.com, has launched its 2008 nationwide internship program to provide more than 1,600 internship positions for university students.
Students will be given work at more than 100 companies in 12 major Chinese cities such as Shanghai, Beijing, Guangzhou, Dalian and Nanjing. Students can sign up for the program at the Website.
HK jobless up
September 19th, 2007Hong Kong's seasonally adjusted jobless rate nudged up from 4.1 percent in the May-to-July period to 4.2 percent from June to August, officials said yesterday. Increases in the jobless rate were experienced mainly in the communications, real estate and wholesale trade sectors, the Census Statistics Department of Hong Kong said.
Decreases in the underemployment rate, which held stable at 2.3 percent, were seen mainly in foundation and superstructure construction, and communications sectors, offsetting increases in welfare and community services and retail trade. Total employment grew by about 10,100 from 3,494,200 in May-July to an all-time high of 3,504,300 in June-August. Over the same period, the labor force swelled by about 18,500 from 3,652, 200 to a new high of 3,670,700.
ADB: China's GDP growth to hit 11.2%, CPI to top 4%
September 17th, 2007BRISK exports, strong investment and buoyant consumption will lift China's economic growth to 11.2 percent this year, up from an earlier estimate of 10 percent, with the inflation rate breaking 4 percent, says an Asian Development Bank (ADB) report released in Beijing today.
"The faster than expected growth momentum built up this year is expected to carry into 2008," said Zhuang Jian, senior economist of ADB's China Resident Mission, at a news conference.
The new ADB report also forecasts that China's GDP growth in 2008 will reach 10.8 percent, revising from the 9.8 percent in an ADB report published in March.
Zhuang said China's economy grew at a faster-than-expected 11.5percent in the first half of 2007, which is the highest rate since1994.
According to Zhuang, China's fast economic growth was led by industry, especially in such sectors as steel, electricity, chemicals, and oil processing.
Strong profitability, buoyant sales and still-low lending rates also drove investment during the period.
The ADB report said investment administered by local governments grew by 28.1 percent in the first six months, nearly doubling the equivalent central government rate.
China's inflation barometer - the Consumer Price Index (CPI) is estimated to hit 4.2 percent this year and 3.8 percent in 2008 as against the previous forecasts of 1.8 percent and 2.2 percent respectively, according to the ADB report.
Zhuang said rising global grain prices and a pig disease outbreak led to rocketing food prices, but this is expected to ease next year, paving the way for the implementation of planned reforms in the pricing of state-controlled sectors such as water, power and natural gas.
Significantly higher than expected inflation, however, poses a risk to the outlook. Zhuang said adverse weather would lower domestic grain production at a time when imported grain prices are high.
Chinese company picks Peachtree City£ºNew plant will create 200 jobs at facility on 241-acre site
September 13th, 2007By KEVIN DUFFY
The Atlanta Journal-Constitution
Published on: 09/12/07
Georgia's business ties with the People's Republic of China grew a little stronger Wednesday.
The state and Sany Heavy Industry Co. of Changsha, China, formally announced that the maker of construction equipment will open a plant in Peachtree City and create 200 jobs.
Sany will invest $30 million in land, buildings and equipment. Operations at the 241-acre site are expected to begin in the first quarter of 2009.
Sany is the third Chinese company in 15 months to announce it will do business in Georgia.
Hans Gant, senior vice president for economic development at the Metro Atlanta Chamber of Commerce, said Sany is the biggest recruitment success so far because in 10 years its work force could grow to 600 and its investment to $100 million.
Sany makes concrete-pumping equipment. Two examples of what it produces, extending 121 feet in the air, were parked in front of the Capitol during the announcement.
Sany Group, the parent company, employs 18,000 people and sells in more than 60 countries. Company Chairman Liang Wengen, who was at the ceremony, is a billionaire, according to Forbes magazine.
"What won the deal is just we wanted the business," Gant said.
Financial incentives played a role. Sany will receive declining property tax abatements over 10 years that will save the company an estimated $2.2 million, according to Matthew Forshee, president and chief executive of the Fayette County Development Authority. During that time, Sany will pay about $2.75 million in property taxes, Forshee said.
In addition, Peachtree City will chip in $50,000 and Fayette County $150,000 to help Sany buy its industrial park site, priced at $6.5 million.
The state Department of Community Affairs will make available a $900,000 Regional Economic Business Assistance grant.
The Georgia Economic Development Department and the metro chamber have been building relationships with Chinese businesses and government officials for several years.
"It hasn't happened by accident," Gov. Sonny Perdue told the audience. "We've been in Asia and China looking for relationships and partnerships."
The state recently began operating a one-person office in Beijing, and it's lobbying China to open a consulate in Atlanta. Delta Air Lines is trying to secure direct flights from Atlanta to Beijing and to Shanghai.
In June 2006, the business recruiting trips began to pay off. Kingwasong, which makes soy sauce, announced it would invest $12 million to $15 million in a new plant in Newnan, creating 200 jobs. In May, a second Chinese business, General Protecht Group, which makes electronic equipment, bought 211 acres in Barnesville to build a plant.
In his translated remarks to the crowd, Liang mentioned Georgia's airports, roads, ports ¡ª even its trees ¡ª as he explained why his company chose the state.
He called it "the outstanding talents in the blessed land."
Union will push for collective bargaining
September 6th, 2007ALTHOUGH collective wage bargaining was being used by more companies, it still needed promotion, the Shanghai Trade Union said yesterday.
Along with the Shanghai Labor and Social Security Bureau and the Shanghai Enterprise Confederation, the union will have a conference promoting collecting wage bargaining this afternoon.
Under collective bargaining, a company's salaries are set after discussion and voting by all the employees.
"Wages are the key issue which directly influences the relationships between workers and employers," said Wu Meng, an official of the Shanghai Trade Union.
"We encourage employers to set up collective bargaining with their workers to ensure that everyone can get a share of the company's success," he said.
Shanghai began collective bargaining in 1998 and by the end of June this year, 46,600 businesses in the city had joined the system which covered about 1.45 million employees.
But the union said this was not nearly enough.
"There were more than 500,000 businesses at the end of last year," Wu said. "So those which have set up collective bargaining only account for a small portion."
Wu said there were 49,000 private businesses in the city and it might be difficult to get every private company involved in collective bargaining because many workers were unaware of their rights.
A union survey found that most employees in privately-owned enterprises thought wages should only be set by the employers.
"They don't believe that workers can negotiate wages with employers," Wu said.
Cisco China's 'management kindergarten' aims to grow seasoned execs
August 16th, 2007China is a red hot market for Cisco, which saw its second-half sales in Hong Kong grow more than 35% from a year earlier, reports the South China Morning Post. But the country is suffering from a lack of experience managers to lead the hi-tech firms - including Cisco - that have set up facilities there.
Businessweek is reporting on Cisco's answer to the problem - grow managers from within by instituting "management kindergarten" programs. Businessweek cites Cisco's Shanghai research center, where the average age of workers is 27, as an example of a unit that is offering such a program.
Quoting Jan Gronski, managing director of the Shanghai facility, and her No. 2 Chris Dong, Businessweek writes:
Gronski and Dong have opened "Cisco Clubs" at three Chinese universities, giving students a chance to work with Cisco engineers. For those on staff, Gronski runs management seminars every Thursday. He schools young managers on everything from giving presentations and decision-making to speaking their minds.
Some readers of the article think that Cisco will still churn out inexperienced managers. But what's the difference between this program and other "management trainee" programs offered by companies in the west?
All Eyes Are On Outsourcing Providers In China
August 16th, 2007Francisco Partners' investment in DarwinSuzsoft and Sierra Atlantic's acquisition of ArrAy highlight increasing focus on Chinese outsourcing capabilities.
Mark Botticelli has learned valuable lessons about China. For one, employees expect cash bonuses before important holidays, like the Chinese New Year. And horizontal organizations don't work.
"Hierarchy is important," says Botticelli, VP of engineering in the mobile solutions division at Trimble, which makes software for devices used by delivery people and other mobile workers. "The project manager needs to go home and tell his wife he has 14 people working for him."
Trimble eased its way through these cultural challenges three years ago by hiring Chinese outsourcer Suzsoft to provide engineering services. This is a path more U.S. companies are likely to follow, making companies like Suzsoft--now DarwinSuzsoft since being acquired by Darwin Partners last year--increasingly popular.
As a measure of that popularity, private equity firm Francisco Partners last week said it would invest $48 million and take a majority stake in DarwinSuzsoft. The investment will be used for acquisitions and organic growth of the U.S. company, which employees 800 Chinese engineers. Also last week, Sierra Atlantic, a U.S. IT services firm with 1,100 developers in Hyderabad, India, said it's acquiring ArrAy, a U.S. company with 200 engineers in Guangzhou and Shanghai.
It's not just the small services providers gearing up: IBM, Tata Consultancy Services, and others have plans to hire thousands more engineers in China. Oracle late last month set up a second Chinese development center to support software partners and integrators, and introduced a computer science program for vocational schools in a deal with the Chinese government.
Companies doing offshore development in China say they're paying salaries that are 25% to 40% lower than what they'd pay in India, without the high staff turnover rates in that country. Chet Gapinski,VP of engineering at Crossbeam Systems, a maker of security systems, steered his company to China last year after facing some of those problems in India. Crossbeam hired ArrAy for a "hybrid" approach that keeps project managers in the United States and engineers in China, with both sides making regular visits to the other country.
Crossbeam initially had difficulty getting U.S. visitors' visas for Chinese engineers, a problem ArrAy smoothed over, Gapinski says. It also found that Chinese engineers can't work on some security technologies deemed sensitive by the U.S. government. In China, experienced service providers also can prevent problems dealing with government, which is closely involved in business.
Trimble, which employs 30 of DarwinSuzsoft's Chinese engineers, has expanded its relationship beyond developing custom apps for a Hong Kong customer to include maintenance for U.S. and Chinese customers and development work on Trimble products.
Botticelli initially was concerned about lax intellectual property protection in China but found Suzsoft's security measures more than adequate. English skills aren't nearly as good as in India, so Trimble requires its Chinese engineers to attend weekly English classes. One sign of success in China: Trimble plans to ramp up its team there to handle new products coming out next year.
Shenzhen eyes top overseas talent
August 16th, 2007The government of the southern boomtown of Shenzhen bordering Hong Kong plans to hold job fairs in North America, Europe and Australia next year to attract top professionals.
Although the move has not been well received by some residents, it has gained the support of overseas returned Chinese and human resources organizations.
"It's very positive. It is a goodwill gesture by the government toward foreigners, especially Chinese people working or studying abroad. It will also help companies attract quality candidates," Ouyang Hui, director of the talent research center of ChinaHR.com, told China Daily.
William Zheng, a special counsel with US law firm Sheppard, Mullin, Richter & Hampton, said the government of Shenzhen has created a good opportunity for companies.
"A growing number of Chinese companies are setting up subsidiaries abroad or acquiring foreign companies. They are in great need of senior foreign executives who are not only good at business, but also know the local accounting rules and laws," Zheng said.
The Chinese-American began working in China in 2003.
"Government-sponsored job fairs have more impact on foreign communities and attract top professionals, more so than individual companies," he said.
According to the Shenzhen office for introducing foreign talents, the city has held job fairs in the United States, Canada, Europe and Hong Kong since 1992. It was the first Chinese mainland city to hold such fairs.
"The fairs have proved successful in attracting overseas professionals," Yin Shaowen, deputy director of the office, said.
The number of overseas returned Chinese surpassed 10,000 in June this year, Yin said. Some of them have set up companies in the city with start-up funds from the government.
"To encourage these people, the government raised the start-up fund for a single project from 150,000 yuan ($20,000) to 300,000 yuan early this year," Yin said.
According to official figures, the city has attracted more than 150,000 overseas technicians and executives in the past 20 years. In the past two years alone, 72,000 have settled in the city.
Mayor Xu Zongheng said the government would soon launch a series of campaigns to make the city a most attractive destination for foreign professionals.
51job and Japan's Recruit to form coupon advertising company in China
August 14th, 2007BEIJING (XFN-ASIA) - China's 51job Inc, a Nasdaq-listed provider of human resource services, and Recruit Co Ltd, an information services company in Japan, said in a joint statement that they have signed an agreement to establish a new company to provide coupon advertising services in China.
The company will be independently incorporated and is expected to have a total capitalization of up to 82 mln yuan provided over several years.
Recruit is expected to provide 60 pct of the funding in cash, up to 49.2 mln yuan, and the remaining 40 pct will be financed through convertible bonds of up to 32.8 mln yuan to 51job (nasdaq: JOBS - news - people ).
The zero coupon convertible bonds will include conversion rights for 40 pct of the share capital of the new company.
In April 2006, 51job and Recruit entered into a business alliance to form a corporate planning group to assess opportunities in the human resources industry and other new businesses in China.
51job operates 23 editions of 51job Weekly and distributes several mln copies each week throughout China.
Recruit, a printer and distributor of free coupon magazines, publishes Hot Pepper, which was launched in 2001 and has expanded to 49 area-specific editions in Japan.
(1 usd = 7.56 yuan)
China's Misguided 3G Mobile Strategy
August 13th, 2007In July, reports surfaced that China's two mobile telecoms giants had hit upon a novel marketing strategy. In the east China city of Suqian, China Mobile and China Unicom were giving away cases of local beer to new subscribers.
An analyst quoted in the Financial Times noted that, although a duopoly, the two companies were competing to lure subscribers as though there were "10 competitors fighting it out."
As effective as beer-driven marketing may be during a sweltering summer, if this is what passes for innovation in mobile telecommunications then the nearly 500 million Chinese mobile phone users might want to reach for something stronger.
The problem is that while China's two mobile phone operators might market with a competitive verve, they behave like the government-managed duopoly they are when it comes to technical innovation.
Wireless value-added services (WVAS) are largely limited to the standard 2G diet of ring tones, ring back tones and text-based gimmicks. Many of these come from small, third-party providers over which the operators maintain rigid control. This has generated more controversy than innovation as WVAS providers have struggled with shady customer recruiting practices, the duopoly's financial demands and wide-ranging content restrictions. Revenues are declining across the board and many WVAS providers are teetering on the brink of failure, let alone dreaming up exciting new products.
As a result, the largest mobile telephone market in the world is a technological desert overshadowed by far more fertile territories in Korea and Japan.
A MISGUIDED STRATEGY
Don't be misled. China's telecommunications regulators are committed to domestic innovation. Unfortunately, they have chosen to focus on the development of a domestic 3G standard, TD-SCDMA, rather than using a foreign equivalent.
This is exactly the wrong the approach.
The lesson of the internet's success is that the underlying network is just the starting line. The great explosion in innovation and wealth creation has been in the services and applications that run on the network. That's why Google is worth US$160 billion less than 10 years after it was founded.
What is more, TD-SCDMA is stuck in the starting gate and China's telecoms regulator refuses to issue licenses for it or any other standard until it is ready. Licensing has slipped from 2004 to "early 2006" to "late 2006 or early 2007" to "before the Olympics" to "we'll get back to you."
For Chinese users, this means continued reliance on creaky "2.5G" data networks and the same moldy basket of uninspiring services.
What's heartbreaking is that in the years China has dawdled over TD-SCDMA, all the ingredients that would have enabled it to be a global leader in mobile applications have come together.
Global 3G standards and technologies have improved and are beginning to live up to early expectations. Handset technology has also matured to the point where real web browsing, IP telephony and even Chinese handwriting input are practical. Motorola's Ming and the turbo-hyped Apple iPhone, a sleek mobile PC cunningly disguised as a phone, are signposts to the future.
ENGINE FOR GROWTH
With the largest mobile user base in the world, China is in a perfect position to be the mobile application laboratory for Asia, if not the world.
While many of China's mobile phone users are low-revenue customers content with basic services, there is an increasingly affluent, mobile and internet-addicted youth generation already pushing the current services to the limit. Mobile internet access could have a much broader impact in China than PC-based access has ever had.
China could exploit this potential by swallowing its pride, accepting a proven global 3G standard and ordering mobile operators to open their networks and support third-party IP-based services. That could spur real innovation and make this the golden age of mobile services in China.
But as long as the state-owned enterprise mentality and top-down technical policy making prevail, that golden age will remain elusive. Instead of being the innovation leader it should be, China will remain the world's largest mobile telephony backwater and 500 million mobile phone users will be left treading water.
City's job market expands 20%
August 8th, 2007THE number of job vacancies and job seekers in Shanghai's second quarter have risen about 20 percent compared to the first quarter this year, according to a job market report issued yesterday.
The report, released by the Shanghai Labor and Social Security Bureau, said 20,000 enterprises registered with the Shanghai Job Placement Center's Website (jobs.12333sh.gov.cn) and other job Websites, offering a total of 390,000 vacancies, a 20.7-percent rise from the first quarter.
A record of 419,000 people applied for jobs at public job placement centers across the city, rising by 23.2 percent from the first quarter, with most job seekers being 25 to 34 years old.
The report said the average age of the job seekers was 32, and 80 percent were under 35, while only 10 percent of the total were older than 45. The number of applicants over 45 decreased by 8.3 percent from the first quarter and 22.5 percent from the same period last year.
The city's key sectors, such as medicine manufacturing, chemical and logistic industries, attracted the most job seekers, with the employment demand-to-supply ratio at about 0.3.
According to the report, a total of 1,009 people applied for 273 medicine manufacturing jobs, putting the demand-to-supply ratio at 0.27, the lowest in the top 10 industries.
The center's career information analyst said the strong competition was due to job seekers following growing industries.
But some occupations are suffering a shortage of qualified staff.
Only 35,402 applications were received for 48,467 sales positions posted during the second quarter.
Jobs in securities investment companies also faced a shortage of staff with the bullish stock market generating a huge demand.
Only 1,189 of the 6,578 jobs in securities firms were filled, giving a demand-to-supply ratio of 5.53.
Online leaks anger job seekers
August 2nd, 2007RESUMES for job applications are believed to be the biggest source of Internet privacy invasions.
A survey of 300 people by 1010job.com, a city-based online human resources agent, revealed that 75 percent of the respondents complained that personal information from their resumes had landed in the hands of unauthorized companies.
Insurance companies lead the list of the most unwanted recipients of this information, followed by real estate agents and investment companies.
But the majority of the respondents (most of whom live in Shanghai) agreed that they did not mind if employment agencies or head hunters obtained the information.
"Insurance companies are really annoying. They keep calling my cell phone asking me to buy all sorts of insurance," said Jiang Wenwen, a graduating college student.
As a student, Jiang said that she had tried to restrict the amount of information she provided on the Web, except for the resumes she sent to employment agencies.
"My resume is probably the only way companies can get information about me," she said.
Jiang is not alone. More than half the respondents believed that online resumes were the source of the leaked information, although a quarter said that hard-copy resumes handed out at job fairs were also a likely source.
A few suggested that employment agencies themselves sold the information to companies.
In 2005, Xinhua News Agency discovered insurance companies buying university graduates' resumes at job fairs for one yuan (13 US cents) each.
Last year, law makers began drafting laws to protect personal information, including the possibility that employers who carelessly discard resumes might face legal action.
While most of the surveyed applicants wanted some protection of their privacy on the Internet, two-thirds agreed that it would be difficult to prevent personal information being leaked because of the demand for employment.
Tsinghua Univ. to recruit 134 int'l teachers
July 29th, 2007China's prestigious Tsinghua University will recruit 134 teachers worldwide, the Beijing News reported here Sunday.
Tsinghua will recruit 49 professors or researchers and 85 associate professors and researchers, the paper quoted the sources from the University as saying.
"We will strictly verify recommendation letters, theses and other related information submitted by applicants to root out academic fraud," said an official in charge of personnel affairs of the university.
Tsinghua required the applicants from out of Tsinghua to submit at least five theses, and overseas applicants to submit at least three recommendation letters.
In March 2006, Liu Hui, a professor was removed from his post for fabricating his academic achievements and work experience.
Currently, Tsinghua encourages professors and associate professors from both in and out of Tsinghua to compete for the academic posts available each year as part of its reforms of existing teachers' employment system.
The recruitment will be terminated on October 10 and the final results will be unveiled by the end of December, university sources said.
51job, Inc. and Japan's Recruit Announce Cooperation Agreement to Establish Coupon Advertising Company in China
July 29th, 2007SHANGHAI, China, July 25 /Xinhua-PRNewswire-FirstCall/ -- 51job, Inc. (Nasdaq: JOBS), a leading provider of integrated human resource services in China, and Recruit Co., Ltd., a leading information services company in Japan serving businesses and consumers in numerous market segments, including human resource services, real estate and automobiles, announced today a cooperation agreement to establish a new company focused on providing coupon advertising services in China.
Independently incorporated, this new coupon advertising company will benefit from 51job's distribution expertise and leverage Recruit's deep product knowledge to help local businesses to tap into the rapidly growing consumer market in China. 51job operates 23 editions of 51job Weekly and distributes several million copies each week throughout China. A recognized market leader in the printing and distribution of free coupon magazines, Recruit publishes Hot Pepper, which was launched in 2001 and has expanded to 49 area-specific editions in Japan today.
"Combining our companies' strengths and experiences, we believe the new coupon company will provide a compelling and targeted advertising solution for businesses as well as an effective information channel for consumers in China," said Rick Yan, President and Chief Executive Officer of 51job.
AstraZeneca Cuts Worldwide Workforce 10% While Investing in China
July 29th, 2007The Anglo-Swedish pharmaceutical company AstraZeneca (NYSE: AZN - News) will cut its workforce by 10% in an attempt to cut costs. The company will eliminate 7,600 jobs, an increase from the 3,000 job cuts it announced in February. According to AstraZeneca, the reductions will save the company $900 million per year by 2010.
CEO David Brennan said the job cuts would most directly affect the company’s European sales and marketing staff. After that, the largest staff reductions would be in research and development – “and other areas” – in Britain, Sweden, Germany, France, the United States, and Canada. AstraZeneca will record a $1.6 billion charge in connection with the firings.
While AstraZeneca is cutting back on its expenditures elsewhere in the world, it is spending money to expand its presence in China and build revenues from the country. Also, it seems to be transferring some of its business to China in an attempt to keep a lid on costs.
Last year, AstraZeneca announced that it would spend $100 million over three years in China to build the AstraZeneca Innovation Center China. The R&D facility, to be based in Shanghai's Zhangjiang Hi-Tech Park, will focus on translational science, developing knowledge about Chinese patients, biomarkers and genetics. The goal is to discover innovative drugs that treat cancer patients in China.
Also, AstraZeneca has a $14 million pact with WuXi Pharmatech (see story), in which WuXi is performing compound collection synthesis for AstraZeneca. The big pharma also entered a collaboration with Shanghai Jiao Tong University that will seek to understand the genetics of schizophrenia.
AstraZeneca was an early entrant into China, establishing operations there in 1993. AstraZeneca China is headquartered in Shanghai, with branch offices in 20 other cities, and a production plant in Wuxi, Jiang Su Province, built in 2001. That facility manufactures about 80% of all the products the company sells in China. All told, AstraZeneca China has 2900 employees involved in the manufacturing, sales, marketing and clinical research of new products.
As we reported earlier (see story), AstraZeneca China will inaugurate a center in China to source APIs (active pharmaceutical ingredients) there, with the goal of placing orders for $100 million of API by 2010. Eventually, it expects 90% of its API to come from China.
The API initiative is a vote of confidence in the strengthened Intellectual Property rights now available in China and the high quality of manufacturing there – as well as the lower prices. At the same time as it began its API sourcing in China, AstraZeneca China changed its slogan from “In China for China,” to “In China for Global.”
Talent shortage linked to benefit cuts
July 27th, 2007A SHORTAGE of professionals has led to a decrease in the number of multinational companies offering benefits such as flexible work hours, sabbatical leave and gym memberships to their employees this year, according to a recent survey.
Companies in China offer the second lowest number of benefits in Asia, leading only Japan, according to the report by Hudson Recruitment, a Nasdaq-listed human resources company.
Hudson surveyed about 2,500 multinational company executives in Asia about their hiring expectations during the third quarter this year. Altogether 673 of the respondents are based on the Chinese mainland, mostly in Shanghai.
Among all sectors, 44 percent of respondents said that their companies have a work-life balance policy, which is designed to enable staff to balance the demands of their job and personal life.
The figure fell slightly from 47 percent when the same question was asked in the second quarter of 2005 for the previous survey, the report said.
Companies in the information technology sector are the most likely to offer work-life benefits, with more than 51 percent of those companies having such policies.
The sharpest decline was reported in the banking sector, where the percentage of benefit-offering companies dropped from 56 percent to 40 percent.
Angie Eagan, general manager of Hudson China, said that decline was the result of heavy recruiting by banks.
"Most employers do understand the importance of work-life balance, but they just cannot afford the luxury to be flexible with people due to a shortage of talents," Eagan said.
She added that benefits are easily applied in fully staffed companies. Many companies are struggling to find enough trained workers, however, making it difficult to offer such benefits.
The report indicated that employment expectations remain high on the mainland. Sixty percent of respondents plan to increase headcount in the third quarter of this year, the highest level in Asia.
Thousands of companies forced to pay back wages
July 25th, 2007LABOR officials in the city forced companies to pay 280 million yuan (US$36.98 million) in delayed wage, social insurance fees and illegal deposits from employees from January to June, the Shanghai Labor and Social Security Bureau said yesterday.
The bureau received more than 10,000 complaints about delayed wages or other fees during the period and inspected more than 20,000 companies around the city. They found 6,987 violations of the law involving about 370,000 workers in total.
The bureau wouldn't provide comparison figures from previous years.
About 39 percent of complaints investigated involved social insurance fees, while delayed wages accounted for 26 percent and unpaid overtime was the focus of 19 percent of grievances.
About 150 million yuan in delayed payments were cleared up during the six-month period.
"The number of cases of deliberately delaying wages dropped during the first half of the year," said bureau official Zhang Yuan, without providing detailed numbers.
"Most of the delayed payments were for extra work or overtime working, and the delays were only one or two months, rather than as long as a year," Zhang said.
The bureau said most of the companies found violating the law were private firms based in the city's suburbs. It wouldn't say how many fines were handed out.
Bureau: Labor rifts at private firms fall
July 20th, 2007THE proportion of labor disputes involving private enterprises has dropped for the first time since 2003, according to the Shanghai Labor and Social Security Bureau.
Though a majority of labor disputes still involved private firms, accounting for 40 percent of the total number in the first half, it fell by 11.7 percent compared to the same period last year, the bureau said in its report for the first half of the year released yesterday.
"The number of cases involving privately-owned companies has seen a 20 percent increase in recent years, since many private enterprises were just starting up," Sui Wei, director of the bureau's arbitration division, suggested.
"But the decreased percentage this time implies that employers now have a better awareness of the labor law and pay more attention to protecting employees' rights," Sui said.
The arbitration division received 15,712 disputes in the first half of the year, of which 13,424 were cleared, a 16 percent increase from last year.
The number of disputes involving foreign-invested companies and those from Hong Kong, Macau and Taiwan rose by three percent, accounting for 23 percent of total disputes.
Meanwhile, stockholding companies saw their case number rise about four percent, making up 15 percent of the total.
According to the division, most of the disputes revolved around wages, social insurance and contract termination.
Among the 4,085 cases arbitrated in the first half, 34 percent were won by employees.
The report also estimated that social insurance disputes could rise next year, because a new labor law will go into effect on January 1, 2008.
The new law stipulates that employees can end their contract if companies fail to hand in standard social security fees.
"In such cases, firms violating the law should pay compensation to employees," said Sui.
IPR engineers
July 18th, 2007THE city's first group of 270 patent management engineers gained their certificates yesterday after they passed training courses.
They will improve protection of intellectual property in local companies, said Shanghai Intellectual Property Administration officials, which plans to train 3,000 patent management engineers by 2010. Shanghai Intellectual Property Service Center, Shanghai University and Shanghai Institute of Politics and Law are the city's three training bases.
3Com pins hopes on China's low labor costs
July 15th, 2007San Francisco (IDGNS) - Networking equipment vendor 3Com is counting on low labor costs in China to help the company earn better margins on its products and compete against rivals like Cisco Systems, the company's chief executive officer said Wednesday.
"There is one large player who is enjoying 68 percent to 70 percent gross margin on its products, while others are enjoying 40 percent to 45 percent gross margins," Edgar Masri, 3Com's CEO and president, said in an apparent reference to Cisco.
However, the disparity in salaries between China and other countries creates an "arbitrage opportunity" for 3Com, he said.
Arbitrage is the practice of exploiting price differences between two markets. While Cisco and others rely on expensive engineering talent in the U.S. and elsewhere, Masri is betting that cheaper labor costs in China will give 3Com an advantage, allowing it to price its products 30 percent to 40 percent lower than its competition.
3Com's strategy bears a striking resemblance to that employed by Chinese telecommunications equipment maker Huawei Technologies, which took advantage of lower costs in China to undercut its competitors and build a growing stake in the worldwide telecommunications market. Once a little-known Chinese company, Huawei is now a major player, having won deals across Asia and in Europe.
The resemblance is not an accident. In March, 3Com acquired the remaining shares in H3C Technologies, a joint venture the company set up with Huawei in 2003. As a result of that deal, 3Com acquired the 2,400 R&D engineers employed by H3C in China.
The engineers help give 3Com an advantage over its competitors, Masri said, claiming that rivals' labor costs are up to five times higher than 3Com's.
Should Beida recruit more recommended students?
July 13th, 2007By Zhang Xi (chinadaily.com.cn)
Peking University released its recruitment plan for postgraduates on Sunday, which raised dissatisfaction of students from other universities.
Beida plans to enroll 4,300 postgraduates and 1,400 doctorial students this year, but not all college graduates can go there by taking an entrance exam. The prestigious university will focus on recruiting those who do not need to sit exams, but instead rely on the recommendations of the colleges where they received their bachelor degrees.
The plan shows of the prospective postgraduates studying sciences, 50 to 80 percent of them will be recommended. And at least half of the new postgraduates in other departments will also be recommended to Beida. In total, the university will enroll seven percent more recommended students than last year. As a result, only a few prospective postgraduates can enter Peking University by taking entrance exams.
In the past, half of those recommended students were from Beida, and the other came from other post secondary institutions. Peking University' s admission policy says only excellent graduates who are from prestigious universities and recommended by their colleges are entitled to enter Beida without taking postgraduate entrance examinations. However, very few students are lucky enough to get the chance.
A student at Capital Medical University is unhappy with the plan. "I think it's very unfair!" she exclaimed. "Although Beida will enroll 4,000 postgraduates this year, only half of them will be picked by the entrance exam." She continued, "Only one student in my class can be recommended. We just want to go to Peking University through our hard work. But how can we get in with such few chances?"
"I didn't do well in my college entrance exam four years ago," says Li Chen, a graduate at a university outside Beijing . "I wish to be a postgraduate in Beida by taking an examination. Can't postgraduate students get in even if they don't have a bachelor's degree from a top university? It's prejudice. All prospective postgraduates at Beida should compete in the entrance exam."
Peking University has its reasons to recruit more students through recommendation. Through their experience, supervisors of postgraduates have found that recommended students "have higher academic levels and tend to be more devoted to studying".
Professor Wen Rumin has worked as a postgraduate supervisor for a long time in Beida's Chinese Department. He says, "The university is doing the right thing since some prospective postgraduates are only good at taking exams rather than academic studies." He believes the academic levels of recommended students are higher than their counterparts who come to Beida by taking exams.
Wen did not think the recruitment policy is unfair because the most important goals of postgraduate education are guaranteeing the teaching quality and selecting qualified talent.
Other supervisors think many students come to Beida by taking the entrance exam and only want to get a degree from Beida rather than really study a subject. From this aspect, they are not as good as those recommended students, who are more welcomed by supervisors.
An educator and professor at Renmin University , Gu Haibing, said Peking University has right to decide how to recruit students. Universities and supervisors should be entitled to enroll suitable postgraduates, as long as the recruitment process is open and with essential supervision.
Jobless youth and parents in test case
July 11th, 2007THE city's first career-training program for jobless young people and their parents is open for business in Wujiaochang area of Yangpu District.
Officials said yesterday the free initiative will target unemployed people under the age of 30 and their parents to offer them up-to-date job-seeking information and teach them application skills on a monthly basis.
"Different from ordinary career consultation for young people, this program is designed to inform parents about the latest job-market developments and encourage parents to help solve their children's unemployment problems," said Shen Lixia, a community official and the program initiator.
Shen said that the idea of parent education came after she found out how important a role that Chinese parents play in their children's job-seeking process.
At a job fair that the community held earlier this year, about 30 percent of young unemployed people had their parents looking for positions and talking with recruiters instead of themselves.
Parents of a 28-year-old woman, who had just found a supermarket cashier's job after five years of unemployment, even complained that the position was too hard for their daughter.
And some parents nag their jobless children daily, comparing them unfavorably with their peers.
Wang Meiping, a professional career consultant at the Hongkou District Job Placement Center, said they can understand parents trying to protect their only child.
"But excessive intervention or blame can hurt children's confidence and hamper their job seeking," said Wang, who was invited to give the first lecture to more than 20 young people and their parents on Sunday.
Program officials will keep track of attendees and expand the program.
IDC: China will be top destination for off-shoring
July 8th, 2007By 2011 Chinese cities will unseat those in India and the Philippines as favored offshore delivery centers, says market research firm
Chinese cities are expected to unseat Bangalore, Mumbai, and Delhi in India, and Manila of the Philippines, as favored offshore delivery centers by 2011, according to IDC.
The market researcher has introduced a new Global Delivery Index (GDI), which compares 35 cities in the Asia-Pacific as potential offshore delivery centers, based on criteria such as cost of labor, cost of rent, language skills, government policies, infrastructure, and staff turnover rates.
Bangalore currently tops the list, followed by Manila, Delhi, and Mumbai. The Chinese cities that figure in the 2007 list include Dalian, Shanghai, and Beijing, at numbers five, six, and seven.
Indian cities have inherent challenges such as cost of staff and pressure on infrastructure, said Conrad Chang, a research manager at IDC’s Asia Pacific operations, in a telephone interview on Thursday. While India has focused on the U.S. and European markets, China has large opportunities in the Japanese and Korean markets, Chang added.
Chinese cities will overtake Indian cities by 2011 because of massive investments made in infrastructure, English language, Internet connections, and technical skills, which are favorable towards offshoring, IDC said Tuesday.
Forrester Research, however, takes a less optimistic view about China as an offshore destination.
Nearly two years ago, the country was widely viewed as a key challenger to India as an offshore services delivery location, however Forrester’s research shows that the market has not taken off as expected, the research firm said in a recent report.
China primarily attracts business from Korean and Japanese companies, but most of them have preferred to set up their own operations in China rather than outsource, because there are not many large service providers in China, said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International (TPI) in Houston, on Thursday.
Many U.S. and European companies, that set up offshore services operations in India, may also have an operation in China, Pai said. “ But the Indian operation will typically be the larger,” he added.
China has still not overcome customers’ concerns about English language skills, intellectual property (IP) protection, and attrition in the country, Forrester said.
In contrast, India has a sophisticated and time-tested legal environment built around Western common law, Pai said. Even if China invests heavily in education, the population cannot get in four to five years as fluent in English as Indians, he said. “ Indians have been speaking English for over a hundred years,” he added.
India’s demographics also favor its continuation as a key offshore services location. On account of China’s one-child-per-family policy, the country’s population is aging. The country has about half as many people under 30 than India, Pai said. The IT industry primarily employs younger staff, he added.
The IDC GDI rates the potential of cities as offshore destinations, said Chang. The actual business decision by companies to offshore to these cities will depend on a host of other factors, he added. The GDI is a moving index, reviewed every six months.
“This is not about India versus China,” Chang said. IDC expects both countries’ offshore business to grow, he added.
Citigroup, Foreign Banks Triple China Profit Growth (Update2)
July 8th, 2007July 4 (Bloomberg) -- Profit growth at Citigroup Inc., ABN Amro Holding NV and other foreign banks in China tripled this year after they were allowed to offer local-currency services, a central bank report said.
Overseas banks earned a combined 3.05 billion yuan ($401 million) in the first five months, up 43 percent from a year earlier, the People's Bank of China said in a research report published by China Securities Journal. Profit growth accelerated from an average 14 percent over the past five years.
China fully opened its banking industry in December, sparking a rush among foreign banks to add outlets and workers to compete for the nation's $2.2 trillion of household deposits. They're still dwarfed by the likes of Industrial & Commercial Bank of China Ltd., which earned 18.7 billion yuan in the first quarter.
``A rising tide lifts all the boats,'' said Zhang Xi, a banking analyst at Beijing-based Galaxy Securities Co. ``Foreign banks will never achieve the economies of scale to pose a serious challenge to domestic rivals given their current speed of expansion in China.''
As of May 31, 75 foreign banks operated 186 outlets in 25 Chinese cities, according to the report. They had 514.3 billion yuan of outstanding loans and 305 billion yuan of deposits. Their non-performing asset ratio stood at 0.6 percent at the end of May.
Beijing-based ICBC, China's largest bank and the world's No. 2 by market value, operates about 18,000 branches in China and has more customers -- 153 million -- than Russia has people.
Better Than Ever
Overseas banks may have overtaken domestic rivals in profit growth in an economy forecast by the central bank to expand 10.8 percent this year. Earnings growth at China's publicly traded banks averaged 29 percent in 2006, according to UBS AG.
The economic growth forecast, published by the central bank on June 29, represents the fastest pace since 1995, when the economy was less than a third of its current size. Overseas banks' combined profit from local-currency services more than doubled to 1.3 billion yuan through May, today's report said.
``Business has never been so good,'' Jeroen Drost, ABN Amro's Asia chief executive, said in an interview yesterday. ``The key challenge here is to keep up with the growth.''
Foreign banks expect to double their total workforce in China to almost 36,000 by 2010, according to a survey by PricewaterhouseCoopers LLP published in May. HSBC Holdings Plc, Citigroup, Standard Chartered Plc, Bank of East Asia Ltd. and eight others have become locally incorporated to offer yuan- denominated bank cards and mass-market services this year.
Capital Controls
China's restrictions on capital outflows -- individuals can't freely invest in overseas stocks, for example -- means banks such as Citigroup and HSBC can't fully capitalize on their international reach, said Zhang.
``High-end customers want access to global asset allocation to diversify risks, but that can't be achieved under the current capital control in China,'' she said. ``That's blunted foreign banks' edge.''
HSBC, Europe's biggest bank by market value, plans to add 30 outlets in China this year and hire 1,000 people a year in 2007 and 2008. It has 35 branches on the mainland, the most of any foreign bank. The bulk of HSBC's 2006 income in China came from corporate and commercial banking with Chinese and foreign clients.
London-based Standard Chartered aims to double its number of China outlets to 40 by the end of this year and Citigroup plans to add 14 outlets to take the total to 30.
Countermeasures
Foreign lenders controlled 2.1 percent of China's $6 trillion of banking assets and less than 1 percent of total deposits, the central bank report said. Their combined profit accounted for 1.2 percent of the total earned by banks in China.
Citigroup, HSBC, Bank of Tokyo Mitsubishi UFJ Ltd., Mizuho Financial Group and Hong Kong's Bank of East Asia Ltd. are the five biggest foreign banks operating in China.
China is letting state-owned banks expand into broking, fund management and insurance, winding back former premier Zhu Rongji's 1993 restrictions, to help them counter overseas competition. The government wants fee-based services to account for 50 percent of revenue at domestic banks over the next five to 10 years, up from the current 17 percent.
Lehman, Lee & Xu and Italian Partner Carone & Partners Launch Italian Desk
July 7th, 2007Beijing, China, July 06, 2007 --(PR.com)-- Miss Valentina Salmoiraghi, an associate of the Italian law firm Carone & Partners will be working in Lehman, Lee & Xu’s Beijing Office, managing the firms' Italian Desk in China.
Starting on June 15th, she will be in charge of supporting the team of Italian and Chinese attorneys put together by Carone & Partners and Lehman, Lee & Xu to represent Italian Clients in China.
Italian companies can now rely on an Italian-speaking lawyer in China which will improve communication among the attorneys involved on the relevant projects. The decision to start the Italian Desk at Lehman, Lee and Xu has been taken in order to fulfill and satisfy the increasing number and complexity of requests of engagement that the allied firms are facing. Moreover, through the Italian Desk the firms will be in the best position to provide outstanding legal assistance to Chinese clients wishing to invest in Italy.
To learn more about the firms, please visit Carone & Partners at www.cplex.it and Lehman, Lee & Xu at www.lehmanlaw.com.
Carone & Partners is an innovative and dynamic Italian firm which combines the expertise of Italian and Chinese lawyers to assist clients in international transactions related to China and Italy/EU. The firm has offices in Milan and Rome.
Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency. The firm has offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia and is managed by Mr. Edward Lehman, who has two decades of legal experience in China.
Ford Focus drives sales growth in China
July 6th, 2007BY SARAH A. WEBSTER
Thanks to a refreshed 2007 Ford Focus, Ford Motor Co.’s retail sales in China jumped to 93,206 cars and trucks in the first half of the year, a 25% increase compared to the same period in 2006, the company reported today.
Ford sells imported and domestically produced Ford, Lincoln, Volvo, Jaguar and Land Rover models in the fast-growing Asian country.
But Ford’s hottest vehicle in China is the Ford Focus, which has been built in Chongqing since the third quarter of 2005 and posted a six-month sales volume of 55,676.
The third-generation Ford Mondeo will be launched later this year as a major player of domestic premium CD-car segment
Ford’s history in China can be traced to 1913, when its first Model T was imported and sold in Shanghai.
Ford now owns 30% of the shares of Jiangling Motors Corporation Ltd., which produces commercial vehicles and other products.
The Dearborn-based automaker also has a 50-50 passenger car joint venture with Changan Automotive Corporation Ltd., which is called Changan Ford Automobile Corporation Ltd. Changan Ford has launched two Ford passenger cars models, the Fiesta and Mondeo. In early 2005, Changan Ford's second passenger car plant in Nanjing started construction.
In April 2005, Ford, Changan and Mazda also announced a new three-way engine plant joint venture, Changan Ford Mazda Engine Company Ltd., and the new plant has been in production since April 2007.
In March 2006, the Chinese government approved Mazda's investment in Changan Ford. The restructured company has been renamed as Changan Ford Mazda Automobile Co., Ltd. (CFMA). Changan, Ford and Mazda hold 50 per cent, 35 per cent and 15 per cent shares in CFMA, respectively.
In the first half of the year, CFMA posted sales of 93,587, a 57% increase over the same period of 2006. CFMA, which has been in operation for less than four years, is now ranked as the 7th largest automaker in China, according to the China Passenger Car Association.
China: Foreign Architecture Firms Doing Design Activities in China
July 4th, 2007The architecture design opportunities in China seem endless. The increased building in preparation for the Beijing Olympics has called on international designers to support China¡¯s efforts to put an international and yet Chinese face to the world for the 2008 Games. In Shanghai, the skyline changes almost daily with dramatic building exteriors complimenting the city¡¯s efforts to have ever taller buildings. This same dramatic architectural opportunity has also reached second-tier cities such as Hangzhou and Ningbo. It is no wonder that foreign firms have sought ways to participate in this exciting market. However, since the advent of Decree 114, many design firms have struggled with finding the best mode of market entry.
Essentially foreign design firms can either: (1) collaborate with a Chinese architecture institute; or (2) set up an architecture enterprise in China ("Architecture FIE") in the form of an equity joint venture, a co-operative joint venture, a wholly foreign-owned enterprise, or part equity acquisition of an existing Chinese architecture institute. The last option creates an FIE that looks like an equity joint venture, but has the benefit of immediate access to the Chinese firm¡¯s licenses, customers, and employees. Recent news shows that AECOM Technology Corp. has followed this last route in acquiring an interest in the China Northwest Municipal Engineering Design and Research Institute. The deal will be closely watched by other investors.
Each of the above options is not without its drawbacks. Collaboration with a local Chinese architecture institute limits the activities of the foreign firm to conceptual design, while the establishment of an Architecture FIE may be problematic, and require numerous regulatory approvals and a high threshold to qualify for certain design activities. An increasing number of architecture firms have begun to adopt an alternative business form by establishing wholly foreign-owned consulting enterprises in China ("Consulting WFOE") in order to provide design consulting for construction projects in China.
This article provides an overview of some of the key issues that foreign firms must consider when planning to carry out design activities in China. We review the following strategies:
Long-term: Establish an Architecture FIE or acquire a portion of the equity of an existing Chinese architecture institute;
Short-term: Collaborate with Chinese architecture institutes; and
Near-term alternative: Establish a Consulting WFOE.
Establish an Architecture FIE or Acquire Equity in an Existing Chinese Architecture Institute
The Chinese government has enacted the following regulations regarding Architecture FIEs:
Regulation on Management of Foreign-invested Construction Engineering Design Enterprise ("Decree 114") issued by PRC Ministry of Construction ("MOC") and PRC Foreign Related Trade and Economic Commission ("MOFCOM") on September 27, 2002, effective December 2002.
Implementing Rule of the Regulation on Management of Foreign-invested Construction Engineering Design Enterprise ("Decree 18") issued by MOC and MOFCOM on January 5, 2007, effective since that date.
Administrative Regulation on Construction Engineering Design Enterprise Qualification ("Decree 93") issued by MOC on June 29, 2001, effective since that date.
Project Design Qualification Standard issued by MOC on March 29, 2007.
According to these regulations, the establishment of an Architecture FIE to undertake design activities will be subject to strict and complicated approvals. The process and time-line for these approvals are outlined below:
Procedure
Relevant Authority
Anticipated Duration
Document Obtained
Approval from the Commission of Foreign Trade and Economic ("COFTEC")
COFTEC will ask for the pre-approval opinion of the provincial level MOC before it approves the establishment of the Architecture FIE.
COFTEC is the provincial level counterpart of MOFCOM
20 working days in COFTEC and 20 working days in the provincial level MOC, according to the PRC Administrative Licensing Law.
However, in practice, no application has been approved within that time period. The anticipated time would likely exceed 40 working days.
Approval certificate
Registration with the Local Administration for Industry and Commerce ("AIC")
AIC
5-10 working days
Business license
Acquiring Qualification Certificate from Provincial Level MOC
Provincial level MOC
20 working days according to the PRC Administrative Licensing Law.
Currently, no cases have been approved within that time period. The processing time will likely take longer than 20 working days.
Construction Engineering Design Enterprise Qualification
Other registrations
Public Security Bureau, local Tax Bureau, etc.
Generally obtained within one month of obtaining the business license.
Various registration certificates
The basic requirements for setting up an Architecture FIE and acquiring the relevant qualification certificates to undertake design activities are:
Experience requirements for the investors: Both the foreign investor and the Chinese investor (in the case of an equity joint venture or cooperative joint venture) must engage in construction engineering design in their respective home countries, and provide two or more engineering design achievements that were completed outside of China, with at least one of them having been accomplished in their home country.
Employee requirements for Architecture FIE: The number of the foreign technical employees of the wholly foreign-owned Architecture FIE who have obtained the qualifications of Chinese certified architect and certified engineers shall not be less than 1/4 of the total number of certified practitioners as provided in the Project Design Qualification Standard. In addition, the number of the foreign technical employees who have relevant professional design experience shall not be less than 1/4 of the total technicians as provided in the Project Design Qualification Standard.
Qualification requirement of the Architecture FIEs: The Architecture FIE is prohibited from undertaking design activities in China prior to obtaining the qualification certificate from the provincial level MOC. Its design activities should comply with, and should not extend beyond, the scope of its qualification certificate.
Currently, the design qualifications in China are divided into the following three categories, according to the Project Design Qualification Standard:
Comprehensive Engineering Design ("CED"): An Architecture FIE with this qualification may undertake design activities for all industries and projects in China.
Industry Engineering Design ("IED"): This qualification applies to 21 industries, including, but not limited to, the petrochemical industry, construction industry, and road transportation industry, etc. The Architecture FIE should apply for the qualification certificate for its particular industry.
Special Engineering Design ("SED"): This qualification is for special projects, such as curtain wall. The Architecture FIE should obtain the precise qualification for the project prior to beginning work.
The IED and SED design qualifications are further subdivided into Grade A, Grade B, and Grade C categories based upon the scale and complexity of the project. It is important to note that under Decree 93 an Architecture FIE can only apply for a Grade B or Grade C IED or SED qualification during its first two years of operation.
Minimum registered capital requirement for Architecture FIEs: Depending on the type of design activity, a minimum level of registered capital is required to undertake the project. For example, a CED qualification requires a registered capital investment of RMB 60 million, and a Grade B IED qualification requires a registered capital investment of RMB 2 million.
Establishing an Architecture FIE can be cumbersome due to the stringent capital requirements, employee hiring, and the complex and time-consuming qualification process. Foreign architecture firms can merge or acquire an existing local Chinese architecture firm and convert it to an Architecture FIE. As noted above, AECOM just acquired part of the equity of China Northwest Municipal Engineering Design and Research Institute, a large scale architecture institute in China, thus converting the latter into a FIE.
Collaborate With Chinese Architecture Institutes
The Provisional Regulations on the Administration of Foreign Enterprises Engaging in Construction Engineering Design Related Activities ("Decree 78") was issued by MOC on May 10, 2004, effective on June 10, 2004. Decree 78 allows foreign architecture firms to undertake offshore conceptual or schematic engineering design work. This includes enacting construction engineering preliminary design (basic design), and shop drawing design (detailed design) in recent projects under collaboration with locally qualified Chinese engineering design institutes ("Chinese Collaborator").
Under this strategy, the foreign architecture firm is not required to establish a separate entity in China, or to acquire the qualifications in China for its conceptual design work for construction projects in China. However, the local Chinese Collaborator must possess a qualification certificate issued by the relevant Chinese construction authorities that will allow it to carry out the requisite design activities for the project.
Currently, there is no regulation that clearly distinguishes between conceptual engineering design and design work that goes beyond the conceptual design stage. Foreign architecture firms should use the language of Decree 78 in describing their activities under a contract to facilitate the collection of fees.
As an architecture firm¡¯s activities would be limited to "conceptual design," we recommend that foreign architecture firms consider such collaboration only as a short-term strategy for doing business in China.
Consulting WFOE
The current trend is for many foreign architecture firms to create wholly foreign-owned consulting enterprises ("Consulting WFOE") that provide consulting services on design and project management activities in China under the PRC Law on Foreign-Funded Enterprise ("PRC WFOE Law").
The Catalogue for Guidance of Foreign Investment Industries does not prohibit a Consulting WFOE from providing consulting services relating to construction design and project management in China. Under this strategy, no qualification certificate or collaboration is needed to engage in "consulting activities relating to the design and project management work." Note, however, that the enterprise is precluded from engaging in direct design or project management work.
The line between what is and is not permissible in design- and project management-related consulting activities may become ambiguous in practice. However, one thing is clear: only an entity with the appropriate qualification certificate may enter into a design or project management agreement. The Consulting WFOE can review third-party drawings and provide conceptual drawings. Also, the Consulting WFOE could enter into contracts under its own name, but such contracts could not explicitly cover design or project management. The Consulting WFOE will be able to hire employees directly. However, the foreign architecture firm will still be limited in its ability to directly bid and obtain design work on projects in China.
Summary
The market entry strategy depends on the company¡¯s short- and long-term views on its potential to grow in the Chinese construction market. These approaches are not exclusive of one another, and the company may wish to consider implementing, in tandem, a short- and a long-term business plan. Even with the proper vehicle for entry, competition with Chinese firms is steep. Remember that once a company gets over these initial regulatory hurdles, the company will still encounter the realities of a competitive market. U.S. companies, bound by Sarbanes-Oxley and the FCPA, may feel that the field is still not entirely level. Similarly, foreign firms will still bear higher overhead costs because of expatriate management within and outside of China. Getting the permits, approvals, and the projects takes a lot more time and effort than architecture firms are accustomed to expending in the U.S. market. As a company moves forward in the China market, the biggest task may be managing expectations.
Key issue for China's new labor law: enforcement
July 2nd, 2007By Jude Blanchette | Contributor to The Christian Science Monitor
Shanghai, CHINA - The comprehensive labor law that China's top legislative body passed Friday includes provisions that have appeared in previous legislation. But what may be different this time, some observers say, is the government's willingness to enforce mandates protecting workers' rights.
Scheduled to come into effect on Jan. 1, 2008, the law stipulates that employment contracts must be put in writing within one month of employment. It also says that employers must fully inform the worker of the nature of the job and of their working conditions and compensation. Furthermore, it limits the ability of employers to use temporary laborers.
But the law's impact lies in how the government interprets and enforces it. "As is always the case with China's laws, the real question will be in whether the new laws are enforced, how they are enforced, and against whom they are enforced," says Dan Harris, an expert at the law firm Harris & Moure.
But, he adds, "there is a feeling the new labor law is more likely to be enforced than the old and, in particular, will be enforced against foreign companies."
Indeed, organizations representing firms doing business in China have objected to certain provisions they say are unclear. In comments last year, the US-China Business Council warned, "The Draft Law may … reduce employment opportunities for PRC workers and negatively impact PRC's competitiveness and appeal as a destination for foreign investment."
On Friday, Xin Chunying, the deputy chairwoman of the National People's Congress Law Committee, tried to allay the fears of foreign companies. "If there were some bias," she said, "it would be in favor of foreign investors because local governments have great tolerance for them in order to attract and retain investment."
The law gives oversight power to labor unions for collective agreements and the implementation of new employment regulations, but because independent labor unions are illegal in China, this duty will fall to the government-sponsored All China Federation of Trade Unions, an organization with deep ties to the Communist Party and local government officials.
Since the first draft of the law was made public in 2005, it has gone through three drafts and elicited more than 190,000 comments from the public.
In a statement issued Sunday, the European Chamber of Commerce welcomed the law's passage, in part because it moved the labor market in the direction that many European countries have gone. According to a statement posted on their website, "After the comprehensive drafting process, the European Chamber is not concerned about the effect of the law on European investment in China."
Since its emergence as an economic powerhouse more than 20 years ago, China has been dogged by criticisms of poor working conditions, the use of child labor, and willingness to placate multinational corporations.
Friday's law comes as the government tries to deal with these complaints and dampen social unrest in rural areas. Indeed, the government is in the midst of a campaign to reduce the impact of the recent discovery of slavery-like conditions in Shanxi Province's brick factories.
Early last month, more than 400 parents from Henan Province whose children had been abducted posted an open letter on the Internet. Their children, it came out, had been sold to work in brick factories in Shanxi Province.
It has since been revealed that thousands of others have met similar fates at brick kilns, many of which are unlicensed After Chinese journalists picked up the story, it rapidly spread around the world, causing outrage and shame in China.
Last week the draft law was amended to punish officials who ignore labor abuses with prison time or other penalties. Ms. Xin said that "The labor contract law makes detailed provision concerning this issue following the exposure of the forced labor scandals."
China to raise wages to offset price hike
July 2nd, 2007BEIJING: Minimum wages in China will be increased this year to offset the sharp rise in food prices that has particularly hurt low-income families, state media reported on Friday, citing the labour ministry.
Local governments must raise minimum wages before the end of 2007 in regions where salaries have risen slowly or are markedly lower than the average, the Xinhua news agency said, citing the Ministry of Labour and Social Security.
"Local governments must adjust minimum wages in a timely manner and ensure that real standards do not fall with the consumer price index going up," the ministry said.
China's inflation rate rose 3.4 per cent in May from a year earlier, above the government's annual target of 3.0 per cent, but food prices have accelerated at a much faster pace.
In a circular cited by Xinhua, the labour ministry said low-income families were particularly feeling the heat after meat and poultry prices jumped by 26.5 per cent in May and the cost of eggs rose 37.1 per cent.
Premier Wen Jiabao also warned in late May that the rising price of pork, the most commonly eaten meat in China, could threaten social stability.
In China, minimum wage standards vary from region to region. At the end of last year, southern China's Shenzhen city had the highest minimum wage in the country at 810 yuan ($105) per month, while eastern Jiangxi province was bottom with a salary of 270 yuan, Xinhua said.
State Grid Corp launches worldwide recruitment plan
July 2nd, 2007BEIJING, June 28 -- State Grid Corp of China (SGCC), the nation's largest electricity transmission company, yesterday launched a worldwide recruitment plan for its five research and development (R&D) institutes.
Under the plan, the company will recruit 100 top scientists for its R&D work, including four academicians.
The five R&D centers are China Electric Power Research Institute, Nanjing Automation Research Institute, Beijing Electric Power Construction Research Institute of SGCC, Wuhan High Voltage Research Institute of SGCC and State Power Economic Research Institute.
The five institutes now have 2,699 staff members, including four academicians.
"The move will increase the company's R&D capabilities. Last year, we made many breakthroughs in the R&D field," SGCC said in a statement.
The company last year started to build China's first ultra-high voltage (UHV) transmission line. The pilot project will see 1,000 kilovolts of alternating current linking the southeastern part of Shanxi Province with Jingmen city in Hubei Province, passing Nanyang city in Central China's Henan Province.
(Source: China Daily)
China, India pose different hiring challenges: Survey
July 2nd, 2007Hong Kong, June 28: Multinational companies in China have a hard task hiring people with leadership skills while in India they face unreasonably demanding fresh graduates, a survey shows.
The fast pace of business expansion in Asia's two emerging economic powerhouses has created a talent shortage and a host of challenges for employers.
"Staff are impatient and there are a lot of jobs out there," said Shalini Mahtani, chief executive of Hong Kong-based Community Business. "If companies are not providing good career opportunities, staff will leave."
Community Business, an organisation promoting corporate social responsibility, conducted the survey in Shanghai and Mumbai with Schneider-Ross, a UK-based business consultancy.
Pay is still important as staff in China have no qualms in leaving a company to pick up a higher salary elsewhere, according to the survey. In India, employers say younger professionals are demanding excessive compensation packages, inflated job titles and immediate opportunities for overseas assignments.
One multinational talked of a fresh graduate who came for interview saying he had four job offers on the table and how could the company better that. Such demands were not unusual, the company said.
Pay is talked about openly in India and employees are liable to switch jobs if they know that their fellow graduates from business school are earning more. This makes it difficult for companies to reward good performance, survey participants said.
In China, competition for staff is so acute that one company reported losing a junior member of staff to a local company that more than doubled her salary and offered a position for which she did not have any experience.
The survey interviewed 25 senior managers and HR directors at foreign companies in Shanghai and Mumbai and conducted a focus group in each of the two cities.
A lack of leadership skills among staff poses a real challenge in China and many employees there leave a company because of the attitude or behaviour of their boss, survey participants said.
Western multinational companies are no longer routinely seen as the preferred employer, as staff in both countries often see local companies that are expanding globally as a better opportunity to gain visibility and climb the career ladder. Multinationals now are having to approach second and third tier colleges for staff.
Diversity in the workforce, whether by gender, generation or culture, is also difficult to implement because local managers either are not sensitive to the issue or business is growing so fast they have no time to focus on it.
In India stereotyping of women is still common.
"There's an assumption that women will get married and they'll leave the workplace," said Mahtani.
In China, poor leadership skills means companies often have to bring in expatriates.
People with disabilities are largely unrepresented in both markets, according to the survey.
Long working hours are another problem, particularly in India where colleagues in different timezones expect staff to be available at irregular hours, the survey showed.
Foreign firms to get tax rebates for hiring disabled Chinese
July 2nd, 2007Foreign companies with disabled Chinese on the payroll will qualify for tax rebates from next year.
The maximum tax rebate per disabled worker will be 35,000 yuan (US$4,550) a year. Meanwhile, salaries of disabled workers will be exempted from employees income tax.
Companies whose work force comprises more than 25 percent of disabled workers will be eligible for rebates on both income and value-added tax, according to the new policy announced by the Ministry of Finance and the State Administration of Taxation (SAT).
Those with less than 25 percent of disabled employees will only get income tax rebates.
China has issued a series of preferential tax policies since the 1980s to promote the employment of disabled people.
But a SAT official said that current policies had left many private and foreign companies out in the cold, unable to qualify for tax rebates.
The new policy, which will apply nationwide from next month, is aimed at "creating a favorable taxation environment for fair competition and promoting employment for disabled people," the official said.
Statistics show that China has nearly 83 million disabled people, with only 22.7 million in employment and about 8.6 million officially listed in unemployment statistics.
Playboy will hire bunnies in China soon
July 2nd, 2007Entertainment complex with bunnies, gambling slated for debut in 2009
HONG KONG–Playboy Enterprises Inc., publisher of the most widely read men's magazine, plans to open a 40,000-square-foot entertainment complex, including gambling facilities and bunny-suited waitresses, in Macau, located on the southeast coast of China.
Playboy Mansion Macao, to be completed in 2009, will include dining, entertainment and retail shops, company chair and chief executive Christie Hefner said in an interview in Hong Kong. It will be part of the Macao Studio City complex, and the gambling operations will be run by casino operator Melco International Development Co., Hefner said in another interview, in Macau.
Billionaire Stanley Ho's gaming monopoly ended in 2002 when the government awarded licences to five other operators in the city, the only place in China where casinos are legal.
By this year's first quarter, 25 casinos were operating in the 26 square-kilometre territory, creating concern the industry may be starting to get crowded.
"I am less bullish about the ability of demand to soak up the capacity that's coming on line for both retail and hotels," said Peter Drolet, a Hong Kong-based analyst at UOB Kay Hian Pte.
Macao Studio City, a $2 billion (U.S.) joint venture between Hong Kong-listed ESun Holdings Ltd. and partners including Silver Point Capital LLC, is next to the Lotus Bridge, which will link Macau and the mainland Chinese city of Zhuhai. It will include a film studio, a million-square-foot shopping mall and gaming and convention facilities.
"Macau has vast growing power as a travel destination, with the number of visitors expected to double between 2006 and 2011," said Hefner, daughter of Playboy founder Hugh Hefner.
"We will look for the most beautiful, personable women from Asia and the United States" to possibly hire as Playboy bunnies, Hefner said.
She said it was "too early" to disclose how much will be invested in Playboy Mansion Macao and how much gaming will contribute to its revenue. Hefner also didn't say how much Playboy will pay Melco to run the project's gaming operations.
Macau's economy grew 16.6 per cent last year, compared with 6.9 per cent in 2005 and 28.4 per cent in 2004, the year the city's first foreign-operated casino began operating.
Macau, with a population of 500,000, is the closest location for the 1.3 billion people in China to gamble legally in casinos.
Gambling revenue in the former Portuguese colony surged 22 per cent to $6.95 billion last year, surpassing the Las Vegas Strip.
Playboy is the world's best selling men's monthly magazine with its U.S. paid circulation of 3 million.
Is Hong Kong Asia's New York City
July 2nd, 2007Ten years after the change-over, Hong Kong is positioning itself to become Asia's New York City.
By George Wehrfritz
Newsweek International
July 2-9, 2007 issue - On the rare days when Hong Kong's Victoria Peak isn't shrouded in smog, one of the world's great maritime hubs is on display from its heights.
Northward in Kowloon, modern container ports—their giant cranes lined up like robotic elephants on parade—load waiting freighters. Barges scurry like worker ants, flags from every port of convenience flap in the breeze and jetfoils buzz back and forth from Macau.
For decades, as East Asia's export economies rose to pre-eminence, the scene has grown more frenetic year by year. But sometime soon—or perhaps that day has already passed—the vast natural harbor that first attracted British opium traders to this spot on the South China Sea in the 1840s will reach its own peak, and start to fall.
The big question in Hong Kong—and it's one that has echoed since the jittery pre-handover days back in 1997—is elemental: what's next? Official statistics suggest a port that's maxed out, a maritime hub that has slipped from number one in the world to number three and sometime next year will likely be overtaken by a city that didn't even exist until the final few years of British rule: neighboring Shenzhen. What will happen, many Hong Kongers justifiably worry, when shipping follows the manufacturing up the Pearl River Delta into mainland China? Will their city slip to the global economic periphery, as some analysts forecast, becoming the 21st-century equivalent of Venice?
Ten years after the Union Jack flew over Hong Kong for the last time, change is most certainly afoot. But change, as they say, can be good. And although Hong Kong's traditional status as East Asia's premier shipping hub is already lost, the city is on the cusp of a reinvention so profound that the view from the peak will likely look quite different in a few decades. First there will be fewer freighters and barges. Then, perhaps, the dockyards will yield to new urban landscapes as they've done previously in places like London and New York. And, if all goes to plan, the scene that unfolds below the peak won't depend so much on whether the winds kick up to clear the toxic skies.
Think of Hong Kong as China's New York. Not today's N.Y.C., to be sure, but the Gotham that had hovered on the verge of bankruptcy in the 1970s and then struggled to reinvent itself by deregulating its two stock markets and becoming the world's leading financial center at the dawn of the digital age. Now China is the growth engine, and the transformation underway entails providing the financial savvy, rule-based business culture and global logistical reach that the vast Chinese economy demands but can't create for itself. ''Every economy changes as the major players [in the global arena] change," says Hong Kong's Financial Secretary Henry Tang. ''In the past we have always used China as a manufacturing base, but now we look to it as a market [with] a huge demand for world-class financial services. Hong Kong is where we supply it."
A ''paradigm shift" is underway in the city, Tang says with confidence. And in Hong Kong's case the consulting jargon actually fits, economically as well as politically. Truth be told, Tang and his fellow cabinet bosses are struggling to come to grips with what's happening all around them. Whereas New York confronted urban decay, high crime and tense race relations, Hong Kong's challenges center on today's rich-poor divide, quality-of-life issues such as air pollution and the city's still-unmet yearning for one-person, one-vote democracy.
Indeed, the influence tycoons exert on policymaking is under attack as never before. And the government's management—or, say its critics, mismanagement—of precious waterfronts and green spaces are major concerns among the middle class.
Although opinion polls show that most Hong Kong people support China's national government, Beijing's ham-fisted efforts to manage the city's democracy debate is engendering fear that the motherland could ultimately renege on its pledge to allow Hong Kong ''a high degree of autonomy."
Perhaps most significant, "a dynamic generational shift" is underway, argues former legislator Christine Loh, founder of the influential think tank Civic Exchange. A new and politicized middle class has emerged, one that's well traveled, technologically savvy and committed to more than getting rich. Their issues include the environment, education and protecting Hong Kong's cultural heritage—the common denominator being better official accountability. ''[This generation] presents the tycoons and the government with its next challenge, and it is where [questions over] how our society ought to be run and where our priorities lie will come to a head."
By most accounts Hong Kong is on the mend as it prepares to begin its second decade as a special administrative region of the People's Republic. Back in 1997, euphoria over the gala July 1 handover yielded quickly to an Asia-wide financial crisis that sent stock and property markets tumbling. Then the city sank into political indecisiveness, suffered a deadly SARS outbreak and after a botched 2003 government move to pass a new public-security law, experienced the largest political protests on Chinese soil since the 1989 Tiananmen Square demonstrations in Beijing.
The setbacks cost Hong Kong's first chief executive, Tung Chee-hwa, Beijing's confidence and eventually his job (he resigned citing ''health issues" in early 2005). And since then, Tung's successor, the bow-tie-clad Donald Tsang, has renewed public confidence, delivered strong economic growth and vowed ''to break barriers and realize Hong Kong's potential in an ever-changing world," as he said recently.
The clearest evidence of Hong Kong's transformation comes not from official rhetoric but in the city's economic data. Since 1997, market capitalization on the main stock exchange has ballooned almost fivefold to just under $2 trillion, about one sixth the size of the New York Stock Exchange today. Over the past three years, Chinese companies have raised about $84 billion with initial public offerings in Hong Kong, and, according to the accounting firm Ernst & Young, the city's main bourse generated 17 percent of the total capital raised worldwide during the first 11 months of 2006, ahead of London (15 percent) and New York (11 percent). The main driver was the Industrial and Commercial Bank of China's $22 billion dual listing, which garnered $16 billion in Hong Kong and $6 billion in Shanghai. This flurry of activity broke an old pattern whereby Chinese companies, fearing a lack of liquidity in Hong Kong, preferred listing simultaneously in either London or New York. ''We have always been successful, but these past few years have really put us on the map," says Tang.
Hong Kong's financial sector now accounts for 13 percent of GDP, up from 10 percent in 1997. And as big as it is, today's IPO boom represents only a part of what Hong Kong's money tribe can offer China.
Consider: the IPO market sends capital into the mainland from outside investors (both Hong Kong Chinese and foreigners). But increasingly, China's main challenge isn't raising funds abroad, but disposing of the enormous pools of money it has amassed by running huge trade surpluses.
Now trapped inside the country's closed financial system, this liquidity is too hot for China's banks and stock exchanges to handle. This year's stock bubbles in Shanghai and Shenzhen, for example, feature extreme volatility, rampant insider trading and price inflation driven by too much money chasing too few good companies.
China's embarrassment of riches represents a huge opportunity for Hong Kong. According to the city's top government economist, K. C. Kwok, Beijing has little choice but to channel ever-larger amounts of financial business Hong Kong's way. One example is a scheme enacted late last year that will allow Chinese banks to invest $75 billion in overseas assets, with much of it expected to land in Hong Kong. Another influx is coming from Chinese multinationals, which are gradually being freed from a longstanding requirement that they repatriate foreign earnings back to the motherland. A third source (and by far the largest) is Chinese households, which together have an estimated $2 trillion in savings squirreled away. ''Imagine you are a mainland Chinese sitting on a pile of money in your bank account," says Kwok. ''You look at all these companies going to Hong Kong to list and you think, 'Why can't I invest there, too?' "
Tourism is another growth sector with promise beyond filling hotel rooms or selling tickets to Hong Kong Disneyland. Since Beijing permitted its citizens to visit Hong Kong four years ago, not only have they bolstered a local travel industry slammed hard by the SARS epidemic, they've also revived the prospects of Hong Kong's private hospitals. Some had been struggling until Chinese nationals began showing up for everything from heart surgery to maternity care. ''You can't just walk in and get a [hospital] room because Chinese who are rich enough and do not trust their own hospitals are there," says Jimmy Lai, publisher of the Apple Daily and a harsh critic of Beijing. ''If you believe Hong Kong's rule of law, free-flowing information, professionalism and integrity are part of our comparative advantage, you can assume that the more we integrate with China the more our advantages will be manifested." Even the old port is transforming into a modern service industry. From 1995 to 2005, the percentage of Hong Kong's GDP derived from freight transport and storage stagnated; its contribution to the economy rose just a single point, to 4.8 percent, while container traffic to Shanghai and Shenzhen doubled every few years. But in a shift that remains ''off the radar screen" to many analysts, says Kwok, trade and logistics actually rose as a percentage of the city's GDP, from 18 to 23 percent, during the past decade. The new business comes from services that include managing complex supply chains that link Asian factories to American and European consumers, regional product sourcing and third-country trading that doesn't bring products into Hong Kong at all. ''We're seeing the globalization of production," says Kwok. ''And Hong Kong is the nerve center for a lot of these activities."
This shift is tectonic, and it gets to the heart of issues that now fuel much of the political debate in Hong Kong.
Like Japan, Hong Kong pours a staggering amount of concrete—much of it in the service of vested interest. It has spent $3.8 billion a year on capital expenditures since the handover, a figure roughly equal to what India now invests annually on its ambitious national highway program. The bulk has gone into new roads, additional reclamation (some along the scenic downtown waterfront) and campus like facilities built at taxpayer expense to bolster the nascent science and technology industries. Next on the drawing board: a massive government office complex that will occupy the last harborside plot near Hong Kong's postcard central waterfront, as well as a logistics hub, another container port and a massive bridge to Macau all located on Lantau Island, Hong Kong's largest remaining wilderness area.
Such projects are increasingly a tough sell in a city where public opinion is turning decidedly greener and local campaigns to preserve historic areas slated for redevelopment garner substantial middle-class appeal. Pressure groups have formed to demand more parkland, oppose demolition of historical landmarks (like the Star Ferry Terminal in Central, which recently went under the wrecking ball) and limit the height of buildings in certain areas to preserve views and keep breezes flowing. Even the business community has begun to lobby for waterfront redevelopment modeled on successful projects that have revitalized docklands in cities like Melbourne, Barcelona and London. ''It's not that people are against construction," argues Ma Ngok, a political scientist at the Chinese University of Hong Kong. "They're against [Hong Kong's] development-led ideology."
The opportunity costs of bad policy could be enormous. Hong Kong's environment is already deteriorating rapidly; air pollution, which on average reached hazardous levels every third day in 2006, is now a major deterrent to the professional talent the city needs to maintain its edge in finance and logistics. Last year, in a survey conducted for the American Chamber of Commerce in Hong Kong by A.C. Nielsen, 95 percent of business executives said they worried the city's smog would harm them or their families, and more than half said they knew professionals who had declined work opportunities in Hong Kong because of the city's poor environment. Earlier this year the city took a major PR hit when the Hong Kong Philharmonic's vaunted Dutch conductor, Edo de Waart, abruptly moved his wife and kids to Wisconsin to escape the city's ''terrible" smog.
Hong Kong's have-nots can't vote with their feet. But because they'll someday wield ballots, their lot is a major political issue. Since 1997, working-class incomes have stagnated; unemployment peaked at nearly 10 percent a few years back but has since fallen by more than half, and living costs have risen sharply. Job insecurity is also rife as labor-intensive industries continue their exodus to China. Since 1995, official data show, the percentage of semiskilled workers in the economy has declined by almost a quarter and now accounts for just 16 percent of total employment. That's good news in that it illustrates Hong Kong's climb up the service chain.
But because the government didn't implement compulsory education until 1978, there's a huge demographic of workers now in their 40s and 50s who can't easily be retrained for the information age and who cling to menial jobs paying meager wages. ''I was a bus washer 20 years ago, and I know a woman who cleans buses today," says legislative councilor Leung Kwok-hung, a.k.a. Long Hair, a 51-year-old Marxist political activist who won his seat in 2004. ''Her salary is lower than what I got and her working hours are longer than mine were. It's ridiculous."
Hong Kong's tycoons are famous for their resistance to political change. They never pushed for democracy under British rule, and since the handover they've argued that the city is not yet ready for it, or that universal suffrage would threaten the economy because low-income voters would elect populists promising costly social programs. ''This is their blind spot, their idée fixe, about people who have no money," says Loh. ''They think everyone who is poor wants welfare, and they kind of discount the middle class, which is concerned about aging parents, the state of public health and have kids in good public schools." Loh and other activists say the root of the debate lies in interest-group politics and a business elite that believes ''if we give average people a political say, they're going to upset our apple cart."
The old apple cart is toppling anyway.
Labor-intensive industries are leaving, and no matter how much the government invests in cross-border roads and additional container terminals, Hong Kong's days as the pre-eminent maritime gateway to a vast continental economy are over. As with New York and London, necessity is proving the mother of invention.
To avoid decline, Hong Kong has begun to rethink how best to manage its precious green areas, rescue its historic waterfront from overdevelopment and otherwise enhance itself as a financial center worthy of global attention even as it better addresses the needs of the city's have-nots. Ten years ago such ideas amounted to heresy; now they are central to the political debate. As always, Hong Kong is showing the world it can learn, adapt and stay ahead.
Over foreign opposition, China passes law meant to protect workers
June 30th, 2007BEIJING // China's legislature passed a sweeping new labor law yesterday that strengthens protections for workers across its booming economy, rejecting arguments from foreign investors that the measure would reduce China's appeal as a low-wage, business-friendly industrial base.
The new labor contract law, enacted by the Standing Committee of the National People's Congress, requires employers to provide written contracts to their workers, restricts the use of temporary laborers and makes it harder to lay off employees.
The law, which is to take effect in 2008, also enhances the role of the Communist Party's monopoly union and allows collective bargaining for wages and benefits. It softens some provisions that foreign companies said would hurt China's competitiveness but retains others that American multinationals had lobbied vigorously to exclude.
The law is the latest step by President Hu Jintao to increase worker protections in a society that, despite its nominal socialist ideology, has emphasized rapid capitalist-style economic growth over enforcing labor laws or ensuring an equitable distribution of wealth.
But it could fall short of improving working conditions for the tens of millions of low-wage workers who need the most help unless it is enforced more rigorously than existing laws, which already offer protections that on paper are similar to those in developed economies.
China, India pose different hiring challenges: survey
June 29th, 2007By Susan Fenton
HONG KONG (Reuters) - Multinational companies in China have a hard task hiring people with leadership skills while in India they face unreasonably demanding fresh graduates, a survey shows.
The fast pace of business expansion in Asia's two emerging economic powerhouses has created a talent shortage and a host of challenges for employers.
"Staff are impatient and there are a lot of jobs out there," said Shalini Mahtani, chief executive of Hong Kong-based Community Business. "If companies are not providing good career opportunities, staff will leave."
Community Business, an organization promoting corporate social responsibility, conducted the survey in Shanghai and Mumbai with Schneider-Ross, a UK-based business consultancy.
Pay is still important as staff in China have no qualms in leaving a company to pick up a higher salary elsewhere, according to the survey. In India, employers say younger professionals are demanding excessive compensation packages, inflated job titles and immediate opportunities for overseas assignments.
One multinational talked of a fresh graduate who came for interview saying he had four job offers on the table and how could the company better that. Such demands were not unusual, the company said.
Pay is talked about openly in India and employees are liable to switch jobs if they know that their fellow graduates from business school are earning more. This makes it difficult for companies to reward good performance, survey participants said.
In China, competition for staff is so acute that one company reported losing a junior member of staff to a local company that more than doubled her salary and offered a position for which she did not have any experience.
The survey interviewed 25 senior managers and HR directors at foreign companies in Shanghai and Mumbai and conducted a focus group in each of the two cities.
A lack of leadership skills among staff poses a real challenge in China and many employees there leave a company because of the attitude or behavior of their boss, survey participants said.
Western multinational companies are no longer routinely seen as the preferred employer, as staff in both countries often see local companies that are expanding globally as a better opportunity to gain visibility and climb the career ladder. Multinationals now are having to approach second and third tier colleges for staff.
Diversity in the workforce, whether by gender, generation or culture, is also difficult to implement because local managers either are not sensitive to the issue or business is growing so fast they have no time to focus on it.
In India stereotyping of women is still common.
"There's an assumption that women will get married and they'll leave the workplace," said Mahtani.
In China, poor leadership skills means companies often havean.
State Grid Corp launches worldwide recruitment plan
June 29th, 2007BEIJING, June 28 -- State Grid Corp of China (SGCC), the nation's largest electricity transmission company, yesterday launched a worldwide recruitment plan for its five research and development (R&D) institutes.
Under the plan, the company will recruit 100 top scientists for its R&D work, including four academicians.
The five R&D centers are China Electric Power Research Institute, Nanjing Automation Research Institute, Beijing Electric Power Construction Research Institute of SGCC, Wuhan High Voltage Research Institute of SGCC and State Power Economic Research Institute.
The five institutes now have 2,699 staff members, including four academicians.
"The move will increase the company's R&D capabilities. Last year, we made many breakthroughs in the R&D field," SGCC said in a statement.
The company last year started to build China's first ultra-high voltage (UHV) transmission line. The pilot project will see 1,000 kilovolts of alternating current linking the southeastern part of Shanxi Province with Jingmen city in Hubei Province, passing Nanyang city in Central China's Henan Province.
(Source: China Daily)
China to Enact New Labor Law
June 28th, 2007BEIJING — Abundant low-cost labor has fueled China's economic boom. But alongside the success stories of bustling factories and surging foreign investment are widespread complaints of unpaid wages, forced labor and other abuses.
When Beijing set out to tackle those problems by proposing a new labor law in 2005, it ignited a heated debate, prompting warnings that the measure might hurt the economy and accusations that U.S. and other foreign companies wanted to erode workers' rights.
This week, after 18 months of deliberation and a rare government request for public comment on the law, legislators are expected to enact a final version that is meant to set standards for China's rapidly changing labor market.
The law, the most significant change in Chinese labor rules in more than a decade, would set standards for labor contracts, use of temporary workers and severance pay.
The change reflects Beijing's willingness to balance its desire for investment against the need to improve conditions for workers at a time of rising tension over a growing wealth gap, said Ronald Brown, a specialist in Chinese law at the University of Hawaii.
"The question facing the decision-makers often has been, 'What will happen if we have hard enforcement? Will that scare people away and take away our competitive advantage?'" Brown said.
"I think the government has been listening and seeing that maybe it's not going to hurt its competitive advantage, and that it's time, and it's important for social stability."
The law was proposed in December 2005 amid complaints that companies were mistreating workers by withholding pay, requiring unpaid overtime or failing to provide written contracts.
Many complaints are directed at Chinese employers or smaller companies run by foreign entrepreneurs. Major Western companies are regarded as offering the best pay and working conditions. But state media are quick to publicize accusations of misconduct against well-known American and other Western employers.
In April 2006, the government published the first draft of the law and asked for public comment, an almost unprecedented step in a communist system where most lawmaking takes place in secret.
It received more than 190,000 responses from workers and Chinese and foreign companies.
Foreign business groups expressed alarm at proposed restrictions on firing workers, limits on use of temporary workers and a provision giving the All-China Federation of Trade Unions _ the umbrella group for unions permitted by the communist government _ a voice in staffing decisions.
The law is "like going 20 years backward," said the monthly magazine of the American Chamber of Commerce in Shanghai, which represents 1,300 U.S. companies. The U.S.-China Business Council warned that restrictions on temporary employees would be "prohibitively expensive."
Labor activists reacted angrily to the foreign lobbying. The U.S.-based group Global Labor Strategies dubbed companies involved the "sweatshop lobby" and accused them of pushing Beijing to "weaken or abandon significant pro-worker reforms."
Apparently stung by that criticism, the European Chamber of Commerce in China backed away from earlier criticism of the law, declaring in December that it "stands firmly behind the Chinese government's efforts to improve working conditions."
The business comments appear to have prompted Beijing to remove the most contentious provisions. The third draft of the law, the latest version released, no longer requires approval from the official labor body to fire workers.
The Standing Committee of the National People's Congress, China's parliament, votes Friday on a fourth version, and its press office said its law committee recommended approval.
The American Chamber of Commerce in Shanghai declined to comment on the latest draft but its chairman, James Zimmerman, expressed thanks to the government for accepting comments.
"We are pleased that the Chinese government has allowed public participation in the law-drafting process, and believe that this has been a constructive exercise in transparency," Zimmerman said in a written statement.
The proposed law adds to a series of government steps to update China's legal and political systems to keep pace with explosive economic and social change.
A law passed in March ended two decades of blanket tax breaks for foreign investors, equalizing their rates with those paid by Chinese companies.
The All-China Federation of Trade Unions has been setting up branches at hundreds of foreign companies in a campaign launched last year.
The ACFTU often is regarded not as an advocate for better pay and working conditions for employees but as an intermediary that represents employers to workers.
But if the proposed labor law is enacted, it could force the body to act more like a Western-style union by giving it formal responsibilities to stand up for workers, Brown said.
"As these new laws are enforced," he said, "the labor union is likely going to have to accept a larger role as an adversary and an advocate, negotiating better conditions for its members."
On Wednesday, China announced a new crackdown on illegal labor practices following an outcry over revelations of slave labor at brick factories in the country's central provinces.
The two-monthlong inspection campaign starting next week will focus on small-scale kilns, coal mines and workshops, according to a statement posted on the central government's official Web site.
Officials have been ordered to "fix illegal labor practices, attack illegal criminal behavior, conscientiously protect the personal interests of the broad masses of the people, and resolve ... problems of the protection of the rights of migrant workers," the statement said.
China has been in the throes of a slavery scandal that has unleashed a flood of negative publicity against officials in Shanxi and Henan provinces. Hundreds of children and adults were abducted and sold to brickyards in those areas. Operators, often acting with local government protection, beat, starved and forced workers to labor long hours without pay.
Nearly 1,000 workers have been released following police raids in recent months, prompted in part by accusations posted on the Internet that authorities were ignoring such practices.
Beijing to recruit record 22,000 Olympic torch bearers
June 28th, 2007Beijing - Organizers of the 2008 Olympics on Saturday unveiled plans to recruit nearly 22,000 torch bearers for next year's torch relay, almost double the number taking part in the Athens 2004 torch relay.
The Beijing organizing committee (BOCOG) will start recruting 21,880 torch bearers from Saturday, including 19,400 from mainland China, Zhang Ming, the director of BOCOG's Olympic Torch Relay Centre, told reporters.
The previous highest number of torch bearers was 13,300 for the 2000 Olympics in Sydney. Atlanta in 1996 had almost the same number as Sydney, while Athens recruited 12,102. Montreal in 1976 used just 1,214 torch bearers, BOCOG said.
'Under the theme of 'Journey of Harmony' and slogan 'Light the Passion, Share the Dream', the torchbearer selection programme aims to involve the public participation in a most broad and extensive way.' Zhang said.
'It will recruit a group of torchbearers who are most deserving and worth of carrying the Olympic Flame within their communities,' she said.
Among the selction criteria, all torch bearers must 'patriotic and dedicated to the Olympic Movement', have contributed to the 'building of a harmonious society', and be 'distinguished for remarkable feats in his or her profession or community', Zhang said.
According to Olympic tradition, the Olympic flame will be lit in ancient Olympia, Greece, on March 25, 2008.
The torch relay will travel across Greece to the Panathinaiko Stadium in Athens, the site of the first modern Olympic Games in 1896.
A handover ceremony will be held in the stadium before sending the Olympic flame to Beijing on March 31, 2008.
One torch will carry the flame to dozens of cities in five continents, while a special high-altitude torch will carry the flame to the 8,844-metre summit of Mount Everest in May.
The torch relay will culminate in the lighting of the cauldron in the Olympic stadium at the August 8, 2008, opening ceremony of the Beijing Games. The last torch-bearer is one of the best-kept secrets at Olympic Games.
BOCOG listed Taiwan in the torch relay route that would include the island state under political conditions that it deemed unacceptable.
Jiang Xiaoyu, the BOCOG executive vice president, on Saturday said he still hoped Taiwan's leaders would accept an agreement that he said the island's Olympic officials had made.
Taiwan objected to China's listing of Taiwan in the route immediately before the Chinese territories of Hong Kong and Macau, which are followed by a succession of Chinese mainland cities, saying Beijing could attempt to portray the island as part of its domestic leg.
Hurray! CFO Departs Position
June 28th, 2007Chinese mobile value-added services firm Hurray! (HRAY) announced that its co-founder Jesse Liu will resign from his position as CFO on June 30.
Liu held that position for six years, but after his resignation, he will remain a board member and continue to assist the company in its strategic transformation towards becoming a leading entertainment content provider and distributor in China. Sean Wang, currently president and chief operating officer of the company, will also assume the role of acting CFO of the company.
"As a co-founder, Jesse has been instrumental in developing and executing our initial strategy, raising private finance culminating in our successful IPO on Nasdaq, and more recently working on our transformation strategies. We appreciate his invaluable contribution since inception and look forward to benefiting from his continued support as a member of the board," remarked QD Wang, chairman and CEO of the company.
IT industry to create four million jobs in china
June 27th, 2007China IT services outsourcing industry could generate $56 billion in revenues and create four million jobs by 2015, a white paper released by Electronic Data Systems (EDS) has claimed.
IT outsourcing service providers in China could earn as much as $18 billion by 2010 and $56 billion by 2015, the report said, adding that the world’s second-largest IT service provider had also reached a strategic cooperation agreement to develop the IT outsourcing industry in China yesterday.
China Employment Contract Law Forum 2007
June 25th, 2007Promulgated 12 years ago, the PRC Labor Law remains the fundamental piece of legislation governing employment relationships in China. Soon that will change. The draft PRC Employment Contract Law, expected to be promulgated in mid-2007, will effect wide-ranging changes to the regulatory environment for labor relations nationwide.
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Sponsor Link: DaCare Legal Search (China)
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We take pleasure in announcing that TransAsia Lawyers will soon be hosting the China Employment Contract Law Forum 2007 with the official endorsement and support of the PRC Ministry of Labor and Social Security (MOLSS). Senior officials from the National People's Congress, State Council, the MOLSS and the local labor bureaus of major cities will support and speak at the event. The forum will focus on the legal interpretation of the new PRC Employment Contract Law.
The Forum is scheduled for 23 - 24 July 2007 at the China World Hotel in Beijing* and will focus on the significant, wide-reaching legal interpretation of the new employment contract law. Several influential government agencies will be involved in the Forum: senior officials from the National People's Congress, State Council, MOLSS and All China Federation of Trade Unions will attend and speak. A number of leading multi-nationals will also participate.
Recommended attendance for:
CEOs
HR Directors and Consultants
Lawyers and In-house Counsel
Business Advisors
Academics
The forum will be the first time that senior PRC officials and legislators will appear on the same platform to discuss the new law. It will therefore provide a unique opportunity for attendees to hear authoritative interpretation of the law and to share their own thoughts directly with key individuals involved in the regulation of employment law in China.
To date, we have confirmed the following keynote speakers:
* Mr Zhang Shicheng, Deputy Director of the Legislative Committee, National People's Congress;
* Mr Li Jian, Director-General, Labor and Social Security Department, State Council;
* Mr Yan Baoqing, Director-General, Legal Affairs Department, MOLSS;
* Mr Qiu Xiaoping, Director-General, Wages Department, MOLSS;
* Mr Rui Lixin, Deputy Director-General, Legal Affairs Department, MOLSS; and
For an outline of the above speakers' topics, please click here.
* Mr Zhang Shouqi, Deputy Director-General, State Administration for Social Security;
* Mr Xu Shuli, Director, Wage Department, Beijing Labor Bureau;
* Mr Li Yanjun, Director, Employment Contract Relationships Department, Tianjin Labor Bureau;
* Mr Zhu Deliang, Director, Labor Disputes Department, Guangdong Provincial Labor and Social Security Administration; and
* Ms Isabelle Wan, Senior Partner, TransAsia Lawyers.
Additional distinguished speakers, including senior judges, local labor bureau officials, HR directors, and legal counsel from well-known multinationals, will participate as panelists.
We will continue to update this page with further details regarding the speakers and program of the Forum.
China Power Shortage
June 25th, 2007Hiring, retention and motivation are huge issues for HR departments in China but it seems that even the best collective efforts of Recruiters and Line Managers would be insufficient to overcome the current shortage of electric power.
Reports from various parts of China indicate that companies, both local and international, are being held back by a shortage of power in their area. If this lines up exactly with the skills shortage, such the the supply of labour is reduced by the skills shortages to the level of supplied power, then that its all to the good.
But such conjecture belongs in the world of idle fantasy. You cannot achieve balance with two negatives. If only things were so easy.
The reality is that some parts of China, especially in the South, are only able to receive electric power 3-4 hours per day. So no matter how few less hires the company makes they cannot make up for the fact that they have to hire the wrong people. They should be hiring part-time people when in fact they are still hiring full-time people. The hiring market in China is so strong it is very hard to get people to do part-time work. Electic power shortages are unpredictable and this makes workforce planning that bit more difficult.
A variety of different culprits have been identified. These have been variously; the white hot rate of economic (not new), delays in new plant opening (plannable), government efforts to close down old, polluting power plants (delayable) and a lack of fuel (bizarre).
(It¡¯s worth noting that it is currently ¡®Huang Meitian¡¯ in China, despite reports that it will start next Sunday, and the power situation can only get worse. Humidity rates are already above 80% and air-conditioning is prefererable 24 hours per day. Soon air-cons all over China will be left on permanently.)
Time to Re-Think?
The worst case scenario is that international companies begin to re-think their investments in China. Fortunately, and strange as this word may sound, the power shortage has been going on for many years. CEOs of multinational companies have already factored it into their investment plans. No one expects China to have the kind of electric power transmission system that exists in Germany or Australia.
But at the same time there are many other countries bidding for any given MNC¡¯s investment. FDI is fickle and can go into reverse very quickly if sentiment changes. India looms large on China¡¯s competitive world map.
Since around the year 2000 companies have shifted to a very ¡®lean¡¯ approach to their business, such that a delay in one part of the supply chain ripples quickly through to the other parts. A ripple from the Workshop of the World could mean a red tide for other places.
That¡¯s a risk most CEOs won¡¯t take.
Temporary Staffing in China - DaCare Staffing
June 23rd, 2007DaCare Staffing is a leader in delivering temporary staffing solutions as well as innovative workforce technology solutions in a variety of industries in China, providing pre-screened, qualified and trained personnel to our customers through our quality service.
DaCare Staffing is part of the DaCare Group recruitment and staffing for China and Asia. Our Intelligent Staffing brand continues to serve both clients and job candidates through diverse branches across the country.
ShangHai, BeiJing, SuZhou, ShenZhen, GhuangZhou, etc
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Phone1: +86 21 5238 9083
Phone2: +86 21 5238 9081
Address: Suite 9D, No. 121-123 JiangSu Road ZhongXi Mansion
Shanghai 200050, China
Email: info[at]dacare-staffing.com
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China Job market faces challenges
June 20th, 2007Source: China Daily
The employment market will remain gloomy for "a considerably long term", with as many as 12 million workers struggling to find a job every year, according to a report released by the labor authority yesterday.
It is estimated that 65 percent of the population will be of working age in the coming 20 years as the children of the baby boom generation of the 1960s and 1970s enter the job market, said the report by the Ministry of Labor and Social Securities (MLSS).
Half of the 24 million people who enter the job market every year will not immediately be able to find work, despite the rapid growth of the country's gross domestic product, which is expected to create about 10 million new jobs every year until 2010, said the report.
The employment outlook is further clouded by the 120 million rural workers expected to remain idle in the countryside, said the report.
Despite the apparent over-supply in the labor pool, the MLSS also stressed in its report that labor shortages have hit factories in some prosperous regions.
The annual 5 percent increase in the number of migrant workers, a major factor in the fast pace of urbanization in recent years, has failed to keep pace with the annual growth in demand for workers, which has expanded by about 10 to 15 percent a year since 2003, said the report.
As a result, about 45 percent of the enterprises in the Pearl River Delta and 34 percent in the Yangtze River Delta polled by MLSS said they did not have enough workers last spring.
Meanwhile, the migrants' growing awareness of their legal and economic rights has also contributed to the shortage.
About half of the migrants surveyed by the MLSS said they would be willing to quit their jobs because of "low pay".
The lack of professional training is another factor in the shortage, said the report.
The report cited a survey by the MLSS earlier this year which found that 37 percent of all new jobs required a medium level of skills, but only 13 percent of migrant workers had received formal job training.
The ministry called for better working environments for workers as well as improved training programs.
While painting a dismal picture of the employment market, the report also sought to dispel fears raised by reports that China's labor supply would dry up by 2010.
A report released by the Chinese Academy of Social Sciences last month forecast that the family planning policy had helped slow the growth of the population.
This indicates that China would be "moving from an era of labor surpluses into an era of labor shortages."
Top-Ranked U.S. Business School Offers Entrepreneurial Immersion Trip to China
June 18th, 2007The University of Chicago Graduate School of Business, ranked #1 in the latest business school ranking by Business Week, is offering an entrepreneurial immersion trip to China August 26 to September 4, 2007.
(PRWEB) June 18, 2007 -- The University of Chicago Graduate School of Business, ranked #1 in the latest business school ranking by Business Week, is offering an entrepreneurial immersion trip to China August 26 to September 4, 2007. (http://ChicagoGSB.edu/entrepreneurship/immersion).
"The trip will help facilitate meaningful business networking and help novice entrepreneurs overcome some of the major obstacles to doing business in China," said Linda Darragh, director of entrepreneurship programs at Chicago GSB. The obstacles include cultural norms, business regulations and processes, financial practices, language issues and transportation, she said.
The trip, offered by the school's Polsky Center for Entrepreneurship (http://ChicagoGSB.edu/entrepreneurship), will also familiarize participants with key cities in China including Dalian, Beijing, Shanghai, Hong Kong and Macau. Participants will learn from U.S. companies already operating in China, meet with Chinese government officials and U.S. trade directors, and network with Chinese entrepreneurs and investors.
The trip also includes a tour of Chinese entrepreneurial companies to learn the benefits and challenges of working with local partners in China, and a visit to a major research park to understand incubation strategies offered to Chinese entrepreneurs by local economic development organizations.
A signature event of the trip is a visit to the Shanghai Knowledge and Innovation Community, where high-tech entrepreneurs, educators, researchers, and venture capitalists will meet, network and work together. The facility, now under construction, is scheduled for completion in 2010. Vincent Lo, developer of the facility and one of the leading entrepreneurs in China, will speak to participants.
Chicago GSB has been teaching courses in Asia since 2000 when the school opened a permanent campus in Singapore for its Executive MBA Program (http://www.chicagogsb.edu/execmea/index.aspx).
For more information about the entrepreneurial immersion trip to China, or to register, contact Linda Darragh at 773-702-9108 or by e-mail.
The University of Chicago Graduate School of Business is one of the oldest and largest business schools in the world. The school's faculty includes many renowned scholars and its graduates include many business leaders across the U.S. and worldwide. The Chicago Approach to Management Education is distinguished by how it leverages fundamental knowledge, its rigor, and its practical application to business challenges.
Chicago GSB offers full-time and part-time MBA programs, a PhD program, open enrollment executive education, and custom corporate education. The school has campuses in London and Singapore in addition to two campuses in Chicago. More information about Chicago GSB can be found at http://ChicagoGSB.edu.
UK Business looks to recruit Chinese students
June 16th, 2007Businesses are turning to MBA students from China because they believe too few British graduates have Chinese language skills, according to a report.
Meanwhile, staff at Liverpool John Moores University used graduation ceremonies this week to protest against the cutting of Chinese studies as part of a reform of its language school.
Forty-one per cent of business leaders surveyed by the Hay Group consultancy said they planned to recruit Chinese MBA graduates.
Universities produce fewer than 500 graduates a year from programmes in which Mandarin forms a substantial part and the report's authors said the lack of linguists would lose the UK opportunities in the Chinese market.
Deborah Allday, one of the authors, said: "We are about to face a war for talent both in China and in domestic markets as companies scramble to recruit talented leaders and managers with an understanding of the Chinese market and business culture.
"The British government needs to take a fresh look at the higher and further education curriculum in this country to determine the best way to make UK graduates and UK plc competitive in the global market place."
She said companies should demand that all MBA students they fund should do a China module on their course and that the government should introduce more Chinese language teaching.
The study, based on interviews with business leaders in Europe, north America and Asia Pacific, found that British business expects sales to China to be worth 10 per cent of their global revenues by 2009.
Managers at Liverpool John Moores decided to drop courses in Chinese to concentrate on those in higher demand and with greater growth prospects.
Don Starr, president of the British Association of Chinese Studies, said: "It is a very resource intensive subject to learn and it is therefore expensive to teach. Because the funding does not recognise that extra cost, vice-chancellors find it cheaper to offer subjects like English and psychology that can be taught in large lecture theatres."
The school system was compounding the problem, he added.
"Private-sector schools have been introducing Chinese in large numbers but the government has allowed 14-year-olds in state schools to drop languages entirely."
The Higher Education Funding Council for England said it would work to find alternative universities for the 15 places that will be lost each year.
Teresa Tinsley, assistant director of the National Centre for Languages, said that although the number of people taking A-levels and GCSEs in the subject had steadily increased, the overall number still remained tiny.
"It is alarming that employers are turning to foreign students with Chinese language skills because that will make them less likely to tackle the shortage of UK nationals," she said.