Category: "News of China"
Equal job opportunities called for rural and urban residents
October 28th, 2008Chinese Vice Premier Hui Liangyu said on Saturday farmers should share equal job opportunities with urban residents, which was key to realize the government goal of doubling farmer's income by 2020.
Farmers were encouraged to start their own business and local government should work out more favourable policies including preferential taxation and easier market access to help farmers find jobs and business opportunities, Hui said at a prize award ceremony of the elite rural entrepreneurs.
The reform and innovation of the rural banking system should be pushed forward so as to resolve the rural residents' problem of cash shortage in starting their own business, Hui said.
China vowed to double rural residents' income from the current level by the end of 2012 as a part of the plan aimed to revitalize the country's rural area and agriculture, which was proved on the Third Plenary Session of the 17th Communist Party of China Central Committee.
Hui said vocational training for rural people should be enhanced to allow more migrant workers to go back to their hometown to run business.
Nokia Siemens to Ramp Up Chinese 3G Staffing Numbers
October 24th, 2008Nokia Siemens Networks (NSN) has announced that it is to increase its TD-SCDMA trained engineers to over 1,200 staff, over an undefined timeframe. The company recently obtained the official approvals for deployment of its TD-SCDMA equipment from Ministry of Industry and Information Technology.
NSN was the major solution supplier for China Mobile Shen Zhen TD-SCDMA network’s planning, construction and optimization.
Adds Steven Shaw, head of Services in Greater China region of NSN, “We have gained invaluable experience in working with China Mobile in the Shen Zhen TD-SCDMA network. With our strong base in 2G and rich global experience in 3G deployment, comprehensive TD-SCDMA portfolio, strong local service support and clear evolution path to LTE, we are confident in helping operator customers to fulfill their goals.”
NSN shareholder, Nokia is a 49% holder in a Chinese joint venture, Potevio with China Putian to develop network infrastructure based on the Chinese 3G standard. Potevio was set up in 2005 and has also been the major supplier of equipment to China Mobile's TD-SCDMA trial networks in Tianjin and Qinhuangdao.
Last month, Nokia's vice-president of Greater China sales, David Tang said that the firm would launch a range of handsets based on the Chinese 3G standard.
Emergency pay fund for unemployed considered
October 23rd, 2008GUANGZHOU: Authorities in Guangdong will consider setting up an emergency fund to protect workers against losing their wages in the event of further factory closures, the provincial labor and social security department said on Monday.
Responding to a resolution put forward by a member of the provincial political consultative conference, the department said in a statement that the feasibility of such a fund will be considered and that financial departments at various levels will likely contribute to it.
The fund will primarily be used as insurance against firms going bust or unscrupulous bosses absconding, the statement said.
Zhang Xiang, director of the labor department, said in the statement: "From time to time, the boss of a company in financial trouble will flee and leave his debts behind, and that creates turmoil.
"In the current economic climate, there is a good chance that more companies, especially labor-intensive ones, will collapse.
"This fund would help protect against some of the financial and social problems caused by such closures."
Zhang said that traditionally, companies paid a premium, on top of their rent, to the owners of the factory buildings they occupied.
In the event of a firm suffering financial difficulties, or the boss absconding, this money could then be used to cover wage payments for the workers.
"But the funds were seldom big enough to cover the total wage bill," he said.
The labor department has also been urging firms to start paying their workers via bank transfer to enable closer monitoring, he said.
Furthermore, the department is currently seeking to work more closely with other local bodies, including the people's bank, industrial and commercial administration, and the foreign trade and economic cooperation department, to develop a better picture of companies' credit ratings.
Not everyone, however, believes the insurance fund is a good idea.
Li Qingqing, an associate professor of economics at South China Normal University, told China Daily yesterday: "Taxpayers' money should not be used to support failing businesses.
"An infinite amount could be lost if firms continue to go out of business.
"Instead, companies should be made more responsible, perhaps by paying some form of premium when they apply for registration."
Survey: Fund management companies offer highest earning jobs in 2007
October 22nd, 2008Thanks to last year's bullish market, the financial sector provided the most lucrative jobs in China and fund management talents topped the 2007 salary rankings, The Economic Observer reported on Monday.
Executives, fund managers and high-caliber investment researchers were the top earners, according to Taihe Consulting, a human resources company, after conducting a survey on 15 large fund management companies in Shanghai, Beijing and Shenzhen.
Industry insiders have attributed the high earnings to a shortage of fund management talents and the thriving fund businesses in 2007.
Even the current bearish market has not shown an adverse effect on fund employees' incomes yet.
Statistics collected by Taihe in June indicated no signs of fixed income reductions among fund management employees. And flexible income was closely related to companies' performances, it found. Some companies can still collect remarkable management fees in 2008 that are no less than last year's, Taihe said.
The cash income of an employee comprises a fixed part and a flexible part in addition to their benefit package. The fixed part is made up of basic salary and allowances, and the flexible, accounting for 30 to 40 percent of the total income, is given as a merit-based bonus, such as year-end bonuses, or as sales commissions. Some positions even offer a flexible income that takes up as much as 50 percent of the total.
An employee with a Shenzhen-based fund management said: "The fixed salary was set at the beginning of the year, so there would be no big change. The flexible part may vary from person to person…some fund managers won't necessarily get a smaller year-end bonus, because the payment is based on the rankings of fund performances."
By contrast, listed securities companies already registered a year-on-year drop of 8.6 percent in salary payments in the first half of 2008, with some employees' incomes reduced by more than 60 percent, according to a report by Shanghai Securities News in August.
From a regional perspective, fund management companies in Shanghai, a national financial hub, offered the most lucrative jobs in 2007, Taihe's survey showed. Beijing came second and Shenzhen third.
The consulting company found that the lower-end salaries of fund management, real estate and high-tech sectors were quite similar. But at the very top level, the financial sector offered salaries that doubled what the high-tech gave, with real estate coming somewhere in between.
"Financial employees earned much higher salaries than people in the other industries in 2007," a Taihe analyst said. "And undoubtedly the most lucrative jobs came from the fund sector."
Hong Kong's jobless rate climbs 3.4%
October 21st, 2008HONG KONG, Oct. 20 (Xinhua) -- Hong Kong's seasonally adjusted unemployment rate rose to 3.4 percent in July-September period from 3.2 percent in June-August 2008, reversing the decrease seen earlier in the year, revealed the latest figures released by the Census and Statistics Department here Monday.
Matthew Cheung Kin-chung, Secretary for Labor and Welfare, warned that the September figures might not have reflected the impact of the global financial turmoil, which is now beginning to be felt.
"Looking ahead, unemployment is likely to rise further in the near term," he said, pointing to some sectors bound to be affected by a contraction in business triggered by the global economic crisis.
According to the department's latest statistics, provisional number of unemployed persons rose by around 4,900 from 129,100 in June-August to 134,000 in July-September.
The provisional underemployment rate, however, decreased from 1. 9 percent to 1.8 percent over the same period of last year as some summer workers returned to schools upon the start of the new academic year.
Comparing July-September with June-August period, increases in the unemployment rate were mainly observed in the wholesale and retail, restaurants, manufacturing and financing sectors.
As to the underemployment rate, decreases were mainly seen in the decoration and maintenance and transport sectors.
Cheung said the Labor Department will closely monitor the situation and stands ready to help the affected employees, vowing to continue enhancing its employment services and the competitiveness of the local workforce through education, training and retraining services and job search facilitation.
"In the long run, the implementation of the major infrastructure projects will help create employment opportunities and economic benefits," he said.
Cheung noted that the Hong Kong government had proposed to introduce a series of facilitating measures to improve the Small and Medium Enterprises (SME) Funding Schemes with a view to strengthening support to SMEs and will continue to discuss with them and listen to their views.
"I believe SMEs could benefit from these measures. I hope that employers could actively consider job restructuring or job sharing as an option to tide over the difficult period," he added.
More job losses in S China amid global financial crisis
October 20th, 2008Another 1,500 workers in south China have fallen victim to the current global financial crisis as they will have to find new jobs when their factory closes next week.
Hong Kong-listed BEP International Holdings Limited announced it would shut its factory in Shenzhen, Guangdong Province, on Monday after its exports had dropped drastically this year registering huge deficits, a company spokesman told Xinhua on Saturday.
The company was currently paying arrears to its 1,500 workers. Some had found employment with other factories in the southern Hong Kong border city.
BEP, founded in 1986, is an export-oriented company. Most of its annual output of 5 million units of home appliances was sold to Europe, North America, Asia and the Middle East, Australia and New Zealand.
It set up the 22,000-square-meter Shenzhen factory in 1992.
Earlier this week, 7,000 workers were sacked in Dongguan, also in Guangdong, after the Hong Kong-listed Smart Union Group (Holdings) Limited closed two factories.
Smart Union Group is one of the world's biggest toy makers. Most of its products are sold in the United States.
Lighting firms increase tech input
October 17th, 2008Energy-efficient lighting manufacturers are increasing their technological input to improve the life of new bulbs and cut prices.
Guangdong Shunxiang Energy-Saving Lighting Technology has developed a new kind of energy-saving bulb that could save up to 70 percent of the electricity used by traditional incandescent bulbs.
The life of the light bulb could reach more than 60,000 hours, 10 times that of regular energy-saving lamps and 100 times more than incandescent light bulbs, according to General Manager Lin Weihe.
"Our lamps with new technology only need to be changed every 10 years, but in the same period, a mercury vapor lamp or sodium vapor lamp would have to be changed 15 times," Lin told China Daily.
The company, headquartered in Chaozhou, Guangdong province, is displaying its latest products at the ongoing 10th China Hi-tech Fair in Shenzhen.
The company plans to invest 500 million yuan in a new plant, which could be operational by 2010, with an annual production capacity of 3 million units.
European Union countries will ban the use of incandescent light bulbs in favor of energy-efficient lightings, following the United States and Australia, by the end of this decade.
China is also actively promoting the use of energy-saving lighting. It plans to sell at least 150 million highly efficient energy-saving light bulbs from 2006 to 2010.
Financial crisis spurs interest in civil service jobs
October 16th, 2008Civil service jobs have gradually become popular again with growing numbers of graduates nominating them as their "ideal jobs".
Amid the current global financial crisis' implications for the private sector, the website for national civil service exams crashed on its first live day on Monday, the Beijing Morning Post reported Tuesday.
A recent China Youth Daily survey on Netease.com shows around 86 percent of the 2,440 respondents considered taking the exam in a bid to join the public sector.
"The reason is simple," a Ministry of Human Resources and Social Security official, who refused to be named, said. "In China, civil servant jobs means good payment, decent social status and permanent social welfare. There is low risk of being fired."
People walk past the gate of the State Administration of Civil Service in Beijing in this August 30 file photo. [CFP]
China will recruit 13,566 civil servants this year, according to the newly released civil service enrollment brochure.
Among the 134 government agencies taking part in the recruitment campaign, the Ministry of Foreign Affairs alone plans to recruit 157 new staff.
For Dong Shu, a graduate of Peking University, a civil service job is at the top of her wish list.
"As a girl, I just want stability. The civil service sector can provide a comfortable and wealthy life. What's more, most of my classmates are going to take the exam," Dong said.
Things are more complicated for Wu Minggang, who will graduate from Beijing University of Posts and Telecommunications in March next year.
"Being a civil servant means a bright future. If you work for a foreign enterprise, you will still be an engineer in 20 years, but if I get a job as a civil servant, (the career development path will be different,)" Wu said.
For Wu's classmate Wang Zhongxu, sitting the exam is just about increasing her chances of getting a job.
"I just want to grab any chance in front of me," Wang said.
Li Pei, a post-graduate of the University of International Relations who became a civil servant last year, feels satisfied with her job.
"We enjoy a dormitory at a low price, about 200 yuan ($ 29) per month. We enjoy three meals for free in the dinning hall. Every month I can give at least 1,000 yuan to my parents," Li said.
Compared with Li's classmates in foreign enterprises, Li's life was rather comfortable.
With a monthly salary of about 5,000 yuan, she also enjoys good insurance and pension coverage.
Hu Fengling, a professor at the University of International Relations, said at least 70 percent of the graduates in his school will take the national civil service exam, but only one in five will get a job.
Fresh graduates face gloomy job market
October 15th, 2008With a looming global financial crisis aggravating the difficulties posed by a fierce job market, many consider the future for the country's fresh college graduates to be bleak.
The number of job hunters from this group entering the market next year is expected to exceed 6 million nationwide, an increase of 7 percent from this year, official figures showed.
"This year, the number of new recruits in the job market has halved and most positions are for experienced applicants only," said Carol Cai, an employee of British market research company TNS.
"Employers always give preference to applicants with some experience so the unemployed possess more advantages than fresh graduates, whose inexperience often works against them in the job search," said Tang Xiaolin, director of the career development center of Fudan University.
It is no longer considered easy for graduates majoring in once-popular fields such as banking, finance, trade and management to land positions, education officials said.
"Companies are still making presentations on campus. However, this is more of self promotion than real recruitment because they have cut their job plans," said Lin Huihui, a graduate who majored in international commerce at Fudan University.
Similarly, many companies are reportedly cutting their payrolls amid the job crunch.
University sources have also attributed the shift by new graduates away from such fields to the financial crisis and credit crunch.
Xiao Jiang, a finance major from Zhejiang University, said he has applied for about 20 positions as a researcher or analyst for multinational companies, nonprofit organizations, private enterprises and associations - whatever options he could think of.
"I didn't think it would take this long," he said. "It's tough just to get an interview.
"I can no longer consider whether my specialty matches my future job. The most important thing is whether I can find a job," Xiao said.
"There is little doubt that the financial crisis has already hurt job growth. The unemployment rate is likely to rise further - and remain high for a considerable period of time after the financial crisis subsides and economic growth resumes," Tang from Fudan University said.
Adding to a shrinking job market for graduates is the competition from their peers returning from studies overseas.
Those studying abroad will most likely return home for jobs because of the tight job market, Tang said.
Faced with such uncertainty, many students have decided that further study for higher degrees would improve their chances of entering the workplace.
"It would only add to fiercer competition in the next few years, when more students graduate," education analyst Lin Yuxuan said. "Graduates should lower their expectations and add experience that will help them become more competitive."
Monster snaps up ChinaHR
October 10th, 2008US-based online recruitment service provider Monster yesterday secured complete control of ChinaHR.com, paying $174 million for the remaining 55 percent stake in the Chinese recruitment site.
Monster had said in its financial report for the second quarter of 2008 that it would pay $200 million to $225 million in cash to ChinaHR.com shareholders.
Monster said in 2005 that it would take the remainder if ChinaHR.com was unable to get listed within three years.
Analysts said the failure of the IPO was due to problems with ChinaHR.com's profitability. The company suffered a loss of 150 million yuan in 2007, according to Monster's financial statements for the year.
"The acquisition will give Monster a stronger presence in the Chinese online recruitment market," said Edward Lo, executive vice-president of Monster China, who takes over as the interim CEO of ChinaHR.com while maintaining his current Monster post.
China's online recruitment market is led by NASDAQ-listed 51Job with a 29 percent share, followed by ChinaHR.com with 24 percent, according to Beijing-based consulting firm Analysys International.
Although Monster's acquisition comes amid a slump in US online labor demand due to the global financial crisis, Lo said it is an opportune time for Monster to invest in the Chinese market.
"The economic situation which has ups and downs is a cycle," he said. "The merger is not a short-term investment but a long-term strategic partnership to create the best global recruitment platform."
Liu Tong, an online industry analyst from Analysys International, said it is a good deal for Monster from a long-term perspective as China's online recruitment market is growing rapidly. It grew 36 percent year-on-year in the first quarter of 2008.
In addition, ChinaHR.com's loss does not mean it has operational problems, he said. In 2007, it achieved a revenue of 281 million yuan.
The merger with Monster means there will be enough cash flow to enhance its brands, he added.
More than 90 percent of ChinaHR.com's revenue comes from the online recruitment compared to 33 percent of its rival 51job's, Liu said, adding it means there is plenty of space for Monster to diversify ChinaHR.com's future revenue structure.
Spirit of wanting to be own boss strong
October 6th, 2008CHINESE people are perceived as more likely to be their own boss running a business and this spirit of entrepreneurship is what franchise owners at an exhibition are hoping to tap into.
"Chinese are more enterprising than other people. We have the feeling they are more likely to do their own business rather than work for others," Anton Widjaja, vice president of PT Top Food Indonesia, the operator of the country's biggest fast-food chain 77 Esteler Juara Indonesia.
The company, which has 180 stores in Singapore, Australia and Indonesia, is looking for a master franchisee to tap the Chinese market. It aims to open the first store in Shanghai by the end of the year and open at least 10 stores within 2 years in cities like Guangzhou and Shenzhen.
The two-day 2008 Shanghai International Franchise Exhibition, which opened yesterday at the Shanghai International Exhibition Center, has lured 100 franchise owners and huge crowds. Among the exhibition participants were names in the dining industry such as Dio Coffee and Dicos fried chicken.
Franchising has seen an encouraging growth in China as it provides an easy way to do business and help brand owners to rapidly grow business in a market they may not be familiar with.
Last year, the sector in China's mainland jumped 16 percent, with more than 2,600 franchisers operating in the country and over 200,000 franchised outlets, the Ministry of Commerce said.
Surplus labor pool shrinks before future revival
September 28th, 2008China's labor market is in the pincer grip of dwindling surplus labor on one hand and growing unemployment on the other as a result of mass closures of outdated factories.
Apparently contradictory, these two rising trends have come to define the labor market of late. Employers are finding it difficult to find suitable workers and employees are scratching heads in their search for ideal positions.
In terms of labor supply, which has long been seen as a factor in the nation's economic miracle, China has already entered a complicated era of a dwindling workforce and a shortage of skilled workers.
But don't panic.
Cai Fang, a senior think tank economist from the Chinese Academy of Social Sciences, assured the Chinese leadership while correcting the widely accepted perception that China's labor supply is still endlessly abundant.
According to some economists, the number of surplus laborers in rural areas alone surpasses 150 million, equivalent to half of the US's total population.
But Cai insisted that this figure was inaccurate. He said 52 million would be a more realistic estimate.
Cai reported the research result when China's highest leaders lent their ears to the country's top-level economists in July to find solutions to the current economic headaches.
"Our research finding has revealed that surplus labor is far less than we expected," said Cai, who is also a member of the Standing Committee of the National People's Congress.
The number of surplus laborers is declining in rural regions. Cai assured the leadership, currently puzzled by rising inflation, energy supply and possible economic slowdown, that by 2020, China's labor supply would increase at an encouraging pace.
To ensure a healthier economy, Cai said China needs to upgrade its economic structure and further improve the treatment of laborers and equip them with new skills and knowledge.
Since last year, the government has been determined to close the labor-intensive but energy-crunching factories. The impact is obvious as many of China's factories are labor-intensive. This will continuously result in unemployment, said Liu Junsheng, a senior researcher from the Labor-Wage Institute affiliated to the Ministry of Human Resources and Social Security.
Foreign Firms Given Labor Contract Deadline
September 25th, 2008More than 100 foreign-funded companies in Shenzhen have been ordered to sign collective contracts with their employees by Dec 5, the local trade union federation said on Monday.
Zhang Youquan, director of the legal affairs department of the Shenzhen Federation of Trade Unions (SFTU), said at a press conference that the firms, which include McDonald's, Carrefour and Ikea, should start negotiations with their employees within 10 working days (of Monday).
The talks should encompass such issues as pay, working hours, paid vacation, social security and welfare, and agreement should be reached by Nov 14, he said.
Contracts should then be signed before Dec 5, he said.
"Our proposal is protected by the law," Zhang said.
"Companies that fail to respond within 10 working days or turn down the offer will be regarded as violating the law," he said, without elaborating on what punishments those who break the law might face.
The federation will also publicly condemn any company that tries to delay the negotiations without good reason, he said, again without elaborating.
Employers should give due consideration to the rising cost of living when negotiating pay rises with their workers, he said.
"Basically the average pay rise should be based on GDP growth and the CPI (consumer price index)," he said.
Li Shaomei, vice-chairman of SFTU, said the latest push for collective contracts comes on the heels of US retailing giant Wal-Mart signing contracts with employees at its 108 unionized stores across the country.
"Wal-Mart has set an example, which is a milestone for collective agreements among foreign-funded companies," she said.
The federation will offer training, if required, to representatives of management teams and trade unions before they begin negotiations, she said.
According to figures from the SFTU, since collective negotiations were introduced to Shenzhen in 1995, more than 40,000 firms have signed contracts with more than 4 million employees.
Wal-mart became the first foreign-funded firm to do so in July, after 18 months of tough negotiations, Li said.
Olympic volunteers well-received at Beijing job fair, newspaper says
September 24th, 2008Job hunters with Olympic experience got a positive reception at a large-scale job fair here, Monday's China Youth Daily reported.
The fair on Sunday, the first after the Games, drew as many as 30,000 applicants.
More than 5,000 positions were offered by about 600 companies, including many big names such as China Life Insurance Company, Lenovo and Yum! Brands Inc.
Although not stated as a requirement, applicants with Olympic service experience were preferred by employers, the newspaper said.
An employee from Yum! who declined to be identified said that Olympic volunteers had a better sense of service, which companies needed.
China's Hainan Airlines Co. Ltd and Grand China Air Co. Ltd will recruit 300 Olympic volunteers as stewards and 50 as managers, said Zhu Yimin, President of Hainan Airlines and Grand China Air last week.
He said Hainan Airlines and Grand China Air will introduce an "Olympic air crew" on selected routes, carrying forward the "Olympic spirit and offering service of high quality to customers".
HK job market remains stable
September 19th, 2008HONG Kong's employment remained stable for the quarter ending August with unemployment at 3.2 percent and underemployment at 1.9 percent, the Census and Statistics Department of Hong Kong said yesterday.
Total employment rose by 13,100 to 3,546,300 from June to August while the labor force grew by 17,600 to an all-time high of 3,675,400.
The number of jobless people rose by 4,500 to 129,100 while the number of underemployed fell by 900 to 69,000.
Unemployment fell in the decoration and maintenance, communications and manufacturing sectors, while there were more jobless people in sanitary services, education services and welfare and community services sectors.
Underemployment falls were mainly seen in foundation and superstructure construction and retail trade sectors, offsetting the rises in the decoration and maintenance, and miscellaneous personal services sectors.
Hong Kong Secretary for Labor and Welfare Matthew Cheung said the unemployment rate has remained unchanged notwithstanding the expansion in labor supply. Cheung warned that there was no ground for optimism in the face of global financial turbulence.
"With the further downside risks to the already challenging external environment, the uncertainties clouding over the near term outlook for the local economy have increased," he said.
He added that the government will closely monitor the impact on job creation and employment while continuing to enhance training, retraining and employment services.
10 pilots told to pay $1.17m to leave airline
September 17th, 2008The courts have ordered 10 pilots of China Eastern Airlines to compensate their employer a total of nearly 8 million yuan ($1.17 million) for leaving their jobs, local media has reported.
The Wuhan Intermediate People's Court ruled on Thursday that each of the pilots was to compensate the airline's branch in Wuhan, capital of Hubei province, 700,000 to 1 million yuan, depending on their service term and the training programs they received, the Changjiang Times reported.
Zhang Hua, who was ordered to pay 700,000 yuan to the airline, told the paper that the ruling was of no surprise to him.
Still, he said he did not regret leaving China Eastern.
"I don't want to live under constant high pressure," he was quoted as saying by the newspaper.
"I want to work for a company that is humane and that has a relaxed atmosphere."
In May last year, 13 pilots of the Wuhan branch of China Eastern handed in their resignations and were asked to pay a total compensation of more than 100 million yuan. The employer claimed that the money was to compensate it for the investments it made to train the pilots.
In August, the provincial labor arbitration committee ordered the 13 pilots to pay more than 9 million yuan to compensate the airline for their departure.
Daunted by the large amount, three of the pilots reportedly withdrew their resignations. The remaining 10 pilots brought their case to the Qiaokou District People's Court.
The court later announced that the 10 pilots should compensate their employer a total of nearly 10 million yuan. The airline lodged an appeal to the Wuhan Intermediate People's Court, which made the final ruling this Thursday.
Zhang Qihuai, a legal expert with the China University of Political Science and Law, said he had told the pilots in a legal consultation that the compensation being ordered by the courts was reasonable, since the amount was about what the company had paid for training the pilots.
"Most State-owned carriers in China sign tenure contracts with pilots to prevent them from leaving the company," Zhang said.
Company officials in Wuhan and Shanghai declined to comment on the ruling on Friday.
China's visa rule to make hiring expats tough
September 13th, 2008China has begun tightening its work visa application process for foreigners to keep out people with a criminal record, but critics say the implementation of the provision is "ill-conceived" and will impede even Fortune 500 companies' ability to hire expatriate talent.
Under the amended rules, foreigners applying for - or renewing - work visas (Z visas) must additionally submit a certificate from a police station in their home country - and authenticated by the Chinese embassy in that country - declaring that the applicant does not have a criminal record.
Initially, the additional paperwork requirement will apply only for foreign workers in Guangdong, the booming province in southern China that's better known as the "world's factory floor". But given that Guangdong has always been a "laboratory" for China's economic and administrative reforms, the provision is certain to be implemented nationwide, reckon immigration lawyers and business consultants.
The new regulation may have been inspired by some recent instances of Chinese businesses being defrauded by foreign-national employees who (it was later revealed) had previous criminal records in their home countries, say lawyers.
In itself, the 'no criminal record' certification isn't an unreasonable requirement. "The motive (for the introduction of the new provision) is to put in place reasonable criteria for people to obtain a work permit," says Chris Devonshire-Ellis, senior partner at Dezan Shira & Associates, a professional services firm providing FDI, legal, tax, accounting and due diligence services for multinational corporations.
But there are "serious shortcomings" in the manner in which it has been implemented, he adds. "It will have a negative impact on the ability of foreign-invested enterprises in China to be properly managed, and a negative impact in the way foreign business people view China as being a reasonable place to work."
As a result of this provision, "it's going to be very frustrating for well-meaning businessmen and employers to get the right quality of senior executives and expatriate personnel into position in China," says Devonshire-Ellis.
Indians face 'discrimination'. In particular, notes Devonshire-Ellis, "certain nationalities, among them Indians, face discrimination in obtaining China visas purely on the basis of their passport."
Although this appears to be a haphazard situation, implemented differently across the country, China's administrative infrastructure appears unable to determine whether an individual is "undesirable" or a senior executive in a multinational. "This is becoming an area of concern and is damaging China's foreign direct investment environment," he adds.
There appears to have been "little or no dialogue" between Chinese immigration authorities and the international community about the implications of putting in place the 'no criminal record' regulation, says Devonshire-Ellis.
In some countries, like New Zealand, there is no such certification process in the first place. In others, such as the US, "there is no formal or well-defined procedure to obtain such a document."
In effect, China has invoked its domestic administrative system, which is based on the restrictive hukou (household registry) system, and imposed it on foreign nationals who apply for a work visa. Under the hukou system, a Chinese national's personal records are stored in their hometown, which is their place of birth. All requests to relocate in China or to engage in business are serviced by the local police station in the hometown, notes Devonshire-Ellis. "But such a procedure simply cannot be assumed to be in place in other countries, and in fact it largely isn't," he observes.
Complying with the new regulation is also fraught with logistical nightmares for those who are already working in China and need to renew their visas. "The request for a certificate from a police station in the applicant's country of origin ignores the fact many expats have worked overseas for years and may not have any contacts with their local police station in their home country," points out Devonshire-Ellis. "Second, it requires an expensive trip back home to secure such documentation."
In any case, in many countries, the administrative procedure to supply such a document does not exist. Even if it does, it's unlikely to be issued by "the local police station" in countries such as the United Kingdom, most European nations, and the US and Canada, where the registry of criminal offenders is maintained at a national, not local, level.
The latest work visa measure comes barely five months after China tightened the provision for securing business (F) visas and tourism (L) visas. In the run-up to the Olympics, and following the riots in Tibet in March, China introduced stringent provisions that still remain in place. Immigration lawyers in Shenzhen expect the F visa and L visa provisions to be relaxed a bit after the Paralympics in Beijing, but with greater monitoring to prevent their abuse.
China's efforts for labour balance
September 13th, 2008CHINA'S monetary policy will not shift substantially in response to the global downturn. But employers in China should increase wages by 10 per cent in order to attract workers as the labour surplus disappears.
These are among the rare insights opened, through China's leading business publication, Caijing magazine, into the economic advice the country's leaders are being given as they face multiple challenges.
Cai Fang, director of the Institute of Population and Labour Economics at the prestigious Chinese Academy of Social Sciences, has spoken to the magazine about his message to Premier Wen Jiabao and the State Council, China's cabinet, during a closed-door meeting with eight leading economists.
He said: "We talked about whether economic growth will slow, how to contain inflation and stimulate growth, and whether China should maintain its tight monetary policy."
China's economists, he said, "are split on the two major macro tasks: fighting inflation and stimulating growth. However, we generally agreed that monetary policy should remain as it is. We should neither loosen it nor tighten it further."
Cai said officials at the State Council were especially concerned about the extent to which the slowdown of gross domestic product growth -- from 11.9 per cent in 2007 to 10.4 per cent in the first half of 2008 -- will hurt employment. "Should we retain the growth momentum to ensure high employment rates?" This, he said, was his main focus. "The growth rate is flattening out, while unemployment is climbing."
In the last quarter, ending June 30, registered urban unemployment reached 4.1 per cent. Clearly it was rising, he said. Before this year, it was declining.
"A few years ago, China's registered unemployment rate didn't reflect the real situation because it excluded laid-off workers. But the number of laid-off workers has largely been reduced in recent years due to the Government's re-employment efforts. Now the registered rate is close to what it is in reality."
But in China, he said, "economic growth and employment are not closely related. One reason is that Chinese policy favours large size companies. The preference became even more obvious when the Government adjusted its macro-economic policies recently."
Companies receiving government backing, he said, "are usually enterprises with high profits, low emissions, low rates of pollution and less reliance on resources. In reality, they are big companies, especially state-controlled ones, equipped with better technologies."
His institute surveyed 17 industries and found that capital-intensive companies, most of which are large firms, contribute substantially to GDP growth but are not so impressive in terms of creating new jobs.
Last year, the control of credit was tightened in both quantity and quality. Better risk controls and higher earnings were required for lending, and that situation diverted loans toward larger companies and away from small ones because, he said, "lending to them became even riskier".
Most unemployment, he said, is structural rather than cyclical. Coupled with the low employment rate of college graduates, the rate even shows signs of rising.
Cai said private companies, most of them small and medium-sized, had played an important part in absorbing labour displaced by massive lay-offs from state-owned factories.
But "the current economic slowdown, however, has hit them hard. And statistics tend to miss unemployment in these sectors", with migrant workers not being registered at all.
Tight monetary policy was not good news for such businesses, he said. "Historically, it's hard for these companies to borrow from banks, and they turn to the market for financing." With the central bank issuing the commercial banks with firm instructions to tighten lending, the SMEs tend to borrow privately from "grey" sources, which "leads to skyrocketing interest rates".
Tax revenues rose rapidly in the first half of 2008, he said, so, in compensation for the adjustments required from vulnerable businesses, "it's widely agreed among scholars that we can cut tax rates a bit.
"There are needs for more government spending -- natural disasters hit China one after another, and we just hosted the Olympics. And it might want to set aside some money for a rainy day."
However, "nobody is speaking on behalf of SOEs and advocating low taxes".
China has no nationwide social security system, he says. Some provinces don't even have a province-wide social security net. "That leads to many migrant workers withdrawing from the social security system. Why? For instance, in the pension system, workers pay 8 per cent of their salary and companies match it."
In seasonal, labour-intensive industries, workers finish their terms and leave the job for good. But their social security benefits can't go with them. So they have to withdraw from the system, taking back their own contributions, while the company's contribution stays within the system.
"So there is no upside for workers to join the pension system, and for companies it creates a financial burden," he said.
"Officials from inland provinces complain that coastal provinces have seen a fast increase of social security funds because they not only siphoned labourers from inland but social security funds as well."
Cai said that migrant workers' insurance provisions should be portable and nationwide. When workers retired, they should be able to receive both their own contributions and those from their employers. "China's development has reached a stage where labour shortages are occurring, and the labor supply-demand equation is changing. That requires a rise in salary and other benefits."
He backed the new Labour Law that came into effect on January 1, and which has come under attack from some employers, saying wages should rise by some 10 per cent.
"I think we should stick with the new law," he said. "There are problems with enforcing it, which were not created by the law itself but by a lack of support measures.
"Companies feel overburdened, partly because of the inadequate social security system. This is not the fault of the Labour Law. If a company can't bear a modest rise, it is not competitive except as a sweatshop. We should let such companies die, if they have to."
In developing countries, he said, sometimes when laws are made to protect workers the result is higher unemployment. "The unlimited supply of labour in developing countries is to blame.
"India is one good example. Research shows that economic development levels in different parts of India are directly related to their labour policies, and those which have tight labour regulations often lag in economic development."
The reason that Cai backs the Labour Law is that labour in China is moving from a surplus to a relative balance. "There must be some kind of incentive to spur labour supply and attract workers," he said.
China's fourth-quarter job outlook weaker-Manpower
September 13th, 2008BEIJING, Sept 9 (Reuters) - China's employment outlook is dimming for the rest of 2008, but post-quake reconstruction will increase jobs in the west of the country, Manpower Inc (MAN.N: Quote, Profile, Research, Stock Buzz) said in a survey released on Tuesday.
A poll of 4,014 employers in nine major cities showed China's net employment outlook -- the difference between firms adding jobs and those cutting them -- was a positive 12 percent for the fourth quarter, the employment services provider said.
But the reading, which is seasonally adjusted, was down 3 percentage points from the third quarter and 1 percentage point from a year earlier.
Lucille Wu, managing director of Manpower Greater China, said job seekers in the services sector were most likely to feel the pinch as companies cut temporary workers after the Olympic Games, although the overall impact would be limited.
The survey's reading for the services sector was unchanged from the third quarter but was down 2 percentage points from a year earlier.
Wu said a slew of government measures, including more bank loans and tax breaks, to help the local economy recover from May's devastating earthquake in Sichuan would encourage hiring in western cities such as Chengdu and Xi'an.
Optimism among employers in Chengdu was at a record high, the survey showed.
Elsewhere, hiring prospects weakened across the Asia-Pacific, according to Manpower, while the U.S. jobs outlook fell to its lowest level since 2003 as growth slowed due to the still unfolding financial crisis. Please click on [ID:nN08468275] for a related story. (Reporting by Langi Chiang; Editing by Alan Wheatley and Ken Wills)
China state executive posts attract rising number of applicants
September 13th, 2008BEIJING, Sept. 12 (Xinhua) -- More than 2,700 people have applied for 16 executive positions of the centrally-administered state-owned enterprises (SOEs) open for public competition this year, the State-owned Assets Supervision and Administration Commission (SASAC) said.
The 2,745 applicants more than doubled that of those applying for last year's 22 posts.
Of this year's available posts, six received 200 to 300 applicants for each.
SASAC said the positions included three general managers, 10 deputy general managers and three chief accountants from different industries. They covered electricity, metallurgy, electronics, chemical engineering and trade firms.
China FAW Group Corporation, China Baosteel Group and China Southern Power Grid, all ranked among the world's top 500 companies, were also recruiting.
SASAC also said 383 applicants, 12 from overseas and four from Hong Kong, Macau and Taiwan, met the qualifications. They have been notified to sit for a written exam to be held soon.
Most qualified applicants have post-graduate degrees and are aged under 45, while 140 currently are heads of enterprises. In addition, 69, or 18 percent, have overseas working or study experience.
In 2003, SASAC started to recruit from both home and abroad. The agency hoped such managers could help improve the competitiveness of SOEs in the global market.
China's efforts for labour balance
September 12th, 2008CHINA'S monetary policy will not shift substantially in response to the global downturn. But employers in China should increase wages by 10 per cent in order to attract workers as the labour surplus disappears.
These are among the rare insights opened, through China's leading business publication, Caijing magazine, into the economic advice the country's leaders are being given as they face multiple challenges.
Cai Fang, director of the Institute of Population and Labour Economics at the prestigious Chinese Academy of Social Sciences, has spoken to the magazine about his message to Premier Wen Jiabao and the State Council, China's cabinet, during a closed-door meeting with eight leading economists.
He said: "We talked about whether economic growth will slow, how to contain inflation and stimulate growth, and whether China should maintain its tight monetary policy."
China's economists, he said, "are split on the two major macro tasks: fighting inflation and stimulating growth. However, we generally agreed that monetary policy should remain as it is. We should neither loosen it nor tighten it further."
Cai said officials at the State Council were especially concerned about the extent to which the slowdown of gross domestic product growth -- from 11.9 per cent in 2007 to 10.4 per cent in the first half of 2008 -- will hurt employment. "Should we retain the growth momentum to ensure high employment rates?" This, he said, was his main focus. "The growth rate is flattening out, while unemployment is climbing."
In the last quarter, ending June 30, registered urban unemployment reached 4.1 per cent. Clearly it was rising, he said. Before this year, it was declining.
"A few years ago, China's registered unemployment rate didn't reflect the real situation because it excluded laid-off workers. But the number of laid-off workers has largely been reduced in recent years due to the Government's re-employment efforts. Now the registered rate is close to what it is in reality."
But in China, he said, "economic growth and employment are not closely related. One reason is that Chinese policy favours large size companies. The preference became even more obvious when the Government adjusted its macro-economic policies recently."
Companies receiving government backing, he said, "are usually enterprises with high profits, low emissions, low rates of pollution and less reliance on resources. In reality, they are big companies, especially state-controlled ones, equipped with better technologies."
His institute surveyed 17 industries and found that capital-intensive companies, most of which are large firms, contribute substantially to GDP growth but are not so impressive in terms of creating new jobs.
Last year, the control of credit was tightened in both quantity and quality. Better risk controls and higher earnings were required for lending, and that situation diverted loans toward larger companies and away from small ones because, he said, "lending to them became even riskier".
Most unemployment, he said, is structural rather than cyclical. Coupled with the low employment rate of college graduates, the rate even shows signs of rising.
Cai said private companies, most of them small and medium-sized, had played an important part in absorbing labour displaced by massive lay-offs from state-owned factories.
But "the current economic slowdown, however, has hit them hard. And statistics tend to miss unemployment in these sectors", with migrant workers not being registered at all.
Tight monetary policy was not good news for such businesses, he said. "Historically, it's hard for these companies to borrow from banks, and they turn to the market for financing." With the central bank issuing the commercial banks with firm instructions to tighten lending, the SMEs tend to borrow privately from "grey" sources, which "leads to skyrocketing interest rates".
Tax revenues rose rapidly in the first half of 2008, he said, so, in compensation for the adjustments required from vulnerable businesses, "it's widely agreed among scholars that we can cut tax rates a bit.
"There are needs for more government spending -- natural disasters hit China one after another, and we just hosted the Olympics. And it might want to set aside some money for a rainy day."
However, "nobody is speaking on behalf of SOEs and advocating low taxes".
China has no nationwide social security system, he says. Some provinces don't even have a province-wide social security net. "That leads to many migrant workers withdrawing from the social security system. Why? For instance, in the pension system, workers pay 8 per cent of their salary and companies match it."
In seasonal, labour-intensive industries, workers finish their terms and leave the job for good. But their social security benefits can't go with them. So they have to withdraw from the system, taking back their own contributions, while the company's contribution stays within the system.
"So there is no upside for workers to join the pension system, and for companies it creates a financial burden," he said.
"Officials from inland provinces complain that coastal provinces have seen a fast increase of social security funds because they not only siphoned labourers from inland but social security funds as well."
Cai said that migrant workers' insurance provisions should be portable and nationwide. When workers retired, they should be able to receive both their own contributions and those from their employers. "China's development has reached a stage where labour shortages are occurring, and the labor supply-demand equation is changing. That requires a rise in salary and other benefits."
He backed the new Labour Law that came into effect on January 1, and which has come under attack from some employers, saying wages should rise by some 10 per cent.
"I think we should stick with the new law," he said. "There are problems with enforcing it, which were not created by the law itself but by a lack of support measures.
"Companies feel overburdened, partly because of the inadequate social security system. This is not the fault of the Labour Law. If a company can't bear a modest rise, it is not competitive except as a sweatshop. We should let such companies die, if they have to."
In developing countries, he said, sometimes when laws are made to protect workers the result is higher unemployment. "The unlimited supply of labour in developing countries is to blame.
"India is one good example. Research shows that economic development levels in different parts of India are directly related to their labour policies, and those which have tight labour regulations often lag in economic development."
The reason that Cai backs the Labour Law is that labour in China is moving from a surplus to a relative balance. "There must be some kind of incentive to spur labour supply and attract workers," he said.
Wang Qishan: China to provide more opportunity for foreign investment
September 10th, 2008China announced it would provide more opportunity for foreign investment, Vice Premier Wang Qishan said on Monday at the opening of the 12th Xiamen International Trade and Investment Fair in the southeast Fujian Province.
China will insist on its opening-up policy continuing to perfect the policies for the utilization of foreign capital to provide more spaces for overseas enterprises in the country.
Chinese vice Premier Wang Qishan (C) attends the opening ceremony of the 12th China International Fair for Investment and Trade (CIFIT) in Xiamen, a coastal city in southwest China's Fujian Province, Sept. 8, 2008. (Xinhua/Zhang Guojun)
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As one of the main forces for the country's development, foreign investment had brought capital, technology and management experience, among others. As China was the developing country that had attracted the largest amount of foreign investment over the past 16 years, more fields covering agriculture, manufacturing and services, were being explored, Wang said. Many international companies viewed China as their first choice.
Wang announced five policies for future investment services, covering promotion of the investment environment, better utilization of foreign capital and encouraging Chinese enterprises to invest in foreign countries, among others.
China will raise the service qualities of governments and guarantee a fair investment environment with a transparent legal system.
The government is encouraging foreign capital to flow into high-tech, modern agriculture, energy conservation industries and modern services to enhance the independent innovation and harmonious development. It will also encourage foreign companies to invest domestically through founding local offices or participating in the reforms of domestic enterprises.
In the post-Olympic Games period China would insist on the opening-up policy and peaceful development, Commerce Minister Chen Deming said.
"I believe every friend here at the fair will receive the opportunity and benefit from the peaceful rise of China."
The Xiamen fair has become an influencial platform for mutual investment that is welcomed by governments, intermediate agencies and enterprises.
"The country (China) is committed to meeting its World Trade Organization obligations, which should boost FDI (foreign direct investment) even more," said Alessandro Teixeira, World Association of Investment Promotion Agencies president.
"Sectors such as domestic commerce, financial services, insurance and tourism are being gradually opened up. Geographic restrictions on where foreign companies are allowed to set up operations are expected to be relaxed in the coming years," he said.
"China's foreign investment policy has come to a turning point, and preferential treatment for foreign capital has been in principle abolished with the exception of certain sectors including high-technology," said Shoichiro Toyoda, the third chairman of the Japan-China Investment Promotion Organization. Its1990 establishment by Chinese and Japanese leaders was to improve the investment climate and promote investment in China.
At almost the same time, the China-Japan Investment Promotion Committee was established as its Chinese counterpart. Currently, Minister Cheng serves as its chairman.
At the time, few Japanese companies had launched operations in China. During the 18 years since its establishment, the Japanese committee has provided support and information for Japanese firms intending to invest in China. It has helped companies deal with problems they encountered.
Currently, its member companies number more than 370. In addition, it has provided advice on more than 20,000 cases.
According to Chinese statistics, Japan's investment in China was decreasing. Japanese statistics, however, indicated the amount of investment, including reinvestment by companies operating in China, had not decreased. It had remained relatively unchanged, Toyoda said.
"In my view, there are four key elements that we should focus on for further promoting new investment in China. They are energy-saving and green technology, smaller companies, the development of Central, Western and Northeast China, and special preferential treatment," he said.
The four-day Xiamen fair features 2,500 exhibitors, 1,000 more than last year. It has attracted 74 nations, including America, Australia, Brazil, Italy and countries from Africa and the Pacific islands. In all, 445 organizations from 104 countries and regions attended. More than 50 countries and regions were holding seminars to introduce their investment environment.
New projects signed at the fair this year have been reported at more than 5,300, including 320 from overseas.
As China's only annual fair for promoting mutual investment, the Xiamen fair has become the world's largest expo of its kind.
More than 100,000 guests from 144 countries and regions and more than 3,000 international companies have attended the fair over the past 11 years. It has drawn 7.7 billion U.S. dollars in investment into China with more than 13,000 projects signed.
Fatter pay packets for Shanghai graduates
September 9th, 2008SHANGHAI university students who graduated in 2008 have an average monthly salary of 2,899 yuan (US$424) from their first job, ranking the highest among six major cities in the country and followed by Shenzhen and Beijing.
The average salary in Shenzhen, Guangdong Province is 2,816 yuan and 2,699 yuan in Beijing.
The average Shanghai salary is up 10 percent compared to last year, according to statistics cited by zhaopin.com, Shanghai Evening Post reported today.
The 2008 salary report compiled by zhaopin.com, a popular job hunter Website, indicated the growth rate of university graduate salaries in the city ranks second in China, just 1 percent behind Nanjing, capital city of Jiangsu Province.
Four other cities including Guangzhou and Beijing also experienced increases in average salaries for university graduates this year, according to the report.
The best paid graduates were usually those who majored in finance, high-tech, manufacturing, real estate and the consumer goods industry, the report said.
Those who majored in finance enjoyed the most rapid salary growth and have an average salary of 2,725 yuan. Graduates recruited by private enterprise also had a quick increase in salary but still start at 2,106 yuan.
Graduates who work for wholly foreign-owned enterprises have the highest starting salary of 2,957 yuan, but the lease growth rate, the report said.
The report said people working in marketing or product-related jobs experienced about a 10 percent increase this year but graduates in human resources and information and technology have taken a cut of 1 percent compared to last year.
The report also pointed out graduates with higher degrees can enjoy a higher growth in salaries this year. Masters degree graduates have had a 12 percent boost while college degree students only jumped 5 percent.
Advisors call for measures to raise migrants' salaries
September 4th, 2008Political advisors Wednesday called on the government to make greater efforts to raise migrant workers' salaries and ensure they have a better standard of living.
With more than 200 million such workers in cities across China, how to better protect their rights and interests has become a crucial issue, members of the country's top political advisory body said Wednesday in Beijing at a meeting on achieving more balanced development between urban and rural areas.
They also called for substantial measures to be taken to provide these workers with insurance for workplace injuries, better educational opportunities for their children and more affordable housing.
Li Zhuobin, a member of the Standing Committee of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), said migrant workers still face employment discrimination and poor access to public services.
Citing the construction industry as an example, he said migrant workers' salaries could be two-thirds or half that of their urban counterparts.
In other cases, employers refuse to hire workers without urban permanent residence permits.
"Many employers do not pay them on time," said Li.
"In sectors that hire a large number of migrant workers, such as construction, catering and entertainment, the government should be strict on implementing the salary deposit rule," he said.
The rule, introduced in May 2004 by the former Ministry of Labor and Social Welfare, requires construction companies to deposit a certain amount of money in a labor department bank account. The money is used to pay migrant workers who fail to receive their due salaries.
In addition, the training of rural workers fails to fully meet employers' requirements and the public employment service's efforts to help migrant workers find jobs are inadequate, he added.
Li suggested that preferential policies to promote employment should cover both urban and rural residents.
Shenzhen looks to fill 560,000 jobs
September 3rd, 2008Authorities in Shenzhen are looking to attract 560,000 workers from rural areas of Guangdong over the next five years in a bid to counter rising labor costs, a provincial official said on Tuesday.
"Shenzhen's ambitious plan is part of the province's double transfer strategy," Lin Yingwu, deputy director of the Guangdong labor and social security department.
"Other cities in the delta region will follow suit," he said
The aim of the strategy is to attract workers to the manufacturing centers of the Pearl River Delta, as well as relocating some production bases to areas with large workforces in a bid to reduce soaring labor costs, he said.
Four industrial parks, funded by the Shenzhen and local governments, have already been built in rural areas of Guangdong, the Nanfang Daily reported recently.
Shenzhen has signed labor cooperation agreements with 14 rural cities, and on Monday, 128 employers from the city offered about 40,000 vacancies, with monthly salaries ranging from 1,300 yuan ($190) to 2,500 yuan, Lin said.
Labor departments in Shenzhen and the 14 cities will work together to improve communications and facilitate the movement of workers, Guan Lingen, director of the Shenzhen labor and social security bureau, said.
Also, online interviews will be held wherever possible to eliminate travel costs, he said.
Li Qingqing, an associate professor of economics at South China Normal University, said the double transfer strategy will be beneficial to all the cities involved.
"Under the plan, delta boomtowns will no longer need to worry about the shortfall of laborers, while the growing rural population will be able to find better ways to make a living," she said.
Job training for 100,000 students
September 2nd, 2008Twelve vocational high schools will be built in the Pearl River Delta over the next few years to train up to 100,000 students from less-developed areas of Guangdong to meet the soaring demand for skilled workers in the region, a local education official said yesterday.
A Nanfang Daily report quoted Luo Weiqi, director of the provincial education department, as saying: "The development of vocational education will be a priority over the next few years.
"A dozen vocational schools, each with 5,000 to 10,000 students, will be set up, and secondary schools in better developed areas of the Pearl River Delta region will be encouraged to work with their counterparts in less developed regions."
The delta region has long faced a shortage of labor, and skilled workers are now in particularly high demand as the region seeks to switch focus from labor-intensive manufacturing to value-added industries.
In contrast, there is a surplus of unskilled workers in the northern, eastern and western regions of Guangdong.
Sending students from poorer regions to train in the Pearl River Delta is, therefore, a win-win situation, Luo said.
Lai Hongying, a publicity official with the education department, said that by 2011, the province aims to train 2 million students a year, up from 1.3 million last year.
Under the same timeframe, it also aims to recruit 600,000 new students a year, up from 540,000 last year, he said.
Polytechnics and universities will also seek to attract more students in the areas of science and technology to provide a richer human resource for the development of a modern industrial system, he said.
In a bid to achieve our goals, we will improve working and living conditions for teachers in rural areas, and go "all out" to attract top academics from home and abroad, Lai said.
More workers get legal aid
September 1st, 2008More workers engaged in disputes with their employers will get access to legal aid as a result of new guidelines issued by China's top trade union body.
According to the document, which was released on Monday by the All-China Federation of Trade Unions (ACFTU), unions at county level or above will set up legal aid agencies to help workers resolve labor disputes with their employers.
The agencies will also help them safeguard personal and property rights related with the disputes.
Workers can apply for legal aid from the agencies even if they are not union members, Xie Liangmin, deputy director of the federation's law department, said.
However, they should be in "financial difficulties" in order to qualify for free legal aid.
At present, each province has different criteria to judge workers' financial situation. In some areas, people covered by minimum social security can qualify for legal aid.
The document also stipulates that workers who do not meet the criteria can still apply for legal aid if their rights are "seriously" violated.
Rural migrant workers who have problems in getting payments or compensation for occupational injuries from their bosses are qualified to receive free legal aid regardless of their financial situation.
"Many workers don't have adequate knowledge of laws and are often discouraged by lengthy legal procedures," Xie said.
"Legal aid agencies will do their best to help the workers use legal weapons to safeguard their rights and interests."
According to statistics provided by the ACFTU, trade unions in China had established 6,178 legal aid agencies by the end of last year, in which they accepted 46,000 cases involving lawsuits and helped to solve 29,000 of them.
"Trade unions started to offer legal aid in 1992," he said.
"The new document will guarantee the status and funding of legal aid agencies."
Chu Junhua, a lawyer with the Beijing Workers' Aid Center, said the number of workers applying for legal aid has increased sharply in recent years.
China loans more to small businesses to boost employment
August 25th, 2008SHANGHAI (AFP) — China's central bank has more than doubled the amount entrepreneurs and small businesses can borrow as part of efforts to boost employment, officials said.
The maximum amount that can be loaned to individuals for business purposes was raised to 50,000 yuan (7,300 dollars) from 20,000 yuan, the People's Bank of China said in a statement posted on its website late Monday.
The limit on loans to labour-intensive small businesses was doubled to two million yuan from one million yuan, according to the notice distributed to local authorities and banks earlier this month.
"(We) need to enhance the policy support for labour-intensive small enterprises, prompt them to hire more jobless people," the central bank said.
Some small businesses in China have been forced to shut down after being hit by slowing export growth and the government's tighter credit conditions aimed at fighting inflation.
The large number of small businesses going bankrupt -- many of them focused on labour-intensive products for export like textile and toys -- has raised unemployment and concerns about possible social instability.
Beijing has long said the official unemployment rate remains below five percent.
HK jobless rate declines to lowest
August 19th, 2008HONG Kong's employment continued to improve from May to July with the jobless rate dipping to 3.2 percent, the lowest level in a decade, according to latest statistics of the Census and Statistics Department released yesterday.
Declines in the jobless rate were recorded in the construction, transport and import-export trades from May to July compared with April to June, according to the department.
Total employment rose by 1,400 to 3,53 million while the labor force surged by 4,500 to nearly 3,66 million.
From May to July the number of jobless people rose by 3,100 to 124,600 while the number of underemployed grew by 2,100 to 69,900.
The department's data also showed the underemployment rate remained stable at 1.9 percent from April to July.
Declines in the underemployment rate were mainly recorded in the decoration and maintenance, welfare and community services and sanitary services sectors, offsetting rises in the foundation and superstructure construction, and amusement and recreational services sectors.
The total labor force grew mainly due to fresh graduates and school leavers entering the job market, the department said.
With a relatively satisfactory absorption of these newcomers and increased job opportunities in the construction sector, the number of unemployed people only recorded a mild rise.
While welcoming the latest fall in the jobless rate, Secretary for Labor and Welfare Matthew Cheung said the Hong Kong government would do its best to promote employment on all fronts and help those adjusting to the increasingly knowledge-based economy through training, retraining and skill upgrading.
Surplus labor pool shrinking
August 14th, 2008China's labor market is in the pincer grip of dwindling surplus labor on one hand and growing unemployment on the other as a result of mass closures of outdated factories.
Apparently contradictory, these two rising trends have come to define the labor market of late. Employers are finding it difficult to find suitable workers and employees are scratching heads in their search for ideal positions.
In terms of labor supply, which has long been seen as a factor in the nation's economic miracle, China has already entered a complicated era of a dwindling workforce and a shortage of skilled workers.
But don't panic.
Cai Fang, a senior think tank economist from the Chinese Academy of Social Sciences, assured the Chinese leadership while correcting the widely accepted perception that China's labor supply is still endlessly abundant.
According to some economists, the number of surplus laborers in rural areas alone surpasses 150 million, equivalent to half of the US's total population.
But Cai insisted that this figure was inaccurate. He said 52 million would be a more realistic estimate.
Cai reported the research result when China's highest leaders lent their ears to the country's top-level economists in July to find solutions to the current economic headaches.
"Our research finding has revealed that surplus labor is far less than we expected," said Cai, who is also a member of the Standing Committee of the National People's Congress.
The number of surplus laborers is declining in rural regions. Cai assured the leadership, currently puzzled by rising inflation, energy supply and possible economic slowdown, that by 2020, China's labor supply would increase at an encouraging pace.
To ensure a healthier economy, Cai said China needs to upgrade its economic structure and further improve the treatment of laborers and equip them with new skills and knowledge.
As a result, the pro-business institutional and economic measures were introduced. And the companies involved, especially those in manufacturing, energy, information technology and agriculture, may get the lion's share of R&D investment.
But these measures, which are aimed at sustaining this economic growth miracle, cannot necessarily lead to rosy employment prospects, especially for the poor. And since last year, the government has been determined to close the labor-intensive but energy-crunching factories. The closure plan will be extended to 2010.
The impact is obvious as many of China's factories are labor-intensive. This is causing and will continuously result in unemployment, said Liu Junsheng, a senior researcher from the Labor-Wage Institute affiliated to the Ministry of Human Resources and Social Security.
The economic growth rate has slowed to 10.4 percent for the first half of this year, from 11.5 percent during the same period last year. The 1 percentage point drop means a loss of about 1 million jobs, Liu said.
"If the trend continues in the coming months, more workers will lose their jobs," said Liu.
China created 6.4 million jobs in the first half of the year, which represented 64 percent of the government's target of generating 10 million new jobs in 2008. Behind the figures lies the harsh reality: employment is not only a longstanding problem for job hunters but also a new headache for employers.
Finding a job is challenging in China and this year, has been extremely hard, as the country has experienced so many unexpected events.
The earthquake and snowstorms have closed down some enterprises. On top of that, at least 5.59 million students have graduated from colleges this year, 13 percent more than last year, and they face unprecedented pressure in the job market as about 700,000 graduates, who could not find work last year, will compete with them for employment.
Along with the steady rise in labor costs, factories and companies also face difficulty in finding "suitable hands" to feed the vacancies as some job hunters lack training. And for export-oriented companies, the appreciation of the yuan has exposed them to difficulties in expanding business.
Generally China has had strong economic growth but this has not been matched by equally strong job creation.
51job Chinese Recruiter Lowered
August 13th, 200851job Inc.'s (JOBS) financial results for the second quarter showed a lower net profit margin due to higher sales and marketing expenses and a higher tax rate. Both its revenue and EPS missed the market consensus.
Although 51job continues to have the highest brand recognition in the online and offline recruiting markets in China, the leading position hasn't gained any competitive advantage for 51job to improve its profit margin. Therefore, we are downgrading the stock from Buy to Hold.
China has 253 million internet users as of the end of June 2008. It has approximately 750 million workers now and more and more companies of different size begin to use low-cost online recruiting. This is a very positive tail wind environment in which to operate. Additionally, it is estimated that revenue of online recruiting services in China will reach RMB 2.63 billion in 2011. According to estimates, revenue of online recruiting services will amount for 45.3% of the total recruiting market in 2010.
Through a targeted sales and marketing strategy, 51job has been focusing on further building the '51job' brand as the 'one-stop' human resource services provider. Now 51job is the most famous brand in the recruiting market in China and this position has helped the company enter more profitable second-tier cities in China.
Using a P/E multiple of 18.2x our fiscal year 2009 earnings per ADS estimate of $0.70 yields a target price of $12.75, which can reflect company's great growth prospects, in our view.
Beijing bar boss recruits Sichuan students
August 12th, 2008A businessman in Beijing has given fresh hope to a group of young women from Sichuan following the tragedy of the May 12 earthquake.
Singaporean Danny Chang, who has lived in China since 1997, opened a new bar "1/5" in east Beijing's embassy area early last month.
"I was wondering what a businessman like me could do to help, apart from just donating money," the 38-year-old said at his bar Monday.
Then a friend from Chengdu came up with the solution, he said: hire people from Sichuan.
"I thought it was really a good idea, so I flew to Chengdu immediately," he said.
His friend took him to a job fair at Sichuan College of Education, where lots of students were looking for jobs.
After chatting with dozens of candidates, Chang chose 12 young women - mostly third-year students majoring in tourist management - and offered them one-year internships.
But the recruitment process was not all plain sailing for the generous bar owner.
With his left arm tattooed with a totem pole and his right draped with a dozen silver bracelets, many students mistook the 1.9-m-tall Chang for a gangster.
Henna, a 22-year-old from Deyang, Sichuan, who managed to land one of the jobs, said Monday: "At first, we all thought he was a mafia boss. Some of my friends even told me not to go, because they thought it might be a trap," she said.
But Chang said he wanted to be honest and open with the candidates, which was why he did not cover up his arms.
As long as the applicants met the basic criteria, the jobs were offered on a first come, first served basis, he said.
"I was there to help people, not to be picky. If you have passion, you're qualified," he said.
The 1/5 interns work eight hours a day, six days a week. They can earn up to 1,000 yuan a month and also get free accommodation and meals.
But the internships are not about money or benefits, Chang said. They offer the girls the chance to learn about the industry and get some really useful work experience.
"They'll learn about cash flow, hosting, bar tending and service, which are all really useful skills," Chang said.
To help them acclimatize, Chang said he has also taken his newest workers out on shopping and sightseeing trips, and even to a club one Sunday night, his only day off.
He said he was impressed at how quickly some of them had picked up English, something he attributed to the nights they spent chatting to the bar's foreign customers.
"They spoke little English when they arrived, but they are getting much better.
"In six months' time, they'll be confident enough to chat with people from anywhere in the world," he said.
Soaring ad income boosts Sina's profit
August 8th, 2008China's biggest Web portal Sina Corp reported its profit jumped 74 percent in the second quarter of this year backed by soaring advertising income.
Its net income grew to 25.2 million U.S. dollars, or 42 cents a share, and its revenue soared 53 percent to 91.3 million U.S. dollars in the period, beating its estimate of 90 million dollars, Sina said yesterday.
The Shanghai-based company's online ad income grew 58 percent to 64.9 million dollars and non-ad revenue rose 42 percent to 26.4 million dollars.
"We are very proud of our record revenue and earnings in the second quarter. Our online advertising business in China, in particular, continues to be robust, growing 58 percent year on year, and was a major driving force in allowing us to achieve a net income growth of 74 percent year on year," said Charles Chao, CEO of Sina. "We expect Sina's advertising momentum to further accelerate in the third quarter, as we are prepared to provide an unprecedented online media coverage of the Beijing Olympic Games."
Sina predicts its third-quarter revenue between 100 million dollars and 104 million dollars, with ad income at 75 million dollars to 77 million dollars.
Credit Suisse said in a report that Sina's ad business will continue to grow next year backed by its status in the industry, excellent sales team and brand value.
China's 51job Q2 net profit down 37.8 pct on soft demand, costs
August 7th, 2008BEIJING (XFN-ASIA) - 51job Inc (NASDAQ: JOBS) said second quarter net profit fell 37.8 pct year-on-year to 2.8 mln usd on softening market demand for recruitment services and higher operating costs.
The Chinese human resources online services firm said second quarter revenue increased 4.2 pct to 31.9 mln usd while operating costs rose 16.8 pct to 12.3 mln.
Earnings per share stood at 0.10 usd.
Rick Yan, president and chief executive officer of 51job (nasdaq: JOBS - news - people ), said hiring by users of its service was sluggish in the second quarter, amid higher labor costs and slower economic growth.
'We expect recruitment activity in the third quarter to further moderate as we believe regulations
instituted by the government for the Olympic Games will restrict normal business practices for companies in Beijing and indirectly affect businesses nationwide,' Yan said.
The company has a third quarter revenue target of 29.9-31.3 mln usd.
(1 usd = 6.8 yuan)
Survey: More Shanghai people unhappy about income
August 6th, 2008More citizens of China's eastern metropolis of Shanghai were not satisfied with their salaries and may postpone buying houses or cars, a survey shows.
The income index for the second quarter of this year set a record low of 114.8 points, 3.8 points lower than that of the first quarter and 7.5 points lower than the last quarter of 2007, according to the survey on consumption confidence conducted by Shanghai University of Finance and Economics (SUFE).
Among the 1,000 surveyed, 13.3 percent said their income shrank over the past year, 4.4 percent higher that that of the first quarter. People's employment expectation index dropped by 23.5 to stand at 84.7 points, and 35.9 percent of the surveyed were pessimistic about job opportunities in the second half of the year.
In addition, 62.6 percent Shanghai citizens thought it was not a good time to buy houses right now, and 55.7 percent would not consider buying one this year.
The survey also shows that about half of the surveyed were negative about buying cars either now or in the second half of the year.
However, official statistics showed that the annual per capita disposable income in Shanghai's urban areas last year increased by 14.3 percent as against that of 2006, and that in rural areas increased by 11 percent year on year.
The Chinese stock markets have fallen drastically since October last year, while the consumer price index has continued to rise, both hitting people's incomes, according to Xu Guoxiang, professor of economics with SUFE.
Business as usual in Chengdu
August 5th, 2008After the May 12 Wenchuan earthquake in Sichuan province, wives would ask their husbands who had to go to Chengdu on business to take biscuits, instant noodles and water because they believed the city must have been battered by the quake and did not have enough food or clean water.
As a matter of fact, about one month after the quake, cinemas, museums, libraries, concert halls, restaurants and bars in Chengdu had reopened and were back to normal.
The average occupancy rate of Chengdu's star-rated hotels has risen to 60 percent and some have even reached 80 percent, higher than before the quake, said Deng Gongli, chief of the city's tourism administration.
The city's real estate, tourism, investment and retail sale sectors have also picked up the pieces.
In June, sales at famous retailers in the city such as Wangfujing Department Store, Ito-Yokado, Suning Appliance and GOME Electrical Appliances Holdings picked up, reaching between 80 and 90 percent of their pre-quake levels.
Twenty-three foreign-funded enterprises have registered in Chengdu after the earthquake, with an investment of nearly US$134 million.
Zhou Mi, deputy chief of the Chengdu committee for the promotion of investment, said: "Chengdu remains the commercial center of southwestern China."
Ge Honglin, mayor of Chengdu, describes Chengdu as a vital economic hub, an inland city with great potential for economic growth as China promotes the development of its western areas.
Land of abundance
Chengdu is traditionally known as the "land of abundance" thanks to the construction of Dujiangyan, the world's oldest irrigation project still in operation.
Two millennia ago, the Chengdu plain suffered from incessant flooding of Minjiang, a tributary of the Yangtze River, during the summer, while it was stricken with drought in the winter.
Li Bing, governor of Sichuan at the time, started harnessing the river by launching the Dujiangyan Irrigation Project around 256 BC.
When the project was completed, it fed a grid of canals that irrigated 160,000 hectares of arable land on the Chengdu plain. That area has since increased to 670,000 hectares.
The plain has stayed more or less free of floods and drought for more than 2,000 years, and has earned Sichuan the reputation of being a "land of abundance". The Chengdu plain has remained one of China's most important agricultural regions for centuries.
In the absence of a dam, experts have hailed the project as one of the world's most impressive hydraulic engineering projects.
Together with Mount Qingcheng, the project was listed as a World Cultural Heritage Site in 2000 by the United Nations Educational, Scientific and Cultural Organization (UNESCO).
Mount Qingcheng, 16 km from Dujiangyan, which is known as "the most tranquil place under heaven," is the birthplace of Taoism, China's only indigenous religion.
Chengdu has been a land of abundance throughout history because of its developed agriculture and lack of conflict. Located in the Sichuan Basin and surrounded by rolling mountains, invading troops found Sichuan inaccessible in ancient times.
The city is famous for pandas, romantic poets, spicy hotpot and, more recently, bars and a relaxed atmosphere.
"It is a mix of Frankfurt, Paris and Chicago," Mayor Ge said.
Ge, a former vice-president of Shanghai-based Baosteel Group, one of China's largest State-owned enterprises, says his last job trained him to think like an entrepreneur. In fact, the Shanghai native has on many occasions acted as Chengdu's main PR man.
He has jumped on opportunities to promote the city to foreign investors, attending the American Chamber of Commerce in China's annual dinner last year, the only mayor to be present. At the 30th Anniversary of the Canada-China Business Council, he gave a lecture and held several meetings with Canadian businesspeople.
Ready for change
Ge is confident that as the world gets increasingly flat, economically speaking, inland Chinese cities such as Chengdu will play an increasingly important role in China's economic development. For the past several decades, coastal cities have flourished thanks to convenient transportation. Now, as modern technology and industry play a more important role, inland cities are in a good position to develop.
Ge is trying to prepare Chengdu for this change.
The city's greatest advantage, he says, is human resources. While factories in many coastal cities suffer a shortage of skilled workers, Ge says Chengdu has made vocational education one of the top priorities of the city's policymaking.
"I am really concerned about training 'grey collar' and 'blue collar' workers," he says.
In addition to stipends from the central government, the local government offers extra subsidies to workers and their children living in the Chengdu suburbs so they can receive technical training. The subsidy will cover all school costs, and in some cases, even family living expenses.
The local government encourages high school students to attend vocational schools if they fail to enter college. In December, the city spent 350 million yuan (US$51 million) to build a vocational school. The school, which will begin recruiting students in September, plans to send over 10,000 technicians per year to Chengdu and beyond.
Chengdu aims to become a base for the information technology, automotive and food processing industries. A vast number of skilled workers will be needed to fill the gap. According to its initial plan, the school will offer training courses and cooperate with enterprises to supply talent to enterprises.
A clean city
Apart from the talent pool, Chengdu is trying to build itself into a place that is suitable to live in.
Ge is proud that nearly all foreign embassies have situated their offices in western China in Chengdu. "They chose it because they feel comfortable living here," he explains, adding that Chengdu aims to be one of the cleanest cities in China.
According to Ge, almost all the buses and taxies in the city burn gas instead of oil to reduce pollution. By 2009, the city expects to safely burn all the rubbish, instead of using landfills. It has also moved major factories out of the city, and is generating electricity with water, instead of burning coal.
In 2007, the city government spent more than 5 billion yuan to build over 30 sewage water processing facilities. Efforts to improve air quality have also paid off: 311 days last year had good air quality. The egret, a rare bird that had long been unseen in the city due to heavy pollution, has recently returned, according to a CCTV report.
"We want to be the city with the best environment in China, and I think we are well on the way to achieving this," Ge says.
The city's GDP reached 332 billion yuan in 2007, up 15.8 percent year-on-year, while the per capita income of urban residents surpassed $4,000. Ge aims to increase the disposable income of urban residents by 8 percent, and rural residents by 10 percent annually.
Ge says strong foundations have already been laid, and that Chengdu's future looks bright.
"When you have the human resources and a suitable place for people to live, enterprises will come and see whether there is a market here for them," Ge says.
Jobs aplenty but flexibility the key
August 4th, 2008HUMAN resources companies have poured into China in recent years looking keenly at the robust economy and the shortage of talent in the market.
Randstad, the second largest HR solution provider in the world, launched a flexible staffing business in China recently because it saw the market could potentially create an additional 1 million new jobs annually in the next three to five years.
A professional flexible staffing business which sends staff to employers who need temporary employees has to be an official employer of the workers and has to take on all the responsibilities for the employees, including training, professional development and other benefits.
People in China tend to confuse flexible staffing with payrolling, which is the predominant business for staffing companies such as Fesco which offers staff for longer periods.
In the flexible staffing business, workers are sent to different client companies to undertake temporary work, usually for weeks or months at a time.
"China is in the early stages of flexible staffing. In Europe, an average of between 10 percent and 25 percent of the workforce are flexible workers managed by staffing companies," said Paul van de Kerkhof, Managing Director of China operation of Randstad.
The service allows employers to use temporary workers to offset dips in productivity in peak and low seasons.
While the annual revenue created by Japanese staffing companies each year is US$30 billion, in the US it reaches US$80 billion and in Europe is worth US$90 billion.
Some Chinese companies, in an effort to circumvent more stringent labor laws introduced this year, have suddenly fallen in love with flexible staffing, Randstad said.
And some international companies have found that operating flexible staffing is extremely tough in China because of regulatory barriers.
Current employment laws require companies, including staff providers, to sign a minimum two-year contract term with employees, which makes it hard for staff providers whose employees have to handle short-term assignments, usually just a few months or even weeks.
"We are working with Chinese regulators to come up with more tailored regulations that support the flexible staffing market," Kerkhof said.
Randstad plans to recruit 100 secretarial staff to fill temporary assignments for clients by the end of this year.
"We believe this is the right move for us because we see the same trend happening in China as happened in other markets: Both workers and companies are calling for more flexibility instead of just job security," Kerkhof said.
Randstad set up its first Chinese office in Shanghai in 2005 and linked with Talent Shanghai Co Ltd in 2006 in which it held a 70-percent stake.
Now it owns seven branches in Shanghai, Beijing and Suzhou with 230 staff members, dealing in flexible staffing, pay rolling and search and selection business.
Executive searcher DHR International, one of the 10 leading executive search companies in the world, has big ambitions for its role in the fast-growing Chinese market.
The company runs an office in Shanghai and will open a Beijing office this year. It expects that revenue will triple in China this year.
"We can serve the Chinese market from the Shanghai and Beijing offices," said Christine Greybe, managing director of DHR International Asia.
The company's concentrates on headhunting senior executives for leading global companies involved in financial services and advanced technology, health care and retailing.
"A lot of our demand is coming from international companies, which account for 85 percent of our clients, but we are also starting to serve Chinese companies that are expanding internationally," said Eric Dieny, executive vice president of DHR International Asia.
Dieny, who has been living in China since 1982, is in charge of the Shanghai office.
"The Chinese companies we serve now are young but very aggressive and many of them are clustered in high-tech industry," Dieny said.
He said their Chinese clients have funding, especially from venture capital firms, and they try to attract senior executives to help them grow into a giant company.
"Senior executives in China move very quickly but those who change jobs frequently are not great value for us," Dieny said.
Zhaopin.com Gains Investment From Macquarie Capital, Seek
August 2nd, 2008Macquarie Capital and Seek, one of the largest Australian recruitment Internet companies, have jointly announced plans to invest money into the Chinese online job recruitment website Zhaopin.com, which was started by expatriates over ten years ago.
Macquarie will buy a 29.1% stake in Zhaopin.com, while Seek will pay USD45 million to increase its stake from about 25% to near 43% on a fully diluted basis. Early in 2006, Seek invested USD20 million into Zhaopin.com.
Liu Hao, CEO of Zhaopin.com, is quoted by the Reuters that this round of investment will meet the demand of Zhaopin.com for future development. Liu says that the investment is only a financial investment and Macquarie Group and Seek will not participate in the operation of the company. Zhaopin.com will maintain long-term independent decision-making power.
According to Zhaopin.com, the finances will mainly be used to hire new workers and to supply better services to customers, but it will not be used for acquisitions. In addition, it will expand its business in China's second-tier cities is the company's another focus.
Arizona lost jobs to China
July 31st, 2008Arizona lost 43,300 jobs to China between 2001 and 2007, according to a study by the Economic Policy Institute, based in Washington D.C.
The biggest job losses were in the computer and electronic products manufacturing industry, where nearly 18,000 workers were cut, the study says.
Rapidly growing imports of computers and electronic parts accounted for nearly half of the $178 billion increase in the trade deficit between 2001 and 2007, the survey shows. By contrast, the U.S. has a $15 billion trade surplus with the rest of the world in advanced technology products.
Nestle delivery workers end strike
July 30th, 2008Nestle workers ended their strike this morning after a deal was reached with management over wages.
Workers said they accepted the company's offer and resumed work before 10am. Under the deal, the commission for drivers and workers delivering milk will increase by 6.5 percent, the workers said. Drivers and workers delivering ice-cream will get HK$46 and HK$36 respectively for every HK$10,000 worth of goods transported.
The workers will hold further discussion with the company over their basic salary by the end of the year. Hans-Peter Edelbluth, Nestle's head of ice-cream and chilled products unit (Greater China) said that the company was aware of inflation and that it would offer a package that would satisfy its employees.
CNPC will cut 5% of workforce
July 28th, 2008China National Petroleum Corp (CNPC), the country's largest oil and gas producer, plans to cut 5 percent of its workforce over the next three years due to soaring labor costs.
CNPC General Manager Jiang Jiemin announced the planned job cuts at a recent annual meeting of company executives in Yan'an, Shaanxi province.
Analysts said the job cuts would be an effective way for CNPC to control its costs.
According to CNPC statistics, its staff totaled 1.67 million last year, so the move would result in a job cut of 80,000 people.
CNPC's job-cut plan came after it saw a large fall in earnings this year. The company's listed arm PetroChina's first-quarter profit fell 31.5 percent, as refining losses and windfall taxes cut its earnings from record crude prices.
CNPC earlier said it would cut office costs and spending on entertainment and travel by at least 10 percent this year.
It will not approve rental or purchase of luxury cars or construction of new buildings or hotels. It will also limit spending on parties and ceremonies and cut back on meetings and overseas trips.
According to China Petroleum and Chemical Industry Association (CPCIA), in the first half of the year, refineries under CNPC and Sinopec incurred 57.1 billion yuan ($8.37 billion) of losses, 47.9 percent more than a year earlier.
The country's largest refiner Sinopec earlier said its net profit for the first half would decrease by over half, as the gap between high crude prices on the international market and the relatively low prices of refined oil products domestically has put its refining business deeply in the red.
The government in June raised the prices of gasoline and diesel by 1,000 yuan per ton. But analysts said the move could not put domestic refiners back in the black.
According to Liu Gu, an analyst with Guotai Jun'an Securities in Shenzhen, Sinopec would suffer 101 billion yuan in refining losses for the full year. As for PetroChina, which has a lower refining capacity than Sinopec, the loss would be around 80 billion yuan for the full year.
Last year, CNPC lost 36.2 billion yuan in its oil refining and processing businesses, according to company statistics.
In 2007, CNPC spent about 100 billion yuan on oil prospecting and another 32.2 billion yuan on oil refining projects in a bid to ensure domestic supplies.
Last year, CNPC processed 120 million tons of crude oil, an increase of around 6 million tons over the previous year.
China's increased hiring bucks regional trend
July 25th, 2008More companies in China expect to increase headcount this quarter, bucking a downward trend in other Asian markets, a new Hudson survey has revealed. Despite the fall in hiring expectations, however, employers have no plans to lower salaries for new hires.
In a report released Thursday, human resource consultancy Hudson said its survey recorded falls in hiring expectations among employers in Hong Kong and Japan in the third quarter of 2008. The report surveyed over 2,600 key employment decision makers from multinational organizations in all major industry sectors in China, Hong Kong, Singapore and Japan.
Some 42 percent of Hong Kong respondents expected to bring in new hires this quarter, down from 57 percent in the previous quarter. In Japan, this number dropped from 55 percent to 46 percent.
In Singapore, 43 percent of those polled expected to see increased hiring this quarter, compared to 49 percent in the previous quarter.
However, hiring expectations rose in China as 55 percent of respondents indicated plans to increase headcount, up from 52 percent in the last quarter.
The Hudson report also noted that China's banking sector has not been badly affected by the U.S. subprime fallout, and the Chinese economy remains buoyant in the lead up to the Olympics.
Salaries remain untouched
Despite the bleak economic environment, Hudson noted, the majority of companies said they were unable to negotiate lower salaries for new hires, and salary inflation remained an issue for employers.
China's employers were the least likely to be able to negotiate lower salaries, with just 8 percent reporting success in doing so, the study found.
Hong Kong had the highest proportion of respondents negotiating lower salaries, but at 13 percent, the figure was still low, said Hudson.
In Singapore, just 10 percent of respondents were able to negotiate reductions in salaries.
Mike Game, CEO of Hudson Asia, said in a press statement: "There is still a shortage of talent in many areas and employers have little scope for reducing salaries for new hires."
Meanwhile, the high staff turnover experienced by employers in the last few years did not show any significant improvements, with only a third of respondents reporting a drop in turnover rates.
In China, 29 percent of respondents reported a reduction in turnover over the last year, suggesting that employees were still confident about finding new jobs, Hudson reported. The response was the same in Hong Kong.
In Singapore, 34 percent of respondents indicated a fall in turnover over the past year. At 39 percent, Japan had the highest turnover rate among respondents from the four economies, the Hudson study found.
Microsoft China Covets IBM Customers
July 24th, 2008IBM (NYSE: IBM), the IT giant that has been making money with utmost concentration in China, now finds that it is facing a fierce combat with archrival Microsoft Corporation (Nasdaq: MSFT), which is attracting talents from the former with higher wages. Also gone are customers IBM has gained after years of hard work.
Interestingly, software tycoon Microsoft seldom had face- to-face conflicts with IBM in the past when it has been caring its own businesses. However, a headhunting war has broken out between both sides in the Chinese market. The targets they are scrambling for are mostly project managers or consultants with rich customer resources.
A middle-level manager of IBM, who earns CNY 40,000 a month, will get more than CNY 60,000 when he choose to work for Microsoft. At a party of old-time colleagues, an IBM employee finds out that his former partners are still project managers or consultants. The difference is that they have hunted new jobs at Microsoft.
IBM's project consultants need to directly talk with customers, communicating information on setup, maintenance, and usage of complex system framework, as well as equipment. The customer resources are what Microsoft is greatly interested, because the market has stable revenue sources, and produces huge profits, and fewer price wars.
Selling operating system and office software will still be pillar businesses of Microsoft, but it is not enough for the software titan in the Internet era. Internet services are Microsoft's focus in the future. The company will shift from personal applications to business software, a territory of other three magnates, namely, IBM, SAP, and Oracle Corporation (Nasdaq: ORCL).
Microsoft's enterprise application platform debuted the American market in March 2008. When related products appeared at the release conference in Beijing on March 13, the company organized a super large lecture with 7,000 attendants in Beijing Workers' Indoor Arena.
An analyst points out that Microsoft needs to pay attention to two affairs in the post-Gates era: the acquisition of Yahoo Inc., and the development in the enterprise software market.
So, Microsoft chooses to seize archrival's talent resources. But, the snatch has not covered all the divisions of IBM. An in-service IBM consultant tells reporters that the company's consultants are working for four business lines including software, hardware, research, and service, while Microsoft only shows interest in software and research.
China Southern to Cut Executive Pay 10% on Fuel Costs
July 23rd, 2008China Southern Airlines Co., the nation's largest carrier, will cut the pay of Chairman Liu Shaoyong and other executives by 10 percent from this month to help offset jet-fuel costs that have almost doubled in a year.
The move is part of a plan to save 1.3 billion yuan ($191 million) this year by cutting operating costs and infrastructure investments, the Guangzhou-based carrier said in an e-mailed statement last night.
China Southern, Air China Ltd. and China Eastern Airlines Corp. have raised surcharges and trimmed capacity to cope with rising fuel prices and slower travel growth. Higher fuel costs will boost China Southern's operating costs by 1.9 billion yuan this year, it said.
``The salary cuts are a symbolic move to show the management's efforts to reduce costs,'' said Yu Jianjun, an analyst at Huatai Securities Co. ``The carriers will do everything they can as jet-fuel prices have run out of control.''
Liu was paid 751,000 yuan ($110,000) last year, including pension contributions, according to the company's annual report. Tony Tyler, chief executive officer of Cathay Pacific Airways Ltd., got a total of HK$11 million ($1.4 million), including benefits and bonuses.
Qantas Airways Ltd. CEO Geoffrey Dixon said today Australia's largest airline will freeze executive pay and cut about 20 percent of management and head office support jobs to curb expenses. Qantas also said it will cut 1,500 jobs.
``It's rare for Chinese company officials to cut their own pay,'' Yu said. ``It's a clear gesture saying they're trying their best to cut costs.''
Surcharges
China Southern rose 8.7 percent to 8.16 yuan in Shanghai and fell 1.9 percent to HK$3.18 in Hong Kong. Both stocks have plunged more than 68 percent this year, amid concerns that rising fuel prices may damp earnings.
Jet fuel last year accounted for 35 percent of operating costs at China Southern and China Eastern. Fuel was 36 percent of Air China's costs.
China Southern raised surcharges on domestic flights as much as 50 percent on July 1 to help cover higher fuel prices. It also increased its levies on flights to Southeast Asia and other short-haul overseas destinations.
The Chinese government raised fuel prices 25 percent last month as part of a wider plan aimed at cutting energy consumption and cooling the nation's economy. Chinese carriers buy fuel for domestic services at a subsidized rate. They pay international market prices for overseas routes.
Jet kerosene traded at $166.15 a barrel in Singapore yesterday, down from a record $181.85 a barrel on July 3.
Ericsson May Say Profit Fell on Job Cuts, Less Demand
July 22nd, 2008Ericsson AB, the world's largest maker of wireless networks, may report its steepest profit drop in more than three years on costs to cut 4,000 employees and waning demand for phones at the handset venture with Sony Corp.
Net income in the second quarter fell 56 percent to 2.82 billion kronor ($472 million), according to the median estimate of 15 analysts surveyed by Bloomberg. Sales at the Stockholm- based company, which reports tomorrow, probably rose 1 percent to 48.1 billion kronor, the least in more than four years.
Chief Executive Officer Carl-Henric Svanberg, who has presided over three straight quarters of falling profit, cut revenue forecasts twice last year because of a slump in North American and European consumer spending. Sony Ericsson Mobile Communications Ltd., the handset venture with Sony, said on July 18 that second-quarter net income was almost wiped out.
``The uncertainties continue to be regarding growth, competition in the industry, and pressure on profit margins,'' said Jan Dworsky, an analyst at Handelsbanken Capital Markets in Stockholm. ``The global network market will be flat going forward, with limited growth next year, and competitive pressures will weigh on profit margins this year and next.''
Ericsson forecast in February that demand for wireless and fixed-line telephone networks used by Telecom Italia SpA, Telefonica SA and other customers will be ``flattish'' this year, and announced plans to trim 1,000 jobs in Sweden and probably three times as many abroad.
`Troubled Portfolio'
WestLB analyst Thomas Langer in Dusseldorf, who cut his rating on Ericsson to ``hold'' from ``buy'' on July 15, estimates the company booked about 800 million kronor in restructuring charges at its network unit. Ericsson spokesman Fredrik Hallstan declined to comment on the coming earnings report.
Sony Ericsson said on July 18 it aims to cut annual costs by 300 million euros ($474 million) and said the handset market will remain ``challenging'' this year. Net income fell to 6 million euros from 220 million euros a year earlier and sales dropped 9.4 percent to 2.82 billion euros, the venture said.
``We expect Sony Ericsson's troubled portfolio to lose money through the second half, in contrast to market expectations for a substantial fourth-quarter recovery,'' London-based Goldman Sachs analyst Tim Boddy said in a July 16 note. He rates Ericsson ``neutral.''
The phone venture contributed more than 20 percent of Ericsson's operating profit in the first quarter, and Ericsson received a 2.2 billion-krona dividend from the company in the period. Svanberg is chairman of the joint venture.
Missed Twice
Svanberg saved Ericsson from the brink of bankruptcy after he took over in April 2003. He accelerated cost reductions started by his predecessor, Kurt Hellstroem. Between the end of 2000 and early 2004, Ericsson cut more than half its workforce. The company had 75,000 workers at the end of the first quarter.
Earnings have met or exceeded analysts' estimates twice in the past four quarters and missed them twice.
The company reports at 7:30 a.m., followed by a press conference at 9 a.m. Chief Financial Officer Hans Vestberg will speak also. He took over in October from Karl-Henrik Sundstroem, who stepped down in October after Ericsson cut earnings targets.
Ericsson fell as much as 1.4 kronor, or 1.9 percent, to 70.9 kronor in Stockholm, and traded at 71.1 kronor at 9:41 a.m. in the Swedish capital. Before today, Ericsson lost 4.7 percent this year, compared with a 23 percent drop for the Dow Jones Europe Technology Index of 22 companies. Alcatel-Lucent SA, the largest supplier of telecommunications equipment, has lost 24 percent.
Job Cuts
Paris-based Alcatel-Lucent posted a fifth straight quarterly loss on April 30 on costs to cut jobs and lowered its full-year sales forecast. Alcatel SA bought Lucent Technologies Inc. in November 2006 and plans to cut 16,500 jobs.
About 50 percent of commercial wireless broadband operators use Ericsson technology, according to the company. Ericsson's largest source of sales is China, which contributed 7 percent of total sales in the first quarter, followed by India and the U.S.
``It's a tough environment,'' said Dresdner Kleinwort Group Ltd. analyst Janardan Menon in London. ``Most of the revenue upside is coming in emerging markets, where price and margin pressure is even more aggressive than in Europe or the U.S.''
Svanberg, who was paid 15.2 million kronor in fixed salary last year, has organized Ericsson into three main divisions: networks, professional services and multimedia.
We view multimedia and its products, with the exception of mobile platforms, merely as an enabler for networks and profession services,'' Stockholm-based Nordea analyst Mats Bergstroem said in a July 16 report titled ``A Bumpy Ride.'' ``Mobile broadband and network expansion will continue to drive demand.'' He advises investors buy Ericsson shares.
China to invest 12.7b yuan on farmland
July 17th, 2008Chinese government will spend 12.7 billion yuan ($1.85 billion) on upgrading lower-yield farmland this year, the State Office for Comprehensive Agricultural Development said on Wednesday.
The money, which is 10.27 percent more than last year, will transform 1.77 million hectares of lower-yield farmland into high-yield. As a result, three billion kilograms will be added to China's total annual grain production capacity.
Around 7.69 billion yuan, or more than 60 percent of the funds, will go to the 13 major grain producing regions of Heibei, Henan, Heilongjiang, Jilin, Liaoning, Hubei, Hunan, Jiangsu, Jiangxi, Shandong, Sichuan and Anhui provinces and the Inner Mongolia Autonomous Region.
Lower-yield farmland is farmland that has an output less than 20 percent of the regional average, calculated on a three-year base.
The measures to upgrade lower-yield farmland varies from different places and the major means includes:
-- to improve the irrigation system and road system;
-- to transform mountainous farmland into terraces, making it easier for the machines to work;
-- improve the soil quality by increasing organic matter content in the soil;
-- to improve farming efficiency by training the farmers.
Altogether 35 water-efficient projects for the medium-scale irrigated regions will be initiated this year with an investment of 301 million yuan, said the office.
The rush in modern China to turn traditional farming areas into industrial zones or residential areas for expanding cities has caused continuous shrinkage of China's farmland in recent years. So the nation has drawn a critical line of 120 million hectares as the official minimum of arable land to feed the world's largest population. But statistics reported the amount of arable land fell to 121.73 million hectares last year.
From 1988 to 2007, China invested 320.3 billion yuan in comprehensive development of agriculture, including 99.2 billion yuan by the central government and 76.8 billion by local governments. Of the total, 34.3 billion yuan was bank loans, and 110 billion yuan was raised by farmers and other sectors.
This year, the country could see the fifth consecutive bumper harvest of summer grain, the first such run of harvests since 1949, the Ministry of Agriculture has said.
Summer crops, which usually account for about 23 percent of the total annual grain output, would surpass the 115.34 billion kilograms produced in 2007, the ministry said.
China yielded approximately 500 billion kilograms of grain last year.
Nokia Siemens Networks wins $870 mln deal with China Mobile
July 16th, 2008Nokia Siemens Networks has won a network expansion contract worth 550 million euros (about 870 million U.S. dollars) from China Mobile, the Finnish-German networks company said Friday.
The contract includes designing, building, maintaining and optimizing the radio and core network for China Mobile, Nokia Siemens Networks said in a statement.
The solutions supplied by Nokia Siemens Networks will help China Mobile increase its network capacity and improve customer experience, while controlling capital and operating expenditure, the statement added.
Nokia Siemens Networks, headquartered in Espoo, Finland, is an international telecom infrastructure company with operations in some 150 countries.
China Mobile, established in 2000, is one of the largest telecom carriers in Asia.
Nokia Siemens Networks wins $870 mln deal with China Mobile
July 16th, 2008Nokia Siemens Networks has won a network expansion contract worth 550 million euros (about 870 million U.S. dollars) from China Mobile, the Finnish-German networks company said Friday.
The contract includes designing, building, maintaining and optimizing the radio and core network for China Mobile, Nokia Siemens Networks said in a statement.
The solutions supplied by Nokia Siemens Networks will help China Mobile increase its network capacity and improve customer experience, while controlling capital and operating expenditure, the statement added.
Nokia Siemens Networks, headquartered in Espoo, Finland, is an international telecom infrastructure company with operations in some 150 countries.
China Mobile, established in 2000, is one of the largest telecom carriers in Asia.
German Continental AG to scale up investment in China
July 15th, 2008German Continental AG said Thursday it plans to scale up investment in China and introduce environmentally friendly technology to improve competitiveness.
Continental, the biggest auto parts supplier in Europe, said that 10 percent to 12 percent of its current earnings comes from Asian markets, where its sales are expected to double by 2015.
Continental has recently invested 55.5 million euros (88.2 million U.S. dollars) in Changshu in China's southeastern province of Jiangsu to build a hydraulic brake factory..
The company said it will make Changshu its production center of the hydraulic brake system in East Asia.
Continental, a world-leading manufacturer of tires and brake systems, has become one of the top five international auto parts suppliers after acquiring Siemens VDO.
Working hours changed for better, cleaner traffic
July 14th, 2008The working hours in Beijing will change from July 20 for the next two months to ease traffic pressure on the roads in the run up to and during the Olympic and Paralympic Games.
Public institutions will open an hour later, at 9:30 am, and close at 5:30 pm, while working hours for companies will be between 9 am and 5 pm, says a Beijing municipal government notice, released on Saturday.
Shopping malls will open at 10 am and close at 10 pm or even later.
Schools, administrative bodies and essential service sectors are exempt from the changes.
The Beijing government encourages people to work online from home, if possible, to avoid commuting and adapt to flexible working hours for government bodies and companies.
The change, first suggested by Liu Guoxiang, a deputy to Beijing municipal people's congress, last year, is aimed at reducing traffic congestion and pollution in the capital.
Home to more than 3 million vehicles, Beijing has urged people to use more public transport during the Olympics.
Taiwan's China Airlines elects Wei chairman
July 11th, 2008Taiwan's leading aircraft carrier China Airlines said Thursday its board had elected Philip Wei as the company chairman.
Wei, 66, who was chairman from November 2005 until he stepped down in October, replaces Ringo Chao, who resigned Monday after less than a year in the post.
Wei's October resignation came two months after a China Airlines Boeing 737-800 burst into flames after landing in Okinawa, Japan. All of the passengers and crew evacuated the plane without serious injuries.
Local newspapers said the transport ministry -- in effect the airline's largest shareholder -- hoped Wei would help the airline swing to profit.
"Regarding the company's operation, we will centre on short-haul flights as the surging oil prices have especial negative impacts on long-haul flights," Wei told reporters.
He vowed to further reform the company and continued to improve flight safety but said he was not mulling salary cuts or lay-offs.
The carrier early June cut its monthly flights by 10 percent to combat rising oil prices.
China Airlines posted a net loss of 2.97 billion Taiwan dollars (97.7 million US) for the first quarter to March.
Global Business Misunderstanding the Chinese Worker
July 10th, 2008Ask multinational firms to describe what motivates Chinese workers, and the responses are remarkably consistent: Money is the only thing that matters.
"Chinese have zero loyalty to their employer," one executive at a manufacturing firm told us. Said the general manager of a Shanghai hotel: "The most important motivator is money."
But those perceptions may be outdated and wrong.
That's the picture that emerged when we interviewed, observed and surveyed employees at three Western-branded hotels in China last year and this year. Many of the workers we studied wanted more than just a paycheck from employers, took pride in being part of a team and often were willing to go beyond minimum requirements to solve problems on the job.
While some of the West's impressions of Chinese workers may have been accurate when U.S. multinationals first started doing business in China in the early 1980s, our findings indicate that what Chinese workers want from a job and what they are willing to put into it has changed since then.
And if what we discovered in the hospitality industry runs true across other industries in China, then multinational companies may be using the wrong incentives to attract and retain Chinese workers. By focusing solely on salary as a motivational tool, they are giving short shrift to things such as training, time off and community building -- incentives that could go a long way in a highly competitive job market.
The Wrong Models
Some of the disconnect between Western managers and Chinese workers stems from the fact that multinational companies formed their opinions of Chinese labor from their interactions with migrant laborers, whose main goal is to make enough money to give relatives back home a better life. Migrant workers account for a big chunk of the work force in China's special economic zones -- areas with more liberal economic laws where Western companies first set up shop in the early 1980s.
Although Western firms have since expanded into parts of China where workers have different goals and values than those of migrant laborers, many Western managers continue to cling to the belief that all Chinese workers value salary equally. Research conducted by academic Geert Hofstede decades ago and repeated in classrooms and by consultants ever since points in the same direction.
We believe, however, that major cultural shifts in China have changed workers' attitudes dramatically since Dr. Hofstede collected data on China in the mid-1980s as part of a world-wide study into how workplace values are influenced by culture. Major societal shifts -- the result of policies such as China's one-child rule -- have reduced the role of family, government, religion and neighbors in social networks. And with fewer opportunities to be part of a group or something larger than themselves, many Chinese workers are looking to their employers to fill that void.
We studied workers at three hotels in China -- the Portman Ritz-Carlton and the Sofitel Hyland Hotel in Shanghai, and another hotel in Lhasa. In addition to interviews and observation, we surveyed 241 employees, most of them younger than 40, using the survey model created by Dr. Hofstede, who compared 53 cultures based on measures such as power distance, or the extent to which the less powerful people accept and expect that power is distributed unequally; individualism/collectivism, or the degree to which individuals are integrated into groups; masculinity/femininity, or the degree to which people are focused on material success as opposed to quality of life; and long-term orientation, or the extent to which a culture values savings and money.
We compared our survey results with those Dr. Hofstede collected on China in the 1980s and found striking differences, particularly in the area of masculinity/femininity. Dr. Hofstede says his culture scores shouldn't be used as the point of comparison because his survey takers weren't hotel workers. While we agree that differences among respondents may account for some of the differences in survey results, we don't believe it accounts for all, considering the extent of the changes we recorded.
High masculinity scores are associated with people valuing things such as higher salaries and recognition in the workplace, while low masculinity scores are associated with people desiring things such as harmonious relationships with peers and bosses. The scores of the nations in Dr. Hofstede's original study ranged from 95 to 5. China's score went from 66 in the 1980s to negative 22 in ours, leading us to believe that in the China of today, taking a star employee out to dinner may be a more effective motivator than a bonus or a plaque on the wall.
Our data also veered sharply from Dr. Hofstede's in terms of the degree to which individuals are integrated into groups. China scored 20, very collectivist, in the 1980s, compared with 71 today, very individualist. Chinese workers have become more individually focused for a number of reasons. Among them: Because of China's one-child rule, families have gone from large numbers of children living in extended-family relationships to one-child nuclear families living in small apartments. In addition, as more companies are privatized, the government is playing less of a paternal role in the lives of its citizens.
Chinese workers also appear to care about leisure time more than previous generations, which, according to Dr. Hofstede's data, valued money and savings rates more highly than their counterparts in other nations. China's long-term orientation score in the 1980s was the highest in the world at 118. In our survey, it was 40, on par with France.
Taking the Initiative
China also is a much different place in terms of how workers view the distribution of power in the workplace, a finding that may affect the success of employee-empowerment programs. In high power-distance cultures, where subordinates feel it is the boss's job to tell them what to do, it is difficult to encourage rank-and-file workers to take the initiative to solve problems on the job.
If the boss has a bad idea in a high power-distance country like Venezuela, the employee response likely would be, "Yes, sir." In a moderate power-distance culture like the U.S., the employee response might be, "Interesting idea, but maybe there's a better way." In a low power-distance culture like Denmark, an employee might say, "Boss, that's another stupid idea."
The power distance of the old China was 80, almost the same as Venezuela. The power distance of the new China is 41, the same as the U.S.
The Chinese employees we interviewed said that while they were cautious with offering suggestions to their bosses, they had plenty to give. One banquet manager, for example, told us he tries to make it seem that his suggestions for improvement are his boss's idea.
Management at the Portman Ritz-Carlton, which stakes its reputation on service, said that although its Chinese staff had been slower to embrace empowerment than staffs in other parts of the world, consistent messages that taking the initiative would be rewarded changed behavior.
Our observations were mixed in this regard. Our team observed several instances of rote, rule-based behavior, such as a hotel worker placing a morning newspaper at the proper place by the door, even though the occupant had opened the door and was extending his hand. But we also observed many staff members responding creatively to difficult customer requests, leading us to believe that Chinese workers are in transition when it comes to taking the initiative.
So if China truly is becoming a society in which both men and women care equally about quality of life, where leisure time is important and where taking the initiative is seen as a good thing, then Western firms would be well-served to re-examine the tools they use to hire and retain workers.
COSL offers $2.5b to buy Norway firm
July 9th, 2008China Oilfield Services Ltd (COSL) yesterday decided to offer 12.7 billion kroner ($2.5 billion) to buy Norwegian company Awilco Offshore ASA (AWO), in a move to create the world's eighth largest rig fleet.
COSL will offer 85 kroner a share in cash for the Norwegian firm, said a company statement yesterday. The offer represents a premium of 18.7 percent over the closing price of AWO shares on July 4.
"AWO's modern high-specification rigs and cutting-edge technology for offshore drilling is a good strategic fit for COSL pursuant to its globalization and growth strategies," said the company statement.
The combination of COSL and AWO would create the world's eighth largest rig fleet, consisting of 34 operated rigs (including rigs under construction) with operation and growth opportunities in most major international markets.
AWO is an international offshore drilling contractor owning and operating five jack-up drilling rigs and two accommodation units. Another three jack-up drilling rigs and three semi-submersible drilling rigs are under construction. AWO also has the option of constructing two semi-submersible drilling rigs.
COSL operates 15 drilling rigs, including 11 jack-ups and three semi-submersibles while operating one leased jack-up rig. In addition, COSL owns and operates the largest and most diverse offshore fleet in China, including 75 support vessels and four oil tankers, five chemical tankers, eight seismic vessels and four geotech survey vessels.
It also has a vast array of modern facilities and equipment for logging, drilling fluids, directional drilling, cementing, well completion and well work-over services.
The company is seeking assets in Southeast Asia, the Middle East, Africa, North America and Russia, Chief Financial Officer Zhong Hua said in June.
China, the world's second largest energy user, has stepped up its search for oil and gas at home and abroad to sustain its fast growth. CNOOC Ltd, COSL's largest customer, plans to increase capital spending by 44 percent this year to $5.2 billion to expand production.
COSL said first-quarter profit this year was 891.35 million yuan ($129.82 million), up 35.5 percent year-on-year, because of strong orders and cost cutting.
The company's profits were up 98 percent to 2.24 billion yuan in 2007 on rising business revenue, which rose 42 percent to 9.24 billion yuan last year. Revenue hit record high in four of its main businesses, including drilling, marine and transportation, oilfield technology and geophysical survey.
Taobao.com gets 2b yuan in additional investment
July 8th, 2008Taobao.com, China's top consumer-to-consumer (C2C) site, will receive a further two billion yuan ($291.32 million) in investment from its parent Alibaba Group over the next five years.
The decision was announced at the five-year anniversary ceremony of the group by Ma Yun, founder and CEO of the Hong Kong-listed corporation.
"The two billion yuan investment will be spent in the next five years on technology, innovation, introduction of talent and other aspects," he said.
The huge amount is the third and largest investment from Alibaba since the establishment of Taobao.com, far exceeding the 1.45 billion yuan it received from its parent starting from 2003.
Ma set a long-term goal for Taobao.com to surpass US giant Wal-Mart, the world's top retailer, whose trading volume reached 3.5 trillion yuan globally last year. The estimated trading volume for Taobao.com this year was 100 billion yuan.
"Wal-Mart needs to buy more market sites, equipment and warehousing if they want to win another 10,000 customers. But for Taobao.com, we only need to get several new network servers," he said.
Taobao.com is currently the nation's dominant online retailer with 67 million registered accounts. About 10 million customers visit Taobao daily.
UK proves attractive to Chinese investors
July 7th, 2008CHINESE investment in the UK grew by 13 percent in the past financial year according to a report yesterday by the UK Department of Trade and Investment.
Chinese companies invested in 59 projects in the UK in 2007-2008 compared to 52 in the year before, making China the ninth largest foreign investor in the UK, and the third largest investor from Asia after Japan and India. The latest figures reaffirm the UK as the leading investment destination in Europe for Chinese investors.
The UK's pro-business regulatory environment, leading position in research and development and its geographic location as gateway to the European market were the main draws for Asian investors, according to director of trade and investment for China, Alastair Morgan, at yesterday's release of the UK Inward Investment 2007/2008 Report.
While London has attracted the lion's share of Chinese investment in the past, accounting for 13 percent of all Chinese projects in the UK since 1997, the UK government is keen to attract investment in other areas.
The South East England Development Agency has set up an office in Shanghai to attract investment in the area that ranks second to London in making up the UK's GDP.
"The trend we have seen is for increasingly high quality and knowledge-driven companies from China," Simon Jagger, of the agency's Pacifici Asian team, told a press conference last week.
Chinese exporters face emerging problem of defaulted payments
July 4th, 2008BEIJING, July 2 (Xinhua)-- Chinese exporters, currently plagued by paper-thin profits, are threatened by another emerging problem of defaulted payments from foreign clients, economists said on Wednesday.
To date, the aggregate overdue international accounts of export companies totaled 100 billion yuan (14.6 billion U.S. dollars), Mei Xinyu, a Ministry of Commerce economist, estimated.
The figure, while tiny compared with the country's 545.05 billion U.S. dollars of exports in the first five months, was further squeezed by the profit margins of exporters, which suffered from the yuan's appreciation and rising labor and raw materials costs, analysts said.
The situation would be more devastating this year as many foreign importers had gone bankrupt after the U.S. subprime mortgage crisis and could not pay their bills, Zhao Jinping, an economist with the Development Research Center of the State Council, told Xinhua.
To make things worse, many exporters allowed deferred payments to compete for orders from a weakened global market. This made them vulnerable to defaulted payments, he said.
Export companies should improve their risk management and make credit assessments of the buyers beforehand, instead of blindly tendering for orders, Mei suggested.
Shanghai raises energy, living subsidies
July 3rd, 2008The municipal government of east China's financial hub, Shanghai, announced on Wednesday a plan to raise subsidies to offset higher energy costs.
From July, the government will subsidize public transport, including buses, ferries and taxis, to cover the extra costs arising from gasoline and diesel price hikes, said Chen Qiwei, Shanghai government spokesman.
"The monthly subsidy for every taxi will increase by 1,050 yuan," he said. That is equivalent to $153.
Shanghai raised gasoline and diesel prices by 5.57 yuan and 6.03 yuan per liter, respectively, as of July.
Farmers will receive an extra 100 yuan per hectare of cropland every month, and those who live on minimum allowances will get another 15 yuan per person every month, Chen said.
On July 1, the city increased electricity prices by 0.03 yuan per kilowatt-hour, but urban and rural residents and the farm and fertilizer sectors were exempt.
The Beijing municipal government said last week it would raise the minimum wage by 10 percent and increase subsidies for households living below the poverty line amid inflationary pressure.
Workers urged to improve their negotiating abilities
July 2nd, 2008The Beijing municipal government has recently published the 2008 Enterprise Salary Guidance, which mandates that the average level of pay raises be kept at 11.5 percent.
The new guidance also sets the minimum pay raise level at an unprecedented 3.5 percent. Previously, it was maintained at a negative or zero percent.
An article in the China Youth Daily cites some experts who said the new guidance could help people combat continuous price increases if the new minimum pay raise level was fully implemented.
Although the Chinese government has made big efforts to bring down prices, the country's consumer price index kept rising over the first five months of this year.
Considering the continually rising prices of energy and food, the article says improving people's purchasing power could be the best way for them to maintain their livelihoods.
But the paper also says the new Guidance may not have much of an impact, because it is only a guiding policy, not an enforceable edict.
While the law guarantees only the standard minimum wage, enterprises ultimately decide whether or not to raise salaries for their employees.
The article suggests employees make concerted efforts to acquire equality in salary negotiations.
Hankou Bank looking for foreign investors
June 27th, 2008Hankou Bank, which was launched yesterday after the restructuring of city lender Wuhan Commercial Bank, said it plans to introduce foreign strategic investors and go public.
The bank aims to attract one to two foreign lenders as strategic investors to get more capital and improve its equity structure, it said. Sources from the bank said it is in talks with several foreign banking groups.
Hankou Bank plans to achieve a stock listing within the next three to five years, sources told China Daily, without elaborating.
The erstwhile Wuhan Commercial Bank, which had 88 branches in this capital city of Hubei province, had total assets of almost 37 billion yuan ($5.38 billion) and a registered capital of 568.4 million yuan by the end of last year. Its capital adequacy ratio stood at 12.17 percent at that time.
Hankou Bank said it will expand its businesses into other regions in a drive to become a national lender.
The bank has obtained the go-ahead from the China Banking Regulatory Commission to open a branch in Ezhou, a smaller city in Hubei, in the second half of this year. It also aims to set up outlets in other provinces next year.
Many other city commercial banks, such as those in Beijing, Nanjing, Ningbo, Tianjin, Dalian, Chengdu and Chongqing, have been renamed and are expanding their businesses into other regions as part of China's banking reforms. Three lenders in Beijing, Nanjing and Ningbo have gone public.
The launch of Hankou Bank is also part of efforts of Wuhan, the biggest city in Central China, to become a regional financial center.
According to a plan unveiled by the Wuhan government in March, assets of rural credit cooperatives in Wuhan and eight other cities in Hubei will be integrated to form a new bank, named Wuhan Rural Commercial Bank.
Local authorities will also encourage private investors to run small and medium-sized shareholding banks.
There are five foreign banking groups and 19 domestic lenders with branches in Wuhan.
IBM Responds To Labor Dispute In China
June 26th, 2008IBM (IBM) China has made a response to the labor dispute in China, saying that it continued to provide economic and medical assistance to the employee after his submission of an application for resignation, but it has not made any comment on the judgment made by Shanghai Pudong New Zone Labor Arbitration Commission which asked it to fulfill the labor contract with the Chinese employee and pay him CNY57332 in compensation.
IBM Shanghai's public relations department has sent a statement to Sina.com in which they say that they provided economic and medical assistance to the employee with depression after he filed a resignation application, and they won't make any comment in detail as the case is still being decided.
Previously, Chinese media quoted the employee who said he would insist IBM carry out the arbitration result and would ask to go back to work in the company though he had not been contacted by the company following SPNZLAC's judgment.
According to Sina.com, the unnamed employee signed a five-year labor contract with IBM in 2006 after his graduation from a famous university in Hubei Province and began to work as an R&D engineer for IBM Shanghai. However, because of the heavy work pressure at IBM, the employee soon was diagnosed with depression. After that, he submitted a resignation application to IBM to give him time to cure his illness, but IBM proposed he change the resignation into an extended sick leave. When the employee's health returned and he asked to go back to IBM with the doctor's suggestion of working while receiving therapy, his request was turned down by IBM. After a number of fruitless negotiations with IBM's top management on resuming his duties, his health became worse. He even once attempted suicide after a meeting with the company's top management.
On February 27, 2008, IBM Shanghai issued a notice to the employee, saying that the company would terminate the labor contract with him because he had broken the company's disciplines and seriously affected the company's normal work order. Believing that IBM China was discriminating against him for his depression, the employee has now sued, asking for IBM to continue fulfilling the labor contract with him, compensate him for past salary and pay him emotional compensation.
Taiwan Strait air links to have big implications for HR: agency
June 25th, 2008The opening of direct air links across the Taiwan Strait may reshape human resource maps in Taiwan and China, an online employment service provider predicted Sunday. If direct cross-strait air links are launched, beginning with weekend charter flights, the number of Taiwanese working in China on a divided-time basis or Taiwanese engineers working in China on weekends and holidays would grow dramatically, a 104 JOB BANK official predicted.
* More people in Taiwan are now thinking about working in China because of unfavorable trends in Taiwan's job market and the soon-to-be-opened direct weekend charters, said Huang Chih-yao, a 104 Job Bank executive in charge of "headhunting for China."
* According to a survey conducted by 104 Job Bank in May, the number of Taiwanese workers seeking job opportunities in China averaged 20,000 per day by the end of May, the highest number since early 2006.
Pay high, but not through the nose
June 24th, 2008How much is too much?
If you talk to a Ping An Insurance shareholder, you are likely to be told the 66 million yuan ($9.45 million) pay package for its chairman Ma Mingzhe is way too much. An executive headhunter might have a completely different take, pointing out that top execs of 500 of the largest US companies averaged $12.8 million last year. As China gets increasingly integrated into the global economy, the headhunter will reason, such apparently exorbitant salaries for top management are only natural.
This year saw a flurry of angry postings on Chinese websites by shareholders incensed at what they felt were obscenely high salaries for those running their companies. Not just Ma, the pre-tax package of three Ping An executives was over 45 million yuan each while that for another five was over 10 million yuan.
Shareholders of five domestic banks fumed at the pay disclosures that showed Shenzhen Development Bank Chairman Frank Newman's pre-tax income rose to 22.9 million yuan in 2007 from 9.95 million yuan the previous year. That of China Minsheng Banking Corp President Dong Wenbiao surged to 17.5 million yuan compared with 4.5 million in 2006.
The annual reports of all 14 Shanghai-listed banks have also shown substantial raises for top managers. Employees complain the fruits of the 71.8 percent average profit rise in these banks last year were mostly devoured by the top bosses. While the banks' average pay has spiraled, they say it's mainly because top executives' salaries have risen steeply, with no dramatic advances in salaries of the rank and file.
In the case of Ping An, particularly, what rankled with shareholders was that executive pay skyrocketed even as the company's shares plummeted. Ping An shares fell from a peak of nearly 150 yuan in October to around 50 yuan in April. In a Sina.com survey, 93 percent of the respondents thus understandably said they did not approve of the company's executive pay practices.
The controversy also comes amid widespread concern about rising income disparity in China. But executive pay is hardly an issue restricted to a socialist state used to egalitarian wages trying to come to grips with the rewards of individualism that capitalism institutes. The United States, the high priest of modern-day capitalism, has been similarly tormented by the vagaries of executive pay.
Individual shareholders and institutional investors alike have been campaigning this year for a "say on pay" at nearly 100 of the top US companies including Citigroup, Coca-Cola, Exxon Mobil, General Electric and Wal-Mart. The demand: a provision to allow shareholders to vote on top executives' pay.
Across the Atlantic, where many countries have already institutionalized shareholders' say on pay, a chunk of GlaxoSmithKline, Shell and HSBC investors refused to vote for the pay proposal for top bosses.
Both in the US and Europe, the issue has transcended the business sphere to become a hot-button political issue. EU finance ministers recently called excessive executive pay a "social scourge", blaming it for unwarranted risk-taking causing the financial turmoil. In the US, presidential candidate Barack Obama has been railing against corporate fat cats and backing the demand for shareholder say in executive pay.
In Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs, Harvard professor Rakesh Khurana explains how the opacity of the process of hiring external CEOs and the misplaced priorities thereof - such as picking someone with "star power" rather than one with real knowledge of the industry - leads to excessive CEO compensation. As China sets about aligning its business practices with the industrialized West, it would do well to avoid such pitfalls.
But excessive restrictions on executive pay might at the same time weigh down the country in the quest for global talents, thus undermining its competitiveness. Institutional checks and balances like encouraging shareholder activism are a much safer bet. Moderation in policy must never be lost sight of in the pursuit of moderation in pay.
China's domestic auto sales set to grow
June 23rd, 2008China's domestic automobile sales are expected to grow 15 percent to hit 10 million units this year, backed by strong demand for passenger cars, an official with the China Association of Automobile Manufacturers said on Saturday.
China's fast-growing economy has created a sound environment for the development of the automobile industry, Dong Yang, vice chairman of the association, said at an industry meeting held in the coastal city of Yantai in eastern Shandong Province.
Despite slower growth in business vehicles sales, demand for passenger cars remained robust, he said.
The government will speed up restructuring the industry by detailing standards on security, environment protection and energy saving, Dong said.
He noted the declining trend in auto prices will be reversed as a result of the sharp rise in prices of raw materials such as iron and steel.
The association's latest data showed that more than 4.3 million vehicles were sold in the first five months of this year, a jump of 17 percent from the same period last year.
Foreign trade surges at Shanghai port
June 20th, 2008Imports and exports continued to surge at Shanghai port, with the volume totaling 245.5 billion U.S. dollars in the first five months of 2008.
Shanghai Customs statistics showed the trade volume was 26.6 percent up year on year, 7.4 percentage points higher than that of same period of last year.
With this volume, Shanghai port did about one-quarter of the country's foreign trade, said a source.
In a breakdown, exports totaled 155.73 billion U.S. dollars, up 28.2 percent, and imports made up 89.77 billion U.S. dollars, up 23.9 percent, of which, imports under general trade accounted for 35.2 billion U.S. dollars, up 28.2 percent from a year ago but 3.2 percentage points faster.
Foreign trade peaked in May at Shanghai port to hit 51.86 billion U.S. dollars, up 35.6 percent from the same month a year ago.
The lion's share of the foreign trade at Shanghai port was done by overseas financed ventures, followed by state-owned companies and private Chinese businesses.
The European Union (EU) remained the port's top trading partner, followed by the United States, Japan, Association of Southeast Asian Nations (ASEAN) and Africa.
Hong Kong's Unemployment Rate Holds at Decade Low
June 18th, 2008Hong Kong's jobless rate stayed at the lowest level in a decade, helping domestic consumption to sustain economic growth as the export outlook dims.
The seasonally adjusted unemployment rate for the three months ended May 31 was unchanged at 3.3 percent, the government said today on its Web site. That matched the median estimate of 14 economists surveyed by Bloomberg News.
``The strong labor market will continue to support the economy,'' said Michael Dai, senior economist at Bank of China (Hong Kong) Ltd. ``There have been big salary increases across the board and that's encouraging consumption.''
Hong Kong's economy grew 7.1 percent in the first quarter from a year earlier, the fastest pace in two years. The expansion for the year may slow to between 4 percent and 5 percent as export demand weakens, the government said last month.
World economic growth will probably slow to 2.7 percent in 2008 from 3.7 percent last year on rising food and energy prices and the subprime credit crisis, the World Bank said last week.
Hong Kong's household spending rose 7.9 percent in the first quarter from a year earlier.
The labor market remained buoyant, Matthew Cheung, the Secretary for Labor and Welfare, said in today's statement.
Increased competition for labor has pushed salaries higher and added to inflation in the city. Wages climbed 2.7 percent in December. Figures for March are due this month.
Price Increases
Producer prices jumped 5.8 percent in the first quarter from a year earlier, the most on record. Consumer prices rose 5.4 percent in April, more than double the 2 percent pace for all of 2007.
For the year starting in April, salaries for civil servants were raised by 6.3 percent for the upper pay group and by 5.29 percent for middle and lower pay groups.
Stock market declines and a faltering global economy may erode business and consumer confidence. The key Hang Seng Index has fallen 17 percent this year.
A survey this quarter of 807 employers in the city showed a decline in the proportion who said they expected to add workers in the following quarter. The drop was from 33 percent to 30 percent, U.S.-based recruitment company Manpower Inc. said.
Top Chinese online site to see transactions top 100 bln yuan in 2008
June 17th, 2008Taobao, Alibaba's online consumer website, expects its transaction volume to surpass 100 billion yuan (14.4 billion U.S. dollars) in 2008, a 130 percent increase from the previous year, according to Liang Chunxiao, Alibaba's vice president.
Speaking at a forum in Hangzhou, capital of east Zhejiang Province. Liang said with the rapid growth in China's e-commerce market, Taobao's customer base had soared in the first quarter, reaching 62 million from 53 million in 2007. Its transaction volume in the first three months hit 18.8 billion yuan, up 170 percent from the same period a year earlier.
"Taobao's transaction volume has grown for four years and reached 43.3 billion yuan in 2007, an outcome that took supermarket retailers like Wal-Mart almost three decades."
In total, 55 million domestic Internet users shopped online last year, spending 59.4 billion yuan, according to the Beijing-based China Internet Research Center.
Taobao is one of seven unlisted arms under the Hong Kong-listed Alibaba.com that was founded in 1999 by Jack Ma in Hangzhou. Its shares rose 122 percent on their trading debut in November.
Alibaba dominates the business-to-business segment in the country. Its consumer arms also include the online payment units Alipay and Yahoo China.
Taobao.com had maintained its leading position in the online shopping market last year and in the first quarter.
China software industry ranks fourth globally, but still a long way to go
June 13th, 2008China's annual output value topped 583.4 billion yuan (84.5 billion U.S. dollars) in 2007, becoming the world's fourth largest software producer. There was still a long way for domestic software companies to go, officials said here on Thursday.
Lou Qinjian, Industry and Information Technology vice minister, said at the International Software China 2008 show that the Chinese software industry had started from scratch since the country began its reform and opening-up three decades ago. It had grown into a fundamental industry with strategic importance to the country.
The country's share of the global software industry rose from 1.2 percent in 2000 to 8.7 percent in 2007, with an annual growth rate of more than 30 percent due to a favorable policy environment.
Cao Jianlin, Science and Technology vice minister, said the country should make an even bigger effort in innovation and personnel training to sustain the industry's long-term healthy development.
The International Software China 2008 opened in Beijing on Thursday and runs through Saturday. Its focus is on industrial policy planning, industrial standards, software technologies and development, investment and financing and enterprise personnel recruiting.
SKF adds to investment in Dalian
June 11th, 2008SKF, the world's leading bearing supplier, announced on Friday a new investment of 580 million yuan ($83 million) to the second phase of its Dalian factory in Northeast China's Liaoning province.
With a 25,000 sq m facility added its current 80,000 sq m factory, completion of the second phase project in 2009 is expected to double manufacturing capacity.
The new factory is to support continued business growth in China and other parts of Asia, especially in the areas of renewable energy, metalworking, mining, construction and industrial transmission industries, according to Tom Johnstone, president and CEO of Sweden-based SKF group.
As a leading global supplier in the areas of bearings, seals, mechatronics, services and lubrication systems, SKF is represented in more than 130 countries and has 15,000 distributors worldwide.
The Dalian factory mainly manufactures large and medium size bearings. It was planned to go through three phases as it was launched in March 2005.
"Reviewing the past three years since the company's establishment, the company's business develops fast, stable and healthy," said Sunny Chan, general manager of SKF (Dalian) Bearings and Precision Technologies Co Ltd.
The investment in the first phase of the Dalian factory was $20 million.
Johnstone said the group decided to accelerate the second step of the Dalian project because of "the strong demand of customers" and "strong performance of the facilities in Dalian".
Earlier this year, SKF Dalian won the SKF group's Excellence Award as well as the 2007 Dalian Preferred Employer Award.
Chinese companies face difficulties across border
June 10th, 2008Chinese investors in Vietnam are facing troubles amid the market turmoil in that country.
Many of them have had to convert their dong holdings into US dollars for fears of further depreciation. Some are facing labor unrest, with workers asking for pay rises to tackle the rising inflation. But most don't intend to shut up shop and move out of the country as they have adopted a wait-and-see policy.
According to Yang Zhen, chairman of the Business Association of China in Vietnam, Chinese enterprises there are having problems getting loans. Raw material and labor costs have also been rising.
Yang's opinion is echoed by Deng Xiaohua, a manager of Sichuan New Hope Group, the largest food company in China with an investment of 4.68 million U.S. dollars in Hanoi.
Deng said banks in Vietnam have been asking companies like his to pay a deposit as high as 90 to 110 percent since the crisis. Earlier, banks would happily allow them to do business using letters of credit. The company is thus facing capital flow problems.
Chinese enterprises have also been suffering income losses as the dong has been depreciating. "If you go to the bank and exchange dong to U.S. dollar today, you have to wait for your turn for 15 days because so many people want to do the same," National Business Daily quoted a Chinese car parts seller in Vietnam as saying. "By the time the conversion is made, the dong will have depreciated even more."
Vietnamese workers in some companies have also gone on strike demanding higher wages. Yang said the head of a plastic bag company from China was attacked during a strike and had to hide in a government hotel. Although the local government protects Chinese enterprises, small and medium-sized business will be affected if the strikes go on.
Yang said the large companies are less vulnerable to the market turmoil than the smaller ones. Most listed Chinese companies say their businesses have not been influenced much so far since the investment in Vietnam is small compared with the operation at home.
Zongshen Motorcycle Group, for instance, says the impact on it so far has been relatively small and the company plans to wait and see for a while before adjusting its policies.
Competition for managers heats up as China booms
June 9th, 2008Firms anxiously seek those with global expertise
Susan Fenton, Reuters
Published: Monday, May 26, 2008
American-born Thomas Kwan's career has taken off since he moved to China to work as the country manager for a U.S. health products company.
"If I'd stayed in the U.S. I wouldn't have had the same opportunity for advancement," said trilingual Kwan, 46, who was brought up in a Cantonese-speaking household in Virginia and also speaks fluent Mandarin and, of course, English.
"The U.S. is still a Caucasian-dominated society," added Kwan, who now lives in Shanghai.
Job fairs in China are one way for companies there to try to fill a void for managers with both Chinese language skills and international exposure.
China's rapidly expanding economy has created a seemingly insatiable appetite for Chinese-speaking managers.
Yet even though three million university graduates enter China's workforce every year, multinational companies are finding it hard to find local talent to meet that demand.
Companies that are successful in luring top-notch recruits are at an automatic advantage in the race for a piece of China's $1.3-trillion US consumer market.
But competition for good quality hires, especially experienced managers, is fierce.
Companies in China will need 70,000 middle and senior managers over the next five years, according to executive search firm MRI Group, but they are unlikely to find them.
"We'll be lucky if we can identify 50 per cent of that number," said Erica Briody, director of MRI China.
Since last year, Pricewaterhouse Coopers has posted Chinese recruiters in the United States, Britain and Australia to scout for graduates at university campuses as they seek to keep pace with business growth in China by recruiting 3,000 people a year.
They are targeting Chinese students studying abroad, as well as experienced foreign professionals with a Chinese heritage, such as Kwan.
"The economic boom in China means the talent needs are demanding. We are building a talent pipeline for the future," said Angela Jiang, a PricewaterhouseCoopers recruitment manager based in New York and responsible for finding U.S.-based talent for the firm's China operations.
Recruiting qualified Chinese-speaking managers is crucial for firms, especially multinationals, as they seek to capitalize on business opportunities in the world's fastest growing major economy.
"Multinational companies are looking to China to grow their organizations," said Briody.
"If they can't get the talent, their expansion plans will be limited. Ultimately they can't be competitive."
A report by the McKinsey Global Institute in 2005 said fewer than 10 per cent of China graduates who applied for jobs at multinationals had the right skills and qualifications to work there. Poor English was the main shortcoming.
The Asian Development Bank in its 2008 Asian Development Outlook says the skills shortage is aggravated by China's failure to produce the right kind of graduates rather than too few.
Chinese graduates may be well versed in theory but often lack practical problem-solving skills, analysts said.
"While the root cause of China's skills crisis lies in the leap in demand for skills, the education system has failed to keep pace," the ADB said in the report.
Kwan, who has been in China for four years, says his understanding of Chinese culture is as invaluable as his linguistic abilities when it comes to managing his China team.
"Here, I am bicultural. I understand that Western culture and Chinese culture are different and that Chinese don't normally speak out," he said.
"A lot of expat managers fail in China because they don't understand that Chinese don't tell you what they think."
Feature: China's Huawei seeks to expand services in E Africa
June 6th, 2008China's Huawei Technologies, a leader in providing next generation telecommunications network solutions for operators around the world, is seeking to expand its services to become a dominant player in telecom services in East Africa.
The telecom firm which is marking its 10 years of business in East Africa said its expansion is in line with Huawei's strategy to expand its regional network by offering customer's specialized service and engineering teams to respond promptly to customer requirements.
The telecoms company has had exceptional growth in the region since it began operations in 1998 in Kenya and become the largest CDMA product provider in the region.
Speaking during celebrations in Nairobi on Tuesday night, Huawei Kenya CEO Herman He said the company first tapped into East Africa market with its cutting-edge technology and top-ranking services.
He said Huawei, together with African operators, has built a comprehensive communication infrastructure, enriching the life of African people due to diversified communication services offered by the telecom company.
"Based on our equipments and solution, Kenyans enjoy various quality and affordable services, including value added service, voice over Internet Protocol (VOIP) and broadband service through NGN, CDMA and 3G," said Herman.
Herman noted that some of the leading telecommunication companies such as Kenya's Safaricom, Celtel Kenya and leading fixed-line incumbent Telkom Kenya have benefited from Huawei' s advanced technology, reliable products and quality service.
"In Kenya, Huawei is the major supplies of optical transmission network of Safaricom, and have offered it high speed wireless internet access service of 7.2Mb through leading 3G solution in Nairobi," he said.
"We have also successfully built Telkom Kenya's National CDMA wireless, as a end to end solution, we also provide Intelligent Network, NGN, Data Communication," he said.
Herman said Huawei will never stop its efforts in providing timely response, proficient service and customized service portfolio.
The Chinese company has created more than 400 jobs both directly and indirectly in Kenya while it has employed over 3,000 employees in the sub-Saharan Africa.
Joe Deng, Huawei's East Africa President, said the firm has invested about 1 million U.S. dollars in Kenya to establish a fully furnished training center with the latest and best equipment to train local customers, partners and their staff in the latest communication technology.
"Huawei East Africa has long-term strategically plan to invest in Kenya and become 100 percent Kenyan company. Area of investment will cover social responsibility, environmental awareness, technology education and knowledge transfer as well as enriching Kenyans life through communication, Deng said.
Huawei Kenya, with around 65 percent Kenyan employees, is a registered local company. It is the headquarters of East Africa, serving other branch offices including Uganda, Tanzania, Congo, and Ethiopian among other countries.
"We constantly update our customers on the latest technological developments which allow them to make informed decisions for their organizations and customers. In 2008, we will strengthen our investment in wireless terminals, as well as research and development," said Deng.
The Chinese company was the first to introduce next generation telecommunication technologies in Africa such as UMTS/WCDMA, WiMAXand CDMA EV-DO and services mainstream mobile operators such as Vodacom, Orange, Telkom, MTN, Milliccom, Celtel and Safaricom among others.
Haier launches first after-sale services center in Jordan
June 5th, 2008AMMAN, June 1 (Xinhua) -- Haier, one of China's Top 100 IT Companies, launched its first after-sale services center in Jordan, in an attempt to extend more extensive technical support to its Middle Eastern customers, an official with the company told Xinhua on Sunday.
Yan Xuhong, General Manager of Haier Middle East, inaugurated the center and affirmed that it would provide fast and reliable services to its customers and clients.
The center, with the latest technical equipment, is run by a number of specialized electronic and technical engineers who have undergone extensive training in the mother company, Yan said.
As part of promotion, Haier has offered a two-week of free charge maintenance and repair of all Haier products, according to Yan.
Haier, the world's fourth largest white goods manufacturer, specializes in technology research, manufacture industry, trading and financial services.
Haier has 240 subsidiary companies and 30 design centers, plants and trade companies and over 50,000 employees throughout the world. It registered a global revenue of 107.5 billion RMB (about 15.4 billion U.S. dollars) in 2006.
Chinese Pilots Pay To Quit
June 2nd, 2008Hong Kong - Employees worldwide desire the protection of lifetime employment, a so-called “iron rice bowl” that can never break, and can’t be taken away. But in China it’s this very kind of lifetime employment that airline pilots are trying to end. One problem, though, is that even when pilots succeed at leaving their jobs they can be forced to pay vast sums to employers on the way out.
In recent months the grievances of Chinese pilots have received wide-spread publicity due to strikes staged against their employers, and the unfair treatment they have received in the newly-liberalized aviation industry.
Adding insult to injury, a slew of court verdicts has ordered the pilots to pay millions to terminate their employment contracts.
On Thursday, Air China agreed to let six pilots in its Zhejiang branch go, but only after it knew it would collect between 1.29 million yuan ($185,612) and 1.7 million yuan ($244,604) from each, in a closely-followed dispute. Two months ago one Air China pilot fainted upon hearing a verdict that ordered him to pay 2.1 million yuan ($302,158) for his resignation.
Also, Chinese pilots have seen their careers suspended and salary halted for up to three years as local courts dealt with their resignations; the airlines inevitably sought legal protection, citing the vast sums they invested in training the pilots. Worse, the law is on the airlines’ side: resignations from Chinese pilots are effective only if their employer agrees to it.
The problem is that the Chinese government controls all four major airlines—Air China, China Southern, China Eastern and Hainan Airlines—and keeps a tight leash on pilots, in much the way it runs the military. In fact, Chinese airlines enlist pilots from the military. This is despite 2004’s market liberalization, which allows small privately-run airlines to set up shop, and compete.
A boom in China tourism also creates an acute shortage for pilots, making them too precious a property to lose. Despite this, pressure from long working hours, intense overtime, and laxness in management and safety issues arising from recent consolidation has prompted an exodus of pilots from the state-owned sector to small, privately-run aviation startups.
Short of resignation, Chinese pilots have sought to get attention through strikes, mass sick leaves, and hunger strike. In one extreme maneuver, on March 20, China Eastern Airlines pilots disrupted 31 flights by flying back to their take-off point, just minutes after departure. The pilots were unhappy about a new, high tax on a formerly tax-free portion of their income and for being put under the loss-making Shanghai parent airline after a 2004 nationwide industry shakeout..
While almost all Chinese state-controlled airlines have disgruntled pilots, loss-making airlines based in Shanghai seem to have particular problems. A branch there was blamed for three waves of mass resignations since 2004 and in one tally, more than two-third of a 70-plus pilot team had tried to resign.
Hiring expectations decline in 2nd quarter
May 30th, 2008Multinational companies' (MNC)'s hiring expectations have largely declined in the second quarter, after sustaining a high level for a long period, but are rising in some sectors, a recently released human resources (HR) report said.
However, most respondents of globally leading recruitment and HR management firm Hudson's survey remained optimistic, saying they considered an imminent recession in China's employment market unlikely.
The global Hudson Hiring and HR Trends Quarterly Report surveyed 718 executives of MNCs in China from sectors including banking and financial, IT and technology (IT&T), manufacturing, consumer, and media, public relations and advertising.
It said overall hiring expectations in the emerging market are declining, with 52 percent of respondents expecting to increase headcount, compared with 61 percent in both the previous quarter and the corresponding period of 2007.
The report also found 14 percent of respondents in China expected the country would face a recession in the next six months - fewer than in any other Asia market surveyed. In Japan, for example, 41 percent of respondents believed a recession was imminent.
Of those anticipating a recession in China, 73 percent believed it would impact their industries.
At 57 percent, the banking and financial services sector reported the highest hiring expectations - although 12 percentage points fewer than in the first quarter.
Some banks are more cautious in their hiring projections, particularly in the consumer-banking sector, where they haven't yet obtained all required licenses, Hudson's Shanghai General Manager Angie Eagan said.
Employment expectations are rising in the media, public relations and advertising industries, where 55 percent of respondents forecasted headcount growth, compared with 47 percent in the first quarter. Many agencies started hiring after Chinese New Year, when clients had finalized their marketing budgets.
The IT&T segment also reported rising expectations, with 55 percent of respondents saying they will hire more staff - compared with 50 percent in the first three months of 2008. The sector remains buoyant as companies continue localizing IT operations.
Manufacturing companies' expectations increased slightly, with 53 percent planning to increase hiring, compared with 51 percent in the first quarter. Construction of MNCs' new manufacturing facilities in China is mostly driving demand for workers.
Expectations underwent the steepest fall in the consumer industry, plummeting to 45 percent from 72 percent in the first quarter.
Hudson said many companies in the sector have been expanding headcount for a long time and have by now filled most positions, ushering the industry into a consolidation phase.
Recession doubted
Only 14 percent of respondents in China forecasted a recession in the next six months, reflecting the country's economic buoyancy. Responses from China were fairly consistent across industries on the issue, although at 21 percent, those from the IT&T sector were most inclined to expect a recession.
"This may reflect a continuing caution in the wake of dotcom failures, as most companies in this sector are busy and are recruiting additional staff," Eagan said.
Most firms would adopt headcount freezes in a recession, with 84 percent of respondents saying they would use the policy to weather the tough times.
Use of salary freezes was the second most-frequently mentioned recession-survival method, with 35 percent of respondents in China saying they would use the policy - more than in any other surveyed Asia market. Firms in China were also the most likely among those surveyed on the continent to cut training in the event of a recession, a measure 18 percent of respondents mentioned.
Media, public relations and advertising firms were particularly reluctant to cut staff, with just 15 percent mentioning the option. However, they were most likely to freeze headcounts and salaries, at 94 and 48 percent, respectively.
At 33 percent, banks were the most likely to cut staff in a recession, as high salaries are typical in the industry.
Firms in the IT&T sector were most likely to cut training, with 44 percent of respondents mentioning the option. "Technical training can be very expensive in China," Eagan said.
HR challenges
As in the other surveyed Asia markets, "hiring the right staff" and "retaining talent" remained the most critical challenges.
Across all sectors, 48 percent of respondents said recruitment was the greatest challenge, while 27 percent said retention was.
Compared with other surveyed markets, respondents in China most emphasized recruitment over retention. The country also had the highest percentage of firms identifying recruitment as the greatest challenge and the lowest identifying retention.
At 65 percent, the media, public relations, and advertising sector had the most respondents identifying hiring the right staff as the greatest challenge. The market for talented professionals with relevant experience has remained tight, especially at senior levels.
Retaining talent is a major concern for the banking and financial services and the manufacturing sectors. In the banking and financial services sector, 30 percent of companies identified this as their most critical challenge, as did 28 percent in manufacturing. Currently, companies in both sectors are focusing on retaining high performers with specialized skills.
Hard to find staff
May 29th, 2008Fifteen percent of employers across Chinese mainland are finding it difficult to fill jobs, according to an annual talent shortage survey released yesterday by Manpower, a world leader in the employment service industry.
The top three vacant jobs are technicians, sales representatives and management or executive positions, and the ratio is four percentage points lower than that of 2007 survey result, said the January 2008 survey, based on 3,900 employers in Chinese mainland.
Compared with 2007, technicians top the list fill for the second year in a row. Sales representatives moved from third to second, and management/executives, ranked fourth in 2007, moved up to the third-most difficult job to fill. In addition, labor positions fell from second to ninth.
"Judging from survey results of the last three years, talent shortage remains a problem in Chinese mainland," said Lucille Wu, managing director of Manpower Greater China.
"It require joint efforts from companies, individuals and the government to solve the problem," said Lucille, adding companies could invest more in employee training, strengthen cooperation with educational institutions, encourage employees to extend their working scope and help upgrade employee skills.
"As for individuals, they can develop their own skills, attend more training and review their own career interests. The government should be committed to a long-term talent training plan, encouraging the development of vocational education and cooperating with companies to forecast future talent needs," said Lucille.
The top 10 positions that employers in Chinese mainland are having difficulty filling in 2008:
2008 Hot Jobs
1. Technicians
2. Sales Representatives
3. Management/Executives
4. Sales Managers
5. Machinists/Machine Operators
6. Engineers
7. Production Operators
8. Skilled Manual Trades (primarily electricians, carpenters/joiners or welders)
9. Laborers
10. Restaurant & Hotel Staff
2007 Hot Jobs
1. Technicians
2. Laborers
3. Sales Representatives
4. Management/Executives
5. Engineers
6. Customer Service Representatives/Customer Support
7. Researchers (R&D)
8. Sales Managers
9. Supervisors
10. Designers
Takashimaya plans Shanghai outlet
May 28th, 2008TAKASHIMAYA Co plans to invest as much as 5 billion yen (US$48 million) to open a department store in Shanghai in its first foray into China, people familiar with the company's plans said.
The 55,000-square-meter outlet may open as soon as 2010 as Japan's third-largest department-store operator seeks to offset a decline in its home market, the three people, who refused to be identified before talks with a Chinese developer are completed, said.
China creates 12 mln jobs for urbanities in 2007
May 26th, 2008BEIJING, May 20 (Xinhua) -- China created 12.04 million jobs for urban dwellers in 2007 and helped 5.15 million laid-off workers find new jobs, said the Ministry of Human Resources and Social Security on Tuesday.
The urban unemployed population was 8.3 million at the end of last year, with the urban registered unemployment rate standing at4.0 percent, down 0.1 percentage point year-on-year, according to a report jointly released by the ministry and the National Bureau of Statistics.
The report revealed that the average annual salary of urban employees reached 24,932 yuan (3,573 U.S. dollars), up 18.7 percent year-on-year in nominal terms and up 13.6 percent adjusted for inflation.
The Ministry of Finance said earlier this month that it would allocate 26 billion yuan this year to help more people find jobs.
In the first quarter, 3.03 million urbanites found a job, or 30percent of the annual goal of 10 million. Meanwhile, 1.28 million laid-off workers were re-employed, or 26 percent of the annual target of 5 million.
Lenovo sees profit more than doubled
May 23rd, 2008LENOVO Group Ltd, the world's No. 4 personal computer maker, announced yesterday its net profit in the first quarter more than doubled as a result of a one-off gain from the sale of its cell phone unit and strong revenue from the Chinese market.
Lenovo posted a net profit of US$140 million between January and March against earnings of US$60 million a year ago. The first quarter net income included a US$65 million gain from selling its money-losing mobile phone business. The result beat expectations of US$129.2 million by analysts polled by Reuters.
The revenue, excluding the mobile handset business, rose 13.5 percent year on year to US$3.7 billion, higher than the 10 percent revenue growth projected by Citigroup's analyst Jim Liang.
"Lenovo continued to demonstrate strong execution of our strategies in the past quarter, achieving the eighth consecutive quarter of profitable growth," Lenovo's chairman Yang Yuanqing said in a statement.
A slowdown in technology spending in the United States is affecting enterprise-oriented PC firms, like Dell Inc and Lenovo, which bought the Thinkpad brand of laptops from IBM. Meanwhile, Lenovo's consumer PC business is also facing pressure from bigger rivals like Hewlett-Packard Co and Acer, which has purchased Gateway.
In China, Lenovo's revenue was US$1.29 billion in the quarter, a jump of 18 percent year on year.
Lenovo is the top sponsor of the coming Beijing Olympic Games and will use the event to launch PCs and laptops that have the Olympic torch design etched on them, Du Ruochao, Lenovo's general manager of East China region, said at a torch bearers' welcome conference in Shanghai yesterday.
Lenovo's share price dropped 2.86 percent to HK$6.45 (92 US cents) yesterday while the Hang Seng Index lost 1.64 percent.
Mainland-Taiwan trade up 21.7% in first four months of 2008
May 22nd, 2008Trade between the Chinese mainland and Taiwan reached 43.91 billion U.S. dollars in the first four months of this year, up 21.7 percent year-on-year, according to the Ministry of Commerce (MOC) on Wednesday.
The mainland's exports to Taiwan reached 8.17 billion U.S. dollars and imports from the island reached 35.74 billion U.S. dollars, up 16.9 percent and 22.8 percent, respectively. the MOC's figures showed.
During the same period, the mainland attracted investment from Taiwan in 731 projects, down 36.9 percent, while the actual use ofT aiwan investment reached 650 million U.S. dollars, up 29.6 percent.
As of the end of April 2008, cumulative investment from Taiwan in the mainland totaled 46.41 billion U.S. dollars in 75,877 projects. The figures date back to 1988, when mainland-Taiwan trade opened up.
Unemployment rate plummets
May 21st, 2008HONG Kong's unemployment rate unexpectedly fell to 3.3 percent, matching the lowest in a decade, helping to boost consumer spending and sustain growth in the city as global demand fades.
The seasonally adjusted jobless rate was for the three months ended April, the government said yesterday on its Website. Economists surveyed by Bloomberg News had expected the rate to stay at 3.4 percent.
An improved labor market, lower interest rates and tax relief may support domestic household consumption and shield the city from weaker overseas demand.
"Export, visitor and capital flows from Chinese mainland have created most of the jobs for Hong Kong in the past few years," said Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong. "Domestic demand will remain robust amid a solid labor sector, negative real interest rates and fiscal stimulus."
Deutsche Bank AG, Germany's largest bank, plans to triple its office capacity in Hong Kong by 2010. The expansion will allow employing as many as 4,000 workers, up from 1,500 currently, the company said on May 6.
Last month's jobless rate matched February's as the lowest in 10 years. The government calculates Hong Kong's unemployment on a rolling three-month basis to smooth out seasonal factors.
Hong Kong's economy grew 7.1 percent in the first quarter from a year earlier, the fastest pace in two years. Household spending jumped 7.9 percent.
Rising incomes are spurring consumption. The average wage rose 2.7 percent in December from a year earlier.
The increase in wages may also escalate inflation as companies pass on higher labor costs to buyers.
RPT-PREVIEW-HK Feb-April jobless rate seen stable at 3.4 pct
May 20th, 2008HONG KONG, May 16 (Reuters) - Hong Kong's jobless rate probably stayed at 3.4 percent in February-April as the pace of hiring slowed amid uncertainties over the economy, a Reuters survey shows.
"The economy was still doing well in the first quarter but employers became more cautious about hiring due to the weakening external environment," said Peng Chen, an economist at JPMorgan.
The unemployment rate has fallen much further than expected, hitting 3.3 percent, a 10-year low, in December-February, as a strong economy has created jobs and a tight labour market. However, the rate crept back up to 3.4 percent in January-March as hiring slowed sharply.
The trade sector is one of the territory's biggest employers and a possible recession in the United States -- Hong Kong's biggest export market after mainland China -- is a particular concern.
As the territory's exports are expected to slow this year, economists see economic growth falling to 4.6 percent, according to a Reuters poll, from 6.3 percent last year and average annual growth of 7.2 percent over the past four years.
In April, growth in business in the private sector virtually stalled and new orders fell for the first time in more than three years, according to the Hong Kong Purchasing Managers' Index, prompting companies to add few staff. Wages however continued to increase, although at the slowest pace since September.
Demand for professionals across sectors is still buoyant amid a shortage of suitable qualified people and the retail and tourism sectors continue to hire amid strong consumption, which has been underpinned by wage growth.
The unemployment rate has fallen from a record 8.5 percent four years ago. Economists say the economy is now close to full employment and while the jobless rate should stay below 4 percent this year it is likely to keep fluctuating.
Forecasts for the seasonally adjusted unemployment rate for February-April (percent): Daiwa Research Institute 3.3 ING Financial Mkts 3.3 Bank of East Asia 3.4 DBS Bank 3.4 JPMorgan 3.4 Standard Chartered Bank 3.4 Hang Seng Bank 3.5 UBS 3.5
Orange to extend stake in China
May 19th, 2008ORANGE Business Services, the business communications subsidiary of France Telecom Group, said China is the fastest growing regional market in Asia and it will bring great-volume investment into the country.
OBS' customers come from two segments: multinational companies in China and home-grown firms which want to expand globally, said Yee May Leong, OBS' senior vice president of Asia Pacific.
"Our strategy focuses on the emerging markets (this year) as China and India," Leong told Shanghai Daily from the sideline of the Women's Forum in Asia in Shanghai.
China is the company's third biggest regional market in Asia Pacific.
"China will finally outrank the leaders (like Australia) and it will come very soon, I think," Leong said.
Leong declined to reveal the detailed investment plan in China but she confirmed the company will invest a lot in the country in future.
OBS has expanded into about 200 tier-two and tier-three cities in China through cooperation with domestic carriers like China Telecom, covering Dongguan, Dalian, Guangzhou, Shenzhen and Xiamen.
OBS has 2,000 multinational clients in Asia Pacific, including Airbus China and port and finance clients based in Shanghai.
Chinese companies' foreign investment jumps nearly fourfold in Q1
May 16th, 2008BEIJING, May 11 (Xinhua) -- Chinese companies' foreign direct investment expanded 353 percent in the first quarter compared with the same 2007 period as domestic firms sought out a more open global market.
The investment hit 19.34 billion U.S. dollars in the first three months, Vice Minister of Commerce Chen Jian said Sunday at a forum. The figure stood at 18.76 billion U.S. dollars for the whole last year.
China set forth the "going-beyond-the-border" strategy in 1999,encouraging domestic enterprises to invest and do businesses abroad.
To support the outbound investment momentum, the government also offered help, including scrapping unnecessary controls on foreign exchange reserves and simplifying administrative procedures.
More than 12,000 Chinese companies have established firms in about 172 countries and regions by the end of 2007. Foreign investments rose nearly sevenfold from 2002 to 2007.
Toyota plans 1.5 bln yuan expansion at Tianjin plant
May 15th, 2008BEIJING, May 15 -- Toyota plans to invest 1.5 billion yuan to boost production capacity at a facility in northern China by 50 percent to 150,000 vehicles a year. The expansion at the plant in Tianjin Municipality is due to be completed by the end of 2009.
The move would boost annual capacity of FAW Toyota, its venture with China's FAW Group, to 470,000 units, and Toyota's overall capacity in China to roughly 690,000 units.
President of China Minsheng Bank tops banking sector income chart
May 14th, 2008Annual reports from several Chinese banks over the weekend reveal sky-high salaries for the senior management boards in China's banking sector. China Minsheng Banking Corporation stands out with the highest paycheck.
Dong WenBiao, the president of China Minsheng Bank, tops the income chart. His annual pre-tax salary reached over 17.5 million yuan last year.
China Merchants Bank is also being generous to senior executives. In 2007, it doled out 53 million yuan to 26 board members and executives, and its CEO, Guan MaWei, earned nearly 10-million yuan pre-tax.
The Industrial bank paid out nearly 16-million yuan to 15 board members and executives. And its president, Gao JianPing, earned nearly 3 million yuan.
Health official: China's nurse workforce surges, but shortage persists
May 13th, 2008China had 1.54 million nurses as ofthe end of last year, up 240,000 from 2005, a senior health official said in Beijing on Monday.
Ma Xiaowei, vice health minister, told a tele-conference that last year alone, 120,000 more nurses joined the workforce, the biggest increase ever.
He said nurses accounted for 34 percent of China's medical workers.
The quality of the nursing workforce was also being lifted, with 57.5 percent of those at 696 major hospitals nationwide having received junior college education or above, Ma quoted a survey as saying.
However, the survey also found nurses faced many problems including a heavy workload and lack of protection of their rights, he said.
In the surveyed hospitals, one nurse often cared for 10-14 patients and some cared for more than 30 patients, he said.
"The shortage of nurses has increased their workload and led tobelow-standard service for patients," he said.
Ma said a new regulation on nurses that took effect on Monday would better protect their rights as to salary and benefits.
Companies investing overseas
May 12th, 2008CHINESE companies' foreign investments jumped more than fourfold in the first quarter as the government encouraged spending overseas to help cut a surging trade gap.
Foreign direct investments rose to US$19.3 billion in the period, Vice Minister of Commerce Chen Jian said at an investment forum in Beijing yesterday. That compares to US$18.7 billion for the whole of 2007.
China has pledged to help companies invest overseas as it seeks to curb a trade surplus that threatens to overheat the economy, Bloomberg News said. Inflation has already hit an 11-year high, partly because of a flood of cash from Chinese exports.
The government is to talk to other countries about lowering barriers for Chinese companies to invest abroad.
China officials hike wages, threatening boost to inflation: economists
May 9th, 2008South China's Guangdong province is the latest area in the nation to unveil plans to raise wages, state media said Wednesday, a move economists worry runs counter to efforts to rein in inflation.
Guangdong provincial labour authorities said in a 2008 plan that they aimed to establish a regular salary increase system and raise wages of all employees in the region by 12 percent or more this year, the China Youth Daily reported.
Other areas in China have announced similar polices, including the financial hub of Shanghai, where a salary rise guideline for this year has called on companies to lift employee wages by five to 16 percent.
This is meant to help households, especially low-income families, cope with the country's surging inflation, which has fuelled government fears of potential social unrest.
China's consumer price index rose 8.0 percent in the first quarter of the year. In February, it climbed to 8.7 percent, the highest in nearly 12 years, before easing slightly to 8.3 percent in March.
But analysts have voiced concern that salary hikes risk exacerbating the inflation problem that they are supposed to alleviate.
"Salary rises are certainly contributing to inflation," said Chen Xingdong, an economist with BNP Paribas in Beijing.
If companies are told to pay higher wages, they may have to raise their prices to stay out of the red, the economists argued, warning this could be the beginning of a vicious cycle.
"The problem will get worse if salaries and price rises take turns," said Ma Qing, a Beijing-based analyst with the think tank CEB Monitor Group.
They argued that it could also add an extra burden on companies that are already under big pressure of soaring upstream raw material prices and might even put them out of business.
"If the requirement goes beyond what companies can afford and therefore forces them to cut jobs or stop production, then the losses may be bigger than the gains," said Shen Minggao with Citigroup.
The Chinese government has signalled growing concern about the ways in which rising prices might adversely affect the poorest in society.
Since January, it has resorted to freezing price hikes on key consumer items like grain, edible oil, meat, milk and liquefied petroleum gas in order to keep them affordable for most families.
Wage rises may be meant to do the same, but economists warned they could actually lead to more social tensions by widening income disparities.
This is because wage rises by decree are likely to benefit mainly government employees, while blue-collar workers in private companies may get left behind.
"I doubt who will benefit from a policy where the government directs salary increases," CEB Monitor Group's Ma said.
"In the final analysis, I think it will only raise government employees' wages. This is what happened in 2006 and 2007."
Google to add China staff, promote products
May 7th, 2008BEVERLY HILLS, California (Reuters) - Google Inc, the world's Internet services leader, plans to boost hiring in China by one-third this year and increase promotional spending to win market share, a senior company executive said on Saturday.
Lee Kai-Fu, Google's president for Greater China, said in an interview that the Silicon Valley company intends to add 200 staffers in 2008 to its existing 600 employees and to keep up that level of hiring for the next three to five years.
The new jobs will be in technology and sales and marketing and half of the jobs will go to new university graduates, Lee told Reuters on the sidelines of the Committee of 100 conference, an annual gathering of Chinese-American leaders. The three-day event in Beverly Hills ends on Saturday.
Google, one of the most popular places to work among recent graduates, has sharply curtailed hiring. The company has hired around 800 new employees worldwide in each of the past two quarters, excluding acquisitions, half the rate of a year ago.
Google, China's No. 2 provider of Web search services behind domestic market leader Baidu.com Inc, also will increase promotional spending for its products such as Google Maps and its e-mail service called Gmail, Lee said.
"You will not see a Google advertisement on TV but you will see more and more promotions and advertisements about Google's products at Chinese Web sites," Lee said, describing how Google plans to rely on search ads instead of conventional marketing.
He said Google also would look to strike more profit-sharing partnerships with Web site operators along the lines of one it already has with Chinese Internet media site Sina.com for news, advertising and search services.
The goal is for Google to boost its own online advertising revenue in China, where millions of young Chinese people are rapidly adopting Internet shopping, Lee said.
"Advertising is our core revenue in China, just like anywhere else for Google," he said. "I believe online advertising in China has very big market potential."
Google Web search advertising services brought in virtually all of the company's $16.6 billion in revenue last year. It had 19,156 employees at the end of March, including around 1,500 that joined through its DoubleClick acquisition in March.
Lee's remarks follow comments by Google Chairman and Chief Executive Eric Schmidt earlier this week of improved business in China. "We are seeing market share growth and good revenue growth as we have learned to operate in that environment," he told investors on a conference call to discuss financial results.
Most of world's top companies invest in China
May 6th, 2008Almost 480 of the Fortune 500 companies have invested in China during the past 30 years, Du Ying, deputy minister in charge of the National Development and Reform Commission said here on Monday.
From 1978 to 2007, China's total use of foreign investment exceeded 760 billion U.S. dollars, the largest amount among developing countries and the second largest worldwide, said Du at a national economic conference held here.
In 2007 alone, China's foreign direct investment reached 83.5 billion U.S. dollars and outbound investment stood at 18.7 billion U.S. dollars, both soaring from less than 20 million U.S. dollars in 1978 when the country initiated the policy of reform and opening up to the outside world.
Meanwhile, the country's foreign trade also experienced a rapid growth, from 20.6 billion U.S. dollars in 1978 to 2.17 trillion U.S. dollars last year.
"By using both the markets and resources from home and abroad, China has improved its international competitiveness remarkably," he said.
CEOs roll in moolah as China's salaries soar
May 5th, 2008SALARIES are soaring for top executives in China's listed companies, especially in the financial sector, according to recently released annual reports.
Shenzhen-based China Ping An insurance company pays the most of all A-share companies to its top executives, according to the Shenzhen Daily.
Ping An augmented its top executives' paychecks by 122 percent, to 282 million yuan (US$40 million), or 1.47 percent of the company's net profit last year.
At the same time, the company posted a 140 percent rise in net profits.
As a result, Ma Mingzhe, chairman of Ping An; Louis Cheung, Ping An's president and CFO; and Dominic Leung, Ping An's CEO, each earned more than 25 million yuan after taxes in 2007.
The average income of Chinese citizens is rising too, although not as fast.
According to the National Bureau of Statistics, the disposable income per capita for Chinese urbanites was 13,796 yuan in 2007, an increase of 17.2 percent over 2006, the biggest rise in six years.
If the current rate of increase continues, salaries in cities will double in four to five years.
Salaries increased 9.6 percent for managers and 9.1 percent for supervisor/senior professionals in the non-manufacturing sector in Shanghai in 2007, in contrast to 8.2 percent and 8.1 percent respectively in 2006. That's according to the 2007 Shanghai Local Compensation and Benefits Total Compensation Measurement Report, conducted by Hewitt Associates on mainly Shanghai-area foreign-invested firms.
Another trend is the salary increase in second-tier cities in the Yangtze River Delta, with Shanghai manufacturing at 8.5 percent, Suzhou 8.8 percent, Wuxi 9.2 percent and Changzhou 10.2 percent.
In an interview with China Knowledge@Wharton, Michael Song, head of Hewitt's compensation and benefits consulting practice, said the average salary increase in Hewitt-surveyed companies was 8.7 percent across China.
Companies were also asked how they were reacting to the ever-climbing CPI. Fifty percent of the 300 surveyed companies said they have factored CPI into their 2008 budgets.
A human resource manager at a US Fortune 500 company, who asked not to be named, said the salary increase rate at his company closely follows that of similar Fortune 500 companies.
"If our pay is above the market level, that will impose big pressures on labor costs. And ... even if you are above the average level, your turnover rate will not necessarily come down. However, if your pay rise is lower than the market level, even by a few percentage points, you will see the turnover rate going up. "
Song acknowledged that the pay increase rate varies atn different levels within the same company. "The higher the level goes, the faster the pay grows," he said.
The cited Hewitt survey says in the Shanghai city manufacturing sector over the last three years the compound growth rate of salaries has increased to 54.5 percent for the top management level while it is only at 14.1 percent for manual workers.
Meanwhile, Song pointed out the entry level salary for new college graduates has recently stabilized at around 3,000 yuan per month in Shanghai, although some outstanding graduates from top universities in China could earn 5,000-7,000 yuan.
Oversupply might account for the stagnant entry-level salary. There are too many fresh graduates every year, and most likely, they don't possess the right skills that companies seek, Song noted.
High turnover rates
The biggest salary increase last year was in the finance and investment sector, especially the funds industry, said Song.
Increasing labor costs are posing challenges to companies' margins.
However, even if companies continuously improve compensation and benefits levels, employee turnover rate shows no sign of decline.
The Hewitt study confirmed that turnover rates are still rising across most sectors, with average rates increasing from 8.3 percent in 2001 to 14.7 percent in 2007.
Some cities and industries see even higher turnover rates, said Song. The main reason is the gap between supply and demand, he said, pointing to the fast-growing economy in China as the fundamental cause of the gap.
"Most enterprises are continuously expanding. Last year, there was an average 10-20 percent increase (in company work forces). When companies are expanding, the whole market is recruiting but supply is not catching up fast enough. Demand for certain functions, like sales and marketing, is even bigger."
Kang Lan, client partner in the Shanghai office of Korn Ferry, the international executive search company, said: "For a function like marketing, which is relatively new in China, there was not much talent accumulation."
Ever-increasing pay hikes pose a significant problem for most organizations.
Tudou.com on track for first profit as users rise
April 24th, 2008TUDOU.COM, often regarded as China's YouTube, will reach its first profit next year thanks to increasing advertising income, the online video Website said yesterday.
The Shanghai-based firm confirmed it has completed a fourth round of financing recently, but it declined to reveal details. The latest investment in Tudou was reported to be between US$57 million and US$70 million.
Tudou will become profitable as early as 2009 but the figures of predicted revenue or profit are not available now, according to Tudou, which means potato in Chinese.
Tudou now has 60 million users every month, or one-third of China's total Internet population.
"The first users were students and the viewers now include white-collar people, especially young women," said Tracy Deng, Tudou's vice president of marketing.
They have greater money to spend and that helps to make Tudou's platform more attractive to advertisers, Deng said. Tudou has attracted advertisers like Microsoft, Intel, Adidas and Pepsi. It features popular products on its front page, which allows users to watch a more complete advertising video.
China's online video market revenue will reach 3.4 billion yuan (US$485 million) in 2010 compared with 900 million yuan in 2007, according to iResearch Inc.
Industry insiders, however, said it is still unclear if online video can make money in China.
Broadcasting rights and media are highly regulated and some of China's state-run media may launch their own Internet video services, which will affect privately-owned firms such as Tudou and Youku.com.
Tudou said it has applied for a license to operate an online video business.
The Website started operating in April 2005 with an initial combined investment of US$30 million.
A big team
April 23rd, 2008CHINESE e-commerce firm Alibaba.com Ltd has teamed up with more than 300 universities to train e-commerce professionals, the Hong Kong-listed company said yesterday.
It will launch courses to teach online trading and aim to cultivate 10 million professionals over three to five years to boost the business mode. Earlier, Ma Yun, board chairman of Alibaba.com, said the firm will invest 10 billion yuan (US$1.42 billion) to build an e-commerce chain in the next three to five years.
Graduates prefer hukou over high salary
April 22nd, 2008In a survey by China Youth Daily last week, 67.8 percent believe a Beijing hukou or registered permanent residence is worth at least 100,000 yuan. Some 14.6 percent thought it should be worth 200,000 yuan.
A questionnaire asked 3,000 fresh graduates if they were given the choice of an annual salary of 100,000 yuan or Beijing Hukou, most chose the latter.
The hukou system is the central government's method of managing urban population. Registered permanent residence allows people to live, work and study in a specific city, but makes living in another city difficult.
In the survey, 77.1 percent said they would choose a job if the offer included applying for hukou; while 11.1 percent considered the hukou the deciding factor. In an online forum among students at Peking University, one student said a Beijing Hukou is worth about 100,000 to 200,000 yuan, making getting the residence permit even more crucial for those whose monthly salary are 2,000 to 3,000 yuan. But for a person with a high monthly salary of over 20,000 yuan, getting a hukou is not an issue.
"I will choose getting a hukou over a high salary," said a graduate student in Renmin University. “I have lived in Beijing for seven years. I have a sense of belonging to here.” She said she'd rather seize the chance to get a hukou than have a higher salary.
In the survey, 38.9 percent thought having a hukou will give them a sense of security and belonging. Graduates and students generally consider the Beijing hukou an important qualification in finding a spouse. "I will find a boyfriend with a Beijing Hukou, as long term, it help me avoid many worries."
A hukou is valuable because it is tied to many social benefits. “With a Beijing Hukou, you can buy affordable housing and apply for public accumulation funds for housing, enjoy relatively high endowment insurance, and your child will have a wider chance to enter a good university with a relatively lower score," A participant in the survey said.
In 1953, the central government began imposing limits on free migration to the cities to relieve the pressure of population growth and employment in urban areas. In 1984, the State Council implemented a rule which allowed some residents in countryside who had stable job in city to apply for a permanent urban residence permit.
But now the public hopes the hukou system will be reformed, and it was the focus of the NPC and CPPCC sessions. A participant in the survey said, "The talk about reforming the hukou blossoms every year in two sessions, but we are still waiting for its fruit."
China Rising – Salaries & Hiring
April 18th, 2008From the point of view of a HR department in China you could just as easily be looking at the rise of salaries. But if you want a visual illustration as to why there is a War for Talent in China, this video comparison of exports in Asia over the past 14 years is just the job.
You can actually see China rising up like a Goliath, and dwarfing the other countries in the region.
This export increase is mirrored by the rise in China's Gross Domestic Product (GDP) which has been kept above 8-9% for about 20 years. Not too shabby, eh?
Inevitably there has been a lag in skills development, and as a consequence China's salaries are rising at about 16% per year on average. This is coming off an internal company awarded rise of about 9-10%, and a job change rise that ranges from 20% to 30%. For in-demand positions this can reach 100%.
(Note that the average city professional changes job every 18 months, according to Hewitt.)
City Salaries
The average annual salary for both professional and non-professional staff in China's cities is now about RMB 25,000 and at current rates equals roughly US$3,500. (By the time you read this it may be worth more dollars). According the National Bureau of Statistics this is an increase of 18 percent over 2006. It is also the biggest rise in six years.
Previous increases amount to 'only' 14% per annum, and at a compound rate of interest this means that in slightly less than six years the average salary in China's cities doubled. Tell that to your average European and he is likely to suffer a little Shock and Awe. Shock that salaries could be increasing so highly somewhere else in the world, and Awe at the size of increases and the rate at which China is catching up on the 1st World. But this would be tempered by a small degree of hope because each percentage salary increase lowers the possibility of further outsourcing of European jobs to China.
If the current rate of increase were to continue, salaries in Chinese cities would double in less than five years. Luckily, this is not a likely scenario, and the dark clouds of the world's economic troubles lead to a silver lining of lessening salary pressures in China. Please don't ask me to enumerate 'lessening'.
The details from NBS provides a little more insight into regional variations. The highest salary is to be found in Beijing which might come as a surprise to newly arrived foreigners, or business visitors, who see much higher levels of development in Shanghai, Shenzhen and Guangzhou.
These three locations would appear to have the strongest need for staff, and by implication be willing to pay the highest salaries. But these three cities are much more attractive and open than Beijing, so they end up with lower average salaries.
Information Lack
The NBS also note that the average salary in China shows a wide distribution of values, not just between cities but also between industries. They cite a lack of market forces but I would approach this from the point of view of information.
Put simply, there is not enough information around to help candidates and employers make rational hiring decisions. Candidates don't know how much to ask for, and companies are desperate to hire so they can be very flexible on salaries for the right person.
Meanwhile, for non-critical positions, companies must maintain internal pay equity so they are very motivated to keep salaries in these positions as low as possible. This results in somewhat schizophrenic hiring, and widely diverging salaries; even for the same job.
The fact that companies do not set pay ranges for jobs also leads to a more dynamic salary negotiation between potential employees and HR departments. The agreed salary figure is more closely linked to candidate/HR negotiation skills than is it to the requirements and key performance indicators in the Job Description. Those who push for more often get it.
China's Tsinghua Univ. to cooperate with Siemens in technology
April 17th, 2008BEIJING, April 15 (Xinhua) -- Tsinghua University signed a five-year contract here on Tuesday with the German multinational Siemens to establish a technology exchange center.
The center will conduct research in rail transportation, waste water treatment, energy conservation, emission reduction, intelligent transportation systems and other fields.
"Cooperation between universities and multinational companies will accelerate the speed of putting new technology into practice. The two sides can learn from each other and achieve a win-win situation," said Zhang Yaoxue, chief director of the higher learning department of Ministry of Education.
Rising yuan will give IT a bumpy ride
April 14th, 2008THE micro-electronics industry of China, the world's biggest IT manufacturing region, will face a bumpy road in 2008 with the appreciation of the yuan and the rising cost of raw materials, industry insiders said during an IT show yesterday.
"The industry is currently developing at a steady and healthy pace but it will face challenges especially on exports as the yuan becomes more valuable," Wang Bingke, vice-director of the enterprise restructuring and operation department under the Industry and Information Ministry, said at NEPCON/EMT China 2008.
The industry's revenue for the first two months this year was 674.4 trillion yuan (US$96.34 billion), up 16.3 percent year on year.
Industry costs for the same period amounted to 580 billion yuan, which is a 16 percent increase over the same period last year.
In 2007, the micro-electronics industry's revenue, which composed 12 percent of China's total industry revenue, amounted to 5.6 billion yuan, an 18 percent increase over the 2006 figure, according to Wang.
Policy push
On Thursday, the yuan cracked the seven mark against the United States dollar,a record high since it was de-pegged from the US currency in 2005 at about 8.3.
A US-based Cookson Electronics representative said its China operations would not only be affected by appreciation of the yuan, but by the rising cost of raw materials.
"There's not much we can do as a company but to hope for favorable government policies since this is an issue faced by all export-related industries," he said.
A representative from Stadium Asia, an electronics manufacturing services provider, shared similar sentiments, saying that the entire industry faced problems with the yuan's appreciation.
GKG Precision Machine Co, specializing in screen printer development, said it may be willing to negotiate the price of its products in order to remain competitive.
Copper price for delivery declined 0.3 percent in three months from its March 6 record of US$8,820 a ton. Prices have increase 2.6 percent this month.
The four-day NEPCON China closed yesterday after attracting more than 650 companies from a total of 22 countries and regions.
Staff sent to China still increasing
April 11th, 2008TAIPEI, Taiwan -- More and more Taiwanese companies are sending employees -- both expatriates and locals -- to China, said Seraphim Mar, a senior partner with Baker & McKenzie, at an AmCham Greater China Business Committee luncheon held recently at the Sherwood Hotel in Taipei. AmCham is the largest, oldest and most influential grouping of international and local businesses on the island.
She questioned, however, whether companies have taken sufficient steps to comply with relevant laws. "Have you considered the consequences of employment relationships in both the short and long term?" she asked the gathering of international business executives. "Is it better, from a legal perspective, to send employees as expatriates from the Taiwan-based operation or to hire them directly in China?" she continued. In particular, she stressed that companies must consider the impacts of the People's Republic of China's new Labor Contract Law, which went into effect on January 1, 2008.
Mar outlined one possible scenario: "Let's say a company in Taiwan is contemplating sending 20 Taiwanese employees as expatriates to work for its affiliate in Shanghai. The company continues paying salaries from Taiwan, while the PRC affiliate pays only minimum salaries. The company in Taiwan also continues to make employee labor insurance, national health insurance and pension contributions. The question then becomes: Who is the actual employer, and how do the various laws in China and Taiwan view the employment relationship?"
Tax issues also come into play. "The worker has de-facto employment in China," said Mar. "That entails social insurance obligations as well as tax liability and transfer pricing issues. The same, however, remains true in Taiwan." One solution, she said, would be for the Taiwan-based entity to reimburse its employees the cost of insurance in Taiwan, rather than contributing it directly.
Another problem is one of termination. "If the company in Taiwan does not have a position available, whose laws govern?" she asked. "If a pension is payable, is it based on Taiwanese or Chinese salary levels?"
Mar also pointed out that, according to the PRC Employment Contract Law, a fixed-term contract becomes open-ended (long-term) contract if the employee has worked for 10 consecutive years or the fixed-term contract is signed twice, consecutively. Likewise, the same occurs when an employer fails to conclude a written employment contract with the worker within a year. "Employers that fail to conclude an open-ended contract," said Mar, "will have to pay workers double their monthly wages starting from the date that such a contract should have been put into effect."
China marches into outsourcing
April 10th, 2008CHANGSHA, CHINA -- In the foothills of Yuelu Mountain here, a young Mao Tse-tung found inspiration in nature for his political aspirations. Today, Communist Party officials have a different vision for this area: a valley of global outsourcing firms.
One of them, Beijing-based Chinasoft International Ltd., is recruiting hundreds of workers to process medical bills and health insurance claims. Its target customers: U.S. doctors.
Chinasoft is launching the venture with a Tennessee firm, Premier BPO Inc., which has similar operations in India and Pakistan. Chen Yuhong, Chinasoft's managing director, thinks it's only a matter of time before China makes big gains against India -- which now leads the world in information technology outsourcing.
"They're seriously concerned about our challenge," said Chen, 44, who has a doctorate in engineering from Beijing Institute of Technology and speaks fluent English.
Most analysts reckon it'll be perhaps a decade before China catches up. India's IT outsourcing revenue, estimated at $18 billion in 2007, is about six times the size of China's. The gap figures to be even bigger for business-process outsourcing, such as medical billing and back-office work. With its history as a British colony, India has workers with strong English skills and familiarity with Western culture. That gives companies there a big edge when bidding for jobs that require reading reports and talking to Americans.
But China's sales of IT outsourcing work are growing at roughly twice the rate of India's. Consulting firm Analysys International says they jumped 45% in the fourth quarter of 2007, to about $600 million. Although much of that was for clients in Japan and other Asian countries, China is making a push to extend its reach.
In 2006, the central government launched the "Thousand, Hundred, Ten" project, aimed at cultivating 1,000 Chinese outsourcing companies that would cater to 100 international clients. Beijing wants to situate them in at least 10 cities. Some are familiar locales -- Shanghai, Beijing and Shenzhen. But success or failure may come down to smaller cities largely unknown abroad.
Wages, plus land and housing prices, have soared in China's top-tier cities, prompting many foreign manufacturers to relocate. Officials hope that places such as Wuhan, Jinan and Changsha will be lower-cost alternatives for the service industry as well.
Junior software engineers in those cities can be hired for $170 to $250 a month -- a third of the going rates in Beijing or Shanghai, said Tian Yuqi, human resources manager at VanceInfo Technologies Inc., a Beijing-based IT outsourcing firm listed on the New York Stock Exchange. Those wages also are a lot lower than in India's outsourcing hubs such as Bangalore and New Delhi, where salaries are spiraling up.
"China enjoys the cost advantage, but India enjoys the market advantage," Tian said.
China's government wants both -- and is helping with incentives. Firms setting up in designated outsourcing zones can enjoy a two-year waiver of taxes. They can get a subsidy of about $700 per employee for training and hiring. Local governments are chipping in with sweet deals for rent and land, as well as cash for certain sectors. Hunan province, for example, has set aside about $56 million to bolster the local animation industry, which is particularly strong in Changsha.
"They're going after it with determination," said Gaurav Gupta, country head in India for Everest Group, a consulting and research firm based in Britain. Gupta and others at Everest track 125 outsourcing cities in the world, including 10 in China and more than 30 in India. Yet for all their potential, he says, Chinese outsourcing companies are generally serving domestic businesses -- not offshore customers, as India's firms tend to do.
Chinasoft's Chen, though, sees a way to leverage China's large domestic market into offshore contracts. As more Chinese businesses and public agencies contract out their IT, back-office and call-center operations, the firms that provide those services could offer connections to Western firms to help them break into the Chinese market.
"We tell them, 'You give us business in [your country], and we'll give you the market here,' " Chen said. Chinasoft also is considering buying a stake in companies such as Premier BPO to help drive more American customers to its fledgling outsourcing operations in China. Though Chinasoft has branch offices around the world, including San Francisco and Seattle, its IT outsourcing revenue was only about $9 million in last year's third quarter, the latest period for which results are available.
Mark Briggs, chairman of privately held Premier BPO, declined to comment on the specifics of the deal with Chinasoft. He agreed that familiarity with English was a major plus for India; something as simple as commas and semicolons can be stumbling blocks for Chinese workers coding data into computers, he said. But training can overcome such language and cultural gaps, and Briggs predicted that the same assets that propelled China's manufacturing industry -- great infrastructure and labor power -- would help it become tops in outsourcing.
"I personally believe China will overtake the rest of the world in BPO," or business-process outsourcing, he said.
Changsha may be well suited to play a key role. Many Chinese regard Hunan as a center of culture and creative talent. The wildly popular television show "Super Girl," akin to "American Idol," was produced here. Changsha accounts for much of the nation's cartoon design and TV programming.
Changsha natives claim an outsize share of placements at top IT companies, managers say. The city boasts three universities rated highly for industrial design and software engineering. China's first supercomputer was developed at Changsha's National University of Defense Technology.
"They have a lot of talented people," said Xuedong Huang, a general manager at Microsoft Corp.'s communications innovation center in Redmond, Wash. Like most major technology companies, Microsoft's investment and work in China have been focused in Beijing and Shanghai. For four years, it has run a small software outsourcing project in Changsha.
"I've been very impressed with the quality, even by Microsoft standards," said Huang, himself a product of Hunan University in Changsha. What's unclear, he says, is whether an inland city as "small" as Changsha, population 6 million, can become a major player in outsourcing.
Changsha has yet to cultivate a star company in IT or business-process outsourcing. One reason is that Changsha's homegrown talent is lured by glitzier, cosmopolitan cities on the coast. Seventy percent of engineering graduates leave Hunan, said Lin Yaping, vice dean of Hunan University's software school. To keep them, "what we need is a dragon head," he said, referring to an internationally famous firm.
About 300 firms have set up in Changsha's software and outsourcing zone at the foot of Yuelu Mountain. Some have partnerships with big names including IBM Corp. and Google Inc., but most are tiny operations. One of the most promising locally bred IT companies, Powerise International Software Co., faltered and was bought by Chinasoft in 2006.
Today, Chinasoft's 160 staff members in Changsha do IT outsourcing for mainly Japanese companies, but most of it is coding work and software testing, not the high-end engineering and designing that Changsha craves.
VanceInfo Technologies' experience in Changsha isn't encouraging.
The Beijing firm opened a branch here in 2003. Tian said it took him nine months to recruit 60 engineers. They had little trouble doing the work, including developing, testing and localizing software and handling electronic transfers of loans for major banks.
But Tian said his staff in Changsha, lacking strong English skills, struggled in conference calls with customers. Nor were VanceInfo's clients entirely comfortable dealing in a small city unfamiliar to them, he said, and the firm shut the office in 2005.
"Compared to the Japanese, major clients in Europe and North America emphasized much more the city's characteristics," Tian said. "They preferred Shanghai. Our clients weren't supporting our establishing centers in cities like Changsha."
Upgrading China's labor force
April 9th, 2008GUANGZHOU, China, This year is likely to be a difficult one for China's economy, as Premier Wen Jiabao warned at a recent press conference. The export business has been shrinking due to the appreciation of the Chinese yuan, as well as the "austerity" policy. This is going to make it harder for people to find jobs.
Chinese academics are now avidly discussing the need for transformation of the nation's industries. This cannot be achieved overnight, however. The most urgent task is to find employment for China's labor force.
One solution would be to support and encourage the export of labor. If taken as a national strategy, China could focus on "branding" its labor force as an exportable commodity. Some Chinese may feel this would dishonor China, which claims a noble history and by tradition considers itself the nation of heaven. But this would be the most effective approach to serve the interests of both the laborers and the country.
When speaking of exported labor, the Chinese cannot help but think of the Philippines and compare it with China.
In the eyes of many Chinese, the Philippines is not a very successful country. In discussing national development models, Chinese academics typically criticize the country, saying, "Everyone says the Philippines has American-style democracy, doesn't it? The result is that its women all go abroad to be housemaids!"
Firstly, whether the Philippines can be viewed as a democratic country remains questionable, in my opinion. But even so, the Chinese are not qualified to mock its democracy by criticizing Filipino maids.
Secondly, earning a living by working is not shameful. And in the global era, it's not bad to go abroad to labor for higher pay, rather than receiving low pay for heavy work in the domestic market. Basketball star Yao Ming's act of going to the United States to join the National Basketball Association is an example of exported labor, after all.
The export of labor has been a very significant industry in the Philippines, and Filipino maids are famous throughout Southeast Asia. For example, there are 700,000 Filipino maids in Hong Kong alone. In fact, it's not an exaggeration to say that middle-class families in Southeast Asia cannot function well without their Filipino maids.
China's current economic model is not essentially different from the Philippines -- both countries are earning foreign currency by selling their cheap labor force.
Today China is proud of being called the factory of the world, but there are actually two kinds of world factories. One is like Britain during the Industrial Revolution, when its industrial products were sold worldwide. Britain relied mainly on its leading skills and efficiency in the world.
China, however, relies almost exclusively on its cheap labor. Its so-called export orientation is merely exchanging its major resource, the domestic work force, for foreign currency in the international market. The Chinese government thus becomes the biggest labor contractor in the world.
China should pay attention to at least two points if it wishes to expand its labor exports. The first is to brand its work force as a high-quality product, in the same way that watches from Switzerland and leather shoes from Italy are recognized for their high quality.
Filipino maids have succeeded in this. People want maids from the Philippines because they are known for their honesty, optimism and diligence, and employers are willing to pay them higher wages than their counterparts from other countries. This is the outcome of long-term assistance from the Philippine government and employment agencies.
Even though China produces consumer goods for the whole world, how many people will remember the Chinese laborers who make these products, working long hours under terrible conditions? Without a reputation for quality like the Filipinos have, Chinese workers' only advantage is their low price. If wages are raised, many industries will move away to other countries.
The second point the government should pay attention to is protecting the basic rights and welfare of its laborers. The Philippine Embassy in Hong Kong, for example, pays attention to employers' inappropriate treatment of its nationals. The embassy keeps a list of employers charged with abusing their maids, forcing them to work overtime or sleep on the floor, for example. If these employers do not improve the situation, they won't be allowed to hire Filipino maids.
In China's factories, some employees' working conditions and wages are far worse than those of Filipino maids. Many work very long hours for a salary of just a few hundred yuan. When will they receive reasonable payment, and take pride in their work like the Filipino maids do?
One advantage of Filipino maids is their ability to speak English; most Chinese cannot compete on this point.
Nevertheless, in many other fields Chinese workers -- such as construction workers, cooks and massage therapists -- can be globally competitive. The Chinese authorities could work on branding such fields and supporting industry associations to develop professional standards and grading systems. Especially Chinese cooks and massage therapists could be very competitive and eventually dominate the world market, for those are among China's traditional areas of excellence.
If the Chinese authorities can build the image of Chinese workers into a high-quality brand, like the Filipino maids, within the next five to ten years, the idea of China rising and surpassing the United Kingdom and the United States could be more than just empty talk.