Category: "News of China"
China's pension system covers more people
October 28th, 2006China's national pension system was covering 182.42 million people by the end of September, up 4.3 percent year on year, the Ministry of Labor and Social Security said in Beijing Thursday.
In the first nine months of the year, some 7.54 million people were newly covered by the pension system, a spokesperson of the ministry told Xinhua.
A total of 339.4 billion yuan (43 billion U.S. dollars) were paid out to retirees between January and September, the spokesperson said, adding that no overdues have been reported so far.
The pension system received revenues totaling 403.5 billion yuan in the first nine months, an increase of 16.1 percent over the same period of 2005.
Source: Xinhua
Microsoft expands R&D team in China
October 28th, 2006SHANGHAI, China — Microsoft is planning to boost its R&D division in China by hiring 500 new engineers.
The recruits will join a team that has doubled in the last year to about 1,200. Within three to five years, Microsoft plans to increase its staff to 3,000 workers and invest $100 million in an effort to make China one of its core R&D bases.
The expanded staff will focus on mobile communications and embedded systems, Internet applications and services, digital entertainment and servers. Everything from basic research to product development will be conducted here in cooperation with local companies.
Yaqing Zhang, president of Microsoft's R&D group in China acknowledged that many Chinese engineers are still inexperienced, especially in managerial ability. Hence, half of the new recruits will come from overseas or from within the electronics industry, instead of from China's growing pool of job-seeking graduates.
China's Leadership Gap
October 28th, 2006Summary: After 28 years of reform, China now faces accelerating challenges of an unprecedented scale. Of these, none is more critical -- or more daunting -- than nurturing a new generation of leaders who are skilled, honest, committed to public service, and accountable. Without them, Beijing's public promises of a prosperous, democratic future will go unfulfilled.
John L. Thornton is a Professor at Tsinghua University's School of Economics and Management and its School of Public Policy and Management, in Beijing, and Director of the university's Global Leadership Program. He is also Chair of the Board of the Brookings Institution. He retired as President of Goldman Sachs in 2003.
RECRUITING THE NEXT GENERATION OF REFORMERS
After 28 years of reform, China faces challenges of an unprecedented scale, complexity, and importance. China has already liberalized its markets, opened up to foreign trade and investment, and become a global economic powerhouse. Now its leaders and people must deal with popular dissatisfaction with local government, environmental degradation, scarce natural resources, an underdeveloped financial system, an inadequate health-care system, a restless rural population, urbanization on a massive scale, and increasing social inequality. Most of these problems, of course, have existed throughout the period of reform. What is different now is that the pace of change is accelerating while the ability of the state to manage that change is not keeping pace.
Solving any one of these problems by itself would be a formidable task. But Beijing must deal with all of them at once. Because China's government is a one-party system with minimal popular participation, success depends on the energy and ideas of its leaders. Yet the Chinese government today finds it harder than ever to attract, develop, and retain talent. Graduates from the country's top universities, who once would have filled government posts, are instead choosing to take jobs in the private sector. Ironically, by creating new opportunities for talented people, China's three decades of reform have made undertaking new reforms more difficult. Moreover, the structure of the country's bureaucracy stifles initiative and promotes mediocrity. Worse, many officials, from the village to the central government, are corrupt, eroding the government's effectiveness and feeding popular discontent with the system.
Of all of China's challenges, none is more critical -- or more daunting -- than that of nurturing a new generation of leaders who are skilled, honest, committed to public service, and accountable to the Chinese people as a whole. Unless China manages to produce such leaders, Beijing will fail to meet the country's challenges, and its public promises of a more prosperous and democratic future will remain unfulfilled.
MANDARINS AND MULTINATIONALS
For much of China's history, the central bureaucracy attracted the country's best and brightest. The famous imperial testing system for identifying future mandarins provided what was, at least in part, a merit-based route to social advancement: government service, especially when combined with personal connections and keen political skills, was the fastest path to power and wealth. Although the powerful state that emerged after the ascendancy of the Chinese Communist Party (CCP) in 1949 changed much in Chinese society, it only reinforced the bureaucracy's near monopoly on talent. Today, however, many ambitious Chinese no longer regard a government job as the best route to success. And those who try to pursue careers in government after spending time in the private sector often find that their way is blocked.
China's educational system continues to identify the best minds (or at least the best test takers) and send them to top universities. Once there, however, most students now study what they find most interesting or what they think will be most lucrative instead of taking courses designed to prepare them for ...
Upon entering the 21st century, the Chinese Government made timely diplomatic-strategy re-adjustments and started to push for better relations with its neighbouring countries, seeking mutual trust politically and co-prosperity economically.
October 27th, 2006The Immigration and Customs Enforcement agency is planning to hire 2,000 agents to work at its division responsible for controlling illegal immigrants and promoting immigration law enforcement.
An internal email memorandum told current employees that the hiring will begin in Miami, Los Angeles, Dallas, Houston, and Phoenix, according to GovExec.com.
In addition to a heavy concentration in the Southwest, other positions may open up in New York, Chicago, Seattle, and San Francisco.
The 2,000 openings would expand the Office of Detention and Removal Operations by 13%, to nearly 17,000 employees. The new job listings will be available at USAJOBS.gov.
¡ª Elaine Rigoli
HONG KONG -- The elusive China Dream is fast becoming reality for many US companies.
October 27th, 2006US corporate profits in China passed $2 billion the first six months of 2006, up more than 50% from the first half of last year, according to the US Bureau of Economic Analysis. US companies are on pace to earn more in China this year than they earned there during the entire 1990s, notes Joseph Quinlan, chief market strategist at Bank of America.
The government numbers are consistent with private surveys: 81% of companies belonging to the US-China Business Council, a lobbying group, reported that their China operations were profitable. More than half said profitability in China matched or beat their worldwide profit margins, according to a recent council survey.
In 1999, the US State Department found that just 57% of US firms were profitable in China.
Equipment manufacturer Caterpillar cited strong growth in China, among other things, last week when it reported a 21% increase in third-quarter earnings. Like most US companies, Caterpillar doesn't report China revenue and earnings separately and won't talk about them in any detail.
But a telling sign of China's importance to the company: Over the past 2.5 years, Caterpillar has doubled its China workforce to 5,000, says Jim Dugan, the company's spokesman in Beijing.
"Just about any place you go in China, there are road and railroad and construction and energy projects," Dugan says. "Those are all fields where we play ball."
'Business is good'
Starbucks, which already operates more than 190 stores in 19 Chinese cities, doesn't break out its financial performance in China. But spokesman Eden Woon says, "Business is good. We are accelerating our growth."
Not all successful US companies in China are household names: Greif, a Delaware, Ohio-based maker of industrial packaging, says profits are strong and growing in China, a market it entered five years ago when it acquired a competitor already operating there.
For centuries, Western businesses have cast covetous eyes at China, a dream market with the world's biggest population, now 1.3 billion. And it's virtually untouched by modern marketing. But their visions of profits, dating back to Marco Polo and before, usually came to nothing. They've been dashed by war, political turmoil, corruption, bureaucracy and grinding rural poverty.
"Time and again," journalist Joe Studwell wrote in his 2002 book, The China Dream, "China has failed to fulfill the promise that foreigners ascribe to her."
But now, China's economy, which began opening to foreign investment and trade in the late 1970s, is booming, expanding at about 10% a year.
Living standards have improved in urban centers such as Beijing, Shanghai and Shenzhen, creating a middle class -- and opportunities for US firms from Starbucks to General Motors.
From 1999 to 2004, according to statistics compiled by the American Chambers of Commerce in Beijing and Shanghai, the number of broadband lines rose to 31.7 million from 2.2 million.
Automobile ownership rose to 22 per thousand Chinese from one per thousand. Cellphones surged to 111 per thousand Chinese from three per thousand.
Learning how to do business
China's entry into the World Trade Organization in 2001 made it easier for foreign companies to operate there. The WTO deal required China in 2004 to start letting foreign firms distribute their goods without first entering into alliances with state-owned Chinese partners, which often siphoned profits and stole technology. These days, more US companies are going it alone profitably without Chinese partners. The percentage of American Chamber members operating as joint ventures in China slid from 78% in 1999 to 27% in 2005.
US companies have learned how to do business in China. "Companies have gained experience from the early years," says Robert Poole, vice president of China operations at the US-China Business Council. "They trained people, established management systems, built reputations for their products."
US firms still face problems in China. Good help is hard to find. Theft of intellectual property is rampant. Competition is fierce as young Chinese companies try to take on more-established Western firms. Greif, for instance, reckons it has 400 competitors in China. But for now the profits are rolling in, and US companies are confident about the future: 97% told the US-China Business Council that they were optimistic about their prospects in China over the next five years.
"When the economy is growing this fast, profits will increase," says Studwell, founder of the China Economic Quarterly. "At the same time, foreign firms have learned hugely from their mistakes of the 1990s."
Courtesy of USA TODAY
Employer liability insurance available in China
October 26th, 2006Senior managers in China's listed companies have a specially designed insurance plan which helps ease work pressure both in and out of the office.
AIU Insurance Company China branch, a member of the American International Group, yesterday presented a liability insurance plan for directors, supervisors and senior managers in listed companies. This is the first plan of its kind in China.
The liability insurance enables listed companies to meet the costs of compensation and legal fees for employees who are injured or take ill at work through the fault of the employers, be they directors, supervisors, senior managers or managing directors in the affiliates.
Small &Medium enterprises contribute to 58.5% of China's GDP
October 26th, 2006Chinanews, Shanghai, Oct. 25 - China has over 40 million small and medium enterprises, which account for 99.6% of the total number of enterprises in China. The products they manufacture and the service they provide account for 58.5% of the country¡¯s GDP, the Shanghai Securities Journal reported.
President of the China Small and Medium Enterprises International Association Zheng Silin says that at present, Chinese small and medium enterprises are at the important historical moment of carrying out international cooperation with their counterparts around the world.
According to Zheng, the sales volume of the small and medium enterprises in China accounts for 59% of the total sales volume in society. In addition, the small and medium enterprises have created 75% of the job opportunities in China¡¯s urban areas. These enterprises, as it were, have played an increasingly important role in the national economy.
On one occasion, Minister of Commerce Bo Xilai said that at present, Chinese small and medium enterprises have contributed to about 60% of the country¡¯s GDP. They have created 70% of the job opportunities and accounted for 70% of the country¡¯s export volume. The small and medium enterprises have already become the source of economic vitality in China and an important link in the global industrial chain, said the minister.
Most migrant workers find cities friendly
October 26th, 2006Chinanews, Beijing, October 25 ¨C According to the ¡°Report on Migrant Workers¡¯ Life in Cities¡± by National Statistics Bureau, more than 70% of them find cities friendly, and over 50% want to stay.
Over 40% of migrant workers believe their working conditions are improving. About 40% find life in cities expensive, and their lack of training adds to their difficulties. Nearly 20% wish to enjoy social security benefits and housing allowances.
The great population shift from rural areas to cities is unavoidable in China¡¯s industrialization and urbanization, and migrant workers (especially migrant industrial workers) play an irreplaceable part in accelerating this process.
China¡¯s foreign exchange reserve to top $1 trillion
October 25th, 2006Chinanews, Beijing, October 24 ¨C According to the People¡¯s Bank of China, the country has a foreign exchange reserve of $987.9 billion, ready to top $1 trillion with an average monthly growth of $20 billion.
The great leap of China¡¯s trade surplus contributes a lot to the rapid growth of its foreign exchange reserve. Statistics show that China enjoyed a $32 billion trade surplus in 2004 (China¡¯s foreign reserve then was only $800 billion), and the figure soared to $101.9 billion in 2005. It is estimated that there will be a $150 billion trade surplus in 2006.
The great foreign exchange reserve actually guarantees financial security in the country, and strengthens investors¡¯ confidence in China¡¯s economy and its influence in the world as well.
Heidrick & Struggles Establishes Hispanic Marketing Practice to Help U.S. Companies Tap Into Fast-growing Hispanic Market
October 24th, 2006Heidrick & Struggles
International, Inc. (Nasdaq: HSII), the world's premier executive search
and leadership consulting firm, today announced the formation of its
Hispanic Marketing Practice. The newly-formalized Practice specializes in
helping U.S. companies capture share of the U.S. Hispanic market, whose
purchasing power is expected to reach more than $1 trillion by 2010.
While many U.S. companies are eagerly pursuing experienced executive
talent to gain a foothold in emerging markets like China and India, many
are undervaluing the growth potential of the U.S. Hispanic market, a
fully-emerged market segment that poses a much lower barrier to entry.
Heidrick & Struggles' Hispanic Marketing Practice works with leading
companies in industries ranging from consumer goods to financial services
to technology to understand the specific talent they require and
proactively build a team that can capitalize on the enormous and immediate
growth potential this market offers.
"For years, we've helped some of the world's largest companies build
marketing teams focused on reaching the U.S. Hispanic consumer," said Jane
M. Stevenson, Managing Partner, Global Chief Marketing Officer (CMO)
Practice. "It was the logical next step to formalize our services by
creating a dedicated Hispanic Marketing Practice team that knows the skills
and competencies companies need to reach the Hispanic consumer and has
access to top marketers with a proven ability to drive growth in the
Hispanic marketplace," she added.
Marketing to the increasingly lucrative U.S. Hispanic market requires
highly-experienced talent with multicultural sensitivity and specialized
skills. "Companies like Wal-mart and others are now realizing that reaching
the U.S. Hispanic consumer takes a highly sophisticated marketer who
understands the nuances associated with this market segmentation," said
Carla V. Palazio, Partner and head of the Hispanic Marketing Practice. "How
a company markets to a Mexican-American consumer in Chicago is very
different than reaching a Puerto Rican consumer in Miami."
According to Heidrick & Struggles, the current "war for talent" poses
many challenges to corporate America, including building and retaining
top-notch Hispanic marketing teams. As the demand for Hispanic marketing
talent, whether acquired externally or developed in-house, will only
increase, Heidrick & Struggles' Hispanic Marketing Practice also helps
clients with the challenges of career management and retention of these
much sought-after executives. Heidrick & Struggles' Hispanic Marketing
Practice operates within the Chief Marketing Officer (CMO) Practice, which
includes 50 marketing practice specialists who span 25 locations around the
world and maintain relationships with the top marketing leaders for Fortune
500, Global 1000, and private companies.
About Heidrick & Struggles International, Inc.
Heidrick & Struggles International, Inc. is the world's premier
provider of senior-level executive search and leadership consulting
services, including talent management, board building, executive
on-boarding and M&A effectiveness. For more than 50 years, we have focused
on quality service and built strong leadership teams through our
relationships with clients and individuals worldwide. Today, Heidrick &
Struggles leadership experts operate from principal business centers in
North America, Latin America, Europe and Asia Pacific. For more information
about Heidrick & Struggles, please visit http://www.heidrick.com .
Russell Reynolds Associates Expands Global Presence with Buenos Aires Office
October 24th, 2006NEW YORK--(BUSINESS WIRE)--Global executive search and assessment firm Russell Reynolds Associates today announced that it is expanding its existing presence in the Americas with the opening of its new office in Buenos Aires. Together with the firm’s offices in Mexico City and São Paulo, the new Buenos Aires office will serve the increasingly complex needs that exist throughout Latin America, particularly Argentina, Chile, Colombia and Peru. Edgar Medinaceli will lead the team from Buenos Aires.
“Finding the right leaders to ensure the continuation of growth in the Latin American marketplace will be critical for both the local and multinational corporations,” said Clarke Murphy, Russell Reynolds Associates Managing Director who leads the firm’s operations in the Americas and Co-Leads the firm’s Private Equity Practice. “Our executive search professionals have local expertise, access to worldwide cross-border resources and the firsthand industry experience that will ensure that our clients will find successful candidates to lead their businesses.”
Russell Reynolds Associates is committed to investing in talent, capital and resources to further strengthen the firm’s already significant global capabilities. Buenos Aires joins Zurich, Switzerland; Beijing, China; and New Delhi, India as new office locations introduced to the firm’s global network in 2006.
“Buenos Aires holds substantial opportunities for our multinational clients,” said Hobson Brown, Jr., Chairman, President and Chief Executive Officer of Russell Reynolds Associates. “We are uniquely positioned to service this important business region. The Buenos Aires-based team brings knowledge of the local market that will help us find the best candidates for our clients across the region.”
About Russell Reynolds Associates
Russell Reynolds Associates is the most trusted name in global executive search and assessment. Through a global network of 37 wholly owned offices, the firm’s more than 275 professionals conduct senior-level search and assessment assignments in a range of industries for public and private organizations of all sizes. With its one-firm culture, deep industry knowledge and unwavering commitment to client service, Russell Reynolds Associates is uniquely qualified to help clients find the best leaders for the future. The firm’s web site is www.russellreynolds.com
China lures expatriates but success hard - study
October 23rd, 2006TORONTO - China is one of the easiest places for recruiters to lure expatriate executives, but is also one of the hardest places for them to succeed, according to a study released on Tuesday.
A survey of more than 140 international recruiters by executive recruitment firm Korn/Ferry International found other popular places for expatriate workers were Western Europe, especially Britain, and North America, as well as Southeast Asia, especially Singapore.
The firm's 10th quarterly executive recruiter index found that the most difficult places to attract expatriates to work included the non-Gulf Middle East, Africa, Central and Eastern Europe, and South America.
"High-growth emerging nations often offer the greatest opportunities for expatriates, but they can also come with the most challenges," Chris van Someren, president of Korn/Ferry for Europe, Middle East and Africa, said in a statement.
Reasons that assignments failed included the lack of cultural fit, family or personal issues or a lack of direction from managers, the survey showed.
Things were toughest for expatriates in China, Japan and South Korea, the non-Gulf Middle East, and in Central and Eastern Europe, and South America, the poll found.
But 91 percent of the recruiters surveyed said executives with international experience were either extremely or somewhat desirable candidates.
"Expatriate assignments can be extremely beneficial for developing emerging leaders and for providing solutions for organizations undergoing significant growth or change - but expatriates are clearly not a substitute for local talent," said van Someren.
Recruiters said expatriate programs helped promote better cultural understanding, facilitated the opening of a new branch or office, and were good as a professional development tool.
But expatriate assignments were least effective for addressing local talent shortages, generating new business abroad and improving staff retention.
The poll found the average ideal length for an expatriate posting was about two-and-a-half years.
Talent Shortages Become A Global Issue
October 22nd, 2006The Infosys campus on the outskirts of Bangalore looks like a chunk of the rich world that has been reassembled amidst the dust and debris of India. The echoes of Silicon Valley are everywhere. The journey there involves a wild ride along dirt roads, but the 22-hectare (54-acre) campus itself is all cut grass and neatly planted flowers. It has every possible amenity, from gyms to yoga studios, from banks to bowling alleys. The restaurants serve 14 different cuisines. Many of the buildings are in the low-slung Californian style, but some of the largest are modelled on Western icons, such as the Sydney Opera House, the Louvre pyramid or Rome's Basilica of St Peter.
Infosys Technologies was started in 1981 by seven Indian entrepreneurs with 10,000 rupees (about $1,000 at the time) between them. The software giant now has annual revenues of $2.2 billion and 58,000 employees. But it is just one of a hundred companies in Bangalore's Electronics City. Bangalore is India's software capital, with 140,000 software engineers (more than in Silicon Valley, the locals boast), and Electronics City is a custom-built high-tech haven. The signs are a list of the world's biggest IT companies, from multinationals such as Hewlett-Packard and Motorola to home-grown giants such as Infosys and Wipro.
Electronics City is the meeting point of the West's demand for high-tech services and India's supply of brain power. The dramatic fall in the cost of communications made it possible for Western companies to outsource services, and a newly liberalised India could offer a huge supply of cheap brain workers. Every year India produces around 2.5m university graduates, including 400,000 engineers and 200,000 IT professionals. India's National Association of Software and Service Companies (NASSCOM) calculates that the country has 28% of the world's IT offshore talent.
Indians point to the advantages that they bring to the market. They work while the West sleeps; they speak (splendid) English; they can throw huge numbers of people at a job. But at the heart of the boom is a simple sum. The cost of an Indian graduate is roughly 12% of that of an American one. Indian graduates also work more: an average of 2,350 hours a year compared with 1,900 hours in America and 1,700 in Germany. The bottom line is that you can buy almost ten Indian brains for the price of one American one.
The outsourcing boom shows no sign of slowing. Gartner, a research firm, estimates that global spending on IT outsourcing will rise from $193 billion in 2004 to $260 billion in 2009. But there are caveats. The most important is that Indian-based companies themselves are encountering severe skills shortages. Wage inflation in India's IT sector is about 16% a year, and turnover is 40%. NASSCOM predicts that India's IT sector will face a shortfall of 500,000 professionals by 2010. GE Capital has posted signs in its Indian offices saying “Trespassers will be recruited”.
Skills shortages are at their most acute among managers. Several Indian companies have had to bring in Western CEOs: the Tata Group, for example, has put Raymond Bickson, a Hawaiian, in charge of its hotel business. Good middle managers are rare: annual wage increases for project managers in IT have averaged 23% a year over the past four years.
Aspiring to world class
How can a country with a billion people suffer from talent shortages? Some reasons are familiar. The number of people with relevant skills is tiny: only 11% of the relevant age group go on to higher education, and older people have had their management skills blunted by the old licence raj. Moreover, growth is so fast that it would strain any educational system, let alone one as ramshackle as India's. For example, in the four years to March 2006 Infosys increased its payroll from about 10,700 to over 58,000—a compound annual growth rate of 53%.
The second caveat is that Indian-based companies are determined to move upmarket. They have mastered the basics: almost 400 of the companies ranked highest by the Software Engineering Institute at Carnegie Mellon University are in India. Now they want to become world-class. This means pushing into more sophisticated areas such as “integrated solutions” and consulting. It also means adopting the latest productivity-boosting techniques, such as applying lean-manufacturing techniques to software development, a favourite strategy at Wipro. At the same time Western multinationals are exporting more and more complicated tasks.
The looming skills shortage and the drive upmarket have made companies obsessive about finding and holding on to the right people. They are investing heavily in education and training, partly to attract the best talent and partly to keep their existing workers up to speed. “We're investing in training like the Dickens,” says Nandan Nilekani, Infosys's CEO. The company has increased its training budget from $100m to $125m. It has also moved one of its board members, T.V. Mohandas Pai, from chief financial officer to director of human resources to show that it means business. In the year to March 2006 Infosys screened 1.4m applications, tested 164,000 applicants and interviewed 48,700 to make 21,000 appointments.
Companies are also getting much more imaginative about identifying new sources of talent. Wipro has different training programmes for different talent pools, including one to help people get a university degree while working for the company. Mr Pai describes Infosys as a “human-capital supply-chain company”. But to keep the supply chain going, India must improve its universities.
Versions of Bangalore's Electronics City are in evidence in a number of developing countries, and so are skills shortages. China is seeing double-digit wage inflation and labour turnover in its IT sector. Senior managers are particularly scarce: two in three companies report difficulties in filling senior positions. Shanghai Automotive, China's biggest carmaker, and Lenovo, its biggest computer-maker, have recently hired American bosses. But other skills are also in short supply: Chinese airlines, for instance, are importing pilots.
If Western companies were initially attracted to the developing world by the low price of talent, they have now moved on to other considerations. Srini Koppolu, the head of Microsoft's India Development Centre (MSIDC), explains that one reason why Microsoft established a development centre in Hyderabad was to gain an edge in the talent war. Being in India gives you access to first-rate techies who do not want to move abroad. MSIDC has grown from 20 employees in 1998 to over 900 today.
The other advantage is local knowledge. Vijay Mahajan, a former dean of the Indian School of Business, which sits next to Microsoft's campus, points out that the developing world is a booming market as well as a huge labour pool. GE calculates that 60% of its growth over the coming decade will come from the developing world, compared with 20% over the past decade. And the only way to understand the new market is to be immersed in it.
Many Western companies thought that their goods would almost sell themselves in the developing world. They reckoned without complicated distribution systems, feisty local competitors and idiosyncratic local habits. Packaged-goods companies found that customers did not want their jumbo packets, for example, because they had little money and little storage space. Local people could have told them that.
Hewlett-Packard has set up research facilities in India in the hope of building a stripped-down 5,000-rupee ($109) computer. Electrolux Kelvinator has developed a refrigerator that will stay cold even after a six-hour power failure. Nokia has produced a mobile phone that includes a built-in flashlight and a dust-resistant keypad. In GE's John F. Welch Technology Centre in Bangalore, 2,200 highly qualified engineers work as part of digitally connected global teams on products as diverse as aircraft engines, power and transport systems and plastics. Cisco's and Motorola's Indian research centres are their largest outside America.
Most of these companies have research arms in China as well. Microsoft's development centre in Beijing is a world leader in graphics, handwriting recognition and voice-synthesisation. Motorola has 16 R&D centres in China. Samsung has set up a handset laboratory with a staff of 300 in Beijing, and Siemens has moved a chunk of its mobile R&D to China.
Think global
This R&D boom in the developing world is part of a bigger trend: the globalisation of R&D. This allows companies to plug into national clusters of excellence (South Korea has been a trailblazer in digital displays, for example, and Israel has an edge in wireless telecoms). It gives multinationals access to once secretive university labs in Shanghai and Moscow. And it speeds up innovation, because global teams can work around the clock.
Still, it is one thing to send humdrum work to Electronics City and supervise high-tech drudges, quite another to outsource bits of your core business and manage world-class skills. That involves much more than co-ordinating activities across geographical boundaries. For example, how do you disperse innovation around the world without weakening your corporate culture? How do you motivate high-flyers from different cultures? And how do you manage prima donnas across borders? You need world-class management talent, and that, too, is extremely scarce.
Source: The Economist 5 Oct. 2006
Banking investment in China set to skyrocket
October 21st, 2006Beijing, Oct 17: Around 5.7 billion US dollars in insurance capital could flood into China's banking sector this year after the nation's insurance watchdog unveiled a package of investment rules.
According to detailed rules issued by the China Insurance Regulatory Commission (Circ) for insurers' equity investment in banks yesterday, insurance institutions could invest no more than three per cent of their total assets in state-owned commercial banks, joint-stock commercial banks and city commercial banks.
By the end of last year, the total assets of China's insurance sector had reached 1.5 trillion yuan (190 billion US dollars), implying that 45 billion yuan (5.7 billion dollars) in insurance capital could be poured into China's banking sector this year.
"Equity investment in banks is just the first step, and we are considering regulations on investment in fixed-assets projects and state-owned enterprises," a Circ official was quoted as saying by China daily.
In guidelines published in late June, the regulator expressed its support for insurers' investment in banks, part of its efforts to boost insurers' investment returns.
"We support insurance companies buying into, or even taking controlling stakes in, well-managed, profitable banks that have a strong customer base," Circ Chairman Wu Dingfu said earlier.
The regulation stipulated that insurers could use their registered capital and provisions over 10 years for the investment.
In terms of purpose and scale, insurers' investment in banks is divided into two types general and grand investment.
Those accounting for less than a five per cent stake in a bank are classified as general investment, while those greater than five per cent are regarded as grand investment. There are no upper ceilings for the investment.
If an insurer plans to make a grand investment, its total assets by the end of last year should be no less than 100 billion yuan (12.7 billion US dollars).
For any investment taking a 10 per cent stake or above, the insurer should have total assets in excess of 150 billion yuan (19 billion US dollars) by the end of last year.
Meanwhile, those target banks for general investment will have to meet a capital adequacy ratio of up to eight per cent, a non-performing loans ratio lower than five per cent and a return on net assets of up to 12 per cent.
In fact, China's largest life insurers have been quite investors in banks.
In late July, Ping An Insurance (Group) company became the controlling shareholder in Shenzhen city commercial bank after it bought an 89.24 per cent stake in the lender for 4.9 billion yuan (620 million dollars).
Ping An has also been in talks with Beijing-based China Everbright Bank. Sources said the discussions are at a very early stage and it is uncertain whether they will result in an agreement.
Bureau Report
Insurance market after China´s WTO entrance
October 21st, 2006It is almost five years since China joined the World Trade Organization on December 11th of 2001.
On Wednesday, China's insurance market regulators and some 200 industry players are meeting in Beijing to discuss their experience in the past five years and the possible challenges ahead.
Li Kemu, the vice chairman of China's Insurance Regulatory Commission made the opening speech at the Insurance and Financial Market Forum on Wednesday afternoon. He stressed China is opening to all and will give them equal treatment, whether they are domestic or overseas players. He said there are now 44 overseas insurance companies operating in China, while another 135 have representative offices here. In big cities such as Shanghai and Guangzhou, overseas insurers claim some 20 percent of each city's total premium.
In 1992, AIG set up the first wholly-owned foreign insurance company in Beijing, which is seen as the beginning of China's opening up of the industry. Another milestone was made in 2004, when China lifted geographic restrictions against foreign insurers and allow them to operate corporate insurance, health insurance and annuity. At present, China restricts overseas life insurers to hold less than 50 percent in their joint ventures. But to foreign insurers, it is still a promising market.
Meanwhile, Li Kemu said the country will further broaden the investment channels for insurance companies. Besides involving in the stock market, banking industry and infrastructure construction, Li said his commission is negotiating with China's Ministry of Railways, and there will soon be insurance capital flowing into China's railway.
China Life Insurance Sector Takes a Giant Leap
October 21st, 2006Insurance sector in China is showing a continuing growth during the past few years. There‘re hordes of opportunities present for players in this sector.
According to recent news, there’s been a remarkable increase in the profits of China LIC (Life Insurance Co.) during the 1st half of 2006. The insurance company is said to have earned around 8.97 Billion Yuan during this period as compared to 5.21 Billion Yuan in the year-earlier period.
As per Macquarie’s research note released Sep 18 2006, the results would probably be dominated by investment gains from both sharp rally in the equity markets in China and strong post IPO rally of Bank of China, of which China Life holds 394 Million shares.
Bank of China has cautioned a slow down in the equity markets in China. Growth in policy fees and premium is likely to decelerate from 22 percent to 15 percent in the 2nd half of 2006.
“China Insurance Sector Analysis (2006)” the latest market research report published by RNCOS- a market research and analysis firm- provides an analytical overview of every aspect of the insurance sector in China.
According to this report, “Higher income among the Chinese and growing need for financial products to safeguard any unexpected loss are the main drivers for the China insurance market. Considerable amount of time and efforts have been put in to develop modern insurance solutions, so that insurance needs among the Chinese are met.”
Issues and facts addressed by this report include:
- Marketing strategies of key players in the insurance industry
- Growth in Health and Group insurance driving the Insurance sector in China
- Demographic factors, like death and birth rates, which affect the insurance market in China
- Emerging opportunities and challenges in this sector
- Factors that spur the growth of Life and Non Life insurance in China.
About the Report
RNCOS report on insurance sector in China provides extensive research and objective analysis of the Insurance Sector in China. It helps clients in analyzing the opportunities critical to the growth of Insurance market in China.
About RNCOS
RNCOS, incorporated in 2002, provides Market Research Reports for your business needs and aims to put an end to your information pursuit. Our expertise in gathering global business information for industry research, corporate training, growth consulting, and business consulting, brings reputed companies and firms to us for business enhancement solutions. We can be your one-stop-shop for Industry research information and niche market analysis.
Morgan Stanley buys bank, gets China licence
October 21st, 2006SHANGHAI/SINGAPORE, OCT 2: Morgan Stanley, the world’s largest securities firm by market value, said it acquired Nan Tung Bank, China, giving it a commercial banking licence in China from which it can apply to do business in the local currency and offer new products, including mortgage-backed securities.
The acquisition, approved by China Banking Regulatory Commission, will enable Morgan Stanley to apply for a licence to offer yuan- denominated services in the world’s fastest-growing major economy.
The commercial banking license currently enables Morgan Stanley to offer foreign -currency denominated services, including deposits, mortgage loans, and trade finance to individual and corporate customers based primarily in the Pearl River Delta region of Guangdong Province, the New York-based firm said on Monday.
‘‘Nan Tung Bank is a good strategic fit for our China business,’’ Wei Christianson, chief executive officer of Morgan Stanley in China, said in an e-mailed statement. ‘‘This platform will allow us to provide a wider array of new product capabilities that are currently being offered only by commercial banks with a presence within China.’’
Zhuhai-based Nan Tung Bank, formerly funded by a Macau-based unit of Bank of China, is now a wholly owned subsidiary of Morgan Stanley, the US firm said, without giving details on pricing. Nan Tung Bank, which has only one branch and fewer than 40 employees, serves customers mainly from Hong Kong and Macau.
By fully acquiring Nan Tung, Morgan Stanley will be eligible to apply for a local-currency license immediately, rather than wait for five years had it started operations in China from scratch. Morgan Stanley can also apply to offer derivatives and foreign-exchange products to local and overseas clients based in the world’s mostpopulous nation.
‘‘That’s the right thing to do but you’d need to get the products past the regulator,’’ said Roman Scott, a Singapore-based partner at Boston Consulting Group Inc. ‘‘Everyone would love to do structured products or derivatives if they were allowed to do so in China, if the markets were stable enough to do it.’’
Rivals including Goldman Sachs Group Inc and UBS AG have bought minority stakes in Chinese lenders, which won’t help them win banking licenses to offer services on their own.
Still, a ban by the China Securities Regulatory Commission last month on international securities firms from buying stakes in local brokerages has blocked a route for Morgan Stanley’s expansion in China.
IBM to move procurement HQ to China
October 21st, 2006IBM said on Thursday it would move its global procurement headquarters from New York to China in an endorsement of the country's ever-growing role as a supplier to the global economy.
The company said John Paterson, its chief procurement officer, had relocated to Shenzhen, the Chinese special economic zone that borders Hong Kong.
It is the first time the company has moved the headquarters office of a global unit outside the US.
The company said the move would not affect staffing levels in the US, where it employs about 2,500 people in its procurement operations.
IBM has operated a China procurement centre in Shenzhen for more than 10 years, and also established a PC manufacturing joint venture there in the early 1990s.
The company sold its PC business to Chinese rival Lenovo two years ago and has also hived off its hard-drive business to Hitachi, but it still maintains a large sourcing operation in Asia.
IBM says it spends about 30 per cent of its $40bn annual procurement budget in Asia, and also employs more than 1,850 procurement and logistics staff in the region.
Shenzhen has successfully attracted investment from a large number of multi-national IT companies, as it seeks to upgrade its industrial base.
The government has actively encouraged low-tech industries to move out of the zone, to cheaper locations inland.
Shenzhen raised its mandatory minimum wage rates by up to a quarter earlier this year in a bid to accelerate the flight of labour-intensive businesses.
While rising labour and other costs in Shenzhen are also a concern for high-tech investors such as IBM, these are mitigated by a dense network of component suppliers that have taken root in the Pearl River Delta, as well as the region's first-rate infrastructure.
Has Korn/Ferry Hit the Ceiling?
October 21st, 2006The employee-search outfit's stock hit its highest level since 2001, but some analysts think the climb may be nearing an end
by Alex Halperin
Based on the recent strength of Korn/Ferry International (KFY) shares, many investors would no doubt give the headhunter high marks in a performance review. Shares of the executive and middle-management search outfit brushed $23.18 on Oct. 17, their highest level since May, 2001. What's behind the strong showing? Analysts attribute the performance to a combination of strong management by the company and macroeconomic factors like low unemployment.
Indeed, in a recent conference call with analysts, the company crowed about the falling U.S. jobless rate, and, more specifically, even lower unemployment in the job market for white-collar workers and those with a college degree, which increases demand for its services. It also highlighted falling unemployment in Britain and Europe, where the company has a large presence. But amid the positive news, analysts disagree on whether investors will be able to squeeze much more juice out of the company, at least in the short term.
Just a few years ago, the shares were underemployed. Following the September 11 terrorist attacks, the stock wallowed in the doldrums, spending much of 2002 and 2003 in the single-digit price range. But as job growth has returned—albeit not as robustly as some would like—and the Dow has reached new heights, Korn/Ferry was well-positioned for the ride.
Database Management
The Los Angeles-based outfit recruits senior-level executives and middle management employees, the latter through a unit called Futurestep, which focuses on employees with salaries in the $75,000 to $150,000 range. By combining the company's recruitment expertise with a database of job-seekers, Futurestep is "pioneering the market," says SunTrust Robinson Humphrey analyst Tobey Summer. There are "hardly any global competitors to what Futurestep does," he adds. Futurestep complements Korn/Ferry's much larger executive recruitment business since employers looking for one service can end up using both.
For the quarter ended July, the company posted revenues of $161.1 million, up from $129.1 million a year earlier, with quarterly net income rising from $11.6 million to $13.7 million. Though the company has offices worldwide, it saw the greatest revenue growth in its core North America executive-recruitment division.
Analysts applaud the company's recent performance but question whether the stock has more room for growth, at least in the short term. Bulls can find encouragement in the relatively strong corporate-earnings climate, which could lead to more hiring. And at the lucrative senior levels, there's a growing need to replace retiring baby boomers.
Competitive Consultants
The company is "catching a good cyclical time for the business," says Summer. Despite his enthusiasm, he rates the stock neutral. He says the company is well-positioned globally with an extensive office network across Europe and Asia.
But he doesn't see that translating into notably better profit margins. He also says that after a few good years, the executive recruiting sector as a whole is doing more promoting and hiring their recruiters from outside the industry instead of tapping more experienced headhunters. While new recruiters—Korn/Ferry calls them consultants—are a sign of a growing industry, they tend not to deliver revenue as quickly, Summer says.
Korn/Ferry no doubt owes some of its recent success to strong performance in the sector. Smaller rival Heidrick & Struggles International (HSII) is also trading near multiyear highs. But over the past five years Korn/Ferry's stock has outperformed Heidrick's. With both outfits armed with ample balance sheets, Summer speculates that they might be on the prowl for acquisitions, though probably more for secondary businesses than executive recruiting.
Labor Upturn
Standard & Poor's, which has a long-standing buy rating (four stars out of five) on Korn/Ferry, says it expects revenues to climb 15% for the year ending in April. Despite this generally positive outlook, though, it cautions that the stock remains vulnerable to "the possibility of an unexpectedly weak global economy."
S&P analyst Michael Jaffe remains relatively bullish. It's a "pretty well-run company," he says, adding that "a lot of the human-resources companies are doing well because we've been in the midst of a labor upturn for past few years."
In a recent report, Korn/Ferry market-maker Merrill Lynch (MER) agrees with Summer that it doesn't see much more near-term upside for investors. And it doesn't expect the company to add a dividend soon.
While the company's prospects appear solid, the shares may not be able to climb the ladder much higher. Perhaps it's time for investors to start thinking about the exit interview.
Staff hiring in China: Passion is key!
October 20th, 2006While the international hotel giants battle to expand their empires in China and mull over branding and marketing strategies, there is something critical they can never ignore - staff.
"Talents are given priority in Marriott, their potential, loyalty, interest and team spirit matters," says J. Willard Marriott, the founder of US-based Marriott International. "Take good care of your associates and they will take good care of customers, who will then return."
As one of the leading international hotel groups, Marriott began operations in China in 1989. Now, its local presence is represented by 26 hotels, and by 2008, the portfolio will grow to 35.
Marriott is not alone in its rapid growth. By 2008, Shangri-La Hotels and Resorts, Asia-Pacific's leading luxury hotel group, will add 17 more to its local list which already numbers 19; UK-based InterContinental Hotel Group (IHG), a worldwide hotel group, has a portfolio of 51 hotels, and plans to develop 74 more by 2008. Ritz-Carlton Hotel Company, the world's leading high-end hotel brand, plans to have nine projects by 2009.
The aggressive expansion can be attributed to the upcoming 2008 Beijing Olympics and the development of China's economy.
"But how to attract and retain staff remains a pressing task," says Michael Malik, general manager with Beijing Marriott Hotel West, considered one of the best hotels in the Marriott chain.
Generally, academic credentials, work experience and English skills are the basic requirements on hotel recruitment lists. However, for most hotels, there are two things even more important personality and potential.
"We hire people for their attitudes," Malik says. "Passion is the key."
The recruitment policy of Portman Ritz-Carlton Shanghai (PRC), which has been ranked as the best employer in Asia and China for three consecutive years by Hewitt Associates, is simple. "We only get highly-talented people," says Ralph Grippo, vice-president area general manager.
The group has developed a quality selection process known across the world when recruiting staff, to test whether candidates fit its culture. "It really works and helps us find suitable staff," says Grippo.
Usually, high-level management aside, most hotel employees are local. The sources are various, including graduates from hotel-related training schools, talents from other industries or hotels, and internal recommendation.
At PRC, people through recommendation from its own staff compose the major source, accounting for 50 per cent of its total workforce.
"It is an efficient way, as our staff know who would be the most appropriate for PRC, and we reward those who succeed in any matchmaking with 500 yuan (US$62)," says Grippo.
Germany-based Kempinski looks for graduates majoring in hotel management abroad, such as France and the UK. "They have better English skills and more knowledge about Western nations," says Li Bo, deputy managing director with Kempinski Hotel Beijing.
However, some people's wariness of working in the hospitality industry remains a stumbling block to recruitment.
"Some people don't think highly of hospitality they believe they need to work longer and harder in hotels than in other jobs," says Winnie N.G, director of human resources at IHG China.
As more hotel groups expand into China's secondary cities, recruiting suitable employees in the smaller cities is not as easy as it is in Beijing and Shanghai, she adds.
Getting the right person is the first step, but it all proves futile in the end if hotels fail to treat them properly.
Employment turnover is a reflection of whether hotels have done a good job in retaining staff. In Beijing and Shanghai's four and five-star hotels, the average turnover is above 30 per cent.
"PRC enjoys the lowest turnover of 17 per cent annually," says Grippo.
Hotels use a number of methods to achieve a lower turnover.
For Malik, the main one is to engage with workers and seek their opinions.
Staff, except for those at management level, annually receive a questionnaire on how they feel about their benefits, managers and salary. A third party from the US then conducts all-round analysis and eventually presents a final report, indicating how employees rate the general managers and whether they are doing a good job.
"This is successful, and shows Marriott shares everything with associates and is proud to gain satisfaction from them," says Malik.
Cheong Waimeng, director of human resources with Grand Hyatt Beijing, says: "We listen to workers' opinions, making them feel they are part of the Hyatt family, instead of just being labour."
For international hotel group giants, being a powerful brand helps a lot. "A brand is in itself advertising, and can attract people automatically," says Malik.
"A strong employer brand encourages people to stay with us," agrees Winnie N.G. IHG often conducts brand promotions in China's major universities, gaining more access to potential candidates.
Training and appropriate rewards are also important tools to help people stay.
But training is not only time-consuming but also expensive. Grand Hyatt Beijing under Hyatt International Corporation annually invests 800,000-1 million yuan (US$97,561-121,951) in training. At Kempinski Beijing, training costs account for 2.5 per cent of revenue. PRC Shanghai puts 1 million yuan (US$121,951) into training every year. Staff at all levels in Marriott can get 40 hours of training.
Cross-department training is an especially powerful method for the international hotel groups. Thanks to their huge networks, staff can be transferred to different departments or hotels within the chain, which can help them to realize their full potential and creates opportunities for promotion.
At IHG, the Assessment Centre Programme aims to provide a talent pool of potential candidates for promotion. "This is a good way to retain," says Winnie N.G.
As for rewards, different hotels have different ideas.
Those who get annual best-performance certificates at PRC can bring their families to have a free dinner in the hotel. Every three months, the best five staff over the period are also given cash bonuses.
At Kempinski, monthly and annually-rated best staff get the chance to study or travel abroad for free.
"To become the best hotel, we will stick to the principle of taking care of our associates, handed down by Marriot's founder," says Malik. "We know the hotel would be in great trouble if our associates such as chefs and cleaners cannot come to work."
Shanghai Top Marques earn 500 million yuan
October 19th, 2006Chinanews, Shanghai, Oct. 19 ¨C The four-day Shanghai Top Marques 2006 was closed yesterday, earning 500 million yuan (US$63 million). Currently luxuries are easily found in Chinese mainland. Extravagant merchandises popular in the Western world have also become fashionable in China.
Yang Qingshan, General Secretary of China Brand Strategy Research Association, reveals that 13% of total population in Chinese mainland can afford to buy luxuries. But numbers of rich people in China are actually increasing slowly compared with the West. However, many investors earn regard China as the most important luxury market in the world.
Luxuries such as 50-million-yuan painting, 20-million-yuan jade, 10-million-yuan racing car and 5-million-yuan article of furniture will never be considered as astonishing gadgets.
But who bought these luxuries at the Top Marques? According to its organizers, buyers are those billionaires listed in Forbes, people who never show off their real wealth, and managers from Chinese private or foreign owned enterprises.
Billionaires from cities like Yiwu, Wenzhou, and Ningbo, in Zhejiang Province enjoy collecting expensive limousines. They are not social celebrities, but they can allocate large sum of money. Some 80% of trade volume of the Top Marques last year were contributed by these people. A staff assistant from the exhibition says these billionaires are frequenters of the Top Marques.
China to become the second largest IC market
October 18th, 2006Chinanews, Beijing, October 17 ¨C The most advanced 6-inch IC production line has started operation in Shenzhen, in the factory of Founder Micro Electronics.
The four centers of IC industry in China are the Yangtze River Delta, with the most complete industrial chain; the region near the Bohai Sea, with advantage of research and development; the Zhujiang River Delta, the biggest IC producer in the country, where most of China¡¯s information products are exported; the area including Sichuan and Shaanxi, which is rich in natural resources.
Being the most potential IC market in the world, China will very probably rank No.2 before 2010, even to rival the USA with many famous brands and competitive enterprises.
Female entrepreneur tops China's rich list
October 18th, 2006SHANGHAI, Oct. 11 (Xinhua) -- A female entrepreneur has topped a list of China's richest people, the first time a woman has headed the list in the country.
Zhang Yin, 49-year-old founder and chairwoman of Guangdong-based Nine Dragons Paper Industries Co., Ltd., has amassed a fortune of 27 billion yuan (3.375 billion U.S. dollars).
"She is the wealthiest self-made woman in the world," said Rupert Hoogewerf who set up the list known as the Huran Report in 1999. According to Hoogewerf, Zhang is richer than the U.S. television host Oprah Winfrey and author of the Harry Potter series JK Rowling.
Zhang Yin was born to a soldier's family in northeast China's Heilongjiang Province as the eldest sister of seven. She went to Hong Kong in 1985 and started her career in waste paper trading with 30,000 yuan.
Zhang defied financial hardship, cheating business partners and intimidation from local mafia to build up her wealth in the subsequent five years before moving to the United States with her husband in February 1990 to pursue her dream of becoming an "empress of waste paper".
In 1996 she set up the Nine Dragons Paper Industries Co., Ltd. in Dongguan of Guangdong. Her product is now used by multinational companies, such as Coca Cola, Nike, Sony, Haier and TCL.
Zhang deems luck as the most important factor in her success, adding that her down-to-earth personality has helped her career.
Falling to second place is Huang Guangyu of China's household electronics giant GOME Electrical Appliances with a fortune of 20 billion yuan (2.5 billion U.S. dollars) after occupying the top spot for the last two years.
Huang started his career on a roadside stall in Beijing selling radios and gadgets. GOME now has 560 branches in over 160 cities on the Chinese mainland and 12 in Hong Kong and Macao.
Ranked in third place is Zhu Mengyi, 47-years-old and CEO of the Hopson Development Holding Limited, with 16.5 billion yuan (2.06 billion U.S. dollars). After graduating from a middle school, he built up his fortune from being a foreman in a township in Guangdong.
Of the 500 people on the list, 35 are female, seven percent of the total. The new list suggests that women are showing increasing talent in business, Hoogewerf said.
Six people in the top ten are involved in real estate and four are from southeast China's Guangdong Province.
People are getting rich quickly, noted Hoogewerf, who added that last year, the person ranked No. 400 had 500 million yuan (62.5 million U.S. dollars), while this year, the 400th person had800 million yuan (100 million U.S. dollars). Enditem
China facing employment crisis with 34.5 mln new job-seekers in next five years
October 18th, 2006The Chinese government is facing a "severe" employment crisis with 34.5 million people expected to come on to the labor market from 2006 to 2010, according to a senior member of the Chinese People's Political Consultative Conference (CPPCC).
Chen Mingde, said at a meeting of the Standing Committee of the CPPCC National Committee, China's top advisory body, that job creation would be crucial to the government's aim of building a harmonious socialist society.
He said 25 million new job-seekers would enter the market this year, of whom 11 million might find jobs in urban areas, leaving 14 million unemployed.
Chen said employment opportunities could expand if local governments put job creation atop their agenda and vigorously develop the service sector, and small and medium enterprises.
Governments should launch special foundations to encourage private businesses, such as favorable loans, risk funds and investment guarantees for the self-employed.
He said local governments should encourage university graduates to work in rural areas in western China with favorable policies such as minimum salaries and medical care, and subsidies for those who go to undeveloped and remote rural areas.
Source: Xinhua
Salary rises for foreign firms continued in China
October 17th, 2006According to a new wage survey published in Shanghai recently, professionals and executives with foreign enterprises in China saw their salaries rise by nearly 7 per cent on average last year.
The survey published recently by the international Hewitt Associate Consulting Corp, included 800 foreign firms in major cities, such as Beijing, Shanghai and Guangzhou, and also many secondary cities in China.
According to Qi Xu, a senior consultant for Hewitt, only 7 per cent of the firms said salaries did not rise in 2003. Four percent said salaries would probably remain the same in 2004. According it Qi Xu, "Such a drastic increase rate is an epitome of foreign enterprises' confidence in investing in China.¡± Throughout China, Shanghai toted up the highest wage hikes at 8.3 percent with both Beijing and Guangzhou following at about 7.5 percent. According to the survey, the annual per-capita income of a senior executive in a foreign enterprise in China is 645,000 RMB (approx. US$77,700). A mid-level executive makes by comparison 297,000 RMB (approx. US$35,780).
To give an example of the spread in salaries in a foreign firm in China, a professional employee could earn an annual salary of approximately 100,000 RMB (approx. US$12,000) while a factory worker or an ordinary employee could expect about 36,000 RMB (approx US$4,340).
Qi attributed the increase to ¡°the increasing pressure on foreign firms to draw talent, foreign enterprises in China had to keep the percentage of volatile salary and long-term encouragement rewards in their salary systems.'' He also stated that "The growing salaries in foreign enterprises also reflect the soaring direct investment in China¡±.
In 2003, despite SARS and other concerns, more and more multinational firms and global research organizations entered China. Many foreign firms have moved their China headquarters from Hong Kong or elsewhere to Beijing and a larger number are choosing Shanghai according to most reports. By early 2004, the number of foreign firms in China had increased to 468,200 with a total investment of US$953.3 billion and actual investment of US$505.55 billion.
Chinese rich with $1.59 trln worth of wealth
October 17th, 2006Chinanews, Beijing, October 16 ¨C Recent statistics show that there are about 320 thousand rich people in the Chinese mainland, with a total wealth $1.59 trillion, making China second on the top-10 list of rich people in Asia, the first being Japan.
Although of the rich Chinese from Hong Kong have the highest personal wealth, the Chinese mainland still ranks second, with each of the rich there having an average wealth of $5 million.
Though China only contributes 13.5% of rich people to the Asian-Pacific Region, their impressive personal wealth gains them a high mark, thanks to the rapid economic growth of the country. The number of extremely rich people in China is growing very fast, too. As a matter of fact, 29.1% of Asian extremely rich people came from the country, especially the big cities in 2005, according to a probe that year.
Rich people in China gained their wealth through industrial and commercial investment, funds and stock right. However, only 14% of their investment is used to buy stock shares, the lowest in the eight world markets.
Recruiting Firm Sues Akin Gump for Fees In Partner Placement
October 14th, 2006By Anthony Lin
New York Law Journal
October 13, 2006
In May, just one month after Akin Gump Strauss Hauer & Feld announced Chang-Joo Kim had joined its New York office as a partner, the law firm cut a check to recruiting firm Boston Executive Search for $227,500.
But did it pay the right recruiter? New York search firm Sivin Tobin Associates says it sent Akin Gump a package about Mr. Kim last December, along with a term sheet. Sivin Tobin is now suing the law firm, alleging breach of an implied contract. Manhattan Supreme Court Justice Jane S. Solomon (See Profile) last month denied Akin Gump's motion to dismiss.
The dispute highlights the frequently less-than-well-oiled mechanics of the legal recruiting process, even as firms have become increasingly reliant on lateral partners and associates for growth. Though actual lawsuits are rare, both firms and recruiters agree clashes are common.
In an Aug. 7 affidavit he submitted as part of the suit, Sivin Tobin co-founder Eric Sivin said he spoke to Akin Gump's then-New York office head, Steven M. Vine, in 1995, at which time Mr. Vine said the firm was interested in hearing about partners with portable business. Since then, Mr. Sivin said, Sivin Tobin had forwarded 10 candidates, three of whom Akin Gump had interviewed.
One of those partners was Mr. Kim, a corporate lawyer specializing in Korean transactions who was then working in the New York office of Dorsey & Whitney.
"Sivin Tobin had several meetings with Mr. Kim," Mr. Sivin said in his affidavit. "We helped Mr. Kim prepare and edit his business plan and provided him with general advice regarding the law firm interview and evaluation process. Eventually Mr. Kim permitted us to submit his resume, along with materials highlighting his professional experience and qualifications."
Sivin Tobin's package to Akin Gump was accompanied by a detailed and personalized letter. Signed by Mr. Sivin and addressed to Mr. Vine, the Dec. 19, 2005, letter said: "Mr. Kim believes that at a firm such as Akin Gump, with its strong infrastructure practice and presence in the Middle East and Asia, could provide the right platform for his client base and enable him to generate work at his historic levels."
The letter was accompanied by a term sheet that stated Sivin Tobin's fee for the placement would be 25 percent of the candidate's total compensation in his first 12 months at the firm.
Mr. Sivin said he received no response to the letter or to subsequent followup calls. After learning that Mr. Kim was contacted by an Akin Gump partner and an offer was likely, Mr. Sivin sent Mr. Vine a Feb. 16 e-mail stating that Sivin Tobin would expect to receive a fee should Mr. Kim join Akin Gump.
Though the law firm did not respond to Mr. Sivin at the time, it stated in court documents supporting its motion to dismiss the recruiter's suit that, at the time Mr. Sivin proposed Mr. Kim as a candidate, the firm had already been introduced to the lawyer by another recruiter, Boston Executive Search.
'Contemporaneous' Approach
Akin Gump argued that Sivin Tobin's submission was unsolicited and the law firm never intended to be bound by the recruiter's terms.
"Plaintiff's suggestion that Defendant obligated itself to two recruiting firms is not supported by any legal authority," the law firm said in court papers. "Defendant was approached contemporaneously by two different firms with respect to the same candidate. It was Defendant's choice as to which of those firms it chose to discuss Mr. Kim."
According to Akin Gump, the Boston firm was the "procuring cause" of Mr. Kim's hiring and therefore the only firm entitled to a fee under New York case law.
"Plaintiff did not provide any services to Akin Gump," the firm says in court papers. "The only thing it did was send an unsolicited resume. Plaintiff never discussed the resume with anyone at Akin Gump, arranged for any interview or negotiated any details of employment."
In a Sept. 28 decision, Justice Solomon said Mr. Sivin had adequately pleaded breach of contract, unjust enrichment and quantum meruit claims against Akin Gump.
The judge said the numerous resumes that Sivin Tobin sent to Akin Gump over the past decade demonstrated a course of conduct between the parties.
"This sufficiently pleads the existence of an implied-in-fact agreement between the parties for Mr. Kim's placement," she wrote in Sivin Tobin v. Akin Gump, 107123/06.
The decision will be published Wednesday.
For obvious reasons, legal search firms have generally avoided taking law firms to court.
"Suing a client is not something we've ever done before," Mr. Sivin said yesterday. "It's not something we like to do and it's not something we're excited about." He declined further comment on the matter.
Sivin Tobin is being represented by John M. Brickman of Ackerman, Levine, Cullen, Brickman & Limmer in Great Neck, N.Y.
Akin Gump is represented by James J. Maloney of Kavanagh Maloney & Osnato in Manhattan.
Potential for Friction
But other firms and recruiters said the overheated lateral market, especially in New York, had created greater potential for friction.
Walter B. Stuart, the partner in charge of Vinson & Elkin's New York office, said his firm signed engagement letters with a handful of recruiters it used on a regular basis. But he said other headhunters regularly "parachuted in" with candidates, and partners at the firm sometime cultivated their own contacts with recruiters.
"In those cases, you just work out the details later on," said Mr. Stuart. But such ad hoc arrangements were more likely to lead to problems later, he said, and the firm was trying to more carefully coordinate its intake process.
The firm's lateral committee tries to identify duplicate candidacies early on, said Mr. Stuart, contacting the relevant recruiters as soon as possible. Many such cases, he said, turn out to involve a fly-by-night recruiter pitching a candidate without the candidate's permission. In other cases, he said, the firm asked the two recruiters to settle matters between themselves before the candidacy moved forward.
Brian Trust, the head of Mayer Brown Rowe & Maw's New York office, agreed that the best solution was for the recruiters to work out the problem, with the firm paying nobody until the situation had been resolved.
"Everyone in this community is well served to avoid litigation," he said.
Mark Henley of New York search firm Smythe Masterson and Judd said he now only handles partners on an exclusive basis, partly to avoid such disputes. In a number of cases, he said, the candidates are at fault.
"The candidates themselves, in their desperation or strong desire to get into a firm where they feel they belong, don't watch out for how they're being presented," he said.
But Mr. Henley agreed that disputes need to be handled swiftly, even when litigation results.
He said Smythe Masterson had mostly maintained amicable relations with firms through four lawsuits over placement fees, including one several years ago against Kramer Levin Naftalis & Frankel.
"And we still do work for them," he said.
- Anthony Lin can be reached at alin@alm.com.
IBM moves key US unit to China
October 13th, 2006SHANGHAI, Oct. 13 - Computing giant IBM Corp said it was transferring its chief purchasing operations to China, a move that highlights Asia's growing importance in the global supply chain.
The decision to transfer its chief procurement office from New York to Shenzhen marks the first time the headquarters of a global IBM division has been located outside the US, the company said in a statement on Thursday.
The leading American technology and software group began shifting its Asia-Pacific headquarters from Tokyo to China's commercial hub of Shanghai in 2004, a process it completed earlier this year.
It also has major research, software, hardware and computer services operations in India which make it that nation's sixth largest technology-related employer.
The addition of its global procurement office to Shenzhen, where it has operated for over a decade and many of its 1,850 employees in Asia are based, is aimed at reshaping the company's supply base in the region, IBM said.
The firm that revolutionized office work with electronic typewriters and then personal computers collaborates with 3,000 suppliers across Asia that account for about 30 percent of the 40 billion dollars IBM spends on annual procurement.
"The demand for software and services skills -- across Asia and worldwide -- is growing," said the group's global procurement chief John Paterson.
"To meet the demand, it will require developing relationships with new partners and suppliers and working with existing ones to help them build skills, processes and management practices to compete globally in the services market."
IBM, once a leading hardware maker, struggled to transform itself over the past decade into a software producer but now earns about half of its revenues from outsourcing and IT consulting.
In May last year, it sold its personal computer unit to Chinese group Lenovo for 1.75 billion dollars, leaving the US company focused on business mainframes and consultancy services.
Paterson said it illustrated a shift underway at IBM from a multinational corporation to a new model -- a globally integrated enterprise.
"In a globally integrated enterprise, for the first time, a company's worldwide capability can be located wherever in the world it makes the most sense, based on the imperatives of economics, expertise and open environments," he said.
For the first six months of the year, IBM recorded a 15.4 percent rise in net profits to 3.73 billion dollars, on a revenue drop of six percent to 42.55 billion dollars.
US losing international clout to China - Poll
October 13th, 2006Asians see the United States losing its undisputed international influence in 50 years to possibly China amid waning trust in Washington to act responsibly in the world, a poll showed.
The study is carried out by the Chicago Council on Global Affairs (CCGA), an independent US think tank.
In the immediate term, US power in the eyes of Asians remains secure.
US influence today is "substantially above any other country" even as others have gained clout, and Asians do not predict much of decline in US influence over the next decade, according to the survey in partnership with US-based Asia Society.
In half a century, however, a majority in all countries covered by the poll -- China, India, South Korea and the United States -- believed "another nation" will become as powerful or surpass the United States in power.
"There is a clear agreement across the board that over the next half century Asians see the United States no more the sole superpower that it is or considered to be today," CCGA president Marshall Bouton told a news conference in Washington.
The survey did not specify in its questions which nation people believe will match or overtake the United States.
"We can only infer what nation people had in mind when they answered that question," Bouton said. When asked whether it was China, he said "I guess so."
China has become a global manufacturing power and is already displacing the United States as the primary trading partner for many nations.
China has also amassed the world's largest trade surplus and world's largest foreign exchange reserves. Its current account surplus has already surpassed that of Japan, the world's second richest economy after the United States.
The poll also found Asians, including the Chinese, still wanting the United States to remain engaged in the region though they express low trust in the United States to act responsibly.
Trust in the United States to act responsibly in the world is "low," according to the poll.
Biggest bio diesel oil factory to be built in China
October 13th, 2006Chinanews, Nanjing, October 12 - The biggest bio diesel oil factory will be built in Nantong, Jiangsu Province in China, and the foundation stone laying ceremony having been held on October 10.
BIOLUX biological fuel Co., Ltd, the famous Austrian bioenergy enterprise, invested 120 million Euros on the project, making it the best present to celebrate the 35th anniversary of the establishment of diplomatic relations between the two countries.
The new factory will have the capacity of processing 700 thousand tons of rapeseeds every year after completion in 2007, producing 265 thousand tons of bio diesel oil and about 400 thousand tons of protein, which will mainly be shipped to EU.
Being the biggest rapeseed producer, China has nearly unlimited potential to extract bio diesel oil. What's more, nearly 75% of China's rape fields are located in the Yangtze River basin, near the new factory. With the help of expressway and ocean shipping, the factory will surely play a very important part in the world bio diesel oil market.
China to reduce its trade growth
October 13th, 2006Chinanews, Beijing, Oct. 13 ¨C The Ministry of Commerce (MOC) has mapped out China¡¯s trade prospect for the eleventh five-year period. According to this plan, by 2010, the total trade volume will reach 2.3 trillion US dollars, increasing by 10% on a yearly basis, but far lower than the 24% actual annual trade growth rate during the tenth five-year period.
A person in charge at MOC explained that during the eleventh five-year period, China would no longer maintain the trade scale.
¡°If we set the figures too high, we won¡¯t be able to focus on the quality of the trade,¡± he said.
For many years, the high trade volume had been backed by large quantities of processing trade, which occurred in China because global economy had shifted its manufacturing base to China. After ten years of high growth, it is expected that such processing trade volume will begin to slow down. On the other hand, China¡¯s high foreign trade growth is largely prompted by its huge export volume, which is driven by a strong demand in the international market. After a certain number of years, such strong demand will also become weaker.
In order to realize the new trade goal, MOC will encourage more private enterprises to explore the international market. It is expected that by 2010, export volume contributed by private enterprises will account for 35% of the total export volume in China, while in 2005, private enterprises accounted for only 20% of the total export volume in China.
China already proceeds rapidly in its currency exchange regime, official
October 12th, 2006Chinanews, Beijing, Oct. 11 ¨C In a recent interview given to Finance and Economics magazine, Governor of the People's Bank of China Zhou Xiaochuan said that allowing more flexibility in the Renminbi exchange rate had already become a clear goal for the exchange rate regime, under which supply and demand relations in the market would become more important. Right now, the reference of a basket of currencies to which Renminbi is pegged is diminishing while market factor is playing an increasingly important role.
He said that Renminbi exchange rate regime should be a process which should follow the principles of "proceeding in a controllable and gradual way and keeping the initiative in our own hands".
The process of the Renminbi exchange rate regime depends on the current conditions of other factors related with it. The reform cannot proceed without considering other related factors. So far, the Renminbi exchange rate regime has already made great progress and the main part of the system has already been changed to be market-oriented. Judging from related factors, it can be said that the reform has already proceeded rapidly enough, Zhou Xiaochuan noted.
He pointed out that the opening of the capital projects in China should be based on two pre-conditions: first, related financial system should be operated in a healthy way -- when management is still at a relatively low level and institutional reforms have not been well applied in some micro aspects, we should not hastily open up the capital market; secondly, before we open the capital industry, related legal system should be improved to effectively protect the property rights to prevent large amounts of capital from flowing outside the country.
Shanghai Top Marques 2006 attracts well-heeled buyers
October 12th, 2006Fancy cars, private jets, diamond watches and designer clothes are attracting well-heeled buyers at Shanghai Top Marques 2006, a four-day luxury lifestyle expo at the Shanghai International Convention Center in Pudong. The organizer expects visitors to spend 500 million yuan (US$62.5 million) on luxury goods. The list of pricey products includes a rare 89.98 million yuan woodcarving, a 9.99 million yuan Koenigsegg CCR sports car - the fastest in the world - and a 7 million yuan Porsche.
Korn/Ferry Relocates Asia/Pacific Leadership From Singapore to Shanghai
October 3rd, 2006- Move is in Response to Growing Demand for Skilled Professional Labor in Greater China Region (GCR) -
Korn/Ferry International , the premier provider of executive search and leadership development solutions, today announced that it is relocating the office of its Asia/Pacific leadership to Shanghai, effective March 1, 2005. Charles Tseng, President, Korn/Ferry Asia/Pacific, will move from Singapore to oversee the strategic development of the firm's operations throughout the region, reflecting the growing importance of the Greater China Region (GCR) including Hong Kong to its business worldwide.
"As China becomes the focal point for many multi-national companies' (MNC's) long-term strategies, securing our footing here is one of the most important strategic ventures for Korn/Ferry's long-term growth," said Paul C. Reilly, Chairman and CEO of Korn/Ferry International. "Demand from our clients from around the globe has prompted this move. Shanghai alone is already home to more than 65 regional headquarters for established MNC's, with more arriving every day. "
Korn/Ferry first opened a representative office in Beijing in 1995, and then in Shanghai in 1997. In 2002, Korn/Ferry was the first major international search firm to be awarded a sino-foreign joint venture by the Beijing Personnel Bureau, followed by a similar venture in Shanghai in 2003.
"The much-used phrase 'war for talent' clearly applies to the China market -- not only in terms of Chinese and international companies looking to hire CEOs, but also in terms of mid-level managers and other 'knowledge workers,'" said Mr. Tseng. "Many of our clients are struggling to attract and retain enough local talent to fuel their plans for the market, and demand for our services is booming as a result. I am extremely pleased to make this move, which will enable us to capitalize on the tremendous opportunities presented in China and around the region."
Korn/Ferry in China: Milestones
* 1978: Opens office in Hong Kong
* 1995: Opens Representative Office in Beijing
* 1997: Opens Representative Office in Shanghai
* 1999 and 2002: Voted "Best Recruitment Firm" by "China Staff"
* 2002: Awarded sino-foreign search joint venture by Beijing Personnel
Bureau
* 2003: Awarded sino-foreign search joint venture by Shanghai Personnel
Bureau
* 2004: Introduces Futurestep service in Shanghai
About Korn/Ferry International
Korn/Ferry International, with more than 70 offices in 35 countries, is the premier provider of executive search and leadership development solutions. Based in Los Angeles, the firm partners with clients worldwide to deliver unparalleled senior-level search, management assessment, coaching and development and middle management recruitment services through its Futurestep subsidiary. For more information, visit the Korn/Ferry International Web site at http://www.kornferry.com/ or the Futurestep Web site at http://www.futurestep.com/.
Website: http://www.kornferry.com/
Website: http://www.futurestep.com/
China honors foreign experts with Friendship Awards
October 3rd, 2006Forty nine foreign experts from 19 countries were honored with Friendship Awards Friday in Beijing by the Chinese government for their outstanding contributions to the country.
Vice Premier Hui Liangyu expressed his welcome to all the foreign experts and international friends working in China.
"It's a process of give and take. Talent exchanges benefit all countries involved," said Jan Wolter Post, who was honored for his contribution to China's automobile industry by introducing advanced technology and research on green-fuel automobiles.
China was confident in opening increasingly to the world and invite more foreign experts to work in various domestic sectors, Post said.
The Friendship Award, which was set up in 1991, is the highest award the government confers on foreign experts who have made outstanding contributions to China's economic and social progress.
"Your professional qualities and dedication have deeply impressed the Chinese people, and your profound friendship with the Chinese people and your valuable contributions to China's modernization will be eternally remembered by the Chinese government and the Chinese people," Hui said.
He said the government would continue to push forward the strategy of reinvigorating China through developing skills and lay equal emphasis on the training and development of domestic talent and introducing international expertise.
A total of 850 foreign experts from 55 countries had been conferred the award by last year.
"My husband got the award in 2003 for his efforts in environment protection," German NGO expert Dorath Lehrach said.
"At that time I thought maybe someday I could be honored this award, and today it comes true," said Lehrach, who assists Chinese NGO development.
According to the State Administration of Foreign Experts Affairs, China introduced 340,000 foreign experts and professionals in 2005, but the country urgently needs senior foreign professionals with innovative, decision-making and management skills.
"We sincerely hope for and welcome the arrival of more foreign experts, overseas Chinese experts and international friends to participate in China's modernization in every way in the future," Hui said.
After the ceremony, Hui, on behalf of Premier Wen Jiabao, invited the experts and their families to attend a grand reception to mark the 57th anniversary of the founding of the People's Republic of China, which falls on Saturday.
Source: Xinhua
Why populous China is facing labour shortages
October 1st, 2006By Abdullah Al Madani, Special to Gulf News
It may be surprising to know that China, the world's most populous country, whose economic boom has largely depended on the advantage of having a huge supply of low-cost workers, faces labour shortages. Studies conducted recently show that China's problem of worker shortage, which first appeared sporadically in 2004, has now become a more persistent one. The problem has pushed up wages at a time when costs of manufacturing goods are already rising due to increases in energy prices. This is likely to weaken Chinese-made products' competitiveness on world markets, and force investors to move to lower-cost countries such as India, Vietnam and Bangladesh.
Chinese factories had to raise the minimum wage this year by as much as 30 per cent to between $70 and $85 a month. With this increase, the largest in a decade, a worker in China today is paid 30 per cent more than his counterpart in Vietnam, for example.
Acute problem
The shortage of workers is most acute in the country's export regions, namely the Pearl River Delta, which feeds into Hong Kong, and the Yangtze River Delta, which funnels into Shanghai. For example, it was officially reported that the city of Shenzhen, on the Hong Kong border, alone faced a labour shortage of about 300,000 workers this year. Commenting on the issue, a Chinese human resource expert said that a few years ago, millions of young people were still flooding into Shenzhen to search for any job at any wage, and factories did not need to put up advertisements to recruit workers or tempt them with incentives and benefits. He added: "Now we put up a sign looking for five people, and maybe one person shows up."
Factors contributing to making a country with a population of 1.3 billion have a labour shortage of nearly two million people according to an estimate are numerous. First, demand on workers has enormously increased in recent years, owning to the vast expansion of industrial, construction and services sectors.
Second, low wages, tax cuts, and long-working hours have all pushed a large number of migrant workers to quit their jobs in the booming coastal pro-vinces and move back to their farms in western provinces. The government's decision last year to eliminate the agricultural tax has fuelled the trend.
Third, Beijing's recent policy of closing the income gap between the urban rich and the rural poor through developing the economies of poor inland provinces and launching housing and infrastructure projects has created many jobs. As a result, young workers from the countryside are less willing to leave home for booming areas in search of a better life.
Fourth, unlike China's old generation, whose members sought employment without proper education or skills, members of the new generation are more ambitious and would rather first develop their skills or have university degrees in order to avoid jobs that are harsh and pay little. This can be supported by the increasing number of university students. Last year, for example, over 14 million Chinese students joined local colleges and universities, up from 4.3 million in 1999.
More old people
Fifth, China's one-child policy, which was implemented in 1979, has turned it into a country of more old and less young people. This is most acute in Shanghai, China's model of economic prosperity, where the age group of 60 and above is expected to account for 30 per cent of the population by 2020. Because of this policy, the number of Chinese aged 15-19 will decline by 17 per cent in five years, to about 103 million from 124 million today, according to a report.
China's dilemma, however, is not confined to the shortages of unskilled or semi-skilled workers. In addition, both public and private companies are having trouble finding enough talented employees and highly skilled labour to fill junior and senior managerial and other posts.
The evidence can be derived from a decision last month by the Shanghai municipal government to hold job fairs in North America in an effort to attract expatriates and overseas Chinese professionals to work in the city.
According to a recent study conducted by McKinsey Global Institute, Chinese firms seeking to expand abroad and continue growing in the years to come will need up to 75,000 internationally experienced leaders. Currently, only 5,000 such leaders are available in the country. Local universities must be held responsible for this, given their failure in producing more graduates capable of working successfully in world-class-companies and brilliantly serving the fast-growing domestic economy. Among the 1.7 million students who graduated in 2003 from over 1,500 local colleges and universities, only a few hundreds had good English and practical experience a requirement of most multinational firms.
O'Melveny & Myers Receives 2006 China Practice of the Year Award
October 1st, 2006 Annual Award Recognizes Legal Excellence in World's Most Dynamic
Marketplace
HONG KONG, Sept. 29 /PRNewswire/ -- O'Melveny & Myers LLP has been
recognized by Asian Legal Business (ALB) with the 2006 China Practice of
the Year award. Finalists were recognized for their "outstanding client
service as well as their ability to combine rigorous analysis with astute
judgment to give clients a competitive edge." O'Melveny's selection from a field of seven international law firms was announced at ALB's annual awards dinner on September 22, 2006 in Hong Kong.
"O'Melveny & Myers is honored and very proud to receive this award,"
said Howard Chao, co-head of the firm's China Practice. "We thank our many loyal clients in China for their support over the years and in connection with this award. Our growth and successes have derived from their confidence in us."
ALB gathers peer nominations from a wide range of practitioners in the relevant jurisdiction. A summary of the nominations together with firm submissions and additional third-party material gathered by the ALB
research team are then forwarded to a panel of judges. The panel, mainly
composed of senior in-house lawyers, then vote for winners in each
category.
"This award acknowledges the great platform we have developed in China and the terrific work we are doing here," said Michael Moser, co-head of the firm's China Practice. "Our clients are very focused on the myriad opportunities in China and we are dedicated to ensuring their success."
"As one of the world's most important economies, China is a top
priority for virtually all of our clients," said Arthur B. Culvahouse, Jr., Chair of O'Melveny & Myers LLP. "To provide the level of service to meet our client's growing needs in Asia -- and more specifically in China -- we have assembled an outstanding group of lawyers. This honor from Asian Legal Business confirms the excellence and prominence of our China Practice."
Asian Legal Business is the only independent magazine dedicated to the latest legal news, events, and developments in the Asia-Pacific region.
About O'Melveny & Myers' China Practice
O'Melveny's China practice is one of the leading international law firm practices in Asia. With close to 100 professionals in Shanghai, Beijing, and Hong Kong, we provide quality advice in the areas of foreign direct investment, mergers and acquisitions, capital markets transactions, private equity, financing, intellectual property and dispute resolution. Our China operations are closely integrated with China practice groups located in our U.S., Japanese and European offices. O'Melveny & Myers is licensed as a foreign law firm in China and works closely with local law firms on China law matters.
About O'Melveny & Myers LLP
O'Melveny & Myers LLP is a values-driven law firm guided by the
principles of excellence, leadership, and citizenship. With the breadth,
depth, and foresight to serve clients competing in a global economy, our
lawyers devise innovative approaches to resolve problems and achieve
business goals. Established in 1885, the firm maintains 13 offices around
the world, with more than 1,000 lawyers. O'Melveny & Myers' capabilities
span virtually every area of legal practice, including antitrust/Competition; Appellate; Class Actions, Mass Torts & Aggregated
Litigation; Corporate; Corporate Finance; Electronic Discovery;
Entertainment & Media; Global Enforcement & Criminal Defense; Health Care & Life Sciences; Insurance; Intellectual Property & Technology; Labor & Employment; Mergers & Acquisitions; Private Equity; Project Development & Real Estate; Restructuring; Securities Enforcement & Regulatory Counseling; Securities Litigation; Strategic Counseling; Tax; and Trial & Litigation.
China Gaining Ground in Global 'Head and Brains Race'
October 1st, 2006COLUMBUS, Ohio, Sept. 29 /PRNewswire-FirstCall/ -- Global competition, once defined by the Cold War arms race, has evolved into a "head and brains race" where nations measure success through the development and application of technology.
That was one of the conclusions from a Battelle-R&D Magazine report on international research and development trends. The report frames international competition as evolving from the arms race to a "hands race" based on lower-cost manual labor and now to the head and brains race driving the current escalation of R&D spending.
"It is tempting, and certainly reasonable, to acknowledge the fact that each of these races has involved a reliable adversary," says Dr. Jules Duga, senior research scientist at Battelle and co-author of the report. "These adversaries continue to present challenges to the United States that can be met and conquered or accommodated only by long-term strategic investment and will."
While the U.S. remains the standard-bearer in terms of worldwide R&D, China is emerging as an R&D giant. That trend will continue, the report projects.
The U.S. is responsible for 32.4 percent of global R&D this year, compared to 13.4 percent for China. Those numbers were first and second, respectively, worldwide but represent a decline for the U.S. and an increase for China. The same trend will continue in 2007, according to the report, when the U.S. will be responsible for 31.9 percent of global R&D and China 14.8 percent.
"There still is a considerable gap," says Duga, "but it's closing."
With China leading the way, Asia continues to seize more and more of the international R&D market. Asia's share of global R&D grew from 34.9 percent in 2005 to 35.6 percent this year and should continue to grow to a projected 36.5 percent in 2007, according to the report. The U.S., over the same period, has declined from 32.7 percent to 32.4 percent this year and is projected to dip to 31.9 percent next year.
Changes in government attitudes, direct government investments, liberalization of their economies, and an increased emphasis on developing a highly educated, technology-oriented population are some of the factors leading to the R&D growth in Asia. These also are reasons why industry from all over the world is changing the way it develops relationships with the R&D communities from these burgeoning countries. The first steps could be characterized as casual, "testing-the-waters" interactions that included preliminary contract research arrangements. These quickly have evolved into major investments in institution-building, the creation of subsidiary operations, and the development of a wide range of joint ventures.
"It is apparent that the modifications in the internal policies of East and South Asia, in particular, have had and will continue to have an influence on the amounts and patterns of R&D performance in the U.S. and other nations," says Tim Studt, editor of R&D Magazine and Duga's co-author on the report.
Outsourcing of R&D has been a growing trend and will continue to grow as long as the cost of doing business makes sense for U.S. companies, concludes the report. The lower costs in most areas, especially China and India, enhance the competitive position as compared to other (usually domestic) resources and lead to measures of higher productivity. When other advantages, such as enhanced global R&D infrastructure and improved support for other global operations, are considered, the value of outsourcing becomes apparent, says Duga.
"Host countries like China and India have come well down the road in terms of providing a technology-friendly environment," Duga says.
Battelle has prepared a report on U.S. R&D funding annually for more than 40 years, including the last 12 in partnership with R&D Magazine. Duga has co-authored that forecast for 27 years. This is Battelle's second comprehensive report on international R&D spending.
The full report is included in the September issue of R&D Magazine. Reprints are available by contacting Battelle's Jean Hayward at (614) 424-7039 or at haywardj@battelle.org.
Battelle is a global leader in science and technology. Headquartered in Columbus, Ohio, it develops and commercializes technology and manages laboratories for customers. Battelle, with the national labs it manages or co- manages, oversees 20,000 staff members and conducts $3.4 billion in annual research and development. Battelle innovations have included the development of the office copier machine (Xerox); pioneering work on compact disc technology; fiber optics for telecommunications; development of new medical products to fight diabetes, cancer and heart disease; breakthroughs in environmental waste treatment; homeland security technologies; and advancements in transportation safety and security.
Shanghai Leader Chen Liangyu Sacked!
September 26th, 2006When living in Shanghai for quite some years, I did have a positive impress at Mr. Chen Liangyu, then vice-Mayor, mayor & later the city General Secretary of Party. Now when I am reading news titles from the subscribed RSS, I learned he was dismissed by being accused of violating discipline and law [links to Xinhua (in Chinese) or to BBC (in English)]. Snips of AP report seemly have other aspects of the case.
Shanghai is a bastion of Hu's predecessor, Jiang Zemin, and Chen's removal could be part of a strategy to weaken rivals in the collective leadership for Hu to better position himself and the allies he wants to maneuver into place.
Chen was viewed as a Jiang protege and therefore an ally in the former leader's attempts to wield influence even in retirement. He reportedly clashed with Premier Wen Jiabao over Beijing's efforts to cool economic growth, lobbying instead for ambitious infrastructure projects for China's wealthiest and most populous city.
"It's a serious warning to corrupt officials and to those who don't toe the party line," said Joseph Cheng, director of the Contemporary China Research Center at Hong Kong's City University.
Major reshuffles of local leaders are planned for many areas ahead of the congress, the Beijing-linked Hong Kong newspaper Wei Wei Po reported Monday. It said local leaders who have defied Beijing's economic policies would be singled out.
With his protector Jiang now descending into political obscurity, Chen could face a lengthy jail term or other harsh punishments.
"Sacking Chen shows that Jiang has no power to protect his proteges and is in no position to affect the choice of new leaders," said City University's Cheng.
Chen was last seen in public on Friday at a meeting of chief justices from China, Russia and four Central Asian states. Mayor Han also attended, but neither man spoke in public.
It was unclear what impact, if any, the scandal may have on Vice Premier Huang Ju, the most senior leader in the Shanghai faction and sixth-highest ranking Communist Party official.
Huang disappeared from the political scene early this year amid reports that he had cancer. But in recent months he has made a number of public appearances.
China is Nasdaq's fastest source of growth in new listings, executive says
September 24th, 2006SHANGHAI, China Chinese companies are the Nasdaq's biggest source of new listings and don't appear to be discouraged by stricter legal requirements, the U.S. exchange's international president said Wednesday.
Mainland Chinese companies now account for 29 of about 3,300 companies listed on Nasdaq, said the president of Nasdaq International, Charlotte Crosswell, in an interview in Shanghai.
The exchange also lists around 50 firms from Hong Kong, a Chinese special autonomous region, putting China third behind first-place Israel and second-place Canada in having the most non-U.S. listings on the Nasdaq, Crosswell said.
"Obviously the growth is coming from China, and that's where we're really seeing the pipeline expand, in terms of numbers of companies coming to market," said Crosswell, who was in China's commercial hub to encourage the parade of new Chinese firms marching toward listings on America's largest electronic stock market.
The growth comes despite the potential disadvantage American exchanges face from the relatively strict rules on reporting and corporate governance required by the U.S. government.
Nasdaq President and CEO Robert Greifeld earlier this month said efforts to attract international listings have been hampered by the Sarbanes-Oxley Act, which took effect in 2002 in response to several U.S. corporate scandals.
However, Crosswell said Chinese companies tell her the regulatory hassles are offset by the added trust from investors. Chinese firms also have comparatively little difficulty implementing the requirements because they are often too young to have developed rigid corporate structures, she said.
"They believe it's a good thing to have," Crosswell said. "They're actually very happy they can prove they can comply with it because they think that's a good story for investors."
As part of its expanded presence in China, Crosswell said Nasdaq was now advising firms that were still two to three years away from listing. It formerly worked mainly with companies that were much closer — usually six months to a year — from listing on the exchange.
While Nasdaq listings from China have traditionally come from the high-tech sector, they are now hailing from increasingly diverse industries, including services, manufacturing, health care and media, she said.
Business has also been boosted by agreements with the governments of Zhejiang and Jiangsu, two of China's most economically dynamic provinces, to steer local companies toward Nasdaq listings.
Crosswell declined to give a figure on numbers of upcoming new listings or any other specific business plans in China, but she said growth was accelerating.
"It's really starting to pickup," she said. "It's certainly our fastest growing market."
Crosswell said the Nasdaq doesn't seek to compete with local stock markets and prefers to encourage firms to launch dual listings at home and in the United States.
Internationally the exchange continues to view the New York Stock Exchange as its chief rival, she said.
Along with competing to draw foreign listings, the Nasdaq and NYSE have become rivals in expanding overseas in a first wave of consolidation in global stock markets.
Nasdaq amassed a 25 percent ownership stake in the London Stock Exchange, Europe's biggest market, after the LSE rejected Nasdaq's initial US$4.2 billion takeover offer in March.
SHANGHAI, China Chinese companies are the Nasdaq's biggest source of new listings and don't appear to be discouraged by stricter legal requirements, the U.S. exchange's international president said Wednesday.
Mainland Chinese companies now account for 29 of about 3,300 companies listed on Nasdaq, said the president of Nasdaq International, Charlotte Crosswell, in an interview in Shanghai.
The exchange also lists around 50 firms from Hong Kong, a Chinese special autonomous region, putting China third behind first-place Israel and second-place Canada in having the most non-U.S. listings on the Nasdaq, Crosswell said.
"Obviously the growth is coming from China, and that's where we're really seeing the pipeline expand, in terms of numbers of companies coming to market," said Crosswell, who was in China's commercial hub to encourage the parade of new Chinese firms marching toward listings on America's largest electronic stock market.
The growth comes despite the potential disadvantage American exchanges face from the relatively strict rules on reporting and corporate governance required by the U.S. government.
Nasdaq President and CEO Robert Greifeld earlier this month said efforts to attract international listings have been hampered by the Sarbanes-Oxley Act, which took effect in 2002 in response to several U.S. corporate scandals.
However, Crosswell said Chinese companies tell her the regulatory hassles are offset by the added trust from investors. Chinese firms also have comparatively little difficulty implementing the requirements because they are often too young to have developed rigid corporate structures, she said.
"They believe it's a good thing to have," Crosswell said. "They're actually very happy they can prove they can comply with it because they think that's a good story for investors."
As part of its expanded presence in China, Crosswell said Nasdaq was now advising firms that were still two to three years away from listing. It formerly worked mainly with companies that were much closer — usually six months to a year — from listing on the exchange.
While Nasdaq listings from China have traditionally come from the high-tech sector, they are now hailing from increasingly diverse industries, including services, manufacturing, health care and media, she said.
Business has also been boosted by agreements with the governments of Zhejiang and Jiangsu, two of China's most economically dynamic provinces, to steer local companies toward Nasdaq listings.
Crosswell declined to give a figure on numbers of upcoming new listings or any other specific business plans in China, but she said growth was accelerating.
"It's really starting to pickup," she said. "It's certainly our fastest growing market."
Crosswell said the Nasdaq doesn't seek to compete with local stock markets and prefers to encourage firms to launch dual listings at home and in the United States.
Internationally the exchange continues to view the New York Stock Exchange as its chief rival, she said.
Along with competing to draw foreign listings, the Nasdaq and NYSE have become rivals in expanding overseas in a first wave of consolidation in global stock markets.
Nasdaq amassed a 25 percent ownership stake in the London Stock Exchange, Europe's biggest market, after the LSE rejected Nasdaq's initial US$4.2 billion takeover offer in March.
SHANGHAI, China Chinese companies are the Nasdaq's biggest source of new listings and don't appear to be discouraged by stricter legal requirements, the U.S. exchange's international president said Wednesday.
Mainland Chinese companies now account for 29 of about 3,300 companies listed on Nasdaq, said the president of Nasdaq International, Charlotte Crosswell, in an interview in Shanghai.
The exchange also lists around 50 firms from Hong Kong, a Chinese special autonomous region, putting China third behind first-place Israel and second-place Canada in having the most non-U.S. listings on the Nasdaq, Crosswell said.
"Obviously the growth is coming from China, and that's where we're really seeing the pipeline expand, in terms of numbers of companies coming to market," said Crosswell, who was in China's commercial hub to encourage the parade of new Chinese firms marching toward listings on America's largest electronic stock market.
The growth comes despite the potential disadvantage American exchanges face from the relatively strict rules on reporting and corporate governance required by the U.S. government.
Nasdaq President and CEO Robert Greifeld earlier this month said efforts to attract international listings have been hampered by the Sarbanes-Oxley Act, which took effect in 2002 in response to several U.S. corporate scandals.
However, Crosswell said Chinese companies tell her the regulatory hassles are offset by the added trust from investors. Chinese firms also have comparatively little difficulty implementing the requirements because they are often too young to have developed rigid corporate structures, she said.
"They believe it's a good thing to have," Crosswell said. "They're actually very happy they can prove they can comply with it because they think that's a good story for investors."
As part of its expanded presence in China, Crosswell said Nasdaq was now advising firms that were still two to three years away from listing. It formerly worked mainly with companies that were much closer — usually six months to a year — from listing on the exchange.
While Nasdaq listings from China have traditionally come from the high-tech sector, they are now hailing from increasingly diverse industries, including services, manufacturing, health care and media, she said.
Business has also been boosted by agreements with the governments of Zhejiang and Jiangsu, two of China's most economically dynamic provinces, to steer local companies toward Nasdaq listings.
Crosswell declined to give a figure on numbers of upcoming new listings or any other specific business plans in China, but she said growth was accelerating.
"It's really starting to pickup," she said. "It's certainly our fastest growing market."
Crosswell said the Nasdaq doesn't seek to compete with local stock markets and prefers to encourage firms to launch dual listings at home and in the United States.
Internationally the exchange continues to view the New York Stock Exchange as its chief rival, she said.
Along with competing to draw foreign listings, the Nasdaq and NYSE have become rivals in expanding overseas in a first wave of consolidation in global stock markets.
Nasdaq amassed a 25 percent ownership stake in the London Stock Exchange, Europe's biggest market, after the LSE rejected Nasdaq's initial US$4.2 billion takeover offer in March.
Large numbers of low quality talent hurt China
September 24th, 2006China needs to take action against the large number of poorly qualified and low quality professionals with university or college certification, Chinese Talents Society Vice President Wang Tongxun said.
China Youth Daily reports Wang Tongxun issued his warning at a forum on human resources development held recently in Beijing.
Record numbers of Chinese citizens have received higher education in recent years. Over 66.5 million people have college degrees or above and around 17% of high school graduates enrol at university. There were 2.8 million graduates in 2005, nearly 9 times the number of graduates in 1985.
But Wang Tongxun said that as universities and colleges grow from institutions that cater to an elite group of students to institutions that education the masses, several problems have been created.
Degrees and titles are easy to obtain in China. Some universities or colleges issue diplomas recklessly, even providing them to people who have not attended the university courses. The lack of a sound qualification system allows poorly skilled Chinese professionals to receive titles more easily than their foreign counterparts.
Wang Tongxun also said the academic research at Chinese universities and research institutes is often carried out in a poorly planned and impatient manner. The resulting papers are rarely cited by foreign researchers and rank below 120 in the world in terms of citations. As a result, most of the research has no value and can't be put into practice.
To compound the problem, the tendency for employers to value people according to their degrees rather than their talent and work experience has led to a culture of degree-hunting where people neglect to improve their talents in a measurable way.
Finally, Wang Tongxun said the phenomenon has led to a brain drain. Around 930,000 Chinese have traveled overseas to study since 1986, but only 230,000 have returned
Heidrick & Struggles Adds New Partner to Singapore Office
September 23rd, 2006CHICAGO, Sept. 1 /PRNewswire-FirstCall/ -- Heidrick & Struggles International, Inc. (Nasdaq: HSII), the world's premier executive search and leadership consulting firm, today announced that Karen Choy-Xavier has joined the firm's Singapore office as a Partner in the Industrial and Technology practices. Choy-Xavier will focus on building relationships with Southeast Asia-based businesses and on the placement of chief information officers with companies operating throughout the region.
"With the hiring of Karen, we have doubled our consultant teams in Singapore to six in the past eight months," said Charles Moore, Managing Partner, Singapore. "With her extensive background in executive search, Karen is a significant hire for Heidrick & Struggles in Asia, particularly given our growing market share in the region."
Choy-Xavier has 18 years of experience in executive search. Her depth of focus with companies based in Singapore and across Asia Pacific is highly regarded, particularly in the technology, industrial and consumer spaces. Prior to joining Heidrick & Struggles, Choy-Xavier spent 10 years with Spencer Stuart as a Partner. Her network of contacts and relationships in Asia Pacific has served her well, exemplified by her numerous senior-level placements within both locally based and Fortune 500 companies.
Choy-Xavier's formative years were spent in sales and marketing for technology pioneers Wang and Digital Equipment. She holds bachelor's degrees in computer science and psychology from McMaster University in Hamilton, Ontario, Canada, and speaks fluent Mandarin, Cantonese, Malay and English.
About Heidrick & Struggles International, Inc.
Heidrick & Struggles International, Inc. is the world's premier provider of senior-level executive search and leadership consulting services, including talent management, board building, executive on-boarding and M&A effectiveness. For more than 50 years we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, our leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit http://www.heidrick.com . SOURCE Heidrick & Struggles International, Inc. Local, Jennifer Tow of Manifesto Ltd, +1-852-2526-1972, jennifer@manifesto.com.hk , or Corporate, Christina Stratinsky of Heidrick & Struggles International, +1-312-496-1646, cstratinsky@heidrick.com
Few Asia boards plan CEO succession: survey
September 23rd, 2006Only one-third of company directors in Asia outside Japan have taken formal steps to ensure an orderly succession when a chief executive leaves, a recruitment firm's study said Monday.
The findings are a stark contrast to some Western countries where up to 80 percent of directors have steps in place to see that when one chief executive departs, a replacement is ready to assume the post.
Among the markets surveyed were China, Hong Kong, Thailand, Malaysia, Singapore, Australia and New Zealand.
The board of directors study was produced by Korn/Ferry International. It looked at boardroom practices of major companies, covering 1,200 directors from 15 economies. Compared to Asia's 34 percent of directors who had taken formal steps to ensure orderly succession, the Americas, including the United States, Brazil and Colombia, emerged with 76 percent, according to results published in The Straits Times.
Eighty percent of companies in Australia and New Zealand have a process for management succession.
"Boards in the Asia-Pacific are beginning to take a more calculated approach to board governance, adopting more Western practices to improve the performance of their boards," Marta Grutka, regional director of marketing at Korn/Ferry, was quoted as saying.
Noting that much of Asia has handled management changes through family ties, she said that the process is changing.
China’s Online Recruitment Market Reached RMB 160.9 Million in 2006 Q2
September 23rd, 2006Analysts International, which provides business information about Technology, Media and Telecom (TMT) industries in China, says that China’s online recruiting market reached RMB 160.9 Million in 2006 .
As the overall online recruiting market keeps on increasing, online recruiting service vendors turn to focus more on the applications of mobile Internet, and come to provide SMS services one after another. The rapid growth of employees brought great development potential for the online recruitment, and overseas investments come to pay attention to the online recruiting market. Analysts International thinks that vendors who have the capability to provide personalised services will become the first ones to charge the users for the services. And meanwhile, more online recruiting websites will put more focus on the exploration on the regional market.
According to Analysts International’s research, the China’s online recruiting market reached RMB 160.9 Million in 2006Q2 with a growth of 8.44% over last quarter. Among which, online recruiting revenue from recruiting web sites whose services are targeted at national scope took 76.4% of the overall market size, and revenue from recruiting web sites with service targeted at provincial scope took 19.3%.
Figure: China’s Online Recruiting Market of 2006 Q2
Analysts International thinks that combination of online services and offline promotion is a major profit model of online recruiting. “As the rising of the online recruiting industry, online recruiting gradually transfer to industry segmentation, industry-based professional services become popular among users. Advantage becomes more obvious for those online recruiting service providers who focus on industry services,” says Huang Yongtao, analyst from Analysts International, “If we look from the aspect of industry competition, we can find that more communities and search engine portals start their business expansion to online recruiting in hopes of making good use of their advantage of accumulations on interpersonal relationships to achieve business value in HR field.”
Japanese expats in China making money and building friendships
September 19th, 2006BEIJING — Li Jun is typical of China’s new middle class. Educated at university, he worked as a financial manager with a multinational firm in Shanghai. He recently bought a digital camera at one of the city’s ubiquitous electronics stores. The make? Kodak, an American brand. Li says he didn’t want to give his hard-earned money to Sony, Olympus, or any other Japanese company. It’s a sentiment shared by Zhang Yong, a deputy general manager at one of China’s leading securities companies. On the mention of Japan, he tenses up with hackles raised.
The fractious relationship between Asia’s economic giants — Japan, the world’s second biggest economy; China its fourth — has come to the fore again as Japan’s ruling Liberal Democratic Party on Sept 22 chooses a new leader to succeed Junichiro Koizumi as prime minister.
On Aug 15, Koizumi fulfilled his long-standing pledge to visit Yasukuni Shrine on the anniversary of Japan’s surrender in World War II. The shrine honors soldiers who have died fighting for their country, including 14 convicted Class-A war criminals whose names were added by the shrine in a secretive ceremony in 1978. Koizumi has visited Yasukuni every year since taking office in 2001, each time saying he went to pray for peace. Each time, China and South Korea condemned him for trampling on the feelings of the victims of Japanese military aggression.
Chinese “hatred” of Japan is balanced by a fair amount of materialistic love, too, as a visit to any modernizing Chinese city reveals. The fashions of Shibuya influence the denizens of Shanghai and Shenzhen as much as those of any other city in Asia. Hello Kitty is everywhere. Order a beer in a restaurant and you’re more likely to get Suntory than Tsingtao. Hondas, Toyotas and Nissans fight for space on the crowded streets.
More than 100,000 Japanese living in Shanghai
There are more than 100,000 Japanese living in and around Shanghai, according to the Japanese consulate, making it the third-biggest Japanese expat community in the world, after New York and Los Angeles. More than a million Japanese visit the city each year for holidays and business trips. There were more than 5,085 registered Japanese companies operating there at the end of 2005, from small restaurants to multi-national corporations. These days, they’re not only building factories to make cheap goods for rapid export, they’re opening local headquarters and selling to China’s increasingly wealthy consumers, too.
Among those entrepreneurs is restaurant owner Teruo Katayama. He predicts Shanghai will one day be like New York, so he wanted to get in on the action early. Similarly, Yuzo Sajiki and his business partner chose Shanghai as the first location for what they hope will be an international chain of hair salons. They settled on the city — after also considering Taipei, Hong Kong and Singapore — because the beauty industry is still developing. Sajiki, who trained in London and worked in New York, also felt an affinity with Chinese people. Others, like Akiko Mitani, a human resources consultant, went to learn the language to improve their career prospects. Mitani found love with a Chinese man and stayed.
For many Japanese in China, the dream turned sour in April 2005 when anti-Japanese protests started in Shenzen and spread across the country. On April 16, protests in Shanghai turned violent. Initially there was a festive atmosphere, according to witnesses such as journalist Dan Washburn, who also writes the Shanghai Diaries blog (www.shanghaidiaries.com). Things got ugly, though, as three different marches converged on the Japanese Consulate on Wanshan Road. Lines of paramilitary police protected the building, but stood by as protestors lobbed bottles, bricks and stones. Nearby, 20 Japanese restaurants and businesses were attacked.
There was no single trigger for the demonstrations, although at that time there was anger about a new Japanese history textbook that glossed over wartime atrocities. Japan was also bidding for a seat on the United Nations Security Council, and there was posturing over the ownership of the Senkaku (Diaoyu) Islands — and, of course, the festering issue of Yasukuni.
“The scale of violence was on a level we never imagined,” says Shigeru Toyama of the Japanese consulate in Shanghai. The police told the consulate that they had not given a permit for the demonstration. Under international law, it is up to the Chinese to compensate for the damage. Over a year later, the repairs have not been paid for, but negotiations continue. Initially, when the consul general visited the local government, they claimed that Japan was responsible for what had happened.
The Shanghai government said it tried to stop the protests, but independent reports indicate that the demonstrations had at least tacit support from the authorities. One blogger reported of a Red Cross Station set up near the consulate on the request of the local government. Later, the authorities — mindful of events in Tiananmen Square in 1989 — evidently became worried that the protests might trigger domestic upheaval. University students were required to watch videos about the demonstrations and told not to protest again. According to Toyama, many protestors were in fact dissatisfied with social conditions, and the violence was “not actually targeted at Japan,” he says.
That was initially hard to swallow for Katayama, who dreamed of becoming China's first Japanese restaurant chain to sell “okonomiyaki” and curry rice. Conveniently located on the route to the consulate, his business was ransacked, its screens, tables and chairs hauled outside and set ablaze. Emi Nakao, a translator and writer, says she was too scared to go outside and became wary of speaking Japanese in public. One girl was hit by a man on the subway because she was speaking Japanese on her mobile phone, according to Mitani.
Even so, “the aftermath was not so serious,” says Toyama. Some Japanese-owned businesses actually experienced a boost from the problems. Sajiki’s hair salon, Matinee, which was not damaged, saw customers increase as more Chinese came by with words of encouragement. It was a similar story at Katayama’s restaurant, Ajikura, when it reopened. He also got valuable publicity when his story was reported in media around the world. “Now 70% of our customers are Japanese, the other 30% Chinese and other nationalities, whereas before they were mainly Japanese,” he says.
Expats trying to help the relationship
By working in China, many Japanese feel that they are helping the relationship between the two countries, as well as making a living. Toshie Nakai decided to move to Shanghai 10 years ago after learning of the hotel boom in China. Now in charge of training at a five-star American hotel, she works with a team of Chinese and deals with cultural differences on a day-to-day basis. On the Chinese side, she had to instill among the workforce an ethos of customer service and hospitality; among her Japanese guests, she had problems with older men getting drunk in public wearing only yukata, behavior that seemed arrogant to Chinese. “I had to educate them,” she says. “They came here thinking they were visiting somewhere like a local Japanese hot springs.”
Japanese-language magazines, such as Hu-ism and Shanghai and Beijing Whenever, are doing their bit to close the gap. Akiko Hagiwara is a former editor of Hu-ism. “I wanted the magazine to focus on art and human interest stories,” she says, to communicate the culture of China to Japanese readers.
Carina Chen is an active advocate of better Sino-Japanese relations and formed the KIM cultural exchange group four years ago. (KIM comes from the Japanese words kako, ima and mirai, or past, present and future). KIM meetings attract up to 100 participants, about a 50-50 mix of Japanese and Chinese along with some other speakers of Japanese. On the day of the demonstrations, Chen arranged for Japanese scholar Tone Morimoto to talk to the Shanghai YMCA about the two countries’ relationship.
Chen went to Tokyo for a two-month exchange program when she was a high school student and expected Japanese people to be severe and unfriendly. Instead she found them to be kind. Lou Ning, a computer programmer, tells a similar story about his 16 years living in Tokyo, and agrees that mutual mistrust is a product of ignorance. Interestingly, they both feel that Japanese people often don’t like Chinese culture. “If I was Japanese and came to China, I would see so many things that I would find unacceptable,” Lou says.
Mixed Japanese-Chinese couples sometimes have more problems with Japanese relatives than Chinese ones. Akihiro Sawano, a deputy sales manager who lives in Shanghai, met his wife, Wang Min, when he came to China to work for a Japanese electronics company. His wife’s family had no problem with their marriage in 1999, but his own mother wasn’t happy and still hasn’t visited them. Sawano and his family mostly speak Chinese at home, although his young son, Ryo, is bilingual and goes to a Japanese school. Mitani also had problems with her family when she married her husband, Zhou Yunbo. “When we met, he couldn’t speak any Japanese, and they were worried that I’d be living in a Communist country,” she recalls.
Human-to-human contact between Chinese and Japanese invariably helps mutual understanding, Chen says. Conversely, misunderstandings are exacerbated and perpetuated by schools (although the irony of Chinese protesting about inaccurate textbooks was lost on demonstrators), and the media, which in China is tightly controlled by the state.
Recently, questions have surfaced about freedom of expression in Japan, too. A right-winger was recently arrested for burning down the house of Koichi Kato, a once-powerful politician who publicly criticized Koizumi for visiting Yasukuni shrine. The alleged arsonist later tried to kill himself in Kato’s garden in the traditional hara-kiri manner.
Koizumi protege Abe also reportedly worshipped at the shrine in secret earlier this year. If Abe is elected and again follows in Koizumi’s footsteps into the hallowed courtyards of Yasukuni as Japan’s leader, it won’t help thaw the icy state of Northeast Asian politics, whatever he prays for. Instead, it’s left to individuals — expats and locals, in Tokyo, Beijing, Shanghai and elsewhere — to maintain the bonds of friendship.
“Sixty years ago Japan was dark, like this 60-year-old kimono,” KIM founder Chen says in her fluent Japanese, pointing at a fabric in the antique shop she manages. “Now the culture is light. People change.”
The hope of Chen and others with a vested interest in Japan and China being friends is that politicians change too.
China's employment sector under pressure, labor minister
September 19th, 2006Minister of Labor and Social Security, Tian Chengping, has said that China faces pressure to provide jobs to the more than 100 million surplus rural laborers and that the situation is unlikely to change in the near future.
These comments were made Thursday when he gave a speech at American think-tank Brookings Institute in Washington.
Tian Chengping explained that in the coming years, 24 million people will need jobs in cities and towns. However there will only be 11 million jobs available, including posts made available by retirement. There will be 13 million surplus laborers in urban areas.
He said that in central and western regions and resource-exhausted cities, the pressure is even greater. In rural China there are 497 million laborers, approximately 200 million of which have migrated to towns or cities for work. However, there is still a 100 million surplus labor force.
Tian Chengping says China has made a great effort to create more jobs. Between 1998 and 2005, 19 million workers laid-off by state-owned enterprises were reemployed. At the end of last year, the urban unemployment rate was below 4.2 percent. A total of 36,000 employment agencies have been established.
Tian Chengping also talked about China's efforts to establish a social security system and to guarantee workers' rights. Those who neglect workers' rights can be punished according to law.
By People's Daily Online
China to receive bigger IMF voice
September 19th, 2006By Steven R. Weisman The New York Times
Published: September 18, 2006
SINGAPORE Member states of the International Monetary Fund, yielding to demands from China and leading Western countries, have adopted a plan to modify the fund's power structure and take steps to expand the voice of China and other rapidly developing nations, officials said Monday.
The modification of the governance of the IMF, the international agency that monitors the global economy and rescues countries from insolvency, was widely described as the biggest step since the fund was established in the 1940's, the era when the victors of World War II created the vast cooperative superstructure for the world economy.
China's share of the votes at the IMF, which has 184 members, would go up only slightly, from 2.98 to 3.719 percent. The shares of South Korea, Turkey and Mexico, the other countries that gained more power from the vote Monday, was similarly modest. But it was hailed by the United States and other nations as a decisive reform.
"It looks like a small step forward, but it's a large step," said Henry Paulson Jr., the U.S. Treasury secretary, who was here for the annual meeting of the IMF and the World Bank and participated in morning-till-night sessions assessing the global economy and possible steps to assure its health.
The precise tally of the IMF members was not available early Monday evening.
In a separate development, a committee of finance ministers that oversees the World Bank endorsed in principle a plan by Paul Wolfowitz, the bank president, to crack down on corruption in the bank's lending, but not unreservedly. They added a proviso that the bank's board of executive directors, a separate group that oversees the day-to-day bank operations on behalf of donor and recipient nations, be able to override the way Wolfowitz carries out the plan.
Wolfowitz, a conservative intellectual who was an architect of the Iraq war as deputy secretary of defense in the first term of President George W. Bush, has stirred unease in the bank with his corruption policy. Many directors fear that it could be overly punitive and lead to cutbacks in aid to poor countries.
The finance ministers' committee also raised concerns, Wolfowitz said, involving the standards to apply to various countries and the question of how much the bank's resources should go to anti-corruption plans.
The finance ministers' committee issued a statement that supported the anti-corruption campaign but with what seemed to be muted wording. It backed the bank's "engagement" on the issue but demanded further information on implementation, and in a suggestion of unhappiness, "stressed the importance of board oversight of the strategy."
Some officials here indicated that the wording of the committee's statement reflected discomfort with Wolfowitz, but Wolfowitz said he was pleased the board had given him a green light to proceed with what has become a signature issue for him in his 15 months at the bank.
Throughout the meetings of the last few days in Singapore, much of the criticism of participating countries has focused less on the World Bank than on the overhaul of the IMF. The fund vote needed 85 percent of the 184 member countries' voting shares to be adopted.
The United States has about 17 percent of the vote and Europe in aggregate about 23 percent. Paulson and his European counterparts have spent much of their time here lobbying other countries to agree to the reform. Japan has 6.1 percent.
The vote was not very much in doubt, but many countries that voted in favor said they did so under protest and insisted that in a second round of discussions, also approved by the vote here, scores of countries will be demanding a bigger voting share for themselves.
The change in the fund governance was advocated by the United States and many European countries as a way of getting China and other developing countries to feel more invested in the international economic system.
The IMF is one of many institutions that American and European officials say are in need of change. There are fears of disaffection with the World Trade Organization, the successor of a global trade regime set up 60 years ago, following the collapse last summer of trade talks.
Western leaders also want to change the composition of the United Nations Security Council, adding some countries to the roster of five permanent veto-bearing members. But they have been unable to agree on which countries to add. The United States wants to add Japan and one of several developing countries seeking membership.
Wolfowitz has said that his organization, the World Bank, also needs to change its governance to give more say to China and other fast-growing countries in the developing world.
Under the surface of the IMF vote was another objective of the United States: to engage China in the fund as it expands its role in monitoring currency flows and exchange rates. Washington hopes that the fund will become another voice urging China to let its currency fluctuate more freely in relation to the dollar.
If there was one overriding consensus among European and American finance ministers, it was that China is artificially keeping the value of its currency low in relation to the dollar, and that this is an unhealthy pattern also being followed by Japan and other Asian nations.
The net effect, economists say, is that Chinese exports are cheaper than they should be, and its imports are more costly than they should be, aggravating the huge U.S. trade and current-account deficits that have turned the United States into the world's biggest debtor nation.
The gigantic American debt that the United States owes to Asian and oil-producing countries was widely seen as posing a major threat to the global economy, along with other threats like the failure of trade talks, rising oil prices and fears of a major new terrorist attack.
As a partial solution the United States wants China to let its currency, the yuan, float more freely in the marketplace, where it would presumably rise in value and lead to fewer exports to the United States. The flip side of an appreciating yuan would be a lower value of the dollar, but American officials never like to be seen "talking down" the dollar.
Paulson told reporters Monday that the Bush administration favored a "strong dollar." But when asked about a comment from Zhou Xiaochuan, governor of the People's Bank of China, the central bank, that the yuan might not rise in value if it were to fluctuate freely, the Paulson smiled broadly and said: "It was an interesting comment."
But many economists fear that the solution of stronger Asian currencies might create a new problem. If a decline in the dollar effective reduces the hundreds of billions in dollar-denominated securities held overseas, it could lead to a panic-driven sell-off of dollars, driving up interest rates with possible damaging effects to the U.S. economy.
Paulson, meeting with reporters, said the IMF vote marked an incremental bit of pressure on China to do something about its currency, and he aimed to reinforce American concerns when he goes to China on Tuesday for his first visit as Treasury secretary.
He cautioned against "immediate solutions or quick fixes" flowing from his trip, but he also said "that doesn't mean I don't like results."
Few other economists and officials here expect Paulson to get Beijing to move quickly on currency, despite the many years of relations he cultivated with Chinese leaders as head of Goldman Sachs, the investment bank he left last summer for his current post.
SINGAPORE Member states of the International Monetary Fund, yielding to demands from China and leading Western countries, have adopted a plan to modify the fund's power structure and take steps to expand the voice of China and other rapidly developing nations, officials said Monday.
The modification of the governance of the IMF, the international agency that monitors the global economy and rescues countries from insolvency, was widely described as the biggest step since the fund was established in the 1940's, the era when the victors of World War II created the vast cooperative superstructure for the world economy.
China's share of the votes at the IMF, which has 184 members, would go up only slightly, from 2.98 to 3.719 percent. The shares of South Korea, Turkey and Mexico, the other countries that gained more power from the vote Monday, was similarly modest. But it was hailed by the United States and other nations as a decisive reform.
"It looks like a small step forward, but it's a large step," said Henry Paulson Jr., the U.S. Treasury secretary, who was here for the annual meeting of the IMF and the World Bank and participated in morning-till-night sessions assessing the global economy and possible steps to assure its health.
The precise tally of the IMF members was not available early Monday evening.
In a separate development, a committee of finance ministers that oversees the World Bank endorsed in principle a plan by Paul Wolfowitz, the bank president, to crack down on corruption in the bank's lending, but not unreservedly. They added a proviso that the bank's board of executive directors, a separate group that oversees the day-to-day bank operations on behalf of donor and recipient nations, be able to override the way Wolfowitz carries out the plan.
Wolfowitz, a conservative intellectual who was an architect of the Iraq war as deputy secretary of defense in the first term of President George W. Bush, has stirred unease in the bank with his corruption policy. Many directors fear that it could be overly punitive and lead to cutbacks in aid to poor countries.
The finance ministers' committee also raised concerns, Wolfowitz said, involving the standards to apply to various countries and the question of how much the bank's resources should go to anti-corruption plans.
The finance ministers' committee issued a statement that supported the anti-corruption campaign but with what seemed to be muted wording. It backed the bank's "engagement" on the issue but demanded further information on implementation, and in a suggestion of unhappiness, "stressed the importance of board oversight of the strategy."
Some officials here indicated that the wording of the committee's statement reflected discomfort with Wolfowitz, but Wolfowitz said he was pleased the board had given him a green light to proceed with what has become a signature issue for him in his 15 months at the bank.
Throughout the meetings of the last few days in Singapore, much of the criticism of participating countries has focused less on the World Bank than on the overhaul of the IMF. The fund vote needed 85 percent of the 184 member countries' voting shares to be adopted.
The United States has about 17 percent of the vote and Europe in aggregate about 23 percent. Paulson and his European counterparts have spent much of their time here lobbying other countries to agree to the reform. Japan has 6.1 percent.
The vote was not very much in doubt, but many countries that voted in favor said they did so under protest and insisted that in a second round of discussions, also approved by the vote here, scores of countries will be demanding a bigger voting share for themselves.
The change in the fund governance was advocated by the United States and many European countries as a way of getting China and other developing countries to feel more invested in the international economic system.
The IMF is one of many institutions that American and European officials say are in need of change. There are fears of disaffection with the World Trade Organization, the successor of a global trade regime set up 60 years ago, following the collapse last summer of trade talks.
Western leaders also want to change the composition of the United Nations Security Council, adding some countries to the roster of five permanent veto-bearing members. But they have been unable to agree on which countries to add. The United States wants to add Japan and one of several developing countries seeking membership.
Wolfowitz has said that his organization, the World Bank, also needs to change its governance to give more say to China and other fast-growing countries in the developing world.
Under the surface of the IMF vote was another objective of the United States: to engage China in the fund as it expands its role in monitoring currency flows and exchange rates. Washington hopes that the fund will become another voice urging China to let its currency fluctuate more freely in relation to the dollar.
If there was one overriding consensus among European and American finance ministers, it was that China is artificially keeping the value of its currency low in relation to the dollar, and that this is an unhealthy pattern also being followed by Japan and other Asian nations.
The net effect, economists say, is that Chinese exports are cheaper than they should be, and its imports are more costly than they should be, aggravating the huge U.S. trade and current-account deficits that have turned the United States into the world's biggest debtor nation.
The gigantic American debt that the United States owes to Asian and oil-producing countries was widely seen as posing a major threat to the global economy, along with other threats like the failure of trade talks, rising oil prices and fears of a major new terrorist attack.
As a partial solution the United States wants China to let its currency, the yuan, float more freely in the marketplace, where it would presumably rise in value and lead to fewer exports to the United States. The flip side of an appreciating yuan would be a lower value of the dollar, but American officials never like to be seen "talking down" the dollar.
Paulson told reporters Monday that the Bush administration favored a "strong dollar." But when asked about a comment from Zhou Xiaochuan, governor of the People's Bank of China, the central bank, that the yuan might not rise in value if it were to fluctuate freely, the Paulson smiled broadly and said: "It was an interesting comment."
But many economists fear that the solution of stronger Asian currencies might create a new problem. If a decline in the dollar effective reduces the hundreds of billions in dollar-denominated securities held overseas, it could lead to a panic-driven sell-off of dollars, driving up interest rates with possible damaging effects to the U.S. economy.
Paulson, meeting with reporters, said the IMF vote marked an incremental bit of pressure on China to do something about its currency, and he aimed to reinforce American concerns when he goes to China on Tuesday for his first visit as Treasury secretary.
He cautioned against "immediate solutions or quick fixes" flowing from his trip, but he also said "that doesn't mean I don't like results."
Few other economists and officials here expect Paulson to get Beijing to move quickly on currency, despite the many years of relations he cultivated with Chinese leaders as head of Goldman Sachs, the investment bank he left last summer for his current post.
China to face 13m job gap yearly
September 17th, 2006Winny Wang
2006-09-15
UNEMPLOYMENT will be a long-term problem in China as the country has a large population but insufficient jobs, Tian Chengping, minister of Labor and Social Security, said yesterday during a speech at the Brookings Institution in Washington DC.
Tian said more than 24 million people will find jobs every year in cities and towns in the next few years, while the country can only offer 11 million vacancies. The problem is much more serious in middle and western regions, he said.
In rural areas, about 100 million people are unemployed among the workforce of 497 million.
Tian said China has made an effort to decrease its unemployment rate. From 1998 to 2005, 19 million laid-off workers were reemployed, and the unemployment rate in urban areas remained stable at 4.2 percent by the end of last year.
The country has set up more than 36,000 job agencies
At a regular State Council meeting on July 25, Chinese Premier Wen Jiabao proposed that China should keep its urban unemployment rate within 5 percent in the coming five years.
DaimlerChrysler Opens New Manufacturing Facility in China
September 17th, 2006Beijing Benz-DaimlerChrysler Automotive Ltd. (BBDC) celebrated the opening of its new manufacturing facility today at a ceremony which included government officials, executives, community leaders and more than 1,000 employees of the joint venture and its two shareholders, DaimlerChrysler AG and Beijing Automotive Industry Holding Co. (BAIC).
The hour-long ceremony included presentations of two vehicles produced at BBDC – the Mercedes-Benz E-Class and the Chrysler 300C. Local production of the Mercedes-Benz E-Class began ramping up last December, while production of the Chrysler 300C will begin soon.
"Almost a quarter of a century after DaimlerChrysler co-founded the first international automobile joint venture in China, the opening of the BBDC’s new manufacturing facility is another milestone in our long tradition in China," said Dr. Dieter Zetsche, Chairman of the Board of Management of DaimlerChrysler AG and Head of the Mercedes Car Group. "This brand new facility is tangible example of our continued growth in Northeast Asia and a major step towards realizing our ambitious goals in the fastest growing market in the world."
Zetsche was joined by Beijing Lord Mayor Wang Qishan; DaimlerChrysler Board of Management Member responsible for Corporate Development, Dr. Rüdiger Grube; BAIC Chairman An Qinghen; DaimlerChrysler Northeast Asia Chairman and CEO Dr. Till Becker, BBDC President Guenter Butschek, and other officials and executives.
With a total land area at the site of 2 million sq. meters, BBDC’s new facility is located in the Beijing Development Area (BDA) in Southeast Beijing. The 210,000 sq. meter facilities currently produce Mercedes-Benz E-Class and Mitsubishi Outlander sedans, and will begin producing Chrysler 300C sedans soon. The next-generation Mercedes-Benz C-Class is also slated for production. BBDC has the capacity to build up to 25,000 Mercedes-Benz vehicles, and 80,000 Chrysler and MMC vehicles annually, with room to expand as needed.
The overall manufacturing site includes a “Mercedes Car Group” facility, a “Chrysler Group / MMC” facility, paint shop and stamping facilities, as well as environmental, logistcs, and energy management centers. The Mercedes Car Group and Chrysler Group/MMC facilities each include separate body shops and assembly areas designed to accommodate the specifications for each brand. Both operations are flexible enough to introduce new models and to adjust particular volumes based on demand.
By adopting best practices in vehicle production and technology worldwide, the facilities’ main processes of stamping, painting, welding and final assembly set a new benchmark for the Chinese domestic automotive industry.
As in all DaimlerChrysler plants, the production system in China has been designed to ensure that any abnormality in the manufacturing process is properly identified and fixed. Both BBDC and DaimlerChrysler engineers have been training production colleagues to ensure that they are fully capable of meeting the high standards, and they are also empowered to continue to make improvements. The BBDC Automotive Technical Training Center, jointly built with Beijing Automotive Industrial School, trains employees on the DaimlerChrysler production system. The training center uses trainers from Germany, and will also send colleagues to train on the line in Germany.
Founded on August 8, 2005, BBDC is a joint venture between the Beijing Automotive Industry Holding Co. Ltd, and DaimlerChrysler. It is an expansion of the original Beijing Jeep Corporation, which was the first international automotive joint venture in China.
DaimlerChrysler and its partners are making significant investments in China for its ongoing and future projects to produce Mercedes-Benz passenger cars and vans and realize the production of heavy-duty and medium-duty trucks. The Chrysler Group will build the Chrysler 300C in Beijing, and license minivan production in Fuzhou (PRC) and Yangmei (Taiwan). DaimlerChrysler Auto Finance China became the first company in China to offer vehicle financing for both passenger cars and commercial vehicles. Additionally, DaimlerChrysler Northeast Asia imports passenger cars and commercial vehicles to Northeast Asia under the Mercedes-Benz, Maybach, smart, Chrysler and Jeep brands.
Avon powers ahead with China recruitment
September 17th, 20069/16/2006 - Having received the first license for a foreign-owned company to resume direct sales of cosmetic products in China, Avon added more than 33,000 new sales staff to its workforce there last month, according to data from the Chinese Ministry of Commerce.
The data, which was cited by Morgan Stanley in a note to investors, stated that the 33,339 new representatives were added to the work force in the month of August, bringing the total number of representatives to 188,273.
The figures indicates that the company is recruiting at an even faster rate than it had originally expected. Back in July the company said that its China sales force had reached 114,000 and that it was hoping to recruit a further 31,000 new employees.
Avon received the go ahead to resume door-to-door sales back in January of this year. The move followed the government lifting a total ban on direct sales implemented in 1998 in an attempt to quash pyramid schemes and other scams that were being offered on a door-to-door basis in the country.
Morgan Stanley reiterated in its note to investors that China remains Avon's brightest hope for future growth at the moment, with the recruitment drive likely to boost sales for the second half of the year and helping to buoy the company's overall results in the Asia Pacific market.
Although the general trend in the company's global sales has been positive, the Asia Pacific region has proved particularly disappointing for the company as a whole. With the exception of China, the company reported a poor performance in other countries in the region, contributing to a 10 per cent drop in sales during the second quarter of the year.
But where other Asian markets are showing slow retail sales, the China market remains robust. Currently China is seeing some of the largest industry growth in the world, with almost all cosmetic and toiletry categories reporting sales growth well into double figures - figures that are in line with GDP that continues to exceed 10 per cent.
This growth could prove the key to getting Avon out of a difficult situation. Restructuring charges have hit the company hard of late, forcing investors to shy away from its shares. Following the announcement of its second quarter results at the beginning of August, the Avon share price fell over $5 to reach $27.40 on August 8. Since then the share price has leveled off and finished trading at $29.54 this week.
But the downward trend in the company's share price reflects a general loss of confidence. The company's latest results showed that sales had gone up, but underlying growth was below analyst's expectations, due mainly to the heavy restructuring charges the company incurred.
During its second quarter net income dropped 54 per cent to reach $150.9m on the back $2.1bn in sales, up 5 per cent on the same period last year.
This figure was impacted by a $49m charge, as part of its massive $500m restructuring program, introduced in the last quarter of 2005. The scheme has seen profits tumble by 54 per cent but eventually could save the company $100m a year.
The restructuring costs have included organizational realignments and a reduction in the workforce, particularly in its middle management that has seen the elimination of more than 25 per cent of its management positions and lowered the number of management tiers from 15 to eight.
To date the company has now eliminated 10 per cent of its 43,000 worldwide workforce, however the expansion into China is helping to reverse that trend, emphasizing just how important the upturn in the China market is to the company.
Google Opens China; Hiring In Japan
September 17th, 2006Kai-Fu Lee and company now have new office space available to them in China. Meanwhile, Google has begun searching for more engineers in Japan to work on new mobile technologies.
The People's Daily Online celebrated 85 years of the Communist Party of China with a banner atop the announcement of Google's new office space in Beijing. Commentary from the news organization stated Google moved into their new quarters on September 4th, having temporarily been housed at Xinhua Insurance Mansion and Tsinghua Science Mansion.
The report described a picture of one workspace as "easy to mistake the office for a personal study." I don't know how many personal studies have dual widescreen computer monitors on the desks and sheathed swords on the walls, but that must be more commonplace in China.
Another set of photos of Google's China staff at work and play shows them making sculptures out of a magnetic construction set and rocking out to Dance Dance Revolution. If they get hungry, there are plenty of snacks available.
Meanwhile in Japan, Google's Omid Kordestani addressed a conference in Tokyo. Reuters reported that Kordestani wants to grow the company's international sales from 42 percent of revenue to more than half.
They will recruit engineers in Japan to help accomplish this. Google already has a deal in place that delivers its mobile search and advertising to cellphones, and they want more from the market according to Kordestani:
"We hope to be much bigger in Japan," Omid Kordestani, Google's senior vice president in charge of global sales, told a conference in Tokyo. "We want more innovation in this market."
"The mobile search and ad in Japan has been very successful," Kordestani said. "It was developed by our engineers in Japan, New York and other locations."
Kordestani also said that Google is seeking to develop new technologies for social network services (SNS.)
"Activities on SNS are bigger than any other activities on the Internet," the executive said. "We're looking to work more in this area."
Google and Guanxi in China
September 17th, 2006Jake at Demo China has an important article on Google's market share in China with plenty of back-up links. Google continues to fall behind China's premiere search engine Baidu. Two research groups show about a 13% increase in Baidu search trsaffic and a 12.3% drop for Google searches in Beijing. The stats seem to be consistent with data mined in other parts of China.
The data does not surprise me as Google pays little attention to the unique needs of Chinese users. The sad part for Chinese users is: Baidu's top search results are pretty much bought and paid for by advertisers; so, the average netizen is not getting an honest cyber-portrait of the best site for his query. And expats and tourists to China are more likely (based on my personal un-scientific study involving 25 new visitors and 15 fossilized expats) to use Google to find services and businesses in their area. And they would get infinitely better results by using Google or Yahoo!: type in Embassy phone numbers China and none of the top 10 entries will get you to a consular officer. In contrast, Google gives you 7 official and unofficial sites that will help those in need of a bureaucrat.
And I think Baidu's numbers will mislead businesses that cater to foreigners. Advertising dollars that could bring them real traffic from customers with disposable income will likely be diverted to an ineffective Baidu. And Baidu is as expat friendly as Google is attractive to Chinese Nationals. Google spent a Googol last year on market research (100 times more than Baidu), but did it from the comfort of their California home. Baidu does not have to get off the couch as they have the confidence, whether worthy of it or not, of Chinese netizens and advertisers.
A funds manager in New York asked me last year asked me why I believed that Baidu would outdistance Google in China when it paid so little to understand the marketplace. I predicted that Google would flounder based on the ancient Chinese pronciple of Guanxi (literally: relationships, but far deeper in meaning) that so far, only Bill Gates has done a good job of understanding. According to Robert Buderi and Gregory Huang in Guanxi: The art of relationships: Microsoft went at the problem of opening up the China market in a way that was a departure for most Western companies. Instead of focusing on sales or cheap manufacturing possibilities, Bill Gates imagined tapping into China’s vast pool of talented computer science students and harnessing their energy in a way that would be mutually beneficial to Microsoft and China. He visited China’s top leaders repeatedly over the years, building a relationship and opening doors. He practiced Guanxi, a Chinese term that conveys trust and mutuality. Says Huang, the “most important principle is that relationships must be nurtured over time. They can’t be bought or rushed.”
I have not agreed with Google or Yahoo's policies since they came to China, but along MSN, I rely on their accuracy in reporting. But, if they are going to stop the economic bleeding they had better find a vendor of Guanxi fast and take a double dose just for good measure. And Baidu had better wise up before someone actually tries marketing a home-grown engine with a touch of honesty.
by Lonnie Hodge
10 sexy jobs
September 16th, 2006By Candace Corner
CareerBuilder.com
(CareerBuilder.com) -- Money, power, fame and glamour are just some of the elements that take a career choice from tedious to tantalizing, but there's a little more to it than that.
In the same way that physical beauty is in the eye of the beholder, the definition of what qualifies as a "sexy" is a matter of what you find most attractive about a job's responsibilities.
Firefighters are sexy because their role requires bravery, and doctors have sexy jobs because they have commitment and credentials. Danger and intrigue can also factor in to what we find alluring.
If there's one other thing sexy jobs share with the perceptions of physical beauty, it's that society, for the most part, creates a general guideline for what makes a job hot. We find interest in the rich and famous and the jobs that seem to have the best perks.
Here are some examples of jobs that sizzle:
1. Showgirl
Why it's sexy: Their job involves performing dances in elaborate, revealing costumes onstage.
Where you'll find them: For the most part, it's Vegas, baby. They're onstage, in the dressing room or working out.
The pros: They're in the spotlight, in peak shape, and always look amazing.
The cons: It's harder than it looks, and involves constant exercise and a lot of practicing. Costume headpieces are heavy and people often confuse showgirls with being part of the sex industry.
2. Couture salespeople
Why it's sexy: The rich and famous often shop high-end. The right store and location means there is a likely chance of working with A-list celebrities and other beautiful people.
Where you'll find them: Mostly in New York, Los Angeles, London, Paris and Milan, but basically anywhere where wearing the latest trend is more important than the price tag.
The pros: It opens up opportunities for meeting the right people to launch a future position in fashion or as a personal assistant. And you can't beat the employee discount.
The cons: Retail is still retail, so expect to continue folding sweaters, re-organizing racks and assisting crabby customers.
3. Fashion journalist
Why it's sexy: These people know the industry inside and out, attend all of the fashion shows and schmooze with designers and other influential people.
Where you'll find them: In the press seats by the runway and on location for interviews. While it's not mandatory, there are more people working in the major fashion capitals.
The pros: Amazing samples and the opportunity to meet some of the biggest names in the business.
The cons: Finding work can be difficult. Writing reviews in this industry means a lot of working hours and dealing with city expenses and difficult people.
4. Runway model
Why it's sexy: They showcase the latest fashion and their job is to be beautiful.
Where you'll find them: On the runway and at fashion shoots, largely at the fashion capitals, but also anywhere there are designers looking to show the public their newest creations.
The pros: They have a reputation for being hot and they get paid for it.
The cons: Competition is fierce. The model look that's in-demand at the moment may not be what designers are looking for next season.
5. Hotel concierge
Why it's sexy: They're smooth operators and know all the right people and places in the area.
Where you'll find them: At upscale hotel locations and around the grounds making sure everyone's happy.
The pros: Area businesses are more likely to treat you right, since you recommend new business.
The cons: Long hours and the not-so-glamorous duty of dealing regularly with difficult personalities.
6. Makeup artist
Why it's sexy: They transform and enhance people's looks to be their best or most interesting.
Where you'll find them: At counters, on film sets, in dressing rooms and anyplace else where someone is going to be televised, photographed or doing a big appearance.
The pros: There is an amazing chance for advancement from counter rep to launching a signature beauty line or garnering celeb clientele once a reputation is established.
The cons: A client with a good experience will say a lot, but so will those with bad experiences. Word-of-mouth creates the biggest buzz, so this could work against a makeup artist.
7. Stunt double
Why it's sexy: Stunt men and women defeat the odds while they leaping off buildings, cruising through fires and conquering car crashes. The thrill and the danger create a high.
Where you'll find them: Somewhere dangerous or somewhere relatively safe and doing something dangerous.
The pros: They get the reputation of surviving some of the most death-defying acts humanly possible.
The cons: Stunts don't always get the recognition they deserve in the public eye.
8. Magazine photographer
Why it's sexy: They are paid to capture images of beautiful and interesting people and locations.
Where you'll find them: At photo shoots and in dark rooms. The majority of the work is in New York and Los Angeles.
The pros: Their creative vision pays off, literally.
The cons: Expensive and heavy equipment, finding the right frame and needing to talk your subjects into your ideas.
9.Club owner
Why it's sexy: They are their own bosses and they create the atmosphere where people go to party.
Where you'll find them: Working the room and overseeing the scene.
The pros: As the owners of the area hotspots, everyone wants to know them. Reputation makes the business.
The cons: Trends come and go, and if club owners can't keep it interesting, patrons will party elsewhere.
10.Professional investigator
Why it's sexy: Their job is all about uncovering confidential information, whether it's insurance fraud or cheating spouses.
Where you'll find them: Doing research, testifying in court or on location for surveillance.
The pros: Uncovering infidelities and getting justice for the romantically wronged is their bread and butter.
The cons: Serving subpoenas and other court-related work is the unglamorous side of their business. The work can also be sometimes perceived as seedy by the general public.
Developing a Jobs Market In a Fast-Changing China
September 15th, 2006As chief executive of China's third-biggest online recruitment company, Liu Hao makes a living off the demand for talented people eager to prosper in the nation's dynamic economy.
Zhaopin.com Ltd. has 18 offices across the country and more than 1,000 employees. At any given time it typically posts 200,000 to 300,000 jobs, ranging from drivers to salespeople to senior executives. Mr. Liu says that is 10 times the number of offerings in 2002, when he took over Zhaopin, in which he was a major investor.
Both the company, whose name means "recruitment" in Chinese, and the industry are still small. Market-research firm iResearch estimates that China's online job-recruitment market was worth about 800 million yuan, or about $100 million, last year, and puts Zhaopin's 2005 revenue at 70 million yuan and its market share by registered users that year at 9.8%. Mr. Liu puts its market share by revenue at 20% to 25%.
But the industry is growing fast. And Zhaopin, which started up in 1994 and now counts such regular clients as the China units of Microsoft, Unilever, Alcatel, BMW and Hitachi, is growing with it. The online recruitment market was up 46% from 2004, iResearch reckons, and Mr. Liu says earnings, which he won't disclose, are, like his job postings, 10 times what they were in 2002. In April of last year, Monster.com, a major U.S. online recruitment company, spent $50 million to buy 40% of ChinaHR.com, one of Zhaopin's two larger rivals. (The other is 51job.com.)
Mr. Liu, 37 years old, takes pride in having propelled the company to its current position. His co-investors include the venture-capital arms of computer maker Lenovo Group and Taiwan's Acer Group. He says Zhaopin could go public, perhaps next year.
But Mr. Liu also takes pride in his own metamorphosis, from Beijing University physics major to Yale University law-school graduate and attorney at New York-based multinational law firm Davis Polk & Wardwell to California venture capitalist to entrepreneur, believing that in the end it's better to commit to one vision than to make a run at many projects.
Mr. Liu spoke from Beijing with Juying Qin in Hong Kong about that principle and about connecting China's leaders and workers with jobs in a fast-changing economy.
WSJ: How does Zhaopin.com mediate between prospective employer and job hunter?
Mr. Liu: We usually sign contracts with our clients or the employers. We check the veracity of the company as well as the job positions they want to post. Job hunters can put their own information into our database .
WSJ: Have you ever found your jobs online?
Mr. Liu: Well, no.
WSJ: What was your first job and what was the most important lesson you learned from it?
Mr. Liu: Practicing tax law. I was extremely impressed. The law firm is like a university or a learning machine, passing along knowledge to junior associate lawyers like me. Law students still tend to be less practical, especially Yale law students.
WSJ: Why did you turn from physics student to lawyer to venture capitalist and then to corporate executive?
Mr. Liu: Being a physicist was my childhood dream. But after a few years, I had a lot more discoveries about myself. I call this process rediscovery.
I went to law school not because I wanted to be a professional lawyer but because in law school, students could be exposed a lot more extensively to society. From a venture capitalist to the manager of this company was quite a natural choice for me. I was managing the company at the time as an investor, the company was not doing well, and I thought it was kind of an obligation for me to go in.
Most of my friends were against my choice, in part because they thought the risk was so high. Being a venture capitalist or being a lawyer is really kind of a cushy job. Lawyers do not really take that much risk. You do give advice to your clients, and you do have to make judgment calls, but those judgment calls do not eventually affect you.
To be a lawyer, you need to restrain your passion and be unemotional. To be a manager, you have to have some passion. If you don't have it, you can't do it.
Fundamentally I felt like were all kind of passive. In my life, I have always wanted to point to something that I really built.
WSJ: You didn't go to business school and had no real managing experience before. What made you so confident you could turn this company around?
Mr. Liu: I actually asked myself the same question when I took this position. But I think personality is the most important thing that leads to success. I was always able to manage the transitions well, from physicist to lawyer and then to venture capitalist, so I should be able to manage another transition well.
WSJ: In your industry, are there big differences between China and the rest of the world?
Mr. Liu: The American job market is more like a seller's market, while China, with a larger labor base, is more like a buyer's market. But the job market in China is nascent. Fundamentally, its problems reflect the problems stemming from the educational system.
Many fresh college graduates don't have the skills to cope with real work. They don't have enough career training. So it can be quite hard for them to find their niches in the first couple of years after graduation.
There are two main problems. First, some people, especially fresh college graduates, make fake résumés by exaggerating their experiences. Second, people change jobs very frequently.
WSJ: Can you describe China's leadership potential?
Mr. Liu: The quality of managers in China has been improving quite obviously in recent years, but there are still far fewer experienced managers than the market demands. Back in 2000 to 2002, people without much management experience could easily get around by carrying some master-of-business-administration degree from some big-name university like Harvard, although some were really not very capable.
WSJ: What is the most important piece of technology you use?
Mr. Liu: Basically I talk on the cellphone 24 hours a day. Sometimes people call me at 3 a.m., and they don't even ask whether I was asleep. If I didn't have a cellphone with me, I would start to worry about what I am missing. This really has become part of my body.
Ping An May Cash in on China Finance Share Craze
September 15th, 2006A possible $2.5 billion secondary offering bid by the insurance giant highlights how hot the market for mainland financial services remains
The stampede by Chinese financial services players to raise megabucks with initial or secondary stock offerings shows no signs of letting up. China Merchant's Bank, the nation's sixth biggest lender, has been overwhelmed by applications from institutional and retail investors for its $2.4 billion initial public offering that will start trade on Sept. 22.
In October, the mainland's biggest lender, Industrial & Commercial Bank of China (ICBC), hopes to rake in $19 billion in a dual listing of shares in Hong Kong and Shanghai in what will likely be the biggest IPO in history (see BusinessWeek.com, 9/5/06, "China Bank Stocks: What, Me Worry?").
Now Chinese insurers may be jumping into the act. Ping An Insurance, China's second biggest life and No. 3 non-life insurance company, may be planning to raise $2.5 billion in a secondary share offering either in Shanghai or Shenzhen during the first half of 2007, according to a report by Bloomberg News. Reached by e-mail, a spokesman for Ping An, which is based in Shenzhen, declined to comment on the report.
EASY MONEY. Given the rapacious appetite for Chinese financial stocks, the odds are pretty good Ping An is taking a serious look at the offering idea. Global and mainland investors just can't seem to get enough of Chinese bank and financial service shares. Two big, mainland, state-owned banks, China Construction Bank and Bank of China, had little trouble selling a combined $22 billion-plus worth of share offerings over the past year in listings in Hong Kong and Shanghai (see BusinessWeek.com, 5/31/06, "A Golden Age for Chinese Banks").
Many are betting that China's stellar growth, burgeoning middle class, and rising disposable incomes will set the stage for the mainland to emerge as one of the most dynamic financial services markets in the 21st century. Meanwhile, Chinese banks and insurers have a choice opportunity to raise a lot of money effortlessly, to grow their businesses, and to hunt for acquisitions.
For instance, China Construction Bank, whose share price has appreciated more than 40% since its IPO last October, announced on Aug. 24 that it will spend $1.24 billion to buy the Hong Kong consumer-banking operations of Bank of America (BAC). Ping An spent more than $600 million in July to buy 89% of Shenzhen Commercial Bank, which will move the insurer into the explosively fast-growing mainland credit card business as well as into commercial banking.
STRONG BALANCE SHEET. Ping An, which is 19.9% owned by HSBC (HBC), is considered a well-managed company by analysts, and has ambitious plans to diversify beyond insurance and into banking, securities, and asset management. It also has a strong balance sheet compared to other Chinese insurers. "Ping An group's capitalization is strong by domestic standards," says a recent report by Standard & Poor's credit analysts Connie Wong and Qiang Liao.
Thanks to robust growth in its core life insurance business, Ping An's 2006 first-half net income jumped 85% to $524 million. Ping An chairman and Chief Executive Ma Mingzhe has won high marks for recruiting overseas talent and building up a strong brand presence in China. "Half of the company's high-level management team members are from overseas," Sun Jianyi, vice-CEO at Ping An, told BusinessWeek in a recent interview.
Ping An ranked No. 6 in a BusinessWeek.com and Interbrand Asia survey of China's top 20 brands published last month (see BusinessWeek.com, 8/28/06, "BW's 20 Best Chinese Brands"). That kind of name recognition will come in handy should the Chinese insurer ask mainlanders to pony up a cool $2.5 billion next year.
Korn/Ferry Profit Rises 28% on Strong Demand
September 14th, 2006Executive recruiter Korn/Ferry International reported higher quarterly profit on strong global demand for senior-level staff.
Net earnings rose 28% to $14.8 million, or 31 cents a share, in its fiscal first quarter, from $11.6 million, or 27 cents, a year earlier.
Analysts, on average, expected profit of 30 cents a share, according to Reuters Estimates.
Total sales were up 25% to $161 million, compared with Wall Street estimates of $149 million in revenue. Fee revenue was $153 million, up 25% from a year earlier.
The company, which also provides leadership development services, won more search engagements and charged higher fees, citing continued global economic expansion for the improved results. It also said clients were focusing as much on retention and development of their workforces as on recruitment.
Los Angeles-based Korn/Ferry said it expected second-quarter earnings of 28 cents to 32 cents a share, compared with Wall Street forecasts of 31 cents. It estimated second-quarter fee revenue of $147 million to $157 million.
Its shares gained 27 cents at $20.19.
Western companies find China hiring surprisingly tough
September 13th, 2006PARIS (MarketWatch) -- Hubert Giraud of French IT and consulting company Capgemini (12533.FR) never thought hiring people in China, the world's most populous country, would be so difficult.
As multinationals like Capgemini flood the market looking for skilled workers, they are running up against unforeseen problems. Salaries among qualified workers are rising faster than expected, mid-level managers in their 40s are scarce, education standards are weak and many Chinese say they'd rather work for a local rather than Western company.
Strong competition for experienced employees, the cultural complexities of working in a Western company and the sense that the top positions will always be held by European or U.S. managers push many Chinese workers out of Western companies after only a few years.
"Eighty million people live in this province," Giraud says, referring to Guangdong in southern China, where Capgemini employs 500 people in its business outsource unit. "When you see that you think you can get anything you want. It's just not true."
In a nation of 1.3 billion only 5.2% of the population has a college degree and above, China's National Bureau of Statistics reported in March. By comparison, roughly 25% of the U.S. population of 298 million have college degrees.
Many multinationals, which spend heavily on training young Chinese graduates to compensate for the educational shortfalls, lose them to local companies after a few years because young Chinese perceive that opportunities for career development and promotion are greater.
In China as well as rapidly developing economies like India, it isn't unusual for Western companies to lead investment and import their own educational standards. What surprises some companies are the lengths to which they have to go to train young Chinese, as opposed to Indians who generally have workable English.
It's not uncommon, managers interviewed for this article say, for a company to lose a third of its workforce in a year. Heidrick and Struggles, a headhunting firm, said in a July study that "talented managers" in China change jobs every 15 months at present.
Heidrick says most companies are happy if they can limit turnover to no more than 15%, particularly in fast-growing industries like technology and telecommunications. Bob Krysiak, STMicroelectronic NV's (STM) president and general manager for Hong Kong, Taiwan and China, says attrition rates for the company's China operations range between 12% and 15%.
"China is like the Internet bubble in the U.S. - vibrant and bullish," says Vincent Gauthier, general manager for Hewitt Associates in Hong Kong. "If you are in your 30s, have English and skills you can walk right out of one job and into another without breaking a sweat. And people do."
The recent influx of college students to Chinese universities means it is easy to recruit 22-year-olds with no job experience. However, people with even a few years of experience are in deep demand.
The surge in employment opportunities has been driven by China's entry into the World Trade Organization in 2001, which led to a leap in investment in China. Last year foreign companies invested $60 billion in China from $38 billion in 2000, according to the China's National Bureau of Statistics.
China's Ministry of Commerce said in the first four months of 2006 roughly 12,000 new foreign companies began operations in China. Heidrick and Struggles notes that established companies in China, both local and foreign, are rapidly expanding their ranks. Of the companies polled by Heidrick, the number of those with staff of more than 5,000 tripled in the last two years from two to six.
Few companies are backing down from ambitious plans to carve out a corner for themselves in China's thriving marketplace, despite rising wages and intense competition. That is because most companies see the Chinese market itself as an important source of revenue. According to Heidrick and Struggles, two-thirds of respondents cite selling to China's 1.3 billion people as the key reason for being in China while setting up operations to outsource goods for the West is a secondary concern.
Both U.S. based and other foreign companies face intense competition for staff and rising salaries to increase their operations. Capgemini, which derives 1% of its revenue from China, is looking to triple its staff in China in the next four to five years to 2000-3000 employees.
STMicro, which draws a quarter of its sales from China, announced last spring it would invest $500 million in a new semiconductor factory. It plans to hire 2,500 across China during next few years.
Meanwhile, General Electric Co. (GE) said it is looking to maintain its annual 10% earnings growth in part by outsourcing to China. At present the company makes about $5 billion in revenue from China and recently Chairman Jeff Immelt said he expects that number to double in the next four to five years. GE employs 13,000 people in China.
The labor shortage, particularly among experienced workers, means companies routinely poach talent from each other, driving up salaries in the process. Hewitt Associates estimates that wages are rising as much as 15% a year for experienced, English-speaking workers, but anecdotal evidence puts the number much higher.
Stefan Dyckerhoff, head of Capgemini's consulting arm in China, hires first-year consultants for $5,000 a year but bumps their pay up to $35,000 by the third. By comparison the average rural salary in China is $225 annually and the average urban salary is $1,164 according to the China's National Bureau of Statistics. Dyckerhoff says salary inflation is outpacing what the company charges in consulting fees, though profit is still possible.
STMicro which employs 4,000 people in China, pays a relatively experienced engineer in Shanghai about $40,000 a year, about a third less than an engineer's salary in Silicon Valley, but not a pittance, the company says.
The problem says STMicro's Krysiak, is that raising salaries alone doesn't keep workers. Many are leaving for rising Chinese technology companies or even to become entrepreneurs.
"There is a lot of venture-capital money chasing Chinese enterprises," he says. "We lose people because some of these guys all want to be part of the next IPO."
Junwen Mo, a 22-year-old Chinese business student, has an internship at BNP Paribas SA (13110.FR) but says many Chinese want to work for a Chinese company in the long run. "For prestige and personal satisfaction it is better to work for a Chinese company," he said, adding that foreign companies might pay better salaries but they don't grant promotions. "If you are ambitious you have to work for a Chinese company after a few years of experience."
Losing people like Mo is painful for Western companies that have spent both time and money training them.
Although China produces 3.1 million college graduates a year, educational standards are lacking, U.S. consulting firm McKinsey & Co. (MCK.XX) says in a 2005 report. Even engineering students from the most prestigious universities in Beijing receive little practical training in either projects or working with a team. Few speak passable English. As a result McKinsey estimates that only 160,000 engineering graduates a year are suitable to work in multinationals - a pool no larger than the U.K.'s, who's population is about 60 million.
To compensate for the poor education system companies are investing in training programs to get new recruits up to speed which can add 15% to personnel costs, McKinsey says.
STMicro routinely trains new recruits for six months or more. Teaching English is the biggest problem but the basics of business - everything from marketing to how to say no to your boss - has to be taught.
Steven Shaw, head of Networks for Nokia China (NOK), spends a fifth of his time mentoring Chinese workers.
"We have English classes, technical training classes, lots of training." Shaw says. "It can be expensive, but it has to be done. It's one of the most important things to young Chinese. They want skills."
However, they also want to believe that they can reach the highest echelons of the companies. It's a message that Western companies are finally getting loud and clear, although finding Chinese managers to head operations is by far the most vexing personnel issue, several managers said.
"Graduate degrees were basically suspended in the late '60s and '70s," says Gauthier, referring to China's cultural revolution. "The 45-year-old manager who speaks English really isn't available."
Nevertheless companies are bending over backward to find Chinese-speaking managers, increasingly poaching talent from firms in Hong Kong, Taiwan or Malaysia.
Capgemini recently hired Chen Bo, the former vice-president of Hewlett-Packard China (HPQ), as chief executive officer of Capgemini China, despite the fact that he doesn't speak English. Chen works closely with a multilingual assistant.
Nokia, too, has boosted its Chinese representation. Shaw says on his management board two thirds are Chinese nationals.
Other companies are also taking notice. Heidrick and Struggles reported that three-quarters of firms operating in China today have native-born Chinese represented on their management teams, up from half two years ago.
"It's important for morale to have Chinese managers, either from China, Hong Kong or Taiwan, at the top," Shaw says. "It is not always the easiest thing to find them."
(Mimosa Spencer in Paris contributed to this article.)
Report: China struggles with people management issues
September 13th, 2006Author: RP news wires
Despite being the world's most populous country, filled with people who would prefer to work for foreign companies, multinational corporations operating in China are finding their businesses hindered by a pervasive talent shortage and struggling to retain their management and employees. A new white paper by Manpower Inc., a world leader in the employment services industry, examines this paradox and offers insight and answers to help multinationals improve their talent management strategies in China.
"Ninety percent of the world's top 500 multinationals have now invested in China, yet many of them are struggling to generate the sales or growth they want because of talent management challenges," said Jeffrey A. Joerres, chairman and CEO of Manpower Inc. "Recruiting the right people, retaining the best staff and developing leaders of the future are difficult tasks in any market. For foreign companies operating in China, the difficulties are magnified by the talent shortage - particularly of managers and executives - and the difficulty of understanding how to adapt talent management strategies to the country's unique business culture and values."
Manpower's white paper, The China Talent Paradox, offers five practical strategies for multinational corporations to embrace if they want to improve employee attraction, engagement and retention in China:
1) Create a learning organization
2) Appoint competent leaders
3) Establish an appropriate organization and culture for China
4) Provide competitive compensation and benefits packages
5) Select the right people
"It is vital that organizations view these five strategies as a holistic, integrated solution," said Joerres. "Neglecting even one of the strategies will weaken the solution considerably."
These five strategies represent the core elements of Manpower's proprietary Workforce Optimization Model that is used to assist clients in recruiting and retaining permanent employees in China.
Joerres said, "These strategies may seem to be self-explanatory to an HR professional, but it is important to recognize what they actually mean in the work environment in China. Effective talent strategy in China relies heavily on grasping the cultural nuances and leveraging this knowledge."
"Learning is a priority for Chinese employees because they are acutely aware of the limitations of their educational system and possess a strong desire to continuously acquire marketable skills," said Lucille Wu, managing director of Manpower China. "Learning has to be embedded into employees' daily activities so that they learn new skills and gain new experience every single day. Lacking this stimulus, they will leave for another company to find better career development opportunities."
Previous Manpower research of 33,000 global employers found that vacancies at the manager and executive level are much more difficult to fill in China than in other countries, which has a direct impact on the ability of organizations to grow.
"To fuel the current level of growth that multinationals are experiencing in China, they need to attract and develop competent leaders that can work effectively in the Chinese workplace," said Wu. "Chinese employees respond best to hands-on leadership and having a role model to demonstrate what is expected of them so that they may replicate their actions. They are also unlikely to tell a manager when they do not understand how to complete their work. This requires a different leadership approach than most Western multinationals expect when they come to China."
Manpower has found that nearly 75 percent of Chinese employees would prefer to work for wholly owned foreign companies rather than joint venture companies or wholly owned Chinese companies. This is a distinct advantage for foreign multinationals competing for talent in China, yet ironically, retention remains an issue for them.
"In addition to the many multinationals who come to China to set up manufacturing operations, there are also many companies that come to China to market their products and services to Chinese consumers," said Joerres. "The preference of Chinese workers to join a foreign company underlines the tremendous opportunities for companies that develop the right talent strategies to compete for a bigger slice of the world's largest consumer market."
Deloitte plans to increase its numbers in China
September 13th, 2006Deloitte, one of the world's four biggest accountancy firms, is planning to beef up its staffing pool in China from the current 6,000 to 9,000 by 2009 to handle its growing business in the country, a top executive said yesterday.
"Currently we have 6,000 professionals in 10 offices in China serving our clients and we expect (the number) to be in the range of 9,000 in 2009," said Manoj P. Singh, regional chief executive officer for Deloitte Touche Tohmatsu Asia-Pacific region.
"Our presence is sometimes dictated by the needs of our clients," said Singh, who took the post in 2003.
"Building larger practices on the (Chinese) mainland is part of our growth strategy," the CEO said.
China is already one of the top eight markets for Deloitte's global operations as measured by staff numbers, Singh said.
The service firm has seen tremendous growth in China in the past few years thanks to the country's booming economy, he said, declining to reveal specific revenue figures.
Deloitte achieved aggregate revenue of US$18.2 billion last year, a 10.9 per cent increase over the US$16.4 billion reported the previous year.
"We have been growing at a double-digit rate both in terms of headcount and revenue in China in the last couple of years," said P. Christopher Lu, regional managing partner.
Singh said the firm's market share had increased four-fold among the top 100 Chinese companies over the past three years, including not only auditing services but also consulting, tax and other services.
"Our strategy is focusing on building our brand around the transformation of Chinese companies, especially for those top 100 and 200 firms," Singh said.
He said the services firm is well-positioned to provide auditing, tax and management consulting services to help build domestic enterprises into world-class or Fortune 500 companies.
Deloitte's existing client base in China is dominated by multinational companies operating in the country, but this varies according to the service.
For example, Lu said, about 70 per cent of its tax customers are multinational companies, while about 65 per cent of its corporate financing customers are foreign firms.
But he said Deloitte is luring more and more Chinese companies.
"We could only achieve our six-year strategy by having the right balance of both local domestic firms and multinational companies and being able to provide valuable services to them," Singh said, referring to his firm's ambitious goal to become the best service provider, a roadmap announced three years ago.
The company announced two years ago it would invest US$150 million in China over the next few years, which Singh said "is the biggest and most significant" global investment the firm had ever made.
The investment in recruitment, training and resources is "well on track," said Singh.
Global CEO Bill Parrett said last year that the firm planned to build China as its second-largest market by 2010 and the largest by 2030.
Source: China Daily
China Labor Paradox: Manpower Research Report Reveals Management Shortage Affecting U.S. Multinationals
September 13th, 2006Wednesday August 30, 12:01 am ET
MILWAUKEE, Aug. 30 /PRNewswire/ -- Despite China's population of 1.3 billion, a critical talent shortage has multinational corporations struggling to retain their management and employees. A new White Paper by Manpower Inc., a world leader in the employment services industry, examines this paradox and offers insight to help multinationals improve their talent management strategies in China.
"The United States is the biggest investor country in China, yet many of its companies are struggling to generate the growth they want because of people issues," said Jonas Prising, President of Manpower North America. "Recruiting the right people, retaining the best staff and developing leaders of the future are difficult tasks in any market. For foreign companies operating in China, there is the added difficulty of understanding how to adapt talent management strategies to the country's unique business culture and values."
The White Paper, The China Talent Paradox, reports that rapid economic and social change has spurred a skills shortage that is set to escalate in the next few years. The labor shortage in China is even more problematic than in other nations because it is most severe among managers. Two in every five companies find it difficult to fill senior management positions. Mid-level managers are also in short supply, particularly those who are Chinese nationals and can interact with local people.
Competition is stiff for this elite group of employees, and high turnover compounds the issue. Management-level attrition rates in China are more than 25 percent greater than the global average, and replacing a high-performing manager can cost 300 percent to 2,000 percent of that individual's salary.
The White Paper details Manpower's proprietary Workforce Optimization Model, which offers practical strategies for multinational corporations to improve employee attraction, engagement and retention in China. These talent management strategies rely heavily on understanding Chinese cultural nuances and leveraging that knowledge.
"To fuel the current level of growth that multinationals are experiencing in China, they need to attract and develop competent leaders that can work effectively in the Chinese workplace," said Lucille Wu, Managing Director of Manpower China. "Chinese employees respond best to hands-on leadership and having a role model to demonstrate what is expected of them so that they may replicate their actions. They are also unlikely to tell a manager when they do not understand how to complete their work. This requires a different leadership approach than most Western multinationals expect when they come to China."
There is good news for U.S. multinationals operating in China if they are successful in developing an employment strategy that fits the culture and values. Although employee retention is an issue, these businesses have a distinct advantage in competing for talent in China. Nearly 75 percent of Chinese employees would prefer to work for wholly-owned foreign companies rather than joint venture companies and wholly-owned Chinese companies, according to Manpower research.
Apple says it's trying to resolve dispute over labor conditions at Chinese iPod factory
August 31st, 2006Apple Computer said Wednesday it was trying to settle a dispute over alleged labor abuses at an iPod factory in China, an awkward case highlighting the challenges big companies face in living up to their codes of conduct while outsourcing most of their production.
The case also reflects the pressures Chinese journalists confront in doing their jobs.
The dispute involves a defamation lawsuit filed by Hongfujin Precision Industry Co., a major exporter owned by a Taiwanese company, against two journalists at the state-run newspaper China Business News who ran stories alleging that some workers on iPod assembly lines were paid only US$50 a month while working 15-hour shifts.
Hongfujin is suing the two, reporter Wang You and editor Weng Bao, for 30 million yuan (US$3.8 million;euro3 million) in the Intermediate Court in the southern city of Shenzhen, which froze the journalists' personal assets pending the trial, according to local media reports.
The case has provoked criticism in the Chinese media and an open letter from the journalists' advocacy group Reporters Without Borders demanding that Apple's chief executive, Steve Jobs, to intervene.
"We believe that all Wang and Weng did was to report the facts and we condemn Foxconn's reaction," said the letter, signed by Robert Menard, secretary-general of the Paris-based group. "We therefore ask you to intercede on behalf of these two journalists so that their assets are unfrozen and the lawsuit is dropped."
Hongfujin is a wholly owned subsidiary of Taiwan-based Foxconn Technology Group.
"Apple is working behind the scenes to help resolve this issue," an Apple spokesman, Jill Tan, said Wednesday. She said she could not comment further.
Court officials in Shenzhen refused comment Wednesday.
Apple's iconic iPod players are made abroad, mainly in China. The Cupertino, California-based company has sold more than 50 million iPods since the product debuted in 2001.
The allegations of harsh conditions at the iPod maker's factory in Shenzhen originally surfaced in a report in June by the British newspaper, the Mail on Sunday.
Apple responded by promising to immediately investigate conditions at the factory. It issued a report earlier this month saying that it found some violations of its stringent code of conduct but no serious labor abuses. It pledged to immediately redress some problems with overtime, employee accommodations and administrative issues.
The report discounted allegations of forced overtime, noting that a chief complaint among workers was a shortage of overtime during slack periods.
Staff who answered the phone at Hongfujin refused to take any media inquiries.
Earlier, Foxconn issued a lengthy statement denying the allegations and defending its labor policies. The statement detailed amenities it says the company offers to employees, including free medical care, "complimentary professional laundry services," soccer fields, libraries and an Internet cafe.
"Foxconn has been recognized by Shenzhen government as a role model," it said.
Foxconn is a trade name for Taiwan's Hon Hai Precision Industry Co. It claims many customers, including Intel Corp., Dell Inc. and Sony Corp. It is one of many Taiwanese companies with operations on the Chinese mainland, despite the political divide that has persisted since China and Taiwan split amid civil war in 1949.
Hongfujin was reportedly China's biggest export manufacturer last year, with overseas sales totaling US$14.5 billion (euro11.3 billion).
China Business News, a respected publication backed by several big media groups, has given Wang and Weng its unconditional backing, saying the two have evidence to support the allegations.
"Our newspaper will definitely back Wang You and Weng Bao since what they did was not a violation of any rules, laws or journalistic ethics," said an official in the newspaper's publicity department. Like many Chinese, he gave only his surname, Yang.
The financial magazine Caijing, meanwhile, accused the Shenzhen court of violating the law in freezing the journalists' assets.
Wang and Weng were not available for comment Wednesday. However, they have set up a blog recounting their ordeal and reflecting on the risks associated with doing their jobs.
"This is the toughest time I have faced since I entered the media business 10 years ago," Weng wrote.
Chinese journalists working in the state-controlled media have always had to cope with censorship and stonewalling by officials and threats and beatings from local henchmen. In recent years, companies have become increasingly aggressive in taking legal action against unfavorable reports.
At the same time, some reporters have come under fire for violating journalistic ethics for taking money in exchange for running favorable reports, or withholding unfavorable ones.
___
Local manufacturers struggle to compete with China
August 29th, 2006The World Today - Friday, 25 August , 2006 12:38:00
Reporter: Andrew Geoghegan
ELEANOR HALL: As BHP Billiton's multi-billion dollar profit result revealed this week, China's relentless growth has been a huge boon for many Australian business.
But there's a downside. A survey of Australia's manufacturing industry has found that this sector of the local economy is losing out to Chinese competition. In just the last year, manufacturers have suffered a net financial loss of almost $900 million in trade with China.
And as finance correspondent Andrew Geoghegan reports, some manufacturers are warning that the local industry will not survive.
ANDREW GEOGHEGAN: It would be an understatement to say China is a country on the move. The rapid pace of economic growth has created huge demand for private transport. In Beijing alone, 1,000 new cars are estimated to be pulling onto the roads every day.
JASON LI: The car and the growth of the car is just an extraordinary phenomenon in china.
ANDREW GEOGHEGAN: Jason Li, a Chinese Australian living in Beijing, works for the China Automobile Association.
JASON LI: It's really stuff of dreams. It's very much tied to growing economic development, the rise in middle class. It's such a status symbol. It's such a centrepiece of lifestyle now.
ANDREW GEOGHEGAN: And Australian business is cashing in on the Chinese dream.
GLEN DOBINSON: Certainly with the population based in China of around about 1.2 billion people, and that's a lot more than the Australian population, quite a few fold.
ANDREW GEOGHEGAN: Glen Dobinson is the Managing Director of Dobinson's Springs and Suspension, a Rockhampton manufacturer. He's been successful in capitalising on the growth of China's car industry.
GELN DOBINSON: So we are trying to capitalise on that four wheel drive market, particularly up there where they have suspension range of products and we've had a client dealing with us since early this year, who's had around three orders, and we have to grow on that base.
ANDREW GEOGHEGAN: However, Glen Dobinson says he's making hay while the sun shines. He sees some very dark clouds on the horizon in the form of cheap manufactured goods imported from China.
GLEN DOBINSON: We find, one of our competitors now is starting to import product out of China, and distributed though Australia as well, to our client base, we are going to have to compete head on with Chinese imports, which, I can only see in the long term, if that keeps up, we are ... it's not going to be an easy ride for us down the road further, yeah.
ANDREW GEOGHEGAN: To the point where you think you might struggle to survive here?
GLEN DOBINSON: Yeah, I think 10 to 15 years time it could be a different story to the stage, where if we can't compete, yeah, we might have to look at maybe importing and rebranding our product ourselves, that's, either that or you got no business. So that's something that we'll have to think seriously about in the long-term future.
ANDREW GEOGHEGAN: Glen Dobinson's problems are symptoms of an Australian manufacturing industry in decline.
And the car components sector is suffering the most acute pain, as highlighted this week by the struggling Ajax fasteners business in Melbourne. It's been bailed out by carmakers, because it can't compete with cheap imports.
HEATHER RIDOUT: A lot of the benchmark prices are China prices, so, if Ajax have to quote for their fasteners, they have a benchmark, Chinese fastener producers, as a price they have to match. So it is very tough.
ANDREW GEOGHEGAN: Heather Ridout is the Chief Executive of the Australian Industry Group.
It's surveyed 700 manufacturers and found that they've accumulated almost $7 billion in benefits from China. However, cheap Chinese competition has cost those businesses closer to $8 billion in lost sales.
Heather Ridout.
HEATHER RIDOUT: Australian manufacturers are now doing much more business in China. China has been identified as the strongest potential overseas market, for industry in terms of their exports, in terms of their overseas production, in terms of their overseas access to Australia. But in that term, the equation still remains strongly in China's favour with a loss of approaching $1 billion.
ANDREW GEOGHEGAN: While the outlook may be gloomy for manufacturers the forecast for Australia's services sector is bright.
Australian Andrew Stoler is a former deputy director general of the World Trade Organisation and is in China at the moment.
ANDREW STOLER: Just as the Australian manufacturing sector is nervous and sensitive up here in China, they have a very inefficient services sector, which is quite worried about increased competition from Australia.
ELEANOR HALL: That's Andrew Stoler, the former Deputy Director General of the World Trade Organisation, ending that report from Andrew Geoghegan.
Manufacturers face testing times with China, study shows
August 29th, 2006 Monday 28 August 2006
Australian manufacturers are experiencing increased competitive pressures in their dealings with China, while at the same time they now see China as the most important market in which to grow their business outside Australia, according to a major new study released today by the Australian Industry Group.
The report, Australian Manufacturing and China: Deepening Engagement has estimated that while Australian manufacturers in 2005/6 have accumulated over $6.8 billion in benefits from China (for example, through increased exports to China and savings from using Chinese global supply chains), the benefits fall short of the losses in sales in domestic and overseas markets from competition from China (totalling over $7.6 billion), resulting in a net financial loss of $880 million.
Ai Group chief executive Heather Ridout says the findings, based on a survey of 700 Australian manufacturers, confirm that China is imposing ever increasing competitive pressures on their businesses.
"Over the past two years, the proportion of companies impacted by China has grown from 70% to 84% and China is making deeper inroads into Australia's domestic and overseas markets," she says.
"Manufacturers identified China as the strongest potential overseas market"
The study found that among surveyed companies around 8% of manufactured exports go to China; one in every 16 surveyed companies has an operation in China; and China is the chief source of foreign inputs into domestic production. Annual income from manufacturing investments in China is estimated to be close to $1 billion.
"While very large manufacturers and affiliates of foreign owned entities are starting to reap slight net financial gains, the majority of manufacturers are finding it tough to secure benefits," Ridout says.
"Overall there remain considerable concerns about non-tariff barriers in China, including the lack of intellectual property protection. A major finding of the study was that Australian businesses are highly concerned about the incidence of Chinese made counterfeit and pirated goods being sold on the Australian market.
"The perception of Australian manufacturers is that dumping of Chinese goods on the Australian market (at below the price to make and sell in China) is also accelerating significantly.
"Consequently, many manufacturers remain unconvinced of the overall benefits of a Free Trade Agreement, although support for an FTA is growing and has increased from 13% in 2004 to 24% in 2006."
Ridout calls on the Federal government to put in place mechanisms as part of its planned Industry Statement so that Australian manufacturers can boost their competitive position in their business dealings with China.
"We need to strengthen our innovative capacities, build world-class skills among our manufacturers, and be prepared to deal with the ever increasing impact of Chinese competition, as well as helping to open up the Chinese market to Australian businesses so that they can establish partnerships and build supply chains," Ridout says.
Ai Group has also welcomed the recent clarification of the government's position that the existing tariff phase-down plans for the Textile, Clothing and Footwear and auto industries were "not negotiable" under FTA discussions with China.
Analysys International Says China's Online Recruitment Market Reached RMB 160.9 Million in Q2 2006
August 29th, 2006BEIJING, Aug. 25 /Xinhua-PRNewswire/ -- Analysys International, a leading Internet based provider of business information about technology, media and telecom (TMT) industries in China, says in its recently released report ''China Online Recruitment Market Quarterly Tracker Q2 2006'', that China's online recruitment market reached RMB 160.9 million in the second quarter of 2006, increasing 8.44% quarter over quarter.
According to the report, in the second quarter of 2006, online recruitment revenues from nationwide recruitment websites accounted for 76.4% of the total online recruitment market in China, and revenues from provincial websites accounted for 19.3% of the total market.
As the entire market size expands, online recruitment service providers began to emphasize on mobile Internet applications and provided SMS services. China's rapid growing working population brings huge development potential for online recruitment market. Overseas venture capitals are also giving attention to this market.
Analysys International says those vendors who can provide individualized services will be able to take the lead in charging service fees from users. More and more online recruitment websites have strengthened local market development.
Online service and offline promotion have become a major profit pattern of online recruitment business. As online recruitment industry develops, the market will gradually be segmented. Industry-based specialized services will be more and more favoured by users.
This subject is further discussed in Analysys International's research report ''China Online Recruitment Market Quarterly Tracker Q2 2006''. For more information, please check the website: http://english.analysys.com.cn/ .
CareerBuilder.com Partners With 51job to Expand Into China
August 29th, 2006CHICAGO, Aug. 23 /PRNewswire/ -- CareerBuilder.com, the U.S.'s largest online job site with more than 23 million unique visitors* and over 1.5 million jobs, announced it is adding another partner, 51job, Inc., to its international network to bring more recruitment resources to employers and job seekers. 51job is China's leading human resource services provider and operates http://www.51job.com/ , the Web site with the most registered members, the largest resume database and the highest daily traffic in China.
Under the exclusive agreement, CareerBuilder.com and 51job will have links to each other on their sites as well as sell job postings and access to their resume databases. The alliance will provide job seekers in both countries instant access to a multitude of new job opportunities in virtually every industry.
"The recruitment landscape has changed dramatically; employers now need to have access to candidates in multiple countries," said Farhan Yasin, President of the International Group at CareerBuilder.com. "Partnering with 51job will not only introduce CareerBuilder.com clients to China's most influential recruitment site and vice versa, it will allow CareerBuilder.com access to the fast-growing Chinese recruitment market."
"We are delighted to collaborate with areerBuilder.com in the U.S. and Canada," said Rick Yan, President and Chief Executive Officer of 51job, Inc. "We believe this alliance will allow both companies' clients access to millions of potential candidates."
*comScore Media Metrix, May 2006 About 51job
51job, Inc. is a leading provider of integrated human resource services in China with a strong focus on recruitment related services. Offering a broad array of products and services, 51job connects millions of job seekers with employment opportunities and streamlines the recruitment process and human resource administration for tens of thousands of companies in China. Through print advertisements in 51job Weekly and online recruitment services at http://www.51job.com/ , both domestic Chinese employers and multinational companies alike are able to attract, identify and recruit new employees. 51job also provides executive search services and a number of other value-added human resource services, including training, business process outsourcing and salary surveys. 51job's nationwide office network in China spans 25 cities operating 23 local editions of 51job Weekly and Hong Kong.
About CareerBuilder.com
CareerBuilder.com is the nation's largest online job site with more than 23 million unique visitors and over 1.5 million jobs. Owned by Gannett Co., Inc. , Tribune Company , and The McClatchy Company , the company offers a vast online and print network to help job seekers connect with employers. CareerBuilder.com powers the career centers for more than 900 partners that reach national, local, industry and niche audiences. These include more than 150 newspapers and leading portals such as America Online and MSN. More than 250,000 employers take advantage of CareerBuilder.com's easy job postings, 18 million-plus resumes, Diversity Channel and more. Millions of job seekers visit the site every month to search for opportunities by industry, location, company and job type, sign up for automatic email job alerts, and get advice on job hunting and career management. For more information about CareerBuilder.com products and services, visit http://www.careerbuilder.com/ .
U.S. staffing companies in China see chance for profits
August 29th, 2006NEW YORK, Aug 27 (Reuters) - China may have plenty of man power, but it could also use some help from Manpower.
U.S. staffing company, Manpower Inc. , is one of a number of business recruiters putting emphasis on the world's most populous country, where a rapidly developing economy is driving the demand for engineers, finance professionals and technology specialists.
China's growth rates of about 10 percent per year, which already makes it the world's No. 4 economy, pushes companies to develop leaders at a faster pace than most other countries.
A McKinsey & Co. study estimates that, within five years, China will need 75,000 executives who have either Western technical skills or language ability -- ideally, both. Only about 5,000 are in the work force now.
"The challenge is not in finding 500 or 1,000 people to man the factory. The challenge is in finding leadership skills and functional management skills," said Iain Herbertson, president of Asia-Pacific for Manpower, which has 350 consultants in 11 Chinese cities. About half its contracts are for information technology workers.
For now, the numbers are relatively modest. Of Manpower's $4.4 billion in second-quarter revenue, the "other" segment -- which includes China, Japan and Australia, as well as Mexico -- reported sales of $577 million. Its operating profit of $15 million was about 9 percent of Manpower's quarterly total. ADVERTISEMENT
But the segment is among the company's fastest growing. Within three to five years, Manpower will have a staff of 1,000 to 1,600 in mainland China.
New rules this month allowed foreign companies to own a controlling stake in their local joint ventures if they set up shop in Pudong, the fast-growing financial center in Shanghai.
The move is part of a broader relaxation of rules, which should help draw more companies to China, and will enable Manpower to expand its range of services, Herbertson said.
"Our business is more than doubling every year," Herbertson said in a telephone interview from Shanghai.
Monster Worldwide , which this year raised its stake in ChinaHR.com to 45 percent, may take majority control of the venture by 2008, though the unit is currently losing about $2 million per quarter.
"We don't expect it to be (profitable) because we are at the beginning of the beginning," said Marcel Legrand, Monster's senior vice president of strategy and corporate development. "Profit is not of great interest to us in that particular market -- it's about an investment."
ChinaHR has about 600 staff and 4 million resumes on file, but those numbers will grow as more Chinese go online, Legrand said.
Monster, parent of the world's largest recruitment Web site, followed customers like Procter & Gamble , L'Oreal , and Hewlett-Packard to China, which fits with a goal for international operations to account for more than half of its revenue by next year.
That global expertise, including serving multinationals in other markets, is what differentiates companies like Manpower and Monster from their smaller competitors.
"We can bring to China the best of what happens in Brazil, or what happens in Korea, and they can help us export their best practices," Legrand said.
This week, Monster hired a former Nike Inc. executive, Tony Balfour, to head its Asia-Pacific operations.
He will have competition.
Rival job site Careerbuilder.com on Wednesday said it was entering the Chinese market in an exclusive deal with human resources company 51job Inc. , to link to each others' sites and sell job postings and access to their resume databases.
At executive recruiter Heidrick & Struggles International Inc. , Asia-Pacific operations had faster revenue growth and highest profit margins than either the United States or Europe. The region accounts for 10 percent of total company sales, and China about a fifth of that.
Since rules are different depending on the services offered, Heidrick owns 90 percent of its Chinese joint venture, said Kevin Kelly, who heads Heidrick's European and Asian operations, adding that consumer goods, technology and industrial companies are its main clients.
Financial companies, including investment banks, will need experienced staff starting in 2008, when new rules take effect under China's commitment to the World Trade Organization.
Heidrick's China operations are expected to double within three years, and the company is recruiting Chinese-speakers in the United States and Europe for positions there, Kelly said.
"European and U.S. markets are more mature, so everyone sees China's huge potential for developing or expanding their businesses," Kelly said.
Labour Law in China - Where are we now?
August 29th, 200621/08/2006
By Frank Mulligan, Talent Software
The labor law in China is about to be changed radically. The current law has been in operation for many years but it was created many years ago and necessarily has weaknesses.
Setting out the basis of the current law, I thought, might be a good way to build a base for comparison with the expected changes in the new law.
So here is a quick summmary of where we are now. It is meant as a quick refresher and should not be taken as legal advice.
* Employer and employees need to enter into a written employment contract. However, an oral contract is also enforceable.
* Contracts can apply to a fixed period, an open period, or a specific project.
* There can be a trial period of no more than six months during which time the employer can terminate the employment contract.
* The law allows for a clause requiring employees to keep business information confidential.
* Employers can terminate on 30 days notice, if the employee is not able to do his work due to illness or injury but if he is still being treated this does not apply.
* Termination can be carried out if the employee is not suitable for the work he is doing. This decision must be made after training or alternative work has been given.
* The contract becomes unenforceable because a ’major situation’ has changed on which the employment contract mainly relies. This has not been defined.
* Employees should give 30 days notice except when they are are in the trial period or the employer does not satisfy his end of the contract.
* Redundancy is a vague area that allows an employer to dismiss an employee if the company is about to go bankrupt. Payments to employees equate to one month’s pay for every year with the company.
* The work week is an 8-hour day with no more than 44 hours per week and at least one day off per week, in practice always 2.
* Paid leave is mandatory but depends on local regulations. There is a 90 days maternity leave provision.
* Disciplinary action has a definite path. First an oral warning, then a written warning and finally, dismissal. If this is not followed the dismissal is invalid.
* If the breaches of discipline is very serious instant dismissal is available.
So we can easily see that the basic labor laws in China are not so complicated and many areas are sufficiently vague as to require a new definition.
The current regulations are under review and the government has invited submissions from concerned parties. The new contract law is likely to differ considerably from the current law in terms of details and provisions. The object is to make it fairer and clearer for all parties, and to underline the rights of workers in a market that is considerably different from the one that pertained when the original law was written.
Next week we can make a comparison with what is expected in the new law.
Labour Law in China - Where are we now?
August 21st, 2006By Frank Mulligan, Talent Software
The labor law in China is about to be changed radically. The current law has been in operation for many years but it was created many years ago and necessarily has weaknesses.
Setting out the basis of the current law, I thought, might be a good way to build a base for comparison with the expected changes in the new law.
So here is a quick summmary of where we are now. It is meant as a quick refresher and should not be taken as legal advice.
* Employer and employees need to enter into a written employment contract. However, an oral contract is also enforceable.
* Contracts can apply to a fixed period, an open period, or a specific project.
* There can be a trial period of no more than six months during which time the employer can terminate the employment contract.
* The law allows for a clause requiring employees to keep business information confidential.
* Employers can terminate on 30 days notice, if the employee is not able to do his work due to illness or injury but if he is still being treated this does not apply.
* Termination can be carried out if the employee is not suitable for the work he is doing. This decision must be made after training or alternative work has been given.
* The contract becomes unenforceable because a ’major situation’ has changed on which the employment contract mainly relies. This has not been defined.
* Employees should give 30 days notice except when they are are in the trial period or the employer does not satisfy his end of the contract.
* Redundancy is a vague area that allows an employer to dismiss an employee if the company is about to go bankrupt. Payments to employees equate to one month’s pay for every year with the company.
* The work week is an 8-hour day with no more than 44 hours per week and at least one day off per week, in practice always 2.
* Paid leave is mandatory but depends on local regulations. There is a 90 days maternity leave provision.
* Disciplinary action has a definite path. First an oral warning, then a written warning and finally, dismissal. If this is not followed the dismissal is invalid.
* If the breaches of discipline is very serious instant dismissal is available.
So we can easily see that the basic labor laws in China are not so complicated and many areas are sufficiently vague as to require a new definition.
The current regulations are under review and the government has invited submissions from concerned parties. The new contract law is likely to differ considerably from the current law in terms of details and provisions. The object is to make it fairer and clearer for all parties, and to underline the rights of workers in a market that is considerably different from the one that pertained when the original law was written.
Next week we can make a comparison with what is expected in the new law.
Global Executive search revenues up 18% over previous year
August 21st, 200621/08/2006
According to the latest quarterly State of the Executive Search Industry report by the Association of Executive Search Consultants (AESC), executive search industry revenues increased 14% over the previous quarter and 18% over the previous year. New searches worldwide were up 6% from Q1 2006 and the average revenue per consultant rose 14% from Q1 to Q2 2006, a sharp rise from the previous quarterly increase of 3%.
Commenting on these figures, AESC President Peter Felix noted, “Executive search industry revenues continue to build momentum with global figures consistently increasing quarter over quarter and year over year. By year end we expect that most member firms will be reporting significant increases over 2005.”
Industry Trends
All reported industries experienced an increase over the previous quarter, with the exception of the Industrial sector, which revealed a 3.8% decrease (in contrast to the previous quarter in which this sector accounted for the largest increase). The industries experiencing the largest quarterly increase of searches in Q2 2006 were Non-Profit (+34.7%) and Financial (+17.8%); both figures more than double the previous quarterly increase for these sectors.
Consistent with previous quarters, the Financial sector captured the largest share of number of searches started as compared to all other reported industries, with 26.4% of the market. The Industrial sector followed with the second largest share, 21%. Consumer Products (16.8%), Technology (15.7%), Life Sciences and Healthcare (12%), Non-Profit (4.6%), and the Professional Services (2.2%) sectors round out the industry breakdown.
Regional Trends
North America saw a minor quarterly increase (+0.8%) in the number of searches started in contrast to the previous quarter on quarter increase of 13.1%. Europe experienced an increase of 3.4% in searches started. Asia-Pacific revealed a significant increase of 18.9%, in comparison to a previous quarterly drop (-3.7%). Central/South America witnessed a 13.4% increase in searches started in Q2 2006.
European Market Share
UK searches accounted for 29.9% of the total European market, a 5.4% quarterly decrease. The number of searches started in Germany also decreased (-1.7%) from the previous quarter, with Germany capturing 13.8% of the total market. Similarly, France saw a quarterly drop (-3.9%) in searches following a previous rise of 7%, resulting in a 9.5% Q2 2006 market share for France.
This data was collected from a sample of AESC member search firms representing the activity of over 1,200 executive search consultants in 42 countries worldwide. AESC access to job search data positions this report as a leading indicator of the future worldwide job market and a barometer of hiring trends in key market sectors.
A full copy of the Q2 2006 State of the Executive Search Industry report is available upon request (for AESC members and the press). Please contact Natasha Renton at nrenton@aesc.org.
Apple says probe finds no serious labor violations at China iPod factory
August 18th, 2006Apple Computer Inc.'s investigation into claims of poor working conditions at a Chinese iPod factory found no forced labor or other serious violations, the company said Friday.
Apple added that it was taking immediate steps to deal with excess overtime and other issues.
The probe by the Cupertino, California-based company, was in response to a report by a British newspaper, the Mail on Sunday, which alleged that workers at the factory were paid as little as 27 British pounds (US$50; euro40) a month and forced to work 15-hour shifts making the digital music players.
"The team reviewed personnel files and hiring practices and found no evidence whatsoever of the use of child labor or any form of forced labor," Apple said in a report on its Web site that summarized the findings of its audit of the facility.
However, the probe did find that in many cases workers were exceeding the company's limits for overtime, which specify a maximum of 60 hours or six days a week.
"We found no instances of forced overtime," the report said. But it said weekly limits were exceeded 35 percent of the time in a seven-month period and that employees worked more than six days in a row 25 percent of the time.
The company running the factory, which was not named in the report, was ordered to enforce Apple's overtime limits, it said.
The inspection also found that in at least two instances workers were made to stand to attention for disciplinary reasons.
"Apple has a zero tolerance policy for any instance, isolated or not, of any treatment of workers that could be interpreted as harsh," the report said. It said the factory has launched an "aggressive" manager and employee training program to prevent such behavior, it said.
While conditions in the factories, cafeterias and most dormitories were good, the audit found overcrowded conditions at two leased dormitories, which are now being expanded to allow more space.
The factory, which supplies electronics components and accessories to other companies as well as Apple, is a small city in its own right, with clinics, recreational facilities, buses and 13 restaurants serving its 200,000 workers.
China suffers a big loss in human resource utilization
August 11th, 2006Chinanews.cn)
Updated: 2006-07-26 16:33
The Social Sciences Documentation Publishing House under the Chinese Academy of Social Sciences recently published the Chinese Human Resources Development Report in 2006. The report points out that due to some traditional concepts and institutional defects, human resources in China have not been fully utilized and it is alarming that a great part human resources are wasted.
Regarding the human resources waste, researchers define the following four circumstances: firstly, some people are allocated to the right position, but their capabilities are not fully utilized. In other words, these people can do more in addition to their present work; secondly, some people are allocated to the wrong positions; thirdly, some people are superfluously allocated to a certain position. A job which can be done by three people, for example, is actually allocated to five people.
It is estimated that about 25 million professional people in China were wasted in 2005,because their capabilities were not brought into full play. Economic ally, this alone caused a loss valued at around 900 billion yuan.
Yu Zhonghua, one of the writers for the report, said that in order to assess how China utilized its human resources and what effect it brought to the social and economic development, they kicked off a large investigative campaign in various departments in May, 2005. During this campaign, they issued 8,000 questionnaire forms to various Party and political institutions, national public institutions, and other organizations.
By analyzing the result, researchers find that in China, a strange phenomenon prevails in the human resources market. Employers like to hire people with a master's or doctoral degree and think that the more these people are in their company, the better. Those who hold a B.A. or B.S. degree can be put on hold. Those who have graduated from junior college or vocational schools should not be considered at all.
In light of this, Yu said, the waste of human resources has already caused practical harm to the society. As a typical reflection of such waste, a large number of people in society tend to pursue a higher college degree, consequently causing college education to expand overly rapidly. As a result, vocational education is adversely affected and a lot of talented people choose to go abroad to find a job.
Now Hiring in China
August 11th, 2006By Rick Aristotle Munarriz (TMFBreakerRick)
August 8, 2006
Running a human-resources business in China has to be like shooting fish in a barrel. Between a dynamic economy that has grown at a 10% clip over the past few years and 1.3 billion potential hires in the world's most populous nation, 51job (Nasdaq: JOBS) is in a good place. Unfortunately, investors think the company should be in an even better place.
Monday night, the company behind the popular 51job Weekly employment classifieds publication saw second-quarter revenues climb 18% higher to hit the U.S. equivalent of $21.7 million. That may not seem like much, especially when you consider that the slower stateside economy still found Monster.com parent Monster Worldwide (Nasdaq: MNST) posting a 36% spike in revenues over the same three months.
However, it's also important to contrast 51job's slower print business -- whose revenue climbed just 7% higher during the quarter -- with the online-recruitment and executive-search segments, which posted hearty top-line improvements of 41% and 36%, respectively.
Margins improved to the point of allowing profits to soar 79% higher to $0.16 per American Depositary Share, before stock-based compensation expenses and currency-related hits. Analysts were expecting earnings to clock in at only $0.11 per ADS, even though they nailed the top-line gain.
The current quarter will be challenging, though. The company is looking to earn between $0.13 and $0.15 per ADS on $21.6 million to $22.9 million in revenue. That's fine on the earnings front, since Wall Street was projecting profitability of $0.13 per ADS. But it's not cool on the top line, where the potential of flat sequential growth flies in the face of the $24.1 million that analysts have been targeting.
The world understands the potential in China. Investors do, too. Our stock newsletters are ripe with recommendations in the region. Ctrip (Nasdaq: CTRP) is a Motley Fool Hidden Gems selection. Motley Fool Stock Advisor has picked SINA (Nasdaq: SINA) and TOM Online (Nasdaq: TOMO). The Motley Fool Rule Breakers newsletter service has singled out three China-based companies, including online-gaming leader NetEase (Nasdaq: NTES) and solar-power pioneer Suntech Power (NYSE: STP).
No, 51job hasn't made the cut in any of our newsletters, but the after-hours slide, which drove the shares into the high teens, does pose some intriguing value-based possibilities. Now trading at 38 times this year's earnings and 28 times next year's profit potential, 51job isn't a screaming value. But with an improving economy placing a greater value on landing quality hires, the company is at the right place at the right time. Risk-tolerant investors may also be feeling the same way.
Caterpillar Will Build New Manufacturing Plant In China
August 11th, 2006July 24, 2006 -- A new wheel loader manufacturing facility will be built in the Suzhou Industrial Park in China's Jiangsu province. Caterpillar intends to begin construction of the 350,000-square-foot building in early 2007 pending appropriate governmental approvals.
"This facility will add to Caterpillar's growing operations in China and provide the primary manufacturing source for Caterpillar wheel loaders in the Asia Theater," said Rich Lavin, vice president of operations for Caterpillar's asia pacific division. " This site offers Caterpillar a business-friendly environment with excellent access to port and ground transportation facilities, established suppliers and great people."
Caterpillar operates 13 China-based facilities which manufacture products including: hydraulic excavators, track-type tractors, motor graders and paving products, large diesel engines used primarily for marine and power generation applications and generator sets for use in China and the Asia Pacific region. Caterpillar also manufactures components at several facilities in China. In addition, Caterpillar holds a minority stake in Shandong SEM Machinery Co., Ltd. (SEM), one of China's leading wheel loader manufacturers.
In the 1980s, Caterpillar launched technology transfer agreements with Chinese manufacturers who began building Caterpillar licensed products. Caterpillar's expansion in China accelerated in the early 1990s with the establishment of a more significant local production strategy.
ArvinMeritor To Establish New Manufacturing Facility In China
August 11th, 2006SHANGHAI, China, Aug. 7 /PRNewswire/ -- ArvinMeritor, Inc. (NYSE: ARM) today announced it will open a new wholly-owned operation in Wuxi, Jiangsu Province, China. The 300,000 sq. ft. facility will initially manufacture trailer axles and suspensions for key trailer manufacturers in China, as well as for export of components to North American and European plants. The company's board of directors approved the investment in the new facility.
Production is estimated to begin in the first half of 2007.
Other drivetrain and brake components will be added to the operation's portfolio, as the company continues to pursue its strategic enterprise model.
"As the country's infrastructure improves, tractor-trailer configurations are expected to rise exponentially, and we will be ready to support both current and future market needs with advanced technology," said Sergio Carvalho, vice president and general manager of ArvinMeritor's Trailer Products and Suspensions business.
Investment in the Wuxi operation will include $35 million for new equipment.
The company has identified local sourcing for its components, which furthers its integrated manufacturing strategy to bring all aspects of the supply chain within close proximity of the facility.
Background
ArvinMeritor is the worldwide market leader for trailer axles and plans to become a major player in China's growing trailer undercarriage market.
Today, the company has four Commercial Vehicle Systems (CVS) manufacturing facilities in China, with one being wholly-owned and the remaining three operating as joint venture partnerships. These locations assemble or produce axles, brakes and related components for medium- and heavy-duty trucks, off- highway and bus and coach markets, in addition to the aftermarket. All products are produced for export or are supplied to leading vehicle manufacturers in China.
ArvinMeritor, Inc. is a premier global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. Headquartered in Troy, Mich., ArvinMeritor employs approximately 29,000 people at more than 120 manufacturing facilities in 25 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company's Web site at: http://www.arvinmeritor.com.
Web site: http://www.arvinmeritor.com//
Siemens China appoints new general manager for Communications Group
August 11th, 2006Siemens China has appointed a new general manager for its Communications Group as a strategic adjustment, a crucial step for its future development, reported the Xinhua-run Shanghai Securities News on Wednesday.
Zhang Zhiqiang, former vice president of Siemens China, is appointed the new position, and will be responsible for all the business of the Communications Group in China.
Zhang joined Siemens China in 1987, starting as an assistant manager in the commercial and management branch. Before his new appointment, Zhang has held management positions in many different business groups in Siemens, including Medical Solutions and Siemens VDO Automotive.
Peter Weiss, the former general manager of the Communications Group, will continue to serve as executive vice president and member of the management board of Siemens China, the newspaper reported.
Source: Xinhua
Apple Cancels General Manager Position For China
August 11th, 2006August 9, 2006
Apple (APPL) is rumored to be removing its general manager position in China and replacing it with four business departments whose general managers will directly report to the head of Apple's Asia Pacific Headquarters.
The four new departments that Apple will set up in China include the Industry Client Business Department (B2B), Consumer Electronics Products Department (B2C) and Education Market Product Department (Edu). The name of the fourth department is still unannounced.
Apart from the manager for the Education Market Product Department who will come from Apple's headquarters, the other two managers are not known yet although local media report that they might be new faces to the company.
A representative from Apple in the Asia Pacific Region has confirmed that Apple is making some adjustments, but he says that the final scheme has not come out yet.
The Chinese Online Recruitment Market is Estimated to be Worth 1.42 billion Yuan in 2006
August 11th, 200611/08/2006 10:10:00
Research and Markets has announced the addition of China’s Online Recruitment Market in 2006 to their offering.
After the operation analysis of the four largest online recruitment webs of 51job, China HR, Zhaopin.com and CJOL, the report gives a comprehensive analysis of local online recruitment market and industrial online recruitment market. Online recruitment develops imbalanced in different regions: it is developing well in southern China, northern China, and eastern China; it has a great development potential in middle China; it is on the elementary step in the northeastern China and southwestern China while it develops relatively slow in the northwestern China. The development of online recruitment for different industries also has different prospects IT industry and manufacturing industry are the two largest industrial clients for online recruitment. The local online recruitment market and industrial online recruitment market are deserving more attention from the investors.
In China, with the development of the Internet, the recruitment methods are continuously changing. The online recruitment characteristics: no region and time limitation, wider range, high efficiency, fast, time-saving, low cost and others, make it become more and more popular to enterprises and applicants. With the market share continuously expanding, it is making steps into the mainstream recruitment ways. Currently, the online recruitment is enjoying a fast-growing period.
In 2004, online recruitment occupied 13.2% of the whole recruitment market, far lower than newspaper recruitment and on-spot job fair. In 2005, the online recruitment market grew sharply and shared 20% of the whole recruitment market. Its market share is estimated to be 28.2% and its market scale is estimated to be 1.42 billion Yuan in 2006 respectively. There’s still a large development space for China’s online recruitment compared with the quotient of 78% in America.
Market scale of China’s online recruitment market, 2002-2006 (Unit: 100 million RMB)
Since 2003, more and more Chinese enterprises began to enjoy the online recruitment service. Especially in 2004, 90% of the World top 500 enterprises in China enjoyed the online recruitment. Moreover, more than half of the high tech enterprises enjoyed the online recruitment service in 2005. The online recruitment gains more and more recognition thanks to its characteristics such as wide range, abundant information, great choices, high quality of applicants and low cost.
Apart from the enterprises, the online recruitment also receives more and more applicants’ preference. Many of them are well educated young people and surfing the internet frequently. In 2005, the number of China’s netizens reached 111 million, showing a great potential for online recruitment development.
According to the index of "per-million-people coverage", the online recruitment websites of China HR and Zhaopin.com are far ahead of others; some local websites such as JOB168, JOBCN, 528JOB are also performing well;
Top 10 online recruitment website according to the index of "per-million-people coverage",Jan 2006
Per-million-people coverage means the visitor per 1 million Alexa installation users on average.
After the operation analysis of the four largest online recruitment webs of 51job, China HR, Zhaopin.com and CJOL, the report gives a comprehensive analysis of local online recruitment market and industrial online recruitment market.
Online recruitment develops imbalanced in different regions: it is developing well in southern China, northern China, and eastern China; it has a great development potential in middle China; it is on the elementary step in the northeastern China and southwestern China while it develops relatively slow in the northwestern China.
The development of online recruitment for different industries also has different prospects IT industry and manufacturing industry are the two largest industrial clients for online recruitment. The local online recruitment market and industrial online recruitment market are deserving more attention from the investors.
Topics Covered
1 Overview of the online recruitment
2 Situation of China’s online recruitment market
3 Situation of the global recruitment market
4 China’s online recruitment market situation
5 Relationship among enterprises, individual and online recruitment
6 Market operation status of China’s some large online recruitment websites
7 Investment opportunity analysis of local online recruitment markets
8 Opportunity analysis of investing in industrial online recruitment market
9 Development trend of China’s online recruitment market
For more information visit www.researchandmarkets.com
Sourced from home.businesswire.com
China's Rise as Auto-Parts Power Reflects New Manufacturing Edge
August 5th, 2006BEIJING -- Raising the bar for competitors around the world, China is shifting its manufacturing resources to increasingly sophisticated goods, as shown by its rapid emergence as a global powerhouse in the auto-parts industry.
Just a few years ago, Chinese-made automotive components were plagued by a reputation for poor quality, and often cost more than U.S. or German parts. Detractors said the precision engineering required for the best parts was beyond the reach of inexperienced Chinese companies and their low-cost workers.
Last year, however, China for the first time exported more parts than its fast-growing auto industry purchased from abroad. Quality has improved so much that major Western auto makers like Volkswagen AG and DaimlerChrysler AG say they plan in coming years to buy billions of dollars of Chinese-made components -- such as brakes, fuel pumps, wheels and steering systems.
Those gains show how China continues to evolve as a manufacturer, posing new challenges for rivals in the U.S., Europe and Japan. After earning its stripes as a maker of simple consumer goods, such as furniture and textiles, China has branched out, quickly coming to dominate more labor-intensive parts of the consumer-electronics business, such as computer assembly, and moving into a broader range of industries.
The country's production of machinery and transportation equipment has surged, and export of those goods -- which range from auto parts to forklifts to vacuum cleaners -- totaled $352 billion last year, a fourfold increase from 2000.
Meanwhile, motor-vehicle production here has nearly tripled, and China is on pace to overtake Germany as the world's third-biggest auto maker. It has become the world's second-largest car market in terms of sales as millions of Chinese buy cars for the first time. Millions more are expected to do so as their incomes rise and car prices fall.
Now, "China competes in the entire range of products from telecom equipment to textiles," says Hafiz Pasha, director of the United Nations Development Program's Asia bureau.
The transition comes at a sensitive time for the U.S. and Europe, which have been finding it harder to hold on to high-paying manufacturing jobs. Employment in the U.S. auto-parts industry fell to about 644,000 in 2004 from about 721,000 in 2002, according to government figures.
More job losses could be on the way: Some major U.S. parts makers -- including Delphi Corp., which has plants in China -- have sought bankruptcy-court protection. And small and midsize suppliers, which often don't have the resources to set up lower-cost operations abroad, are facing growing pressure.
"In the past two years, Chinese bids for auto-parts orders have driven customer price targets to a level below our costs on some products," said Larry Denton, chairman and chief executive of Rochester Hills, Mich., parts maker Dura Automotive Systems Inc., at a recent government hearing in the U.S.
U.S. parts makers have also raised concerns about their access to the huge Chinese market. Earlier this year, the U.S. joined the European Union in asking the World Trade Organization to overturn a Chinese tariff policy that the two trading partners say discourages imports of auto parts.
China says the policy, introduced in 2005, is designed to prevent tariff fraud. It imposes additional tariffs on auto parts that exceed certain thresholds in terms of value or number of components. China says the idea is to discourage anyone who might seek to circumvent its auto tariffs by importing dismantled vehicles at the lower tariff rate that applies to parts and reassembling them in China.
The growth of the Chinese parts industry comes as manufacturers here increasingly grapple with rising wages and higher energy and raw-materials costs. In China's booming coastal areas, where many factories are located, land and labor are no longer as cheap and abundant as they once were, says Lü Tie, a scholar at the Institute of Industrial Economics in Beijing. Those areas "are now pretty close to the level of middle-income countries. Their comparative advantage is changing," he says.
With local wages on the rise, Chinese manufacturers are seeking to improve their efficiency and reduce their reliance on low-cost labor. They are increasingly churning out higher-value products such as auto parts and shifting away from traditional exports such as textiles and toys.
Some Western companies are reaping the benefits of China's quest for greater productivity. Rockwell Automation Inc., a Milwaukee maker of high-end equipment and software to run factories, said it has seen its China business grow by more than 30% a year since 2003.
"There is a misperception" about China, says Scott Summerville, Rockwell's president for Asia Pacific. While China still has a lot of labor-intensive manufacturing, he says, "there's a big push right now to make Chinese companies globally competitive. You can't do that just with cheap labor."
Rockwell is part of an influx of foreign money and expertise that has contributed to the improving quality of Chinese-made auto parts and other products. The world's biggest auto companies are also bulking up in China, looking for growth that is increasingly hard to come by in mature markets. They, in turn, often demand that their parts makers be able to supply them directly in China.
In recent months, such major Western auto-parts suppliers as Robert Bosch GmbH, of Stuttgart, Germany, and ArvinMeritor Inc., Troy, Mich., have made significant investments in Chinese factories that can make parts for the local market as well as for export.
The higher standards that global companies have introduced, combined with the international growth of local auto-parts makers like Wanxiang Group, has spurred innovation. To gain access to more customers and better technology, Wanxiang has bought several U.S. companies and has expressed interest in buying some assets from Delphi. It says its sales have been growing an average of 26% a year and reached 25.2 billion yuan, or about $3.15 billion, in 2005.
Smaller Chinese companies are also climbing the technology ladder. Huaxiang Group, based in the coastal city of Ningbo, started out in 1982 making plastic caps for medicine bottles. Now it makes molded plastics for auto interiors. Though it has been supplying VW's China operations, about 20% of its 2005 revenue of 2.25 million yuan came from exports, says Xu Peiqi, who runs the office of the board of directors. Huaxiang opened an office in May in VW's hometown of Wolfsburg, Germany.
"The companies are very focused on exports," says Huang Xiaohua, secretary general of the Auto Parts Industry Association of Ningbo. "Products are going up-market," as local manufacturers are increasingly becoming first-tier and second-tier suppliers for the major auto makers, he says.
"When we started exporting in 1997, people argued that you couldn't make" auto parts cheaper in China, says Jack Perkowski, chief executive of Beijing-based parts maker Asimco Technologies Ltd. "People also argued that China would never be a large car market."
Now, he says, "the conventional wisdom is that China can copy but not create. That's going to go too."
China to recruit foreign experts through Internet
June 18th, 2006Foreigners who intend to work in China can have interviews with employers in China through the Internet.
From May 29 to June 4 this year, an online recruitment campaign will be launched by China Association for International Exchange of Personnel.
Foreign job hunters just log on www.e-jobfair.com, view the vacancies, submit their resumes, and ask to "meet" and "talk" with the employers through an audio-visual interaction system on the web.
The whole process is free and there is no need of downloading any plugs. It is the first time that such face-to-face online international recruitment has been made possible in China.
More than 500 Chinese educational institutions and companies have registered on the web site and more than 4,000 foreign job seekers have put forward their resumes there.
The web site also links with the world's top three English teacher associations: TESOL, TESL Canada and IATEFL.
An incomplete statistics show that some 100,000 foreign teachers and experts are working in China. Nearly 5,000 universities and colleges have been approved by the State Administration of Foreign Experts Affairs to have foreign teachers.
By People's Daily Online
Headhunting Heats Up in China Market
June 8th, 2006Marie-Anne Hogarth
The Recorder
September 28, 2005
Earlier this year, New York-based recruiter Henry Lipschutz persuaded Kurt Berney, a prized partner at Wilson Sonsini Goodrich & Rosati, to join O'Melveny & Myers' China practice.
Landing a skilled M&A partner like Berney who was willing to relocate to China was a coup. And it came from a cold call.
The world's largest law firms are intensely interested in China and the other fast-growing economies of Asia. But firms eager to open or expand offices there are finding the supply of lawyers is outstripped by demand.
That's creating opportunities for U.S.-based recruiters like Lipschutz, who says Asia now accounts for about 60 percent of his placements. For now, it's a small market -- there just aren't that many partners in Asia willing to move around. But it's expected to grow.
"There is tremendous opportunity for search work on the horizon [in China]," says Newport Beach, Calif.-based consultant Peter Zeughauser, who advises many firms on their China strategies. "It's starting now and it will be a long run -- maybe 15 to 25 years."
Firms with established China practices, like O'Melveny, can recruit people like Berney, who are willing to take a specialty and move it overseas. Firms trying to launch a China practice, however, need partners who've been on the ground in Asia.
"There are a lot of legal recruiters actively recruiting in China -- there is no shortage of people trying to do that," says partner Howard Chao, who heads O'Melveny's Asia practice. "Where things are tight are senior people with lots of China experience."
Lipschutz, who points to the shortage of partners in explaining why he's focused on recruiting second- to fifth-year corporate securities associates, agrees. "All the partner-level lawyers that should be in Asia have been there for the last three years," he says.
Thomas Shoesmith is one of them. After starting his career with Cooley Godward, he joined the Shanghai office of Paul, Hastings, Janofsky & Walker. Earlier this year, recruiter Avis Caravello brought the IP litigator to Thelen Reid & Priest, where he's launching the firm's China practice.
"Tom would call me at 8 at night" -- morning in China -- "and the kids would answer the phone, 'It's Tom Shoesmith,'" Caravello said.
Despite the need for evening and even middle-of-the-night phone calls -- there's a 15-hour time difference between San Francisco and Shanghai -- more U.S.-based recruiters are making inroads in China.
Zeughauser, who says he only represents partners who've told their current firms they are looking to leave, says he's currently doing some work in China.
Major, Lindsey & Africa joined the small colony of Western recruiters with offices in Hong Kong a few years ago. Recruiters there are increasingly doing more work for U.S. firms that want to open in Beijing and Shanghai.
"Demand has been strong now for five years, but at least with respect to China, it does now seem to be hitting a fever pitch," says Charles Fanning, a global practice leader at Major Lindsey who is based in San Francisco.
Joe Macrae, founder of Mlegal consulting, primarily does recruiting on behalf of U.S.-based firms in the London market. He says his firm is currently handling work on behalf of five candidates in Taiwan and Shanghai seeking to work stateside, or to move within their local markets. Silicon Valley recruiter Carl Baier recently handled work for candidates in China and India, and as a solo he forges deals with larger search firms in other parts of the world.
The biggest hurdle for recruiters is the shortage of recruits. "To the extent that we could find people in China, they would be very viable candidates," says Caravello. "But it is like the needle in the haystack in Asia."
Adding to the difficulty, talent searches in China have become increasingly specialized. Where firms employed generalists who could handle foreign direct investment, they're now calling on specialists in IP, private equity and M&A, says Gregory Nitzkowski, co-managing partner at at Paul, Hastings, Janofsky & Walker. The latter are especially in demand, recruiters say, as Chinese companies in the last year have developed an appetite for American ones.
As in other international markets, poaching is common. And as with many ex-patriot communities, lawyers in Hong Kong and China seem more often willing to make the move.
"There is more mobility in Asia," says partner Michael Gisser, who co-heads the Asia-Pacific practice of Skadden, Arps, Slate, Meagher & Flom. "There is less stigma associated with job-changing by partners and associates alike. In the U.S., "if someone is on their third or fourth law firm, it is more likely to raise a question."
While individual hires account for much recruiting, some firms prefer to bring on groups in the international market.
"Our London growth has been with groups and I love recruiting [that way]," says Morrison & Foerster Chairman Keith Wetmore. "I have higher confidence around quality and demonstrated team dynamics [with a group]. With a single person, you don't know why they are in the market."
Topic: Headhunting in the Mainland Chinese Market
June 8th, 2006Topic: Headhunting in the Mainland Chinese Market
October 2002 issue
with ART's Managing Director
Interview Date: 14 September, 2002:
Q1. How does recruiting for the mainland Chinese market differ from recruiting for other markets?
A1. Every market is a little different, and we do not find China to be notably different from most world markets in most respects. It's always the same question: "does this client's business model and expectation coincide with this candidate's experiences and career path?" The level of candidates that we recruit in China - mostly "C" level, VP level, Managing Director/ G.M. levels, and Director/ Manager levels - tend to be "global class" people. These are the same types of people that could and do operate successfully anywhere, be it in Beijing, Shanghai, Shenzhen, Hong Kong, Singapore, Taipei, San Francisco, New York, London, Zurich, etc. Most of these people have either lived, worked, or were educated in other parts of the Asia-Pacific, North America or Europe. These candidates might have known ART for years or might have heard about ART from trusted colleagues in China or abroad. They understand that the calibre of our candidates is high, and our clients' expectations of them are high. Such people usually find us, or we find them through our network of contacts. Generally, good people recommend other good people, so in recruiting people in China we place some reliance upon trusted referrals to steer us in the right direction.
Depending upon the specific job, industry or business model, sometimes there are shortages of specific mainland China profiles. In that case, it might be necessary for an employer to seriously consider Hong Kongers, Singaporeans, Taiwanese and other Chinese speakers from abroad. The most notable of these would be a VP or "C" level person for a small early stage China division of a small or medium sized foreign company. Foreign startups in particular typically are founded by people who have limited finances and who work very hard with limited staff. When they seek senior managers for new Chinese operations, they often look for the same type of "shirtsleeves" person to head their China groups. Such people, however, can be a bit hard to find in mainland China, particularly since most foreign-trained or foreign-company experienced Chinese executives come from large multinationals. So a person whose resume might suggest a high suitability for an American employer (i.e., s/he worked for U.S. multinationals, s/he received an education in the U.S.), that person might not automatically be suitable at all for a Silicon Valley-type startup firm. While a Chinese finance manager at a major U.S. multinational might be supported by a very large China staff, that person taking a job as a CFO of a startup China division, might find himself or herself alone in a room with the expectation of "doing it all." Most search firms operating in the China market do not appreciate this subtlety, and that is why many of their matches are not good fits for the candidate or the client. When we take on such assignments, then, we ask the employer to keep this factor in mind. When we discuss such jobs with candidates, if we do not see a lot of appropriate startup company experiences, we ask pointedly if such a job would interest her or him. We typically lay out scenarios: you will be expected to do all the work, you will not have a staff until business allows for hiring, you will have to do what ten others do at your present company, etc. We rather have nine candidates out of ten realize early that this would not be good for them, rather than to place someone in the wrong job.
Our focus in China tends to be people who are bilingual English/Chinese (Mandarin or Cantonese) speakers who are fully bicultural, which is to say that they are "at home" in China, familiar with mainland Chinese customers and business partners, and also are able to deal effectively with overseas companies, customers and business partners in the way that those companies would expect to be dealt with. Because China today is still a mix of people coming from state company experiences and domestic and foreign private company experiences, the overall numbers of Chinese middle managers and senior managers with the experience of running proper corporations or departments 100% along world class lines is still limited. In five or ten years, the expertise of Chinese managers will be truly outstanding, as today's junior managers and middle managers hone their skills. We recruit middle managers today for middle management roles, because we know that they are valuable recruits today and critical for tomorrow's CEO, CFO and VP placements. Right now, we are seeing in China many fully able world class managers, a larger number of managers with hybrid Chinese and foreign business styles, and a larger number that only could perform within their existing Chinese business models.
One somewhat different aspect of China recruitment is finding people who are suitable for joint ventures. While JV's are found in every country, there is a perception by some clients that entering into a joint venture in China with a local partner is a "high stakes" proposition, bringing a potential of high gain along with potentially high risk. So when we look for a General Manager or Finance head who is to be the prime contact person with the JV partner, a special person must be found. Some people can work perfectly well in monitoring a JV with a state partner, while others only would be good with a private sector JV partner. Also, the goals of JV's in China can vary significantly: it could be a transition for the foreign company to buy out a local partner, it could be a pure partnership, or it could be primarily a mechanism for funding or modernizing a local partner in return for a stake in future profits. JV General Managers or Finance Directors anywhere are always in a sort of high risk business model, regardless of the country, but in China, where cost accounting, manufacturing cost, and balance sheets are somewhat new concepts, it sometimes is hard for a prospective partner to fully understand what the local partner brings to the table, can bring to the table, or what it might take off the table. Each type of business model requires a manager suited to those ends. Most important is that the person be a trusted monitor and negotiator on behalf of our client's interests.
Q2. Is there still a "hardship" premium for postings to China?
A2: We are very leery of any foreign candidate in China or any person seeking a position in China who feels the place is a "hardship posting." In remote provincial areas, some special allowances might be quite justifiable, including for Chinese nationals relocated to those jobs, but in Beijing or Shanghai, a person calling for "hardship" premiums is probably someone that we would not be able to help.
It kind of reminds me of the story that used to circulate a decade ago about how a cost of a cup of decaffeinated coffee in a Tokyo hotel restaurant was $20. My comment to that is either don't order decaf in a Tokyo 5-star hotel (drink tea instead), or don't leave your country if you exactly want to recreate every shred of your past life, brick by brick, in another country. Certainly don't expect that a prospective employer is going to happily coach you on to extract such benefits from their budget. A person who starts out feeling that China is a hardship posting probably should not be in China. There are benefits and problems in living in every city in the world. To a degree, "everything is negotiable," but if the China job seeker is primarily focused on expat benefits, we get nervous that they might be more interested in locking in big amounts of cash and a luxurious lifestyle, rather than concentrating on the bottom line: making our client's mission successful.Success involves commitment to a market, and success involves some sacrifice and risk taking. If the person comes into a tough job with all the comforts locked into an ironclad, long-term contract, where is the motivation to work hard? If an employer had to choose between two very closely matched candidates, one already living in China who only wanted a good salary, bonus and decent benefits package, versus another candidate who wanted all that plus a hefty expat package, which candidate do you think that the employer might regard more favorably? No employer is in a position to give away free money. If they are offering an expat package, it's likely because that candidate was the best candidate interviewed for the job.
Many international executive search firms sometimes seem to push high cost expat candidates on their clients without even seriously considering capable local candidates with bankable credentials. We do not specialize in expatriate recruitment. Some percentage of our placements involve expat assignments, but every job search that we take on, regardless of the country, assumes that we should first try to find candidates already in that city or country. In some cases, a client can consider bringing in people from other cities or countries, and they might be willing to consider reasonable expat benefits on a case-by-case basis. Some candidates might have requirements such as school fees or housing allowances, but these candidates might be competing with very good local candidates who don't need the employer to pay their food and rent, and who do not carry with their candidacy other such up-front burdens. The decision to consider one candidate with a reasonable total cost versus another with a higher set of requirements is left to the employer. We leave it to the employer to weigh the pluses and minuses of each candidate. Since our candidates are in 100 countries, we have a broad database of people to consider, depending upon the client's budget and needs. If the employer has no budgetary limits to bringing in managers from abroad, that is not a problem for us, of course.
Nowadays, we see people in Hong Kong, Singapore, Taiwan, Australia, North America and Europe who are willing to take a job in China and who do not even ask for the cost of a plane ticket, because they perceive that there are great opportunities in mainland China. The person who might speak of a hardship premium for a posting in Shanghai or Beijing these days might be a person who is only half interested in the place or the opportunity. This more than likely would be a person who overestimates his or her own current market value, or underestimates the capabilities of his or her competition.
Q3. What are the main attractions of a China posting for candidates?
A3. The most obvious attraction is probably the vastness of personal career opportunities. Just to discuss finance jobs, a person who is currently a finance director at a hum-drum job might be pegged for a China VP of Finance job at a multinational engaged in financing a vast China market expansion plan, or a very exciting startup that might make him or her a millionaire. Currently, the economies of Hong Kong, Singapore, the U.S., Europe, and Japan have been slow, so many foreign firms are seriously focusing their attention on countries like China. This interest, as well as an expansion amongst local Chinese companies, causes there to be many interesting management opportunities for Chinese nationals and foreign professionals alike.
Having good work experiences in China is seen as an asset in most resumes of senior and middle management candidates. If you are a foreigner considering a job in China, the likelihood is that when you return to your home country after a China assignment, your profile might possibly be raised in the view of employers. It is one thing to "think global," and it's another thing to have actually "been global."
The quality of the work in China, again only discussing finance jobs, can be very exciting. This is a country where much of the groundwork of creating formal finance structures, institutions and systems has only barely begun. A person who in his or her home country might not have the opportunity to make deals with the big players, much less help create financial systems, institutions and mechanisms for a country or industry, might possibly have the chance to do so in China.
Some people come to China because their family origins are in China and they would like to broaden their understanding of China.
Some people are returning migrants from abroad who, after several years working in foreign countries, feel that their best prospects are in serving as bridges between the country of their birth and the country of their professional lives.
Some people go to China in search of the proverbial proposition of selling their product or service to a billion people. These people might be motivated by big dreams or big money - or both.
Q4. What are the main drawbacks of a China posting for candidates?
A4. This answer really depends upon the location and the candidate. There can be a wide variety of issues that could make a China posting wrong for any one person. We therefore would highly recommend that a foreigner who has some interest in a China posting do a lot of research about the place in advance of considering applying for a job in China. In a thousand ways, life in China is not the same as in Taiwan, Hong Kong or Singapore, and even having Chinese fluency does not guarantee that one would be happy working in China or would be successful. Because of the many personal variables involved in such postings, ART tends to recommend to its client companies people who are already well experienced in or well established in the target city and market, be they Chinese nationals or foreigners. We think that by focusing on such candidates, we help minimize everyone's risk of failure.
Q5. Can you give an estimate of the increase/decrease in demand by international firms for candidates willing to relocate to China?
A5. Our firm specifically prides itself on trying to present local candidates on six continents, so most employers coming to ART seeking managers for mainland China or other countries usually do not look for us to present them with people who are not already in the country where they need the person to be based. Often, in fact, many employers contact us to help find the replacement for their past or current expat managers. Typically it is a situation where the person being replaced is the "first generation" manager being rotated back to the home country. In other cases, it is a case of the person simply having failed, often due to lack of local language skills, lack of local business contacts, or a limited understanding of local business culture. If anything, we are seeing a greater demand for high calibre, internationally trained or internationally experienced local Chinese managers to run Chinese operations. There can be quite a challenge in finding these candidates, but they will be the future, and companies that are lucky enough to snatch these people up will have, in our opinion, a much better chance of success than putting in charge a foreign manager who might describe himself as a "China expert," but who, shockingly too often, is usually a person who is not even capable of reading the day's weather report in a local Chinese language newspaper.
Q6. Any other issue you feel may be of interest to international employers looking to place staff in mainland China?
A6. Too often executive compensation in China is tragically misperceived by foreign companies without regard to either the supply and demand of appropriate candidates or without regard to the value that a really good local Chinese candidate can bring to a foreign employer. What we sometimes see is this potentially reckless and simplistic thought process by some employers: "Wages in China are a fraction of our own, so a Chinese general manager's salary should therefore be a fraction of a general manager's in our own country." Yes, it is true that the average general manager in China is much lower paid than the average general manager in most industrialized countries, but in China, an average general manager is someone who does not speak English well or at all, has never worked for a foreign company, and whose conception of profit and loss is one that a foreign company would never consider acceptable in running their China business unit.
The profile that most foreign companies seek for China is not the "average general manager." Rather, it would probably be something closer to the average one-tenth of one percent of the Chinese private sector industrial managerial class. These are the people who might have U.S. MBA's, who might have worked or lived in Europe, the US or Singapore, whose English is fluent, who perfectly understand foreign conceptions of business success and failure, and who have successful track records in China working as senior managers or general managers of foreign firms in China. Their salaries are high by Chinese standards because they are worth every penny, and their skills are constantly sought out by foreign firms. The first, easiest and worst mistake a foreign employer can ever make in entering the China market is to underpay their top local management team. Either you will not be successful in hiring the best managers that you need to shepherd your products and services properly into the Chinese market, or you will soon find that your key managers are giving you notice, because of the many opportunities offered them by your competitors and others, who do understand the value that their knowledge, skills, contacts and personal integrity can bring their companies.
China's Recruiters Speeding Up
June 8th, 2006As multinational companies expand into China, the headhunting business is growing quickly and moving online, says Zhaopin CEO Liu Hao
Zhaopin was founded in Beijing in 1997 as an old-fashioned headhunting company. Since then, it has shifted much of its focus to the Internet, and has become one of China's leading online recruitment firms. Still, Zhaopin hasn't abandoned the old ways of doing business, continuing to run recruitment ads in newspapers, especially in smaller cities. Clients include many multinationals such as Microsoft (MSFT), Shell (RDSB), DaimlerChrysler (DCX), Hewlett Packard (HPQ), Motorola (MOT), and Intel (INTC). Advertisement
Thirty-six-year-old CEO Liu Hao has degrees in physics from Beijing University and the University of Washington in Seattle, and a law degree from Yale University. He recently met with BusinessWeek's Beijing bureau chief, Dexter Roberts, at Zhaopin headquarters to discuss his Internet operation and the overall recruitment market in China. Edited excerpts follow:
How has your company developed recently?
We have been growing very rapidly, with 100% annual growth in revenues the last three years. A couple of years ago we were profitable, but in the last few years, with the speed up of our expansion -- we have grown from 4 cities to 16 cities -- we have not been profitable. In early '04 we had fewer than 300 people. Today we are at about 1,000.
We are particularly strong in the multinational business. Think of the Fortune 500 companies -- 95% of them are our clients. We are definitely not the largest recruiter in China. No. 1 is [Nasdaq-listed] 51job.com. But their strength is mainly in newspaper ads. They do only 20% of their business online. We instead are 60% online, with 20%-plus in newspapers. The rest of our revenues are from headhunting.
Why are you expanding into the interior of China?
We see this as the driver of our growth. In the past, the online market has really been centered in Beijing, Shanghai, Shenzhen, and Guangzhou. Outside these cities it was just in the development stage. But China's secondary cities also have huge populations. In the past, Internet penetration was not so high there, but that is changing.
For cities like Wuhan and Hangzhou, for example, their online jobs market might only be worth a couple million yuan ($125,000) right now. But in the next few years it will grow to 10 million yuan ($1.25 million). As multinational companies expand across China, we will go with them. We will probably be in 20 cities by yearend.
How bad is the talent shortage in China?
In the past, when companies first came into China, they were all struggling to fill managerial positions with people with solid operating experience. Chinese returnees with overseas degrees came back, but often had very little managerial experience. Over the last couple of years we have started to see a new pattern. General managerial staff is still in great demand, but the market demand is getting much more specialized.
For example, there's an acute shortage of skilled workers such as specialized engineers. That's particularly true in industries like autos, with the entry of BMW, Mercedes, and all the Japanese brands into China over the last few years. The pharmaceutical industry and the finance industries are also facing talent shortages. In general, sales and marketing professionals, medical care staff, and investment and fund managers are all facing serious shortages.
Are wage inflation and turnover a big problem right now?
China has doubled the number of people in its colleges over the last few years. That has had a deflationary effect on salaries for entry-level people. But in certain industries over the last couple of years, salaries have increased dramatically. For example, in the computer and Internet industries they have gone up 20% to 30% over the past year. Wherever you have venture capital flowing, salaries will go up. But in consumer electronics and the cell phone industry, we have seen that pay levels have dropped a little bit. So we actually see pockets of deflationary pressure.
Second-tier cities face a more severe problem. Cities other than Beijing and Shanghai have a particularly hard time keeping top talent. For example, take Xian. There are 100,000 to 200,000 college graduates in Xian every year. Xian is a city with a high educational level. But most graduates leave Xian after college. Beijing- and Shanghai-based companies offer higher salaries and a sexier work environment.
Chinese employees are known for changing jobs quickly. Why?
China's job market is still not very mature, and professional ethics are still in the process of developing. We still see cases where job candidates will sign an offer and then decide not to take it. People also jump ship more often here in China. The general sentiment of society is impatience.
People are very ambitious. It's like a virus affecting the job market: It is very hard to develop employee loyalty. People see working at a multinational as a stepping stone -- something to put on their résumé before moving on. Talented people are being lured away by local or private companies. Others would prefer to start their own companies.
How does that drive your business?
A lot of employers are starting to realize that going online is the best way to find the kind of employees they want. Certain employers use the Internet as a way to screen employees -- anyone the company would consider hiring should be proficient online. And a lot of multinationals are spending more online, while decreasing their print ads.
How do you see the overall online jobs market developing?
In Beijing, revenues from online job listings overtook newspaper listings last year and now lead by a large margin. Online jobs are growing at 30% a year now and were about 100 million yuan last year in Beijing. The size of the Shanghai market is a little smaller but growing at the same pace. Nationwide, newspaper revenues from recruitment ads are around 2 to 3 billion yuan, but growth is pretty much flat. The online recruitment market for all of China was probably around $50 million last year, and is growing at around 30%.
Any plans to take your company public?
Yes. Probably late next year. And it will most likely be on Nasdaq. It's where all the Chinese Internet companies have gone
China triggered "global job boom"
April 26th, 200610 million opportunities created ¡ª Xinhua
BOAO (Hainan): China has created some 10 million job opportunities for the world over the past five years, said Vice President Zeng Qinghong here on Saturday.
China had also been importing nearly $500 billion worth of goods annually since its entry into the World Trade Organisation in 2001, Mr. Zeng said. He was giving a keynote speech at the opening ceremony of the Boao Forum for Asia (BFA) Annual Meeting 2006.
Highlighting the opportunities of development China has brought to the world over the past years, he said imports from Asian countries and areas increased 20 per cent year-on-year to hit $440 billion in 2005, accounting for 67 per cent of China's total volume of imports.
Beneficial cooperation
Overseas investment by Chinese companies has increased by over 20 per cent annually, with 80 per cent of it made in Asia.
China will ``unswervingly'' pursue peaceful development and pay more attention to friendly and mutually beneficial cooperation with the world, especially with Asian countries and regions, Mr. Zeng said.
He said China's smooth and fast development would provide more opportunities for regional cooperation in Asia. He said 2006 was the first year of China's 11th Five-Year (2006-2010) plan.
In the coming five years, China would improve its mode of economic growth and focus attention on environment protection and resource-conserving to maintain a stable and relatively fast development.
By 2010, Mr. Zeng said China's GDP would exceed $3 trillion, and the annual import volume will surpass $1 trillion. The energy consumption per unit would be reduced by 20 per cent, and the emission of pollutants would be cut by 10 per cent.
Mercer launches insurance JV in China
April 26th, 2006Maggie Zhang
2006-04-26
MERCER Human Resource Consulting, the world's biggest insurance broker, launched a joint venture in China yesterday.
The venture, Shanghai Mercer Insurance Brokers Co Ltd, offers health-care benefits and advisory services to organizations in China. Mercer refused to identify its JV partner, saying it is awaiting the Chinese firm's approval to disclose the information.
"We are ambitious and optimistic about the market and our business will grow rapidly," said Edouard Merette, Asia-Pacific president of Mercer. "The potential is enormous as it's still in the initial stages of the market in China."
China's insurance premiums topped 493 billion yuan (US$62 billion) last year. Premiums collected from the country' insurance brokers were at about 10 billion yuan, accounting for a mere 2 percent of the total.
Considering the 2 percent figure, the insurance broker sector enjoys big growth potential, said Rosaline Chow Koo, regional business leader of Mercer Health & Benefits Asia. She also said China will be the fastest-growing market for the company.
The venture has 10 employees to start. But Merette said it will grow into the "thousands" in a fairly short period.
The US-based company holds a 24.9 percent stake of the venture, just under the 25 percent maximum a single foreign investor is allowed by regulators in the insurance sector. Its unidentified Chinese partner holds the remainder.
The China Insurance Regulatory Commission granted the license for the venture late last year with registered capital of 10 million yuan.
China is boosting its commercial insurance sector to partly absorb the nation's US$1.8 trillion in household savings. Authorities want to increase combined insurance assets to 5 trillion yuan by 2010 from 1.6 trillion yuan at the end of March.
Germany's SAP hopes to triple China staff by 2008
April 19th, 2006Last Update: 5:20 AM ET Mar 24, 2006
SHANGHAI (MarketWatch) -- Germany's SAP AG (SAP), the world's biggest business software company by revenue, hopes to triple the number of its staff in China by 2008, a senior executive said Friday.
SAP now has 1,100 employees in China, including staff at a regional support center in the northeastern port city of Dalian, a laboratory in the central city of Chengdu and a new laboratory in Shanghai.
Get Me Personnel, We got hottest Job in China
April 17th, 2006Who's got the hottest job in China? The HR guy.
Michael Cline has seen the front line of the piracy battle in China. As a vice president for global personnel at AO Smith, the maker of heaters and motors based in Milwaukee, he helped guide the firm's China expansion from no plants in 2001 to multiple sites in four cities by 2005, and from zero employees to 3,000 people. Problems soon emerged: Employees were selling the company's technology to outsiders, and sales staff were, he says, "leading a dual life" by also working for rivals.
"The environment here was very different from anything the company had faced before," says Cline, who now runs a U.S. textile company in China. "I was spending 70% of my time" on China.
So AO Smith called in a U.K. consultancy called Control Risks to plug the security holes and help vet employees more carefully. They tried to root out nepotism by managers who directed business to companies controlled by family members, says Dane Chamorro, the China deputy manager with Control Risks in Shanghai. AO Smith declined to comment on the security issues. "There are a lot of messes here" in China, Chamorro says.
China's economic boom and attendant surge in intellectual property theft and financial crimes are taxing the skills of personnel departments. The demand for those skills is making personnel into one of the hottest careers in China today. According to consulting firm Mercer, wages in China for top HR executives of multinational companies grew 20% in each of the last two years to $97,000--in a country where per capita income is 1% of that figure.
The risk of a bad hire is getting bigger as manufacturers transfer sophisticated technology to woo local consumers and overseas investment funds pour fresh capital into local businesses. Corporate-snooping outfits are thriving as clients demand more background checks on their partners and employees. After opening a Shanghai office in 2003, Control Risks has gone from 2 to 22 employees in the city and will add an office of 5 people in Hong Kong this year.
For decades after the Communists took over in 1949, workers spent their entire careers with one state-owned company and rarely moved to a different town. Although state-owned enterprises now account for only a third of the economy and workers are far more mobile, there are no good national databases for checking employment histories, education credentials and criminal records.
The cost to check out a potential or past hire can range from $100 to $5,000, more than in the U.S., where criminal, legal and credit databases are more easily checked. The expense and hassle deters some businesses from even bothering, says Control Risks' Chamorro. Résumé fraud is rampant, and applicants frequently forge names on recommendation letters. "They don't expect to be checked--that's why they do it," says Chamorro.
And don't bother calling a former employer by phone. "If you call another part of China to ask about someone, people will tend to say everything is fine because they don't want to risk trouble from saying anything bad," says Simon Yin, cofounder of Hongren Club, an association based in Shanghai of about 1,000 personnel professionals. Yin is a big proponent of informal information exchanges about job applicants and of using references among group members.
"A lot of laws are there, but they don't always help. You have to work internally," says Arthur Yeung, who teaches at the China-Europe Business International School.
Low Costs, Plentiful Talent Make China a Global Magnet for R&D
April 14th, 2006Kathy Chen
Jason Dean
The Wall Street Journal, 14 March 2006
BEIJING -- Multinational companies, drawn by a huge and inexpensive talent pool, are pouring money into research and development in China -- a trend that promises to broaden the country's huge role in the global economy.
The total number of foreign-invested RnD centers in the country has surged to about 750 from 200 four years ago, according to China's Ministry of Commerce. And in a survey of multinationals published in September by the United Nations Conference on Trade and Development, China was by far the most frequently cited location for RnD expansion, well ahead of the U.S. and third-place India, China's chief rival as an emerging innovator.
Still, China's growth as a global RnD hub faces some constraints. Among them is the country's weak protection of patents and other intellectual-property rights. That has encouraged some foreign companies, fearful of risking their trade secrets, to keep more cutting-edge research out of China, analysts say. But others have rushed to expand the scope of their development efforts here.
Whereas RnD investment in China initially focused on adapting existing products and technologies to the Chinese market, companies such as Procter & Gamble Co., Motorola Inc. and International Business Machines Corp., among many others, have been investing to expand their Chinese RnD operations to develop products for the global market.
PnG opened a research arm in China in 1988, consisting of two dozen employees concerned mainly with studying Chinese consumers' laundry habits and oral hygiene. Today, the U.S. consumer-products giant runs five RnD facilities in China with about 300 researchers who work on innovations for everything from Crest toothpaste to Oil of Olay face cream.
The Chinese facilities have been a lead site for developing a new grease-fighting formula of Tide laundry detergent that sells in Asia, Eastern Europe and Latin America. At one facility in Beijing's university district, researchers use computer modeling to tinker with other promising formulas that chemists in white lab coats and protective glasses then mix and test. "We are developing capabilities in China that we can use globally," says Dick Carpenter, director of PnG Technology (Beijing) Ltd.
Giving impetus to the RnD expansion in sectors from biotechnology to pharmaceuticals to semiconductors is China's government. Having enlisted foreign investment to transform China into a manufacturing powerhouse over the past few decades, Beijing now is mounting a campaign to strengthen domestic innovation that could help push the country into more advanced niches of the global economy.
In his annual report at the National People's Congress in Beijing, which ends tomorrow, Chinese Premier Wen Jiabao said the central government will increase spending on science and technology by nearly 20% this year. "China has entered a stage in its history where it must increase its reliance on scientific and technological advances and innovation to drive social and economic development," he said.
China's State Council, or cabinet, recently said the country would seek to boost RnD investment to 2% of gross domestic product in 2010 and 2.5% by 2020. At a news conference Friday, senior officials outlined tax breaks and other tools they plan to use to meet that target. Last year, total RnD spending in China -- not including foreign investment -- reached $29.4 billion, rising steadily from $11.13 billion in 2000, according to the government.
China faces numerous obstacles to joining the ranks of the world's innovation leaders -- beyond its weak intellectual-property protections. Research spending is still small compared with that of developed countries; the U.S., for example, spends about 2.7% of GDP on RnD, compared with 1.3% of GDP in China last year. And much of what is spent in China still comes from foreign companies: Less than a quarter of Chinese midsize and large enterprises had their own science and technology institutions in 2004. Of China's high-tech exports, valued at $218.3 billion last year, nearly 90% was produced by foreign-invested companies, according to the Ministry of Commerce.
Still, the RnD trend is bolstering China's position relative to other developing countries, particularly India, which is also seeking to build its innovation abilities. India's total domestic spending on RnD rose an estimated 9.7% to $4.9 billion, or 0.77% of GDP, in the fiscal year ended March 2005, according to India's Ministry of Science and Technology.
India is also trying to build RnD, "but the scale of investment is not much" because of budgetary constraints, says V.S. Ramamurthy, a top official at the ministry. Foreign investment in Indian RnD has also lagged behind that of China, he says. And while Mr. Ramamurthy argues that the amount of investment isn't the only way to measure RnD success, "it is a concern for us."
Zhang Jun, director of the China Center for Economic Studies at Shanghai's Fudan University, says that given time, "China's advantages in this area will become more obvious...and its attractiveness will increasingly become stronger than India's."
Among China's draws, he says: the relatively low cost of hiring engineers and researchers; a huge talent pool, including five million university graduates annually (one-fifth majoring in science or engineering); and China's own huge market of 1.3 billion consumers. China offers its students abroad incentives to return once they graduate, including generous research grants and chances to run their own RnD projects.
One early returnee is Enge Wang. Mr. Wang, who had worked as a research associate at the University of Houston, decided to return to Beijing to conduct research under a Chinese Academy of Sciences program in 1995. At the time, he says, his U.S. colleagues and friends questioned his decision, but he says he is glad he made the move. Today, Mr. Wang is director of the Institute of Physics under the academy, one of China's top research organizations, which is engaged in several RnD cooperative ventures with foreign companies.
China's "research funding is getting much better," Mr. Wang says, and as a result, overseas Chinese are flocking back from top U.S. institutions like Harvard University and Lawrence Berkeley National Laboratory. Talented returnees can secure enough backing "to build up their own lab and extend their research in one direction for 10 years," he says. "It's hard to find such conditions elsewhere."
"There's been a paradigm shift among foreign companies in China," says Chen Zhu, a Chinese Academy of Sciences vice president. "Now, more foreign companies realize
China is not just a market but a country with huge amounts of talent."
Motorola, which began investing in low-level RnD in China in 1993, now has 16 RnD offices in five Chinese cities, with an accumulated investment of about $500 million. The U.S. company has more than 1,800 Chinese engineers, and the number is expected to surpass 2,000 this year. They have recently begun developing new phones and other products for sale not only in China, but also overseas, executives say.
One phone developed in China, the A780, lets users write on the screen with just a finger, rather than a stylus. It's now available in the U.S. and Europe. Another phone that can scan contact information from business cards using a built-in camera and enter it into a contact database is expected to be marketed in the U.S. "China is moving from the manufacturing center into advanced RnD," says Ching Chuang, who heads Motorola's Chinese RnD operations.
Microsoft Corp.'s basic-research lab in Beijing was only its second outside the U.S. when it opened in 1998. That China lab now employs about 200 full-time scientists, and the software giant expects its total RnD headcount in China to double in this year to about 800 researchers.
At IBM's research lab in Beijing, Chinese scientists have led the development of several technologies now being used abroad. Among them: "voice morphing" software that can convert typescript or a recorded voice into another voice. "Our RnD now has a global mission," says Thomas S. Li, director of IBM China Research Lab.
At the state-run Institute of Computing Technology, engineers are tackling one of technology's tougher challenges: designing a computer microprocessor. Though still many years behind industry leaders like Intel Corp., the institute last year unveiled its second-generation microprocessor, with about the same computing power as mainstream chips in the late 1990s. This year, it plans to finish work on a third-generation chip that could narrow the gap.
China is also emerging as an RnD force in such sectors as nanotechnology, biotech and genetically modified crops. It was the first country to establish a full rice genome database, which has helped Chinese scientists develop hardier and higher-yielding strains of the staple cereal.
Swiss pharmaceuticals companies Novartis AG and Debiopharm SA have teamed up with the Shanghai Institute of Materia Medica under the Chinese Academy of Sciences to conduct research into traditional Chinese medicines to look for treatments for malaria and Alzheimer's disease. "This last decade, the progress we have seen in China's scientific research sector is phenomenal," says Ju Li-ya, director of Debiopharm's China department.
China Job fair attracts Taiwanese
April 14th, 2006By Li Dapeng (China Daily)
Updated: 2006-04-10 05:40
The mainland's first job fair directed at Taiwanese was held on Saturday in Xiamen, Fujian Province, with hundreds of job-hunters flocking to the fair in hope of snapping up one of 500 vacancies on offer.
The job fair, organized by human resources companies across the Taiwan Straits, was especially open to Taiwanese graduates and professionals.
More than 200 job-hunters attended the fair, including about 100 students and professionals from Taiwan, as well as 100 Taiwanese studying in universities on the mainland.
Lin Jia-yi, a Taiwanese college student, was one of many job-hunters travelling between different company booths at the job fair.
A recent graduate of Taiwan National Chengchi University, Lin is focusing on the mainland for her career.
"There are many more job opportunities here than in Taiwan," Lin said. "Though I may earn less in the short term, my career prospects are very attractive."
About 50 mainland and mainland-based Taiwan and overseas companies and institutions had over 500 vacancies on offer at the fair.
Wang Jianzhong, an official with Kunshan Human Resource Centre from East China's Jiangsu Province said: "We didn't find the suitable professionals we needed today, but we did get valuable information about the expectations and needs of Taiwanese people in relation to their career development on the mainland."
"Job information about the mainland is still not transparent enough for Taiwanese talent, which has been the main obstacle for them starting their careers here," said Steve Tsai, chief executive officer with Pan Asia Human Resources Management and Consulting Corporation, the fair's Taiwan organizer.
"So the human resources organizations on both sides should co-operate to offer more information to help them," Tsai said.
"Both sides are trying to make this kind of cross-Straits job fair a regular event," added Tsai.
"The gap in salary between Taiwan and the mainland has caused many Taiwanese students to go back to work on the island after they graduate from mainland universities," Zhao Shi-Cong, president of Taiwan Students Union, said.
Zhao said generally, a monthly salary of NT$20,000 to 30,000 (US$619-929) is available for graduates with bachelor degrees in Taiwan, while they would only receive 2,000 to 3,000 yuan (US$250-374) on the mainland.
According to him, about 9,000 to 10,000 Taiwanese students are studying at mainland universities.
Taiwanese professionals who are working in Xiamen can also enjoy a number of favourable tax regulations issued by local government, said officials with Xiamen Local Taxation Bureau.
For instance, the threshold for individual income tax for Taiwanese people working on the mainland is 4,800 yuan (US$600) starting from this year, which is 3,200 yuan (US$400) higher than that of their mainland peers.
Statistics from the bureau indicate more than 3,000 Taiwanese people are working in the city.
Wharton Executive Education Launches New Program in China
April 14th, 2006Wednesday April 5, 10:00 am ET
New Partnership With China Minsheng Bank Will Lead Branch Managers Through Comprehensive Management Development Program
PHILADELPHIA, April 5, 2006 (PRIMEZONE) -- The Wharton School of the University of Pennsylvania has announced a new Executive Education program in China for China Minsheng Banking Corporation. The partnership was made official at a signing ceremony on March 21, 2006 in Beijing. China Minsheng Banking Corporation, the country's only privately-held bank, is expected to become one of the leading retail banks in China in the next few years.
Between March 2006 and May 2007, three cohorts of 60 senior executives from China Minsheng Banking Corporation will complete eight modules, spanning various aspects of management development, with specific reference to the banking industry. Examples of topics to be covered include:
-- strategy
-- leadership skills
-- financial innovation
-- international accounting standards
The program will be taught in Shanghai by Wharton faculty with sequential translation into Chinese. Participants will include branch managers from various locations of China Minsheng Banking Corporation.
``Wharton Executive Education is very excited about this partnership with China Minsheng Banking Corporation and we believe that this is the beginning of a long relationship,'' commented Peter Degnan, executive director of Wharton Executive Education. ``Wharton has significant expertise in delivering executive education for the banking industry. We look forward to this opportunity to support China Minsheng Banking Corporation's efforts in becoming a world-class retail bank.''
``The Wharton School brings to this task unparalleled intellectual resources, in the existing work of our faculty, and also in our eagerness to learn more about China's tremendous potential for growth and development,'' said Wharton Deputy Dean David Schmittlein at the launch ceremony.
Shao Ping, executive vice president of Minsheng Bank and president of the Minsheng Bank-Shanghai Branch, stated that the competition in the financial service sector of the 21st century lies in innovation and human resources. ``The Wharton-Minsheng program will build a new body of knowledge, widen strategic perspectives, and develop innovative thinking to make the core team of Minsheng Shanghai Branch outstanding among its competitors.''
``By the end of 2006, China will have to fulfill (its) WTO commitments for a more open banking sector,'' commented Xu Jie, general manager for international iusiness at Minsheng Shanghai Branch. ``I feel comforted that this Wharton program for senior executives can guide us in probing the right questions to arrive at the critical insights and answers as Minsheng looks to the future.''
Additionally, Wharton and Minsheng signed a strategic agreement to work together in the following areas: promotion of the Chinese edition of Knowledge at Wharton, the School's online business journal; Minsheng human resource development; and Wharton faculty research and consulting.
The Wharton School is committed to developing its relationships in China. It recently opened an office in Shanghai and launched the Chinese edition of Knowledge at Wharton.
About China Minsheng Banking Corporation
Founded on Jan. 12, 1996 in Beijing, China Minsheng Banking Corp., Ltd. (Minsheng) is the first national joint-stock commercial bank in China with stocks mainly held by non-state-owned enterprises. It also is a standard joint-stock financial institution set up strictly in accordance with the Company Law and the Commercial Bank Law, which distinguishes itself significantly from state-owned banks and other Chinese banks. Since its establishment 10 years ago, Minsheng has become well known to domestic and overseas financial markets.
About the Wharton School
The Wharton School of the University of Pennsylvania -- founded in 1881 as the first collegiate business school -- is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. The most comprehensive source of business knowledge in the world, Wharton bridges research and practice through its broad engagement with the global business community. The school has more than 4600 undergraduate, MBA, executive MBA, and doctoral students; more than 8,000 annual participants in executive education programs; and an alumni network of more than 81,000 graduates.
JPMorgan to hire 750 in RP, eyes China deal
April 14th, 2006DETROIT - JPMorgan Chase & Co.'s Chief Executive Jamie Dimon on Monday said the Wall Street bank was increasing its presence in Asia, with plans to hire 750 people in the Philippines this year and actively looking for acquisitions in China.
"We are optimistic about the future in China," Dimon said in a speech at the Detroit Economic Club.
He said the bank would hire another 4,000 staff in India this year, taking its total there to about 9,000.
Unisys to hire 1,000 for expanded China operation
April 14th, 2006by Antony Savvas
Wednesday 22 March 2006
Unisys has opened a new outsourcing and software development centre in Shanghai, as part of a move to hire an extra 1,000 staff in China over the next three years.
The Shanghai centre will provide software development, IT and business process outsourcing services, technical help desk services, and technology support and maintenance services.
Cal Killen, Unisys global sourcing vice president, said, "Now more than ever, Unisys clients require global sourcing options to further their business strategies, manage costs and optimise their return on IT and services investments."
In addition to providing global sourcing support, the multi-purpose Shanghai facility will serve as the company’s Open Source centre of excellence, where Unisys will develop and deploy an open source software environment.
Unisys’ existing China operations already include offices in Beijing, Shanghai and Guangzhou.
EDS to hire 2,000 in China
April 14th, 2006by Antony Savvas
Thursday 6 April 2006
EDS is to open up to three outsourcing centres in China that will hire around 2,000 staff over the next two years.
EDS recently moved its Asian headquarters from Australia to Shanghai, and it is currently identifying locations for the two to three Global Delivery Centres it now plans.
The new centres will offer outsourcing services, including IT outsourcing and hosting, to both multinational and Chinese clients.
The first centre is expected to open some time this year. There are already similar EDS centres located in Malaysia and India.
EDS currently only employs 100 staff in China, so the expansion is a major but not unexpected move.
Earlier this year, EDS said it expected to double the size of its headcounts in India and China over the next two to three years. This comes at a time when the company is axing thousands of staff in the US and across Europe, as it strives to cut costs.
EDS currently has over 15,000 staff in India. It announced up to 20,000 redundancies in the US and Europe at the back end of 2004, which are still being implemented.
Last month, Unisys established an outsourcing centre in Shanghai, which will offer a range of services, including software development.
Over the next three years, Unisys plans to expand this operation by hiring 1,000 workers and potentially setting up similar centres in other Chinese cities.
EDS is also currently trying to buy Indian outsourcing company Mphasis BFL for $380m (£223m), to help ramp up it offshore outsourcing business even further.
Mphasis, based in Bangalore, is a publicly quoted company in India and has both an IT services and business process outsourcing (BPO) business.
The company has more than 12,000 employees, with around 11,000 of these based in India. Mphasis has clients in industries covering financial services, transportation, technology and healthcare.
The Mphasis board views the EDS offer as “favourable”, but it so far hasn’t officially responded to the takeover attempt. Its board will next meet on Tuesday, 11 April.
http://www.computerweekly.com/Feeds/RS/Articles/2006/04/06/215258/EDStohire2,000inChina.htm
China-Based Employees Demand More Perks, Better Salaries
April 12th, 2006By Kathy Chen and Peter Wonacott
From The Wall Street Journal Online
China's office workers may not know who Dilbert is, but many are feeling the pain of the popular cartoon character who works long hours for a soulless corporation.
And they are starting to fight back.
PricewaterhouseCoopers' Beijing office recently has seen a rash of resignations in its auditing division, and, in July, a group of senior auditors approached the firm's partners to complain about what they described as paltry pay and long hours.
"People felt that they were doing a very good job, but their salary increases weren't ideal," says one auditor who quit the firm this summer after working there several years, partly because of the long hours. To top it off, he says, even though senior auditors often worked until 1 a.m. or 2 a.m. each night and on weekends, they weren't eligible for overtime pay (though they could take time off).
PricewaterhouseCoopers quietly settled the dispute by agreeing to pay all of their auditors overtime and to issue annual bonuses early. "We hadn't done the best job communicating with staff, which happens when we're so busy," says Dave McCann, the firm's partner in charge of human resources in China. "Now we're starting more communications."
Problems are brewing in the cubicles at multinationals in China. As business booms, foreign companies are pressuring local employees to be more productive, even as budgets -- and salaries -- remain tight. The trend coincides with some fundamental changes in China's white-collar work force: No longer satisfied with just a job at a brand-name foreign firm, many Chinese professionals aspire to more leisure time and other accoutrements of a middle-class lifestyle. They also are showing greater awareness of their legal rights under labor laws.
The result is that labor friction, once confined to factories and unprofitable state enterprises, is seeping into the offices of multinationals in China. "At first, Chinese employees [at these companies] felt the salaries were higher, so they put up with the conditions. But gradually, they have become more and more dissatisfied and want to see improvements," says Zou Zhen, a division chief at the state-backed All-China Federation of Trade Unions.
Adds Frank Gallo, head of the Beijing office of human-resources consulting firm Watson Wyatt Worldwide, "Companies need to be more conscious of people's needs."
A multinational job in China is still much cushier than working for a state-run company. While workers may be under more pressure to perform, monthly salaries are equivalent to $400 for receptionists and $3,500 for engineers, for example. Wages at state-run enterprises usually range from $50 a month to $200, although some are starting to pay more-competitive salaries.
Foreign firms also offer more opportunities to go abroad and to learn modern skills. Meanwhile, many of the former perks offered by state-run employers -- job security, shorter hours -- are fast disappearing as they, too, come under competitive pressures.
The number of labor disputes is rising, too. Last year, Chinese arbitration authorities heard some 226,000 cases involving more than 800,000 employees, up 23% and 31%, respectively, from 2002. Mary Gallagher, an assistant professor of political science at the University of Michigan, says that while foreign companies prefer to settle disputes internally, they also are seeing a rise in the number of cases.
But some workers are taking their multinational employers to court. Last fall, more than a dozen former managers at MSD China, a joint venture between Merck & Co. and a Chinese pharmaceuticals company, filed suit against the company alleging that they were fired over wrongful charges of misconduct. The firings took place around the time Merck was conducting global layoffs, and the Chinese employees believe the company fired them to avoid paying severance packages.
Alice Chin, MSD's head of external affairs, says the company terminated certain employees because "they violated the company's policies and procedures." She says several cases have been settled through arbitration, while others are pending in China's arbitration and court systems.
In April two Chinese workers sued Shanghai ADT Facilities Management Co. after they were fired for allegedly breaking company rules. A General Motors Corp. joint venture had hired workers from Shanghai ADT for low-skilled tasks, such as cleaning services. These employees worked at the GM site, but weren't given health benefits or a work contract, and paychecks were delayed, says Qiu Jie, a director of the Labor Law Aid Center at the East China University of Politics and Law in Shanghai, which advised the employees. The arbitration panel ordered Shanghai ADT to pay them back wages and erase the rule-breaking allegation.
Shanghai ADT, a joint venture between Knight Facilities Management Inc. of Saginaw, Michigan, and two Shanghai companies, including GM's passenger-car partner, Shanghai Automotive Industry Corp., declined to comment. Shanghai GM said it wasn't aware of the dispute. Shanghai GM said any such situation would mean it would "take immediate action to demand the supplier provide all the necessary information and labor contracts...to address the issue."
Some Chinese professionals also are getting riled over the often-huge differences in pay between local and expatriate staff. Under China's old centrally planned economy, workers were paid roughly the same. These days, pay scales are uneven, and working elbow-to-elbow with highly paid expats stokes resentment, says S. Prakash Sethi, a professor at the City University of New York's Baruch College who advises multinationals on codes of conduct. He says similar workplace frictions are playing out in other countries where skilled local professionals are in demand, such as India.
In this environment, some trade-union officials see an opening to expand their membership among white-collar workers in foreign companies, one-third of which are unionized. China's unions fall under the umbrella of the All-China Federation of Trade Unions, which traditionally has been closer to management than workers.
Some multinationals are trying to adjust their policies pre-emptively to meet the changing needs of their workers -- and of their own fast-growing operations in China. Merck, which has a female-heavy work force, says it has introduced flextime for working mothers and opportunities for managers to work in the U.S.
PricewaterhouseCoopers, whose annual revenue is growing more than 30%, is revving up hiring and becoming more selective about which projects it takes on. "With our China practice becoming more mature," says Johnny Chen, partner in charge of the firm's Beijing office, "we need to focus more on retaining the qualified accountants we have recruited and trained."
http://www.careerjournal.com/myc/workabroad/20041130-chen.html
Labour shortages hit China's manufacturing sector
April 12th, 2006Lack of young workers could push up the cost of Chinese-produced goods
Persistent labour shortages in China's factories are pushing up wages and benefits, which could make Chinese-made products less of a bargain, according to economists.
Government estimates suggest that major export industries are looking for at least one million more workers, but the real number could be much higher.
According to the government, minimum wages, which averaged $58 US to $74 US a month in 2004, have climbed 25 per cent in the past three years in big cities like Shenzhen, Beijing and Shanghai.
But as wages increase, some companies are looking to move to lower-cost countries such as Vietnam and India.
One economist said these persistent shortages are the result of a shinking supply of uneducated workers as more and more young people are going to college to avoid working in factories. Last year, more than 14 million students enrolled in post-secondary education, up from 4.3 million in 1999.
Government policy is also contributing to the shortages. Last year, in an attempt to bridge the enormous gap between the urban rich and the rural poor, the government eliminated the agricultural tax and stepped up efforts to develop local economies in poor, inland provinces.
Instead of going to the coastal regions, where the majority of China's factories are located, many young people are choosing to stay close to home and work on farms or take part in the growing local economies.
The country's one-child policy is also contributing to the shortages, with fewer young people entering the workforce as the first generation born under the policy emerges from post-secondary education.
http://www.hrreporter.com/loginarea/members/viewing.asp?ArticleNo=4357
Ford's Volvo Division to Start Manufacturing Cars in China
April 12th, 2006Monday, March 20, 2006
•Volvo Unveils New Hybrid Technology
BEIJING — Ford Motor Co.'s (F) Volvo Car Corp. said on Monday it would begin making cars in China this year, a step into the world's third-largest car market that other upmarket automakers took years ago.
Chief Executive Fredrik Arp said Volvo would build its S40 sedan at a plant owned by Changan Ford, a Ford joint venture in the southwestern city of Chongqing.
While Volvo conceded it was late in entering a increasingly difficult market where profits margins were shrinking, the company was confident Chinese manufacturing operations would be profitable as early as next year.
Volvo said it could reach its Chinese manufacturing target of 10,000 cars a year in 2007, and was working with a number of Changan Ford's local suppliers to meet the government's local content requirements and the company's quality standards.
"We are, after working with (Changan Ford) on this project for over a year, convinced that their factory, working together with our own experts, can produce the quality Volvo requires," Arp told reporters.
"At 10,000 units we will be making money," Alexander Klose, the head of Asia Pacific for Volvo told Reuters.
Bosch to Recruit 4,000 Staff in China
April 12th, 2006(SinoCast Via Thomson Dialog NewsEdge)BEIJING, Mar 17, 2006 (SinoCast via COMTEX) --from the current 14,000 to 18,000 in the following two years.
That means the company aims to recruit additional 4,000 employees in the 1.3 billion-population country by 2007, including at least 1,000 ones for Bosch Diesel Systems, 2,200 ones for Bosch Power Tools, and 600 for Bosch Rexroth.
Franz Fehrenbach, the chairman of the board of management of Bosch, said the company's development in China will depend on the indigenous personnel with high-quality and strong enterprise.
Bosch has launched management training projects for graduate students early this year, aiming to cultivate manager teams for the company in the future.
China graduates lower their salary expectations
April 12th, 2006Apr. 12, 2006 (China Knowledge) – About 6,300 jobseekers competed for 2,920 vacancies at a job fair which was held on Apr. 11, at the Shenzhen Career Service Center, according to State-run Xinhua news agency.
A fresh graduate, Du Qingjie said that his salary expectation is about RMB 1500 (US$187) per month if the company does not provide accommodation. Du graduated from a university in the Shanxi province with a major in electronics. He regards Shenzhen as the first choice city for his career development as many IT companies are concentrated there. He has sent out more than 20 resumes in the last two weeks, without receiving any reply.
Despite the low salaries expected by fresh graduates, some companies are still unwilling to hire inexperienced workers. With about 4.13 million students graduating this year, 25% more than in 2005, and the number standing nearly four times as many as 2001, the competition among new graduates is becoming increasingly fierce.
Market Size of China Recruiting Market 2002-2006
April 12th, 2006According to iResearch's China Online Recruiting Research Report 2004, China recruiting market rose to 4.16 billion RMB in 2004 and is expected to reach 5.12 billion RMB in 2006.
Technorati Link
April 10th, 2006Red Hot China Venture Capital Forum Strikes Reform Gong
April 8th, 2006China's venture capital's emerging industry has struck the gong for much needed reforms for domestic venture firms at the sell out China Venture Capital Forum now being held in Shenzhen with over 1000 attendees. Sure, this discussion does reaffirm the purpose of this blog to educate and inform more global investors on these prescient trends: China's policy drivers have full intentions to reform its nascent venture capital industry, liberalize the listing requirements for domestic startups and increase the available research and development funding for science parks.
According to an article in the Red Herring, "of the total of 183 Chinese venture-backed IPOs to date, 76 percent, or 143 were in foreign capital markets, and only 24 percent (4) were domestic claims the father of China's venture industry, Cheng Siwei, Vice Chairman of National People's Congress.
Siwei's keynote address was bolstered by the voice of Xu Guanhua, the Minister of Science & Technology, who also sounded a clarion call to the Communist Party to dramatically relax listing requirements for Chinese companies so they no longer have to go offshore.
Of course, there are many reasons for the short march of Chinese venture capital liberalization. Professor Haiyang Li, Assistant Professor at the Jesse H. Jones Graduate School of Management at Rice University commented on this trend in a recent e-mail to CVN.
"I believe that the rush of venture capital funds into China's technology industries is driven by two types of factors: domestic and international. From a domestic point of view, over the past 15 years, many Chinese technology firms have been growing very fast and they are facing "bottleneck" right now in terms of managerial capabilities, strategic market selection and financial support."
Many western investors believe that the increased entry of China venture capital funds might solve some of these problems.
The key point sounded at the opening day forum is China's ambitious goal to increase funding for research and development by 20010 to almost $112 billion. The view form both academics and industry watchers is that the Chinese government's mandate on proprietary innovation over the next decade sends a clear signal to the capital markets that China Inc. expects to see more technology entrepreneurship.
Expect to read here about a flood of deals to be announced over the course of the next few months.
http://www.chinaventurenews.com/50226711/red_hot_china_venture_capital_forum_strikes_reform_gong.php