Category: "News of China"
China Data: Human Resources
April 7th, 2006China Business Review recently published a HR data sheet, you can download from here. Inside, you will find:
Compensation and turnover statistics, as well as tips for attracting and retaining talent
China's Tight Talent Market
China Market Movement, 1995-2005
Salary Increase Rate by Job Level in First Tier Cities, 2005
Average Salary Increase by City, 2005
Salary by Exptriate Type, 2005
Total Cash Composition by Expatriate Type, 2005
Supplementary Benefits Practices among Foreign-Invested Enterprises, 2005
Employee Turnover Rate, 2001-05
Turnover Rate by Staff Type April 2004-March 2005
Why Employees Leave, 2005
Why Employees Stay, 2005
Tips for Attracting and Retaining Talent
Pitfalls in Talent Acquisition in China
51job Stake Sold to Japan's Recruit
April 7th, 2006NEW YORK — 51job Inc., which publishes a leading employment paper in mainland China, said Wednesday certain shareholders have agreed to sell a 15 percent stake to Recruit Co. Ltd., a privately held Japanese human resource services company, as part of a wider strategic alliance between the two companies.
Under terms of the agreement, Recruit has agreed to buy 8.5 million 51job shares at a price of $13 per share, or $26 per American depository share. The deal also gives Recruit the option to buy another 25 percent of 51job over a three-year period.
Shares of 51Job rose $2.29, or 12.9 percent, to $20.00 before the bell. The Shanghai, China-based company also lists job online and provides executive search services.
The two companies said they will set up a planning group within 51job to assess human resources opportunities and other new businesses in China. Recruit will also be involved in 51job's business development activities and cooperate in certain new business areas, 51job said.
Recruiting, developing, and retaining staff in China
April 7th, 2006As multinational corporations compete for a share of China’s burgeoning economy, they face various human resource issues, including how to recruit, develop and retain local staff. Paula Santonocito reports on these challenges.
When Google recently hired Kai-Fu Lee from Microsoft to head up its China operations, the story of a giant corporation vying for rights to an employee based on a non-compete agreement made headlines. Corporations will no doubt focus on the outcome of the legal wrangling, but the story raises another issue as well.
"When a company hires a new president, China and its bigger rival launches a US lawsuit citing 'predatory hiring,' then you know that China is hot," says Mike Goldstone, founder and managing partner of Goldstone & Co., a Hong Kong-based firm specialising in executive search, board advisory, and human resource advisory.
In sharing his perceptions with Expatica, Goldstone points to what may be lesser known facts: Lee is not even a Mainland Chinese (he is Taiwanese), he is US-educated, and he has spent most of his career in the United States.
According to Goldstone, who has 12 years' experience hiring heads of China for Western multinationals, Lee’s background illustrates that the profile of a high-level executive, even one in demand, isn't necessarily obvious.
The competition for Lee also raises the question: Why is hiring senior executives in China so difficult?
Skills gap
With a population of 1.3 billion, it seems China would have an abundance of in-country talent. But Goldstone indicates this isn't the case.
"China suffers from a 'demographic Black Hole'," he tells Expatica. "Because of the closure of the Chinese universities during the Cultural Revolution, China did not produce any academically trained graduates between 1982 and 1996, and then only in small numbers for several years. So even today, statistically speaking, there are very few Mainland Chinese university graduates with more than 15 years work experience and almost none with more than 20."
Goldstone cites how 20 years from now this shouldn't be as problematic because Chinese universities have been pumping out large numbers of talented, self-motivated people.
But there is another factor, one that may not be so easily resolved.
"The Chinese economy is growing at such a rate that Mainland Chinese executives need to be able to manage an operation somewhere between 10 to 30 percent bigger and more complex every year just to stay on top of their existing jobs," Goldstone says.
These demands take a toll. "There is a lot of road-kill caused by this steamroller economy: executives, both local and foreign, who just can't raise their game quickly enough," Goldstone explains.
Communication and culture
Growth has also created another area of concern for executives struggling to keep up in China: demands of the corporation’s home country.
Goldstone points out that the China operations of many foreign companies have become large enough and strategic enough so that they now report directly to corporate headquarters, or at least have more direct communication with headquarters.
"This puts an added strain on Mainland Chinese executives to bridge the communication and culture gap, most of whom have no overseas experience and who lack the cultural understanding to manage, say, a boss in Seattle effectively," Goldstone says.
Choosing leaders
It's Goldstone's observation that in lieu of hiring local Mainland Chinese executives to oversee operations in China, a lot of US companies are hiring Mainland Chinese returnees. "The benefits are that many returnees have been in the U.S. long enough to understand the workings of typical US corporate culture and how to work it. The downsides are that many have been out of China too long to have effective informal networks or to understand modern day buying behaviours, employee motivators, etc.," he says.
Local staff are often sceptical about returnee leaders, Goldstone tells Expatica, noting there can also be resentment for the higher compensation returnees typically receive.
When seeking leadership, companies sometimes look within the organisation, turning to emerging market expatriates. The can-do attitude of trusted, results-oriented executives made them leaders of choice in the early to mid 1990s, Goldstone explains, indicating there is still a place for these individuals. However, attitude isn't everything. "In my view, an executive running China can't really be more than 30 percent effective unless they can at least speak Mandarin, and preferably read and write it as well," he says.
The fourth, and perhaps most desirable option, is hiring ethnic Chinese executives who originate from Hong Kong, Taiwan or Southeast Asia. Goldstone tells Expatica it's an approach that foreign companies have taken for the last 10 to 15 years. In general, these leaders have necessary advantages—including local language capability, familiarity with both local and Western cultures, an understanding of how to get the job done, and a global view. However, there simply aren’t enough leaders to meet demand. In fact, Goldstone indicates that informed observers generally cite the finite supply of these executives as the key constraint on China's ability to continue to increase manufacturing market share.
Managerial challenges
Going forward, Goldstone says there will be challenges for executives overseeing operations in China, regardless of their country of origin. "Without doubt, the biggest challenges are faced by those companies which are trying to build a large market within China rather than just to use a China as low-cost production base," he tells Expatica.
This is due in part to managerial challenges related to culture. Goldstone gives the area of sales as an example.
"Basically, Mainland Chinese like to buy on their own terms from their own country people. Companies that I have worked with find out very fast that the only effective sales force in China is a 100 percent local sales force—but the problem then becomes how to manage that sales force to corporate headquarters standards. That’s where the talent is required," he explains.
The situation is further compounded by the fact that sales people are in demand, and they're aware of their market value. Retention, therefore, becomes a key issue.
Coaching and developing local staff
One tool for retention is staff development. Kevin Ng, a partner with Deloitte in Tianjin, tells Expatica that even though executives overseeing operations in China may not have time, it’s important to coach the local staff.
Recruiting in China isn’t an issue for the global consulting and financial advisory firm, but retention is. After one or two years, employees in China tend to leave Deloitte for further study or to work for a competitor, Ng says.
The market keeps growing and there is a lot of temptation for employees, Ng explains, indicating that nowadays job hopping can lead to a paycheque increase of 50 percent.
"Companies need to know how to recruit and develop Chinese workers—and how to retain them," he says. Ng recommends that companies provide training, show concern for employees, and arrange for overseas assignments to increase international exposure and perspective.
Goldstone concurs with Ng that retention tools are paramount. He says China really is the land of opportunity for the current generation of university graduates aged 21 to 45. However, Goldstone notes that people are willing to stay put if they feel their current employer is actively investing in developing their skills and offering them the opportunity to test their newly developed skills in positions of increased responsibility.
"From a headhunter's point of view, the worst challenge in China is trying to hire talented mid-level general managers or functional people to new enterprises from well-respected multinationals which manage their HR well. In such cases, candidates tend to adopt a 'three strikes and you're out' approach with their current employer before they will accept even a patently better career step with another employer. That’s retention in any country," he says.
Going forward
As companies evaluate operations in China, human resource issues are getting closer scrutiny. Indeed, in the first of a series of webcasts focused on China, US-based manufacturing magazine IndustryWeek cites human capital as the single most important factor in achieving growth in China.
The web presentation, hosted by John Brandt, CEO of the Manufacturing Performance Institute and columnist for IndustryWeek, highlights the importance of hiring well, and then training and cross-training well. Skills to train for include technical, teaming, financial, and creativity, Brandt says.
Training and development is also the focus of a new initiative by Manpower, a world leader in the employment services industry. The firm recently launched the first in a series of international public-private partnerships in China. From its office in Shanghai, Manpower will develop human resource strategies and infrastructure to support China’s rapidly growing labour requirements. Projects include quantifying future vocational skills and training required in Shanghai, the installation of Internet-based assessment systems in local employment offices, and the design and provision of training and development programs, among other efforts.
Manpower's initiative illustrates a growing awareness of the importance of managing human resources in China. But the firm’s latest move is also indicative of a larger trend: aggressive expansion in China. Although Manpower entered the Chinese market in 1964 with an office in Hong Kong, today the firm and its subsidiaries have a network of 38 offices in China, including 17 in Mainland China.
There is no question that China is the global hot spot. Nevertheless, experts caution that operational challenges in China are unlike those in other locations, and that expansion will not necessarily lead to greater market share, a fact some companies are already discovering.
The most successful organisations will be those that understand the challenges specific to China and adapt accordingly, experts tell Expatica. At the top of the list is how to effectively recruit, develop, and retain local employees in order to create a solid base from which to grow and prosper.
Sony names Takashino new chairman for China unit
April 6th, 2006SHANGHAI, April 4 (Reuters) - Sony Corp. said on Tuesday that Shizuo Takashino has been named as the new chairman of its China business, taking the helm in a market the company expects to become its second largest in the next three years.
Takashino will take over as chairman of Sony (China) Ltd. from Kei Kodera, who left the company at the end of March, said spokesman Shinji Obana.
Takashino has been in China for the last year, previously working as an executive vice president connected with the company's Japan operations, Obana said.
The move comes amid a broader global overhaul for Sony, which has posted weak results in the last few years amid a lack of major hits for its core consumer electronics business.
In September last year, Sony's newly appointed global chief executive Howard Stringer and President Ryoji Chubachi unveiled a sweeping restructuring plan that included the shedding of 10,000 employees, closure of several plants and sale of more than $1 billion in non-core assets.
China has been one of the company's few bright spots of late, with annual sales of over $3 billion in a market set to overtake Japan as the company's second largest in the next three years, Kodera told Reuters in an interview last year.
The company has set a target of reaching $8 billion in annual China sales by 2008/09.
But the company also had a misstep in China late last year, when it was forced to withdraw six digital camera models that were plagued with issues such as image uniformity and problems with their liquid crystal displays.
Obana said the company stopped taking back the models in question at the end of last month, but has not begun reselling them in China.
China Digital Communication Group CEO Chang Chun Zheng Steps Down
April 6th, 2006LOS ANGELES, CA and SHENZHEN, CHINA -- (MARKET WIRE) -- 04/04/06 -- China Digital Communication Group (OTC BB: CHID), one of the largest and fastest growing battery components manufacturers in China, announced today the resignation of CEO and Chairman Chang Chun Zheng. Yu Xi Sun, president of China Digital, was designated by the board to assume responsibilities of CEO and chairman until the company hires a replacement for Zheng.
Sun said, "We are saddened by the departure of Mr. Zheng, who has stepped down for personal reasons. He has played a key role in the growth of our company. We wish Mr. Zheng and his family all the best. The board of directors has begun a search for a new chairman and CEO."
Sun, who holds an M.S. degree from the Hubei University Law School, began her career as legal counsel at Hubei Xing Yuan Battery Company. She subsequently held a number of marketing positions until she was named assistant president at Shenzhen E'Jenio Science and Development Company. She went on to become vice president, then president of China Digital.
About China Digital Communication Group
China Digital Communication Group, through its wholly owned subsidiary, Shenzhen E'Jenie Science and Technology Co., Ltd. (E'Jenie), is one of China's leading manufacturers and developers of advanced telecommunications equipment. E'Jenie sells advanced high-quality lithium-ion battery shell and cap products to all major lithium-ion battery cell manufacturers in China. E'Jenie's products are used to power mobile phones, MP3 players, laptops, digital cameras, PDAs, camera recorders and other consumer electronic digital devices. China Digital Communication Group is continuing its expansion across East Asia, while seeking distribution partners and acquisitions in new global markets, including the U.S. For more information, visit http://www.chinadigitalgroup.com or contact Roy Teng, China Digital, (310) 461-1322, e-mail: info@chinadigitalgroup.com.
An investment profile on China Digital Communication Group may be found at http://www.hawkassociates.com/chinadigital/profile.htm.
For investor relations information regarding China Digital Communication Group, contact Frank Hawkins or Ken AuYeung, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com. An online investor kit including press releases, current price quotes, stock charts and other valuable information for investors may be found at http://www.hawkassociates.com and http://www.americanmicrocaps.com.
Keith Minty Appointed as New Chairman of the Board of China Diamond Corp.
April 6th, 2006LONDON, ON, March 14 /CNW Telbec/ - The Company is pleased to announce as part of its corporate restructuring the appointment of Mr. Keith C. Minty, P. Eng., as a director who has also been elected as Chairman of the Board effective today, subject to TSX Venture Exchange acceptance. Mr. Minty has over 25 years of international mining and financial experience and since graduating as a Mining Engineer in 1978 from Queens University, has established an excellent reputation in the mining and investment communities. Mr. Minty, has previously held the executive position of President and CEO of North American Palladium Ltd., and was instrumental in developing that company into Canada's largest primary palladium producer. Mr. Minty received the "Mining Man of the Year" Award in 2002 for outstanding achievement in the Canadian Mining Industry.
"Keith is a versatile senior executive with demonstrated leadership strengths in developing and executing company strategies related to operations and management, financing and resource and reserve development and brings a solid track record of transforming resource companies into profitable enterprises in the mining industry" commented Sam Halbouni. "I stated previously that our objective was to build a strong management team and board of directors. The addition of Keith as Chairman of the board will provide management and the Company access to a person who has a strong corporate and mining background. With Keith's extensive international mining and financial experience, we look forward to his contribution in advancing China Diamond Corp. and its projects."
In addition, as mentioned in the March 8, 2006 news release, Mr. David Critoph, a Chartered Accountant and a former partner of the international accounting firm of Deloitte & Touche, joins the Company as a director. Mr. Critoph has extensive professional accounting experience having been actively involved in the financial industry since graduating in 1964 from the University of British Columbia
As part of the Company's further corporate restructuring, Mr. Halbouni, who remains as a director of the Company, will now be concentrating his efforts in China to represent the Company's interests as Chairman and legal representative of its joint venture companies, to assist management with the development of the Company's projects, and to liaise with government officials in order to foster relationships.
Additionally, Mr. Michael Michaud, P. Geo., President and CEO, will continue to lead his technical and operating team in existing operations operational improvements and evaluate and develop the company's China projects. Mr. Michaud with Mr. Minty's assistance will continue to improve the company's profile in the investment community.
"On behalf of the Company's management and the board of directors, I wish to thank Mr. Halbouni for his past efforts and his commitment to continue to support the Company" said Mr. Michaud, "For the past 3 years, under Sam's leadership, the Company has developed a strong management team and board of directors and has advanced the Company's gold and diamond projects that establishes a strong foundation for the future development of the Company. The management and the board of directors appreciates Mr. Halbouni's efforts in developing the Company and strongly support Sam in his new role which will focus his activities in China where he has acquired invaluable experience and developed strong relationships. The Company appreciates not only Sam's strong financial support, but also the commitment of his time and dedication to the Company. The Company is pleased with the addition of Mr. Minty and Mr. Critoph that adds considerable mining and financial expertise to the Board".
At the meeting of the directors of the Company on March 13, 2006, the board has approved the makeup of following committees:
Audit Committee: David Critoph (Chairman)
George Laforme
Keith Minty
Compensation Committee: Keith Minty George Laforme (Chairman)
David Critoph
Sylvio Escaloni
Governance Committee: Keith Minty (Chairman)
Lee Barker
Xie Datong
Sam Halbouni
As announced previously on March 8, 2006, the independent committee of the board of directors consisting of George Laforme, Lee Barker, Sylvio Escaloni and David Critoph will continue to take on the mandate to review of the Company's current corporate governance and expenditure authorization policies and procedures in March 2006. The committee expects to report its findings and recommendations to the Governance Committee and the board by the end of the first half of 2006.
Pursuant to the Exchange Bulletin dated February 15, 2006, the Company's securities remain halted pending clarification of the Company's affairs as previously announced on February 24, 2006 by the Company. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
China's Linktone appoints Michael Li new CEO
April 6th, 2006SHANGHAI, April 3 (Reuters) - Wireless media company Linktone Ltd. said on Monday it had appointed its former chief operating officer Michael Li as its new chief executive.
Li, Linktone's chief operating officer from 2003 until January this year, assumes the post following the resignation of previous chief executive Raymond Yang in February, the company said in a statement.
Shanghai-based Linktone also announced it had completed most of its restructuring plan at the end of the first quarter, which would improve the company's financial performance in 2006.
Shares in Shanghai-based Linktone have fallen 37 percent since the end of last year.
Great China International Holdings Appoints Paul Deng Chief Executive Officer
April 6th, 2006SHENYANG, China, March 7, 2006 (PRIMEZONE) -- Great China International Holdings, Inc. (OTC BB:GCIH.OB - News) today announced the appointment of Zhiren (Paul) Deng as Chief Executive Officer, succeeding Fang Jiang, who will remain in the positions of Chairman of the Board and President.
Mr. Deng, 55, joined Great China as its Chief Business Advisor in November 2005. He previously was Chief Executive Officer of Sichuan Exposition Development Ltd., a multi-functional real estate project covering 800,000 square meters, located in Chengdu, Sichuan, China.
From 2003 to 2004, Mr. Deng was the Chief Consultant to Beijing Junefield Group, and for three years prior to 2003 he was Chief Executive Officer of Beijing X&D Property Consultants Ltd, which participated in the strategic planning and sales of more than 70 real estate projects in China. He is a frequent guest lecturer of Real State EMBA courses at Tsinghua University, Beijing University and Fudan University.
``We are pleased to have attracted an executive with the breadth of experience that Paul Deng brings to our company,'' Mr. Jiang said. ``He is widely known as the founding father of China's real estate industry and highly respected throughout China. I am confident that under Mr. Deng's leadership, Great China International Holdings will experience solid growth and deliver strong returns to our shareholders.''
Founded in 1989, Great China International Holdings' wholly owned subsidiary, Shenyang Maryland International Industry Co., Ltd., is one of the largest non-state-owned real estate developers in Northeast China. The company's core business is premium residential and commercial development and management. It currently owns and manages the President Building, which was completed in April 2002, with 25 tenants comprised of Fortune 500 companies. The company's prior developments included the Maryland Building, Roma Resort Garden, Qiyun New Village, Peacock Garden, University Campus of Shenyang Teacher's University, and Chenglong Garden, mostly located in Shenyang.
Techedge, Inc. Appoints Dr. Shu as CEO and Chief Scientist for China BioPharma
April 6th, 2006ISELIN, N.J.--(BUSINESS WIRE)--April 4, 2006--Techedge, Inc. (OTCBB:TEDG - News) today announced its appointment of Dr. Jean-Denis Shu (MD, MBA) as the CEO and Chief Scientist of its soon to be wholly owned subsidiary China BioPharma Limited.
On February 13, 2006, Techedge, Inc. announced that it had signed a letter of intent to acquire China BioPharma Limited, a Cayman island Company, which has the rights to have majority ownership in one of the largest non-governmental owned vaccine development and manufacturing companies in China. The company's currently available products are vaccines against Influenza and Epidemic Hemorrhagic Fever. Techedge is in the process of preparing the legal document and expect to close this deal in Q2, 2006.
Formerly the Regional Director of Far East & North Pacific of Chiron Vaccines, Dr. Shu is widely recognized as a vaccine expert in China, with extensive experiences in business start-ups and general management in vaccine industry, proven track-record in medical and marketing management in France and China, and strong resource network. His past professional experiences also include General Delegate China for Aventis Pasteur, and Medical and Regulatory Affairs Manager for Pasteur Merieux Connaught, based in Lyon, France. Dr Shu was the author of several articles and books in vaccines.
A French citizen born in Shanghai, Dr. Shu is bi-cultural and tri-lingual (English, French and Chinese). He earned a Certificate of Finance and Accounting from Wharton School, a MBA from the European School of Management (ESCP-EAP) in Paris, a Diploma of Specialization on Gynecology-Obstetrics from Medical and Pharmacy College of Besancon in France, and a Medical Degree, B. Med. from Medical University of Shanghai II, in China. Dr Shu spent five years as Foreign Physician in French hospitals.
"As a witness and player, my career in vaccine industry has developed for ten years together with the growth of Chinese vaccine market that is one of the world fastest growing markets. I am very excited about this opportunity and am committed to lead China BioPharma to become a leading market player in China's enormous vaccine and bio-pharmaceutical industry", commented Dr. Shu.
About Techedge, Inc.
Techedge, Inc. (OTCBB:TEDG - News) is a leading developer of mobile VoIP and wireless broadband solution provider. The Company provides disruptive and low cost communications solutions combining matured radio with VoIP technologies for emerging service providers. The Company has recently repositioned itself to focus at opportunities in the fast growing bio-pharmaceutical sector in China. For more information, please visit its website at www.techedgeinc.net.
CommVault Establishes Operations in China, Appoints Philip Xu Head of China Operations
April 6th, 2006Launches Shanghai Technical Center of Excellence for Localized Support to China Market
OCEANPORT, N.J. and BEIJING, March 29 /PRNewswire/ -- CommVault(R), a provider of Unified Data Management(TM) solutions, today bolstered its ability to serve global markets by establishing a representative office in China, and announced the appointment of Philip Xu as head of CommVault's China office. CommVault also has increased its investment in the rapidly-growing Chinese market by opening a native-language support center, located in Shanghai, which will provide full support and training to CommVault customers in China. The company also announced the completion of a Master Distributor agreement with Beijing Toyou Feiji Electronics Co., Ltd., (Toyou), one of China's leading providers of storage solutions and professional services.
Philip Xu, CommVault's China operations general manager, will be headquartered in Shanghai. Xu's strong leadership track record in the Asia/Pacific storage software business brings proven industry expertise and reputation to the management of CommVault sales and support offices currently located in Beijing, Shanghai and Guangzhou.
"The storage software market in Asia/Pacific is forecast to have a compound annual growth rate of 16.8 percent from 2004-2009, according to projections available from industry analyst firm IDC," said Dave West, vice president of marketing and business development at CommVault. "CommVault believes the Chinese market for storage software is primed for growth. We are making the necessary investments to establish a leadership position in this fast-paced market by building a strong local presence, with experienced local managers and full native-language support capabilities. The agreement with Toyou, in addition to CommVault's existing OEM relationships with Dell and Hitachi Data Systems, are validations that CommVault's innovative QiNetix technology and unified approach to data management answer the needs of China's enterprise IT managers."
Localized product, local support and commitment
CommVault has made a strong commitment to the Chinese storage market with the development and availability of a localized, fully-supported simplified Chinese language version of its innovative CommVault QiNetix 6.1 Unified Data Management solution. Full product support and training is provided by CommVault's Shanghai support center, staffed by local, native-language storage experts.
CommVault users in China include Tencent, China's leading provider of Internet and mobile value-added services. Tencent, which integrates IM across different platforms, such as Internet, mobile and fixed line networks, also is the provider of the QQ search product, which enables users to search for web pages, pictures, music, documents and news.
"We rely on CommVault Galaxy, a component of the QiNetix suite, to backup growing stores of data from more than 100 servers," said Mr. Jiang, project manager, Tencent. "As a provider of on-demand Internet and media services, we must meet demanding RTO and RPO objectives. We are confident that Galaxy's scalability, reliability and ease of use will help us manage our explosive growth."
Zhou Zexiang, general manager, Toyou, said, "I'm very happy that Toyou has the opportunity to partner with CommVault. As a recognized leader in the global storage management software market, CommVault's innovative Unified Data Management solutions will provide users in China with better value and a technically superior, cost-effective solution. This strategic relationship will increase the abilities of both companies to support users in China with practical solutions that solve the complex data management issues they are facing today."
About CommVault
CommVault(R) provides Unified Data Management(TM) solutions for high- performance data protection, universal availability and simplified management of data on complex storage networks. The CommVault(R) QiNetix(TM) platform, based on CommVault's Common Technology Engine, integrates Galaxy backup and recovery, snapshot management and recovery, active data migration and archiving, e-mail compliance, enterprise service level management and reporting and storage resource management software solutions. The QiNetix unified approach allows customers to add/integrate QiNetix components, at a fraction of the time, effort and money required by separate point products.
Information about CommVault is available on the World Wide Web at http://www.commvault.com/ or by calling (732) 870-4000. CommVault's corporate headquarters is located in Oceanport, New Jersey in the United States.
This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions and others. Statements regarding CommVault's beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from anticipated results. CommVault does not undertake to update its forward-looking statements.
CommVault Systems, CommVault Galaxy, CommVault QiNetix, DataMigrator, DataArchiver, QNet, CommServe StorageManager, MediaAgent, iDataAgent, CommCell and the CommVault logo are trademarks and may be registered trademarks in some jurisdictions of CommVault Systems, Inc. Product and company names herein may be trademarks of their respective owners.
SKorea's Hynix to invest new 230 million dollars in China
April 6th, 2006SEOUL (AFP) - South Korean chipmaker Hynix Semiconductor said its board of directors approved a plan to invest 230 million dollars in expanding operations in China this year.
A new Hynix-owned business entity will be launched to boost chip production at a joint venture plant under construction in Wuxi in China's eastern province of Jiangsu, Hynix officials said.
Hynix, the world's second largest memory chipmaker, and European giant STMicroelectronics, are to open the two billion dollar plant, Hynix-ST Semiconductor, in Wuxi this year.
"The new investment is to be used to launch a new unit, Hynix Semiconductor Wuxi, to increase production more than planned by the joint venture at the plant in China," Hynix spokesman Kim Ah-Young told AFP.
She made the comment to clarify an earlier statement that said Hynix would build a new plant.
Hynix has been looking at China as a new production base to help the company defuse a trade row over its chip exports and boost earnings.
The South Korean company has been hit by punitive tariffs in the European Union and United States over allegations it has been supported by government subsidies.
Hynix was rescued in December 2002 by a multi-billion-dollar bailout arranged by South Korean creditors, some of whom were state-controlled.
Hynix officials told AFP Thursday that the Hynix-STSemiconductor plant would begin mass production as early as July in 2006. Hynix owns 67 percent of the joint venture while STMicro controls 33 percent.
Hynix and STMicroelectronics agreed to invest 500 million dollars each in the joint venture, with the local Chinese government and financial institutions to put up one billion dollars.
"We expect to start mass-producing new products on the eight-inch (200 millimetre) wafer line in July and on the advanced 12-inch (300 millimetre) wafer line in December," a Hynix official told AFP.
Hynix posted a net profit of 1.85 trillion won (1.9 billion dollars) in 2005, up seven percent from a year earlier, on 5.9 trillion won in sales.
http://news.yahoo.com/s/afp/20060406/tc_afp/skoreaitchinahynixinvestment_060406101625
Asia Times: AmCham bullish on China
April 1st, 2006BEIJING - Intellectual property rights and power shortages are problems in both Shanghai and Beijing but the outlook for business in both cities remains overwhelmingly positive, says the "White Paper 2005 American Business in China" released September 1.
The white paper, the seventh annual report of its kind, was jointly prepared by the American Chamber of Commerce in China (AmCham) and the American Chamber of Commerce in Shanghai, and outlined the current state of business for a number of industries, ranging from manufacturing, trade and distribution to services. Released annually, the paper is the result of surveys and consultation among nearly 2000 member businesses of both chambers.
City-specific challenges for Beijing, Shanghai
It also points out a number of city-specific challenges faced by Beijing and Shanghai as they develop a more international business environment. Despite growing government attention, intellectual property rights protection remains a prominent problem in both cities. While progress has been made, AmCham says the lack of protection is forcing business to reconsider plans in both Shanghai and Beijing. A lack of enforcement by local governments was cited as a major issue.
Energy supply is also a concern. Both cities faced shortages this summer and had to "borrow" power from neighboring areas. The stop-gap measure kept both cities operating, but long-term solutions are needed, says AmCham.
Still, said James Green, AmCham Shanghai's director of government relations, the biggest challenge is human resources. "Finding, training and keeping management," Green said. "It's a hot, hot labor market and people are in high demand."
In Beijing, said AmCham, there has been progress in reducing red tape for businesses and transparency is better. There is, however, an acute lack of water and growing traffic woes that may hamper the city's ability to meet long-term goals. Air quality in the city is also a problem. The number of airborne particles rose last year and, the report points out, the Chinese Academy of Social Sciences ranked Beijing 14th among China's cities on that count.
Shanghai businesses tended to focus on the practical side of business and lifestyle. A stable supply of electricity was a concern alongside slow Internet connections, which make it difficult to do business online. One concern, which affects Beijing as well, is a lack of regulations for distribution companies: "... lack of progress on distribution rights is especially noteworthy in Shanghai."
As in Beijing, intellectual property rights are a concern but they may have a more direct impact in a city looking to attract high technology businesses to its 140 foreign-invested research and development centers. Many companies don't expand beyond a representative office "for fear of losing proprietary information and technology."
Other concerns for Shanghai businesses included daily-life issues. Health care was a top concern, as was traffic safety. Education for expatriates also posed a challenge: businesses said their employees had trouble finding spots in accredited foreign schools at reasonable fees. Ultimately, however, the outlook is positive, said AmCham Shanghai chairman Jeffrey Bernstein.
US firms upbeat
A huge majority of US businesses operating in China reported increases in annual revenues last year, according to the white paper. About 86% of respondents said they posted higher revenues in 2004 compared to the previous year; and 68% were "profitable" or "very profitable" last year.
The nationwide survey also showed that US companies had great confidence in China's business environment. "The vast majority of survey respondents, 93%, report that China's economic reforms have improved the climate for US businesses, and 92% said their five-year business outlook in China is 'optimistic' or 'cautiously optimistic'," the white paper said.
At the same time, US businesses are facing increasing competition from both local companies and foreign rivals. Profitability in 2004 was slightly lower that in the previous two years, indicating more challenges. "We attribute the leveling margin to both improved markets elsewhere and to US firms' financial performance in China more closely tracking their global performance as China revenues grow," the white paper said.
It explained that factors such as price pressure from major customers, as well as changes in market and commodity prices, and salaries, are driving down margins. But the white paper added this was minor compared to the continuity of higher profitability since China joined the World Trade Organization. Despite increasing challenges, most US companies said they would increase business activities in China.
Emory Williams, chairman of AmCham China, said the annual white paper made suggestions not only to the Chinese government but also to the US administration. For example, he said, the US government should relax restrictions on issuing visas to Chinese. According to the chamber's survey, visas issued to Chinese nationals were up 23% compared to the previous year, but still lower that the level before September 11, 2001.
China suffering shortage of civil aviation specialists
April 1st, 2006BEIJING (AFX) - China will need to employ at least 240,000 civil aviation specialists over the next two decades, the official Xinhua news agency reported, citing an industry expert.
'China's civil aviation business will suffer a shortage in specialists for quite a long time in the future,' said Du Yefu, an expert from the Civil Aviation University of China, according to Xinhua.
China aims by 2020 to have a civil aviation market that is on a par with that of the US now, but there is currently a large gap between the two nations, the news agency said, citing Du.
Less than 200,000 people work for aviation companies in China compared with over 700,000 in the US, Xinhua said.
The average ratio between staff members and aircraft in international air companies is 100 to one, whereas in China it is 200 to one, the news agency added.
http://www.forbes.com/business/feeds/afx/2006/03/27/afx2625840.html
Volvo to sell China-made luxury cars
April 1st, 2006MONDAY, MARCH 20, 2006
BEIJING The Swedish carmaker Volvo said Monday that it would start selling locally made S40 luxury sedans in China.
Ford Motor's joint venture in China will produce 10,000 units of the S40 sedans a year from Changan Ford's plant in the western city of Chongqing, said Frederik Arp, president and chief executive of Volvo Cars.
Volvo will start selling the S40 sedan this summer, which is from June to August in China.
"Local production is the key to remain competitive in China," Arp said at a press conference. The company is facing a situation where its "main competitors are already producing their volume models locally."
Rising incomes in China have generated an increasing number of buyers for premium cars. Car sales in China rose 21 percent in 2005 to 3.97 million units and could grow 17 percent this year, according to the China Association of Automobile Manufacturers.
So far, Volvo has imported cars into China. Last year, it sold 4,786 units, an 84 percent increase over 2004. Sales of the S40 accounted for nearly a third of the total.
Bayerische Motoren Werke said sales of cars made in China rose 77 percent to 15,300 units last year, compared with a 9.9 percent sales gain worldwide. BMW, which set up its China venture in 2003, makes five models at its venture in the northeastern city of Shenyang.
DaimlerChrysler's venture in China, which started to sell locally made Benz sedans in December, increased sales of imported Benz cars by 39 percent to 16,128 units last year. The company is making two E-class models at its venture in Beijing. Chrysler Group plans to start making 300C sedans this year.
The decision to start local manufacturing was made because of "the significant growth of the overall market combined with the fact that the lion's share of the growth is happening from local manufacturers," Arp said. "So being an importer only is not necessarily a long term success situation."
Depending on the demand, the output for the S40 from the Chongqing plant may rise, Arp said, without giving details. The sedan accounted for nearly a fifth of Volvo's global sales last year.
"It's a great advantage not to have to invest in all the facilities in a joint venture," Per Norinder, Volvo Cars' general manager in China said. "Changan Ford already has a factory up and running."
A locally made Honda Civic
Honda Motor plans to sell locally made Civic compact cars in China.
The company, which produces the Civic in 12 countries, said it planned to sell 50,000 Civic units in China this year.
"Civic is more important for Honda in China than its other models like Accord, as the popular compact car model is more attractive to consumers with its cheaper price and fuel efficiency," said Yale Zhang, an analyst with CSM Asia in Shanghai.
BEIJING The Swedish carmaker Volvo said Monday that it would start selling locally made S40 luxury sedans in China.
Ford Motor's joint venture in China will produce 10,000 units of the S40 sedans a year from Changan Ford's plant in the western city of Chongqing, said Frederik Arp, president and chief executive of Volvo Cars.
Volvo will start selling the S40 sedan this summer, which is from June to August in China.
"Local production is the key to remain competitive in China," Arp said at a press conference. The company is facing a situation where its "main competitors are already producing their volume models locally."
Rising incomes in China have generated an increasing number of buyers for premium cars. Car sales in China rose 21 percent in 2005 to 3.97 million units and could grow 17 percent this year, according to the China Association of Automobile Manufacturers.
So far, Volvo has imported cars into China. Last year, it sold 4,786 units, an 84 percent increase over 2004. Sales of the S40 accounted for nearly a third of the total.
Bayerische Motoren Werke said sales of cars made in China rose 77 percent to 15,300 units last year, compared with a 9.9 percent sales gain worldwide. BMW, which set up its China venture in 2003, makes five models at its venture in the northeastern city of Shenyang.
DaimlerChrysler's venture in China, which started to sell locally made Benz sedans in December, increased sales of imported Benz cars by 39 percent to 16,128 units last year. The company is making two E-class models at its venture in Beijing. Chrysler Group plans to start making 300C sedans this year.
The decision to start local manufacturing was made because of "the significant growth of the overall market combined with the fact that the lion's share of the growth is happening from local manufacturers," Arp said. "So being an importer only is not necessarily a long term success situation."
Depending on the demand, the output for the S40 from the Chongqing plant may rise, Arp said, without giving details. The sedan accounted for nearly a fifth of Volvo's global sales last year.
"It's a great advantage not to have to invest in all the facilities in a joint venture," Per Norinder, Volvo Cars' general manager in China said. "Changan Ford already has a factory up and running."
A locally made Honda Civic
Honda Motor plans to sell locally made Civic compact cars in China.
The company, which produces the Civic in 12 countries, said it planned to sell 50,000 Civic units in China this year.
"Civic is more important for Honda in China than its other models like Accord, as the popular compact car model is more attractive to consumers with its cheaper price and fuel efficiency," said Yale Zhang, an analyst with CSM Asia in Shanghai.
BEIJING The Swedish carmaker Volvo said Monday that it would start selling locally made S40 luxury sedans in China.
Ford Motor's joint venture in China will produce 10,000 units of the S40 sedans a year from Changan Ford's plant in the western city of Chongqing, said Frederik Arp, president and chief executive of Volvo Cars.
Volvo will start selling the S40 sedan this summer, which is from June to August in China.
"Local production is the key to remain competitive in China," Arp said at a press conference. The company is facing a situation where its "main competitors are already producing their volume models locally."
Rising incomes in China have generated an increasing number of buyers for premium cars. Car sales in China rose 21 percent in 2005 to 3.97 million units and could grow 17 percent this year, according to the China Association of Automobile Manufacturers.
So far, Volvo has imported cars into China. Last year, it sold 4,786 units, an 84 percent increase over 2004. Sales of the S40 accounted for nearly a third of the total.
Bayerische Motoren Werke said sales of cars made in China rose 77 percent to 15,300 units last year, compared with a 9.9 percent sales gain worldwide. BMW, which set up its China venture in 2003, makes five models at its venture in the northeastern city of Shenyang.
DaimlerChrysler's venture in China, which started to sell locally made Benz sedans in December, increased sales of imported Benz cars by 39 percent to 16,128 units last year. The company is making two E-class models at its venture in Beijing. Chrysler Group plans to start making 300C sedans this year.
The decision to start local manufacturing was made because of "the significant growth of the overall market combined with the fact that the lion's share of the growth is happening from local manufacturers," Arp said. "So being an importer only is not necessarily a long term success situation."
Depending on the demand, the output for the S40 from the Chongqing plant may rise, Arp said, without giving details. The sedan accounted for nearly a fifth of Volvo's global sales last year.
"It's a great advantage not to have to invest in all the facilities in a joint venture," Per Norinder, Volvo Cars' general manager in China said. "Changan Ford already has a factory up and running."
A locally made Honda Civic
Honda Motor plans to sell locally made Civic compact cars in China.
The company, which produces the Civic in 12 countries, said it planned to sell 50,000 Civic units in China this year.
"Civic is more important for Honda in China than its other models like Accord, as the popular compact car model is more attractive to consumers with its cheaper price and fuel efficiency," said Yale Zhang, an analyst with CSM Asia in Shanghai.
BEIJING The Swedish carmaker Volvo said Monday that it would start selling locally made S40 luxury sedans in China.
Ford Motor's joint venture in China will produce 10,000 units of the S40 sedans a year from Changan Ford's plant in the western city of Chongqing, said Frederik Arp, president and chief executive of Volvo Cars.
Volvo will start selling the S40 sedan this summer, which is from June to August in China.
"Local production is the key to remain competitive in China," Arp said at a press conference. The company is facing a situation where its "main competitors are already producing their volume models locally."
Rising incomes in China have generated an increasing number of buyers for premium cars. Car sales in China rose 21 percent in 2005 to 3.97 million units and could grow 17 percent this year, according to the China Association of Automobile Manufacturers.
So far, Volvo has imported cars into China. Last year, it sold 4,786 units, an 84 percent increase over 2004. Sales of the S40 accounted for nearly a third of the total.
Bayerische Motoren Werke said sales of cars made in China rose 77 percent to 15,300 units last year, compared with a 9.9 percent sales gain worldwide. BMW, which set up its China venture in 2003, makes five models at its venture in the northeastern city of Shenyang.
DaimlerChrysler's venture in China, which started to sell locally made Benz sedans in December, increased sales of imported Benz cars by 39 percent to 16,128 units last year. The company is making two E-class models at its venture in Beijing. Chrysler Group plans to start making 300C sedans this year.
The decision to start local manufacturing was made because of "the significant growth of the overall market combined with the fact that the lion's share of the growth is happening from local manufacturers," Arp said. "So being an importer only is not necessarily a long term success situation."
Depending on the demand, the output for the S40 from the Chongqing plant may rise, Arp said, without giving details. The sedan accounted for nearly a fifth of Volvo's global sales last year.
"It's a great advantage not to have to invest in all the facilities in a joint venture," Per Norinder, Volvo Cars' general manager in China said. "Changan Ford already has a factory up and running."
A locally made Honda Civic
Honda Motor plans to sell locally made Civic compact cars in China.
The company, which produces the Civic in 12 countries, said it planned to sell 50,000 Civic units in China this year.
"Civic is more important for Honda in China than its other models like Accord, as the popular compact car model is more attractive to consumers with its cheaper price and fuel efficiency," said Yale Zhang, an analyst with CSM Asia in Shanghai.
http://www.iht.com/articles/2006/03/20/bloomberg/sxford.php
China's Reserves Top Japan's as World's Largest
April 1st, 2006March 31 (Bloomberg) -- China overtook Japan as the world's largest holder of foreign-currency reserves last month, the latest evidence of China's rising influence as an international financial power.
The Chinese government's currency assets excluding gold rose to $853.7 billion as of Feb. 28, surpassing Japan's $831.6 billion, according to Bloomberg News calculations using government data. China's reserves, which now account for 20.1 percent of the world's total of $4.3 trillion, climbed a third during the past year. Japan's reserves account for 19.5 percent of the total.
A record trade surplus and a flood of foreign investment has pushed China's currency holdings higher, increasing pressure on the yuan to rise in value and prompting the government to encourage investment overseas and purchases of imports. The U.S., led by Treasury Secretary John Snow, is pressing China to let its currency move with market forces.
``One can think of the phrase `be careful what you wish for' if China revalues,'' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. A strengthening of China's currency could affect ``import prices, inflation pressures in the U.S., and could make the Fed's job more difficult,'' Sinche said.
U.S. lawmakers are considering more than a dozen pieces of legislation that would place punitive tariffs on Chinese imports unless the yuan is allowed to strengthen. Lawmakers including Senator Charles Schumer, a New York Democrat, say China's undervalued currency hurts U.S. exports.
Yuan's Gains
Since the yuan, a unit of the renminbi, was revalued by 2.1 percent against the dollar on July 21, it has only gained about 1 percent. The yuan rose to the highest today since July's revaluation on speculation the market will have more influence on exchange rates after the foreign ministry yesterday said currency participants determine the value.
The yuan rose as high as 8.0173 against the dollar and was 8.0175 at the 3:30 p.m. close in Shanghai from 8.0264 yesterday, taking gains on the week to 0.16 percent, according to data compiled by Bloomberg.
Canada's central bank governor, David Dodge, said yesterday in Princeton, New Jersey, that China shouldn't be allowed to ``frustrate market forces'' by blocking movements in exchange rates.
$1 Trillion
Both China's government and central bank have said they will make the country's exchange rate system more flexible, while ruling out another revaluation. China's reserves may rise to $1 trillion by the end of this year, marking the first time any nation's reserves have reached that level, according to Stephen Green and Tai Hui, China economists for Standard Chartered Plc China economists.
China's trade surplus tripled to $102 billion last year, helping to drive economic growth of 9.9 percent, the fastest among the world's major economies. Schumer and South Carolina Republican Senator Lindsey Graham, after visiting China last week, postponed a vote on their China sanctions bill to give the country more time to change its currency system.
People's Bank of China Governor Zhou Xiaochuan said in a speech March 20 that adjusting the yuan's value won't reduce the trade surplus. He said China will need two to three years to achieve balanced trade by increasing domestic consumption.
``The Chinese government has started expanding domestic market demand, lowered deposit rates, liberalized markets, allowed for exchange-rate fluctuations as part of our policy of improving the balance of international payments,'' Zhou said. ``The U.S. side must lower its fiscal deficit and boost savings.''
Direct Investment
China's reserves of foreign currency, which economists say are between 70 percent and 80 percent in dollars, rose by an average $17 billion a month in 2004 and 2005. That was also fueled by about $120 billion of foreign direct investment and billions of dollars of capital inflows betting on a rising yuan.
``We have to be somewhat careful about a radical revaluation'' of China's currency, said Mickey Kantor, a former U.S. trade representative under President Bill Clinton and now a partner at the law firm of Mayer, Brown, Rowe & Maw LLP. ``It could lead to more non-performing loans, which could make the banking system weaker. This is something we do not want to do.''
Kantor said U.S. should still be ``strong advocates'' for a revaluation of China's currency.
Treasury Holdings
China's holdings of foreign currency assets are now so large the country is shifting more of the added reserves into euros and yen to reduce its exposure to dollar-denominated assets.
China has been investing its reserves in U.S. bonds and assets. China held $262.6 billion in U.S. government Treasury bonds at the end of January, making it the largest investor after Japan. China's purchases of Treasuries have helped hold down market interest rates in the world's largest economy.
On March 5, Zhou said China won't reduce the size of its dollar holdings, though the central bank will ``adjust'' total reserves based on international market conditions.
In a separate report, the International Monetary Fund said today central banks cut their U.S. dollar reserves for the fifth straight year in 2005 and also pared their holdings of the euro and yen.
Central banks held 44.8 percent of their total foreign- exchange reserves in the U.S. currency at the end of the fourth quarter, compared with 46.8 percent in the same period of 2004, the Washington-based IMF said.
As recently as 2001 the world's central banks held over half of their reserves in dollars. The new figures validate speculation among investors that central banks are reducing holdings of dollars in favor of other currencies.
Detroit's Loss Is China, Slovakia's Gain as Auto Jobs Move East
March 31st, 2006March 3 (Bloomberg) -- General Motors Corp. pays Qiu Mingyuan $18 a day to build engines in Shanghai. Thousands of miles away in Oklahoma City, Adana Spain last week lost a job paying about 10 times more when GM closed a factory there.
Qiu and Spain are the face of an eastward shift in car production after automakers including DaimlerChrysler AG and Ford Motor Co. announced plans to cut 192,000 jobs in North America and western Europe over the past five years. As the companies display new models this week at the Geneva Motor Show, they are shifting jobs to countries such as Russia, China and Slovakia in pursuit of cheaper labor and sales in growing markets.
Last year, for the first time, automakers built more cars outside North America and western Europe than inside, according to PriceWaterhouseCoopers. The migration of jobs may not end for eight to 10 years, says Chris Benko, a car industry analyst for the consulting firm.
``They've been outsourcing our jobs for a very long time and it isn't just GM,'' says Spain, 59, who moved to Oklahoma in the early 1980s after GM closed the plant in Southgate, California, where her late husband worked. ``The American plants, as far as General Motors and them go, it's going to continue to buckle, and the foreign plants are going to grow and take over.''
While global auto sales will rise almost 19 percent in the next seven years, most of the increase will come from outside North America and western Europe, says Nigel Griffiths, a London-based analyst for Global Insight Inc. His firm projects sales will grow 5.5 percent in the two regions, compared with 36 percent in the rest of the world, including 20 percent in eastern Europe and 44 percent in Asia.
`Horrendously Painful'
``The dislocation is going to be horrendously painful,'' says Benko, who is based in Detroit. ``This industry has lived on borrowed time a long time and it needs to go through this readjustment.''
Factories in North America and western Europe produced 48.9 percent of the world's cars last year, down from 50.5 percent in 2004, Benko estimates. That share will drop to 44.7 percent in 2013, he forecasts.
Detroit-based GM plans to close nine factories and eliminate 30,000 hourly jobs in North America by 2008. Last week, it shut the plant in Oklahoma City where Spain and her colleagues built Chevy TrailBlazers and other sport-utility vehicles.
The company sold 26.2 percent of all new cars in the U.S. last year, down from 51 percent in 1962. That loss in market share has left GM with too many U.S. plants and too many workers.
Spain, whose husband died in 1999, says she didn't work for GM long enough to be eligible for full retirement benefits and will look for another job.
Toyota's Rise
Toyota Motor Corp., on pace to unseat GM as the world's largest automaker in the next few years, is increasing its market share in both the U.S. and Europe. Asian automakers captured a record 36.5 percent of the U.S. market last year. Their share of western Europe rose to 17.4 percent from 14.8 percent in 2000.
The stock of Toyota, based in central Japan's Toyota City, has risen 53 percent in the past 12 months, compared with a 16 percent gain in the 19-member Bloomberg World Auto Manufacturers Index. GM shares have dropped 44 percent in the same period.
Like GM, Dearborn, Michigan-based Ford is shedding workers in North America. Chief Executive Officer William Clay Ford Jr., 48, in January said the automaker would close 14 plants and eliminate as many as 30,000 jobs during the next six years. DaimlerChrysler's Chrysler unit cut 40,000 jobs in North America from 2000 to 2004 to end losses at that division.
In western Europe, carmakers such as Paris-based PSA Peugeot Citroen and Wolfsburg, Germany-based Volkswagen AG are offering early retirement and buyouts while opening factories further east.
Volkswagen, DaimlerChrysler
Volkswagen may eliminate as many as 20,000 positions in Germany in the next three years. Auto sales in western Europe declined 0.2 percent to 14.5 million vehicles last year and have yet to get back to the peak of 14.63 million sold in 1999.
DaimlerChrysler CEO Dieter Zetsche, 52, is spending about 3 billion euros to cut 14,500 jobs at corporate headquarters and the company's Mercedes division, mainly in Germany. At the same time, he plans to invest about 1.5 billion euros in China to make Mercedes and Chrysler models there.
GM and Ford have announced a combined 18,700 job cuts in Europe since 2003.
Volkswagen, Europe's biggest automaker, plans to hire workers for a new assembly plant in Russia that will produce 300,000 Skoda Octavia sedans a year, Volkswagen CEO Bernd Pischetsrieder, 58, said Jan. 8 during an interview at the North American International Auto Show in Detroit.
Peugeot Chief Executive Jean-Martin Folz, 59, says the move to the east will continue.
`Center of Gravity'
``The center of gravity of our sales is moving east, while the center of gravity of our production was far in the west,'' he said Feb. 8 in Paris, when the company released 2005 earnings.
Peugeot's western European deliveries dropped 2.1 percent last year to 2.36 million vehicles. Sales in the rest of the world, mainly eastern Europe, the Middle East, South America and China, rose 8.4 percent to 1.03 million vehicles.
The company's shift to the east is already changing the lives of its workers.
Barry Suddens, 59, took a buyout from Peugeot in May 2005 after working at its Ryton, England, plant for 20 years. He left with 55,000 pounds ($95,816) in hand and a pension of 917 pounds a month. Peugeot cut a total of 1,600 jobs at the Ryton plant in 2004 and 2005 through buyouts and early retirements, leaving about 2,000 workers at the factory.
Suddens says that since leaving Peugeot he has had 73 interviews for jobs ranging from stacking boxes at a warehouse to filling shelves at the local Tesco Plc supermarket, without an offer. He now volunteers to lead groups of schoolchildren on tours of his old factory.
``I planned to get another job,'' he says. ``I've totally given up now.''
Slovak Optimism
Peugeot spent 700 million euros to build its new factory in Trnava, Slovakia, which will employ 3,500 people. It plans to invest an additional 350 million euros to expand the plant's capacity in 2010, adding 1,800 more jobs. The carmaker had 40,000 applications for the first 3,500 positions.
In 2005, gross monthly wages in the Slovak manufacturing industry averaged $574 (18,088 koruna), compared with $3,259 in the U.K., according to the national statistics offices of the two countries.
Marek Mikus, 24, is four weeks into a five-week training course before he starts his job at the new Peugeot plant.
``I'm very happy I got this job,'' says Mikus, who previously worked as a security guard. ``Peugeot is a big, stable company, and conditions for work are better here than with someone else.''
Qiu, 28, says he has been working in the engine department at GM's factory in Shanghai for two years and earns about 3,500 yuan ($434) a month. The average hourly wage for a unionized assembly-line worker at GM plants in the U.S. was $26.35 at the end of last year, according to the United Auto Workers Web site. That's about $4,200 a month.
No Complaints
Qiu says he's satisfied with his pay. ``There's nothing to complain about,'' he says.
It's not just the low wages that make emerging markets attractive. Factory jobs follow sales growth, says Global Insight's Griffiths.
``I don't hate those people for those jobs moving over there,'' says former GM employee Spain. ``Those people are going to scramble for those jobs. I don't blame them. But I walk through the plant, and it just about rips my heart out.''
Large auto-parts firms faring badly vs. China
March 31st, 2006By Bob Fernandez
Inquirer Staff Writer
Some auto-parts companies have it worse than Cardone Industries Inc.
Delphi Corp., the giant parts maker spun off from General Motors Corp., is in bankruptcy protection, and on Wednesday announced a massive employee buyout plan. Another big one, Dana Corp., filed for bankruptcy protection March 3.
Cardone's biggest competitor, American Remanufacturers Inc. of Anaheim, Calif., was liquidated last November, putting its 1,650 employees out of work.
Cardone picked up some of its former competitor's business, at least for now. George Zauflik, a Cardone Industries vice president, says his company has hired 225 workers in Philadelphia since November as former orders from American Remanufacturers, the nation's No. 2 auto rebuilder, flowed to Cardone plants.
But automotive retail chains that used to buy rebuilt parts from the California company also started buying new parts from Chinese manufacturers, Zauflik says.
Cardone still has the advantage of quick delivery to U.S. retailers. But Zauflik said he fears that advantage could disappear if Chinese companies build and stock warehouses in the United States.
In bankruptcy court documents, American Remanufacturers cited debt, pricing pressures, raw material costs, and foreign competition for its woes. The company had plants in New Hampshire, Ohio, Arizona and California.
Herbert Ottman, 55, had a job in one of them. The machine operator showed up for his shift before dawn on Nov. 17 in Bedford, N.H., to find that security guards had locked the plant gates. Five-hundred-sixty workers in Bedford and in a sister plant in Merrimack, N.H., had no jobs. The two plants were operated as Car Component Technologies, a division of American Remanufacturers.
"I'm going to have to start a new career, for whatever time I have left," Ottman said. He's applied for 70 to 80 manufacturing positions in a widening circle around his home. "It hasn't been an easy road the last couple of months."
Foreign professionals in great demand (China)
March 31st, 2006GUANGZHOU: There will be greater demand for foreign professionals in fields such as manufacturing, English teaching and overseas marketing in Guangzhou, the capital of South China's Guangdong Province, in coming years.
Robust economic growth, efforts to improve the city's international appeal and the staging of the 2010 Asian Games in Guangzhou have all contributed to the internationalization of the city, according to Chen Like, director of Guangzhou Municipal Administration of Foreign Experts Affairs.
With the municipal government projecting an average 12 per cent annual economic growth, and industrial output set to double over the next five years, demand for related foreign professionals is set to grow.
The city has identified several key industrial growth sectors automotive, shipbuilding, petroleum, chemicals, and iron and steel in which foreign input may be needed.
Foreign-funded companies are planning to boost numbers of expatriates in their Guangzhou operations, while State-owned and local privately owned firms are also seeking foreign professionals to enhance their corporate management and overseas marketing capabilities, said Peng Wei, deputy director of the administration.
A local State-owned firm that hired foreigners for quality control and sales has, for example, successfully gained a significant share of the US market.
At the same time, Guangzhou's schools are crying out for more foreign English teachers to improve spoken English as the language becomes more important in the workplace and in the lead-up to the Asian Games.
According to Peng, foreign professionals made around 30,000 trips to Guangzhou each year.
They are engaged in the business, technical, educational, cultural and sports sectors.
The municipal government has also announced that Guangzhou will draw around 10,000 overseas Chinese scholars over the next five years.
The contribution made by foreign professionals is well recognized, Chen said.
For example, a reception was held last week in honour of Maureen Patricia Stratford, who's been working in Guangzhou for 10 years.
Stratford is an expert educator of children suffering Down's syndrome; she relocated to Guangzhou from Nottingham in the United Kingdom 10 years ago with her late husband after they retired.
"I just did what I can do Guangzhou is a wonderful city and I enjoyed the life here," Stratford said at the reception held by the club for Down's syndrome children she helped to establish.
Down's syndrome is a congenital disorder with clinical attributes such as moderate to severe mental retardation, a broad short skull, broad hands and short fingers.
"We appreciate her help to our family. I hope that more foreign experts like her could come to work in China," said Huang Haiying, a mother of a 15-year-old boy with Down's syndrome.
Guangzhou Municipal Administration of Foreign Experts Affairs said there's no problem finding foreign professionals; but with limited resources, establishing a database of potential candidates is difficult.
Headhunting firms that set up deals to bring out foreign professionals make low profit margins at the moment, given the relatively small volume.
In order to attract foreign professionals, businesses will have to strike a balance between turning a profit with the assistance of overseas workers and how much they can afford to pay them.
According to Chen, schools will need to distinguish between qualified English teachers and English speakers.
Source: China Daily
http://english.people.com.cn/200603/30/eng20060330_254606.html
Wal-Mart Plans To Boost Presence In China, Hire 150,000 more
March 29th, 2006Retailer Plans To Open 20 More Stores In China In '06
BENTONVILLE, Ark. -- Wal-Mart expects to hire up to 150,000 employees in China over the next five years -- five times its current work force there -- as it expands its number of stores.
Wal-Mart has targeted China, which has long been a major supplier of its products, as a key region for its international store growth.
Wal-Mart now has 56 stores in China with about 30,000 employees. It plans to open 20 more stores this year.
The news comes less than a week after world's largest retailer moved to expand in another fast-growing region -- Central America -- by taking a majority stake in a local retail chain that it first bought into last September.
Wal-Mart took over Central American Retail Holding Co., also known as CARHCO, for an undisclosed price.
GlobalAutoIndustry.com to Hold ''Key Strategies for Sourcing from China'' and ''Succeeding in China's Booming Auto Industry'' Seminars on May 17 in Troy
March 29th, 2006Luncheon will feature special interview with former Assistant U.S. Trade Representative (USTR) for China Affairs Charles W. Freeman III
TROY, Mich.--(BUSINESS WIRE)--March 23, 2006--GlobalAutoIndustry.com, the leading worldwide portal and intelligence source for the automotive industry, announced it will hold its 8th in a series of seminars on doing business in China. The event, consisting of two separate seminars in one day, will feature "Key Strategies for Sourcing from China" and "Succeeding in China's Booming Auto Industry." The seminars will take place on May 17 at the Troy Marriott in Troy, Michigan.
"The Chinese automotive market and industry have become critical to an auto supplier's global footprint," states Ron Hesse, president of GlobalAutoIndustry.com, adding "However, doing business in China requires a true understanding of the business culture, communications issues, laws, human capital, market scope, and more. Everyday, we receive numerous calls and emails from suppliers requesting assistance with various China challenges. This 'must attend' Seminar will address these needs and provide solutions for them."
A powerful lineup of speakers will address critical issues for auto suppliers venturing into China, expected to be the world's hottest automotive market for the next 20 years.
Lunch will include a special interview with the former assistant U.S. Trade Representative for China Affairs Charles Freeman, as well as other interviews with China experts.
Mr. Freeman is the Managing Director of the China Alliance, a unique association of four leading independent law firms that includes Detroit-based Butzel Long.
The Morning Session will share valuable insight and research on sourcing components and parts from China, and will include presentations and solutions on:
"Implementing a Sourcing Strategy in China"
"Intellectual Property Issues Related to Sourcing from China"
"Logistics of Sourcing Products from China"
"Optimizing your China Sourcing Strategy in the Context of your Global Business Strategy"
"Critical Elements for Building a Sourcing Team and Selecting Partners"
"Sourcing from China: Lessons Learned"
The Afternoon Session will focus on key issues on setting up operations in and succeeding in China's booming automotive industry and will include presentations and solutions on:
* "Communicating with the Chinese - Language and Cultural Insights "
* "Chinese Market Outlook - Where will the numbers go besides up?"
* "Finance, Bank and Tax Issues in China"
* "Selecting the Proper Business Entity for your Operations in China"
* "Choosing the Right Location for your China Operations"
* "Recruiting and HR Issues in China"
Throughout the day, a Chinese language trainer will be on hand to teach attendees key words and phrases in Mandarin Chinese to help get started doing business in China.
The Seminar will be held at the Troy Marriott in Troy, Michigan. Costs to attend are $395 for either half-day session, or $595 to attend both. Executives registering before April 7th will receive a $100 early registration discount.
About GlobalAutoIndustry.com
GlobalAutoIndustry.com connects the worldwide auto supplier industry with the resources to effectively do business globally. Through the web site, www.GlobalAutoIndustry.com, auto supplier executives can find insight, solutions and strategies focused on doing business in the world's top automotive markets.
Monthly eJournals provide targeted information and insight on doing business in foreign automotive markets and GlobalAutoIndustry.com Solutions provide effective international answers to suppliers' global business and operational needs.
The Company's eJournals, including CHINAtalk, ASIAtalk, EUROtalk, AMERItalk, LATINtalk and GLOBALtalk HR, now reach over 25,000 automotive supplier subscribers worldwide.
Parent company, HCI Group Ltd., is based in Troy, Mich., with European headquarters in Amsterdam, the Netherlands.
How Rising Wages Are Changing The Game In China
March 29th, 2006A labor shortage has pay soaring. That is sure to send ripples around the globe. Businessweek
For years, Yongjin Group has earned a decent profit selling lamps and furniture to the likes of Wal-Mart (WMT ), Home Depot (HD ), Target (TGT ), and Pottery Barn. But lately the company has seen its margins shrink to 5% -- half what Yongjin made when it opened its factory in the steamy southern Chinese city of Dongguan 14 years ago. Why? Labor shortages are forcing the company to boost wages. Last year salaries surged 40%, to an average of $160 a month, and Yongjin still can't find enough workers. "This business needs a lot of labor," says President Sam Lin. "This is a very tough challenge."
Some 1,500 miles northeast, in the city of Suzhou, Emerson Climate Technologies Co. is facing similar woes. The maker of air conditioner compressors has seen turnover for some jobs hit 20% annually, and Emerson General Manager David Warth says it's all he can do to keep his 800 employees from jumping ship to Samsung, Siemens (SI ), Nokia (NOK ), and other multinationals that are now operating in the tech manufacturing hub. "It has gotten to the point that we are just swapping folks and raising salaries," says Warth.
Wait a minute. Doesn't China have an inexhaustible supply of cheap labor? Not any longer. From the textile and toy factories of the south to the corporate headquarters and research labs in Beijing and Shanghai, the No. 1 challenge today is finding and keeping good workers. Turnover in some low-tech industries approaches 50%, according to the Institute of Contemporary Observation, a Shenzhen labor research group. Guangdong Province says it has 2.5 million jobs that remain unfilled, while Jiangsu, Zhejiang, and Shandong provinces say they, too, face shortages of qualified workers. "Before, people talked about China's unlimited labor supply," says Zhang Juwei, deputy director of the Institute of Population & Labor Economics at the Chinese Academy of Social Sciences in Beijing. "We should revise that: China is facing a limited supply of labor."
Reports of labor shortages first cropped up in late 2004, but companies thought the phenomenon was temporary. Now a surge in both turnover and wage costs is convincing multinationals and their suppliers that the China game is changing permanently. With the gap between wages in China and those elsewhere gradually closing, the pressure to pass price increases on to consumers in the U.S. and other markets will start to build. As Citigroup (C ) noted in a February report: "The continuous growth of labor costs in China, even at a moderate pace...is likely to have implications for inflation worldwide." These factors eventually will force the Chinese to upgrade their entire industrial base to make higher-margin goods. And those bigger paychecks are building a consumer class in China that multinationals want to target.
"THERE IS A BREAK POINT"
The wage issue has started to affect how companies operate in China. U.S. corporations and their suppliers are starting to rethink where to locate facilities, whether deeper into the interior (where salaries and land values are smaller), or even farther afield, to lower-cost countries such as Vietnam or Indonesia. Already, higher labor costs are beginning to price some manufacturers out of more developed Chinese cities such as Shanghai and Suzhou. "There is a break point where people will say this is too expensive," says Michael Barbalas, general manager at the Suzhou plant of Andrew Corp. (ANDW ), a Westchester (Ill.) maker of wireless networking gear. At his factory, he says, wages have been rising by 10% annually.
This is a slow process, to be sure. Imports from the mainland have yet to fuel inflation in the U.S., while improved productivity in China has so far offset higher wages. But economists say those productivity gains are getting harder to find, and manufacturers who are seeing their margins hit, such as Yongjin, can hold out for only so long before they have to try to raise prices.
The pressure has as much to do with skills as it does with numbers. Although the total labor force is about 800 million, relatively few people have the qualifications employers want. For most textile, toy, and tech-assembly jobs, for example, export-oriented manufacturers prefer women from 18 to 25 years old or people with experience operating machinery. "The skills base does not meet the demands of a rapidly growing market," says C.P. Lee, Asia-Pacific human resources chief at Motorola Inc. (MOT ), which has 9,000 employees in China.
As a result, companies across the board are feeling the squeeze. Last year turnover at multinationals in China averaged 14%, up from 11.3% in 2004 and 8.3% in 2001. Salaries jumped by 8.4%, according to human resources consultant Hewitt Associates LLC. And a January report by the American Chamber of Commerce in China found that rising labor costs have pinched margins at 48% of U.S. manufacturers on the mainland. "China runs the risk of losing its advantage" of cheap labor, says Teresa Woodland, an author of the report.
That means managers can no longer simply provide eight-to-a-room dorms and expect laborers to toil 12 hours a day, seven days a week. When 30-year-old He Maofang first arrived in Dongguan in 2000, for instance, "work was hard to find." But now "there are plenty of choices," says He, who started at Yongjin last June. In addition to boosting salaries, Yongjin has upgraded its dormitories and improved the food in the company cafeteria. Despite those efforts, its five factories remain about 10% shy of the 6,000 employees they need.
Many companies are compensating for the shortages by penetrating deeper into China's vast heartland, where wages can be half what they are on the coast. General Motors (GM ), Honda (HMC ), Motorola, and Intel (INTC ), for instance, have all shifted some manufacturing or research to inland locations in recent years, both to tap lower costs and to open up new markets. But a two-year-old effort by the Chinese government to lift rural incomes through tax cuts is keeping some potential factory workers on the farm. So with investment growing in the interior, labor shortages are popping up there, too. "More and more multinationals are looking for opportunities in second-tier cities," boosting salaries there faster than in the traditional manufacturing strongholds farther east, says Jean Lin, head of the compensation practice at Hewitt.
BETTER TRAINING
The trend goes beyond the factory. Only about 10% of Chinese candidates for jobs in key areas such as finance, accounting, and engineering are qualified to work for a foreign company, estimates consultant McKinsey & Co. While China today has fewer than 5,000 managers with the skills needed by multinationals, 75,000 jobs for such managers are expected to be created over the next five years, McKinsey says. The talent crunch "is the No. 1 constraint on China's growth," says Andrew Grant, McKinsey's China chief. "It will hit earlier and be more powerful than any [other] constraint," such as raw materials shortages.
Some U.S. companies in China believe better education and training is the way to stay ahead of the game. Motorola regularly hires graduates straight from school and then trains them at its "Motorola University" in Beijing. Intel Corp., which has invested $1.3 billion in chip assembly, testing, and research and development in China, has backed initiatives that have trained 600,000 teachers there. "It helps contribute to our future workforce," says Intel China President Wee Theng Tan.
LOWER ENERGY BILLS
Others are doing everything they can to retain employees. St. Louis-based Emerson has introduced flexible work hours at its Suzhou plant for workers with children. It has built a "green" office with solar power, ambitious recycling plans, and chargers for the electric bicycles used by many staffers. And to build loyalty the company holds quarterly parties for the entire staff and organizes free trips to resort areas. "I chose Emerson because it is a well-respected company," says 25-year-old Rocky Lu, who started as a technician at Emerson's Suzhou plant in February. He got a 50% raise from his last job, at a state enterprise, to nearly $400 a month.
Emerson is cutting costs elsewhere to ensure that rising wages don't price it out of Suzhou. It has lowered utility bills by raising the thermostat a couple of degrees in the summer and dropping the mercury in the winter while passing out long underwear to keep workers warm. It has added reflective light fixtures that can use lower-wattage bulbs. And it has recently tapped excess heat from its factory to warm dormitory showers. "So far it's an even trade-off" between rising labor costs and efficiency gains, says Emerson manager Warth. "We have to deal with it if we want to remain in business."
Beijing realizes that it, too, needs to deal with the issue if it wants to stay in business. So the government is further loosening rules that prevent rural residents from moving to cities to work and is offering tax breaks to overseas Chinese who return to the mainland. The higher education system is also being overhauled to include more practical classes and vocational training in a bid to expand China's skilled workforce by a third, to 8% of the population. China will still be the world's workshop. But the world will need to adjust to the inexorable rise of the workshop's wages.
Low Costs, Plentiful Talent Make China a Global Magnet for R&D
March 29th, 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 R&D 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 R&D 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 R&D 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 R&D 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 R&D operations to develop products for the global market.
P&G 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 R&D 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 P&G Technology (Beijing) Ltd.
Giving impetus to the R&D 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 R&D 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 R&D 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 R&D, 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 R&D 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 R&D 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 R&D, "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 R&D 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 R&D 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 R&D 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 R&D 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 R&D in China in 1993, now has 16 R&D 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 R&D," says Ching Chuang, who heads Motorola's Chinese R&D 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 R&D 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 R&D 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 R&D 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.
For Indian IT biggies, China is hot
March 29th, 2006Bruce Einhorn, BusinessWeek | March 24, 2006
It's fair to say that Hari Natarajan is obsessed with Microsoft. A vice-president at Satyam Computer Services, one of India's biggest outsourcing specialists, Natarajan is in charge of the company's strategic-relationship unit with Microsoft. Or, as he puts it, "I breathe, eat, and drink Microsoft every day."
And what occupies the Microsoft-focused thoughts of Natarajan these days? Easy. Satyam and Microsoft are partners in a new joint venture designed to develop the software-services market in China. Right now, China isn't much of an outlet for Indian outsourcers like Satyam. But Natarajan and others at Satyam are determined to change that.
"This is a huge market with great innovation potential," Natarajan says. The local market is only about $1billion, but that will probably grow eightfold in the next five years. "You don't see these kind of growth numbers anywhere else in the world," he adds.
A major shift
That's one reason Satyam and other Indian companies have been busy putting down stakes in China. Infosys has acquired 50,000 square meters of land in Shanghai and 300,000 square meters in Hangzhou, and is building new centres in both cities.
Tata Consultancy Services has reached a deal with Microsoft and the Chinese government to launch a new joint venture in Beijing this year. And on March 1, Zhang Guangning, the mayor of the southern Chinese city of Guangzhou, visited Satyam headquarters outside of Hyderabad in southern India. While there, Zhang and Satyam's managing director, B Rama Raju, signed a deal to set up a Satyam operations center in Guangzhou.
All of this represents a major shift for India's information-technology leaders. Not long ago, China wasn't even an afterthought for Indian software executives, who looked pretty much in one direction: West. And who could blame them? After all, companies in Europe and North America represented almost their entire customer base. Japanese companies didn't do much outsourcing, and what little they did wasn't sent India's way. Other Asian markets were similarly unpromising, and there was no business to speak of coming from China.
That's all changing. Increasingly, companies in Japan and South Korea are outsourcing. They're sending a lot of that work to nearby China, where it's relatively easy to find programmers who understand Japanese or Korean -- certainly a lot easier than finding people in India who can speak those languages.
Job boom
With China attracting tens of billions of dollars in foreign direct investment each year, there's a growing list of Western multinationals that need outsourcing help for their Chinese operations. And Chinese companies themselves are starting to realise that they not only need to upgrade their IT systems, they need outside help to do the work for them.
One of the early Indian movers into China was Bangalore-based Infosys. Early this decade, following visits to Infosys headquarters by then-Premier Zhu Rongji and Li Peng -- China's longtime No 2, who at that time was head of the National People's Congress -- the Indian company announced plans to open an office in Shanghai.
To date, the growth hasn't been spectacular: Infosys has only 450 people in China, out of 50,000 employees worldwide. But James Lin, a Taiwanese-born veteran of IBM Global Services, who joined Infosys in 2004 as chief executive of China operations, says Infosys will be embarking on a China hiring spree. "In the next five years," he says, "we're talking about 6,000 (Chinese) staff total."
Maintaining lead
Why the renewed commitment to China? According to Girija P Pande, Asia-Pacific director for TCS, Indian companies have to build up their workforces there. The business model depends on it. "This is a business of skill and scale," he explains.
"There aren't many countries with both. In Asia, you have India and China." Of course, companies like TCS are already employing tens of thousands of Indian engineers. That leaves China as an untapped talent pool. "So China becomes important as well," says Pande.
Executives like Pande insist that Indian companies have little reason to fear that all of those talented Chinese engineers will go to work for homeland companies that can seriously threaten Indian IT dominance. Indian companies last year had $17 billion in revenue, compared to just $2 billion for their Chinese counterparts. Three years from now, Indian companies will have sales of $48 billion, compared to $5 billion for Chinese.
"They aren't going to be in the same league. If anything, they will fall behind," Pande says. "They don't have scale, and they don't have the marketing connections that Indian companies have established."
Structural risk
Not everyone is so sure. A December report from analysts at Merrill Lynch noted that China produces 400,000 new computer-science graduates a year, compared to 181,000 IT-engineering grads in India. China also boasts far better infrastructure, the Merrill analysts reported, and less red tape than India.
While Chinese IT-services outsourcing companies are still in their infancy, they stand a good chance of growing up quickly. "Unlike the general belief that the China threat is a very distant one, we believe the first wave of competition from China could be felt in two or three years," wrote the Merrill analysts. "(And) over a three- to five-year time frame, we need to watch the structural risk posed by China in 'commoditising' IT services outsourcing."
All the more reason why Indian companies need to expand their operations in China now, while they still have time.
Putting china on your resumé
March 29th, 2006EXECUTIVES LOOK FOR CAREER BOOST FROM ASIA STINT
By Katherine Yung
Dallas Morning News
Bobby Carter shows all the symptoms of China fever.
Each week, he meets with a private tutor to learn Mandarin. On airplanes, he listens to language tapes. And in his spare time, he reads books about the Asian powerhouse and blogs written by expatriates living there.
China ``is really intriguing to me. I want to experience it,'' said Carter, 44, UPS's international sales and marketing manager for the Southwest region.
Although he's traveled in the region for his job, now he wants to work full time in China, for at least a few years.
``Who would think in our lifetime we would have the opportunity to be pioneers in anything?'' he said.
As China evolves into an increasingly important market for many U.S. companies, a growing number of Americans are eager to work there, despite potentially formidable obstacles of language and culture.
`Not a hardship'
Interest in China extends beyond multinational corporations. Increasingly, managers at small and mid-size businesses are volunteering for forays in China, seeking excitement, riches and a career boost.
``It's not a hardship,'' said Louisa Wong-Rousseau, managing director of China for Stanton Chase International, an executive search firm. ``People see going to China as a career advancement.''
Though many in China prefer to hire locals, a shortage of skilled executives means expatriates remain in demand, said Lisa Johnson, director of consulting services for Cendant Mobility, a large relocation company.
Many companies award assignments in China to their rising stars, she said. ``It's where a lot of companies' future is.''
According to a Cendant Mobility study conducted last year, people relocating to China for business reasons are typically married men in their early 40s.
Shanghai, China's most cosmopolitan city, ranks as the top destination for expatriates. But a growing number of them are headed to less well-known places like Chengdu, Dalian and Tianjin.
Americans who have taken the plunge and relocated to China often find the experience an eye-opener.
In November 2004, Nokia Oyj employee Ron Davenport sold his house and two cars in Grapevine, Texas, and moved to a gated community in Beijing.
Now, he is helping develop low-cost phones at Nokia's product creation center in Beijing.
``The pace is quite frantic,'' Davenport, 41, said of the Chinese business environment. ``But I am much more sensitive to growth in other parts of the world.''
`Flying in and out'
For Mark Abe, living in China became a necessity. The 40-year-old executive for Plano, Texas-based Electronic Data Systems arrived in Beijing three months ago to help his company win information technology services contracts from Chinese airlines, airports and other air services providers.
``It's very hard to build those relationships when you're flying in and out,'' he said.
The expatriate from Orange County quickly learned that conducting business in China requires forming personal relationships, not just making sales calls.
``The business models that are prevalent here in China are different from ones in other parts of the world,'' he said, referring to the nation's many state-owned firms.
``Don't wait,'' he advised others considering working in China. ``The country is changing so fast. Jump in with both feet and don't look back.''
Taking on a China assignment does involve some challenges and adjustments.
Chief among them is finding health care that meets U.S. standards, according to the Cendant Mobility study.
An unhappy spouse and children can also cause problems.
Ironically, once expatriates and their families adapt to life in China, the hardest part is often coming home.
Attorney Carter Meyer endured a difficult transition when he and his wife returned to Dallas in August 2004 after living in Beijing and Tokyo for a little more than two years.
``It was hard getting used to it,'' he said of the first few months back on American soil. ``I missed the food quite a bit. I missed the people.''
Meyer, 37, recently left Vinson & Elkins to become head of a small venture capital firm. But if the right opportunity came along, he would consider going back to Asia.
``On a résumé, it has a lot of credibility,'' he said of his time spent in China. And ``I appreciate the size of the world a lot better.''
http://www.mercurynews.com/mld/mercurynews/business/14203721.htm
China Needs People!
March 26th, 2006Foreign firms invest $1 billion a week in China but they lack creative managers who are willing to take risks.
Reasons For Lack of Talented Managers
1. Success often depends more on loyalty to the party than business acumen .
2. There aren't many MBA programs in China.
3. Chinese talent is 1st-generation. They don't have role models. Their parents worked for state-owned firms and were too bureaucratic. Entrepreneurial types are too unrestrained.
4. The Confucian heritage emphasizes rote learning and hierarchy. That might explain why Chinese managers are cautious about taking the initiative. But maybe living in a police state has something to do with that, as well.
5. The one-child policy doesn't grow team-players. [Are only children loners?]
No Marketing Talent
Local Chinese are good technically and in administration. But there is no experience in marketing.
"You find yourself micro-managing more than you'd like.... If the tasks are across departments, or if it means working in a team or trying to relate to others, they still have a long way to go."
The biggest issue - Retention
In 2004, 1 in 10 execs changed jobs in Shenzhen. 1 in 12 in Beijing. That's a nationwide employee churn rate of 11.3%, up from 8.3% in 2001.
Some smaller firms see a 30% turnover.
Compensation Rates
Middle Manager, foreign firm (in Beijing or Shanghai): $27-32K (base plus bonus)
Senior Managers: $46-54
Top execs: 80-90K
Salaries Rising
Avg annual salary increases for mid-level and senior managers: 6-10%.
Accountants' salaries: rising 14% / year.
Standard Perks: Bonuses, long-term incentives, free housing, meals, a mobile phone, car. Also: more holidays, mat and pat leave, more frequent job rotation and share options.
Employers also make Big Contributions to China's National Security Fund. So, workers cost double their basic pay.
Attractions: Chinese employees will join a company for good training.
Alternate Strategies
Overseas Chinese are filling some jobs. But they're expensive and don't know the local market.
Non-Managerial Labour
1. South Chinese economy is growing and moving into higher level work.
2. Firms can't find skilled labour.
3. They can't find cheap labour. (What does "cheap" mean in China?)
Some companies are relocating to cheaper inland cities.
Some will outsource to Vietnam and Cambodia.
Problems with HR Strategy
Business plans aren't taking the lack of talent or the cost of recruiting and retaining talent into account.
From the Economist
how returned overseas chinese viewed by locals?
March 25th, 2006Post from blog.bcchinese.net
received a mail:
I'm a chinese girl who was born and raised in *** (an european country). I'm coming this *** to work in Shanghai, and I'd like to know how chinese people consider people like me, I mean huoqiao ren. Are we considered as strangers, even if we look like asian, and talk chinese ?
returned overseas chinese are still regarded as "chinese" and therefore a "zi ji ren" (people of our side), no matter what passport they hold. however there are some changes in recent years. overseas chinese are no longer seen to hold those advantages over the local chinese in fields such as language, skills or working experiences, in fact, the trend is that many executive search firms favor local talents over those returned from overseas because of their extensive experiences and knowledge of china.
interestingly, the chances are greater that local chinese got frustracted in socializing with overseas chinese than with foreigners. i don't understand why. but in general, returned overseas chinese can fit into shanghai quite well, and they are viewed as a member of shanghai and chinese community.
good luck to you!
http://blog.bcchinese.net/bingfeng/archive/2005/08/16/32031.aspx
China's draft labor law worries foreign firms
March 25th, 2006By UNITED PRESS INTERNATIONAL
Published March 21, 2006
BEIJING -- A proposed Chinese labor law has foreign companies worried that China is giving power back to the state-backed trade union.
According to a draft of the Labor Contract Law, released late Monday, the union would have to be consulted about mass layoffs and approve companies' rules for employees. It also would have the right to negotiate on behalf of workers through collective bargaining, the South China Morning Post reported Tuesday.
State media said the National People's Congress had invited public comment on the draft law for next month, after the full text was posted on the NPC's Web site.
Companies claim the proposed law marks a step backward for China's economic reforms by taking away flexibility in hiring and firing.
The law requires companies to pay a full year's salary to employees departing under "non-compete" agreements, a level far higher than in Western countries.
The planned law also sets the length of probation for new employees and requires companies to make severance payments to workers on fixed-term contracts if their contracts are not renewed.
Criticizing foreign companies for failing to install unions, state media have threatened to draw up a blacklist. Companies also must hand over a mandatory payroll tax to the union.
http://www.wpherald.com/storyview.php?StoryID=20060321-101225-2734r
Firms recruiting in China find few fits
March 25th, 2006By RALPH JENNINGS
BEIJING (Kyodo) Japanese companies trawling for new hires at the second annual Beijing job fair have found few skilled applicants among the latest group of graduates.
Employers taking part in the Japan Chamber of Commerce and Industry in China's second annual weekend job fair on March 11 at Beijing Normal University said they found few good matches.
They want people with technical skills but many job-seekers were Japanese language specialists with little work experience.
"People who understand technology don't know Japanese, and the people who understand Japanese don't know technology," said a Chinese sales official at a Chinese branch of Matsushita Electric Industrial Co.
The job fair drew some 800 people -- fewer than the 1,000, hoped for -- from about 100 universities. A total of 33 companies participated, taking resumes and holding brief interviews with the job-hunters.
Companies collected an average of about 20 resumes each. Of those, three or four might have the qualifications for open jobs, recruiters said.
"The feeling isn't that good, because they don't meet our needs," said Wang Huan, an account manager with the Beijing branch of Hitachi Information Systems (Shanghai) Ltd.
She said she wanted mostly experienced workers, not the college students who came to hear about Hitachi's 15 job openings in Beijing.
The class of 2006 is a large one, due to a surge in university enrollments four years earlier, and now graduates are finding it more difficult than they expected to find good jobs. The People's Daily reported recently that 4.1 million university students will enter the job market this year, 700,000 more than in 2005.
Graduates expect to make roughly 3,000 yuan to 5,000 yuan ($ 373 to $ 621) per month, enough to give something back to parents who paid their tuition as a family investment.
The Japan Times: Tuesday,March 14, 2006
In China, That Ivy League Degree Isn't Gold
March 19th, 2006from The Asian Wall Street Journal November 01, 2005
China still is a magnet for ambitious, Western-educated entrepreneurs coming home to start high-tech companies and cash in on China’s economic boom. Take Charles Zhang, the Massachusetts Institute of Technology-trained founder of Web portal Sohu.com Inc., and Edward Tian, who earned a doctorate in the U.S. and once charmed Rupert Murdoch into joining the board of his Beijing telecommunications company.
But this favored class isn’t looking quite so favored, at least in the eyes of venture capitalists looking to invest in China. The trend is largely anecdotal, but for many “seed capitalists” poking around Beijing and Shanghai, slick Westernized returnees are out. Local, rough-around-the-edges entrepreneurs are in.
“The less English you speak, the better,” says David Zhang, a venture capitalist in Beijing with San Francisco’s WI Harper Group. He and other investors say locally trained executives often are more thrifty with cash and better understand local Chinese markets – and businesses that know how to tap them – than people who have been abroad for years.
“A lot of the returnees, actually, they have lost touch with China,” agrees Vincent C.H. Chan, a managing director at Jafco Asia, part of Jafco Co. of Japan.
Instead of courting Ivy League graduates with slick business plans, Messrs. Zhang and Chan are plowing money into no-frills Chinese start-up businesses such as wireless-services provider China Broad Media Corp. The company, funded by WI Harper, is the brainchild of Tian Song, an entrepreneur who went to college in Beijing and toiled in the state-owned telecommunications sector there. He says, through a translator, that his only visit to the U.S. was a brief trip to Las Vegas.
Jafco has helped to finance such entrepreneurs as Zhou Hongyi, who founded Chinese Internet search-engine concern 3721 Network Software Inc. Yahoo Inc., intrigued by Mr. Zhou’s technology – it enables people to use Chinese characters to search the Web – bought the company nearly two years ago for US$120 million.
Some returnees may have “studied in a good school,” says Andy Yan, managing partner of Hong Kong investment firm SAIF Partners. But “when they come back, they think they know everything.”
One of Mr. Yan’s favorite home-grown success stories is Hu Xiang, a founder of SAIF portfolio company Mobile Antenna Technologies (Shenzhen) Co. Mr. Hu, 52 years old, is about as far from a polished returnee as one can get in China: He doesn’t speak English and missed nearly 10 years of schooling during the Cultural Revolution that began in the 1960s. Mr. Hu dug tunnels and later was a low-level factory worker, sometimes going hungry.
That Mr. Hu suffered during the Cultural Revolution and had to work so hard for his success, instead of leading a more comfortable life abroad, appealed to Mr. Yan. “We’ve been through so much,” says Mr. Yan, who had similar experiences. “The challenges now don’t seem so big.”
After spotting a business opportunity in supplying locally produced wireless antennas in China – and being inspired by a Chinese translation of “The HP Way” management tome – Mr. Hu started his own company. Mobile Antenna says it has about US$40 million a year in contract sales and makes gear for such Western companies as Lucent Technologies Inc. and Harris Corp. of the U.S. Networking giant Cisco Systems Inc., of San Jose, Calif., is an investor.
To be sure, a significant number of Western-educated Chinese businesspeople will continue to snare funding from overseas venture capitalists. That is particularly true in high-tech fields in which China doesn’t have much local expertise. Returnees also can help implement basic business practices that aren’t always common at home-grown Chinese businesses: the U.S.-educated Mr. Tian, for example, says employees at his first Chinese start-up company sometimes had trouble organizing quarterly earnings numbers on time, or even using telephone voice mail.
Many U.S. financiers have little choice but to continue to deal with China’s English-speaking elite: Most American venture firms don’t have Mandarin-speaking partners on the ground in China.
Still, focusing only on returnees can mean missing out on good deals. And returnees often demand stock options and Silicon Valley-type salaries, Mr. Zhang of WI Harper notes. That can drive up costs and lower profits for venture investors.
Local chief executives often better understand consumer tastes and trends that drive industries like Internet commerce and mobile communications in China, Mr. Yan of SAIF says. A degree from a foreign university is no longer a must; China’s economy is expanding so rapidly it offers many opportunities to learn management skills.
A case in point, Mr. Yan says, is Mr. Hu at Mobile Antenna. Lacking English skills and the resources to go abroad, Mr. Hu eventually earned a degree at a Chinese university. He built a career in academia and at a state-owned electronics factory, moving to the giant Chinese telecommunications concern ZTE Corp. in 1991.
Like many entrepreneurs stuck in big companies, Mr. Hu became restless. In an interview, he says he saw how ZTE spawned a local, Chinese supply chain for telecommunications gear used in fixed-line phone networks. By 1994, he saw mobile-phone use skyrocketing in China and figured the companies building the mobile networks would need a nearby, low-cost supplier of wireless components.
He left ZTE in 1997. Two years later, he started Mobile Antenna with a few partners and about US$370,000. They struggled at first, he says, but gradually improved product quality and won big international firms as customers. The company now has nearly 570 employees and is building a new office in another part of Shenzhen.
He has done well enough to send his daughter to Boston College in the U.S.
- Rebecca Buckman
Staff Reporter of The Wall Street Journal
CHINA WATCH: Cheaper, Better Managers Sought Abroad
March 14th, 2006http://au.biz.yahoo.com/060220/18/jtei.html
Monday February 20, 2006, 5:14 pm
CHINA WATCH: Cheaper, Better Managers Sought Abroad
By Jane Lanhee Lee Of DOW JONES NEWSWIRES
SHANGHAI (Dow Jones)--Tired of the revolving door of Chinese managers and the rising salary with each new hire, Paul Stepanek decided it was time to find cheaper talent elsewhere. So he went to India.
For roughly the same salary as his previous Chinese quality assurance manager, Stepanek recruited 32-year-old Indian engineer Sandeep Sharma, who speaks English and has about a decade of experience.
"We've had a new manager every year for the past seven years. When you lose a manager...you lose all the history that you've had and all the training that's gone into it," Stepanek said. His company, USActive, helps U.S. firms source metal and plastic machine parts in China and helps manage their factories, including that of Milwaukee-based manufacturer Jason Inc. (JAS.XX), where Sharma works.
As foreign companies like Jason set up Chinese factories in droves, there is an increasing shortage of competent managers capable of dealing with foreign clients. With English-language skills more important than a mastery of Chinese, companies are recruiting from India and the Philippines - a trend that is expected to get bigger before, eventually, enough local Chinese are trained by multinational companies in English and other skills to begin filling the gap.
"Anybody in Shanghai can go out and look for a job tomorrow and get a job that's going to pay 20% to 100% more than their current salary, because there are so many companies that are coming into China every week, every month," said Stepanek, an American who speaks fluent mandarin Chinese and has lived and worked in Taiwan and China for 18 years.
Over the next decade or 15 years, China will need 75,000 executive level managers who can work both in China and in a global setting - compared with an estimated 3,000-5,000 now, says Andrew Grant, who last year published a report, "China's Looming Talent Shortage."
Grant is a director and leads the Greater China practice of global consulting firm McKinsey & Company (MCK.XX).
"A lot of people had the somewhat superficial assumption that China's a very large place with lots and lots of people. Therefore the notion that there is a talent shortage in any way, must just be a misnomer," said Grant. "But now they are taking the challenge seriously."
Thanks to Detroit, China Is Poised to Lead
March 14th, 2006http://www.nytimes.com/2006/03/12/business/yourmoney/12ford.html?_r=1&oref=slogin
By KEITH BRADSHER
Published: March 12, 2006
CHONGQING, China
Soaring Sales, Hot Competition
VOLKSWAGEN and other carmakers used to prosper by sending outdated factory equipment to China to produce older models no longer salable in the West. But competition has become so fierce here that Honda is about to introduce its latest version of the Civic only several months after it went on sale in Europe, Japan and the United States. Toyota, meanwhile, is assembling its Prius gasoline-electric sedan only in Japan and China.
When Ford Motor opened its first production line here in western China just three years ago, it used a layout copied from a Ford factory in the Philippines to produce 20,000 sedans a year based on a small car design taken from Ford operations in India.
But this winter, Ford opened a second production line next door that is practically identical to one of its most advanced factories, the Saarlouis operation in southwestern Germany. The new line produces the Focus, the same small car it builds in Germany (but different from the Focus sold in the United States). And with continuing improvements to the first line, it will bring total capacity here to 200,000 cars a year by June.
The Chinese managers here are not even satisfied with that. "I want to learn from Germany and then improve on it," said Li Jianping, the factory's vice director of manufacturing.
Ford's success in rapidly expanding the scale and sophistication of its Chongqing operations illustrates how quickly the overall auto industry is expanding and modernizing in China. One requirement for a country to become an automobile exporter is to develop a highly competitive domestic market that demands excellent quality and efficiency, and China has managed to create just such a market.
American and European carmakers, including Ford, General Motors, DaimlerChrysler and Volkswagen, as well as Toyota, Honda and Nissan of Japan are introducing their best technology to their plants in China, and not only to compete against one another. They also face rapidly growing competition in the Chinese market from purely local companies like Geely, Chery and Lifan.
These indigenous Chinese automakers captured 28.7 percent of the market in January, the first time in many years that Chinese brands have been pre-eminent — ahead of brands from Japan (27.8 percent), Europe (19 percent), the United States (14 percent) and South Korea (10.3 percent), according to Automotive Resources Asia, a consulting firm in Shanghai.
The multinationals "really have to bring their latest models," said Yale Zhang, an analyst in the Shanghai office of CSM Worldwide, an auto consulting company based in the Detroit suburbs. "Even average consumers understand if this is not the latest model."
Multinational joint ventures in China produced a total of 2.3 million family vehicles last year.
In the race to be No. 1 in China, the world's fastest-growing car market, multinationals from the United States, Japan and Europe are falling over one another to share their latest designs, technology and manufacturing expertise with Chinese partners. But industry experts say that the sharing has helped China prepare to become a major car exporter within four years, increasing the pressure on G.M., Ford and other industry giants, which are already losing sales and market share to foreign rivals.
Few auto executives now doubt that the successful Chinese companies that emerge from the free-for-all in their home country will be ready to tackle world markets. "I've seen the Chinese vehicles in China from various, various brands, and I've said it's a threat that will come to the U.S., I think, by the end of the decade," said Thomas W. LaSorda, Chrysler's chief executive.
All of the multinationals rapidly expanding in China say that their main goal lies in serving the Chinese market and not in exports. Still, Honda is already exporting small cars from China to Europe, while DaimlerChrysler is negotiating to build very small cars in China for sale in the United States, probably under the Dodge brand.
Until the last few years, China's main advantages in the global auto manufacturing market were in its cheap labor and its talent for copying older Western designs, often while avoiding licensing fees, a practice that cut research and development costs to almost nothing.
Wages of less than $200 a month remain a big advantage for China, but it is developing another. Domestic and foreign automakers are starting with clean slates to build new operations, using efficient approaches and advanced management methods. It is similar to the way German and Japanese companies built new and more efficient factories starting in the 1980's, mostly in the American South, helping them to leap beyond Detroit's expertise.
G.M. and its local partner, the Shanghai Automotive Industry Corporation, built an extensive vehicle design and engineering studio in Shanghai that has just finished a redesign of the Buick LaCrosse for the Chinese market.
Soaring Sales, Hot Competition In the central city of Wuhan, Honda has just finished quadrupling the capacity of its joint-venture factory with the Dongfeng Motor Group, to 120,000 cars a year. It is also starting to build the Civic there. The expansion, costing $350 million, took just a year, half as long as a comparable expansion in the United States.
Perhaps most tellingly, on Dec. 15 Toyota began assembling Prius hybrids in the northern city of Changchun. The world's multinationals had long been leery of transferring proprietary technology to make hybrid gasoline-electric engines in China, for fear that it would be copied. While Toyota is still cautious, China is nonetheless the only place besides Japan where Toyota is assembling the Prius, arguably its most important car in a decade.
Furthermore, Volkswagen said in September that it would jointly develop a hybrid minivan for the Chinese market with Shanghai Automotive — a project that is likely to give the Chinese automaker a significant understanding of the technology.
THE risk for the multinationals is that their inventions may be turned against them. When G.M. followed Volkswagen into the Chinese market in the mid-1990's, it was assigned the same partner: Shanghai Automotive, which announced plans on Feb. 23 to begin assembling and selling its own brand of cars in China while retaining the joint ventures. Other Chinese partners of multinationals are expected to follow suit in the next several years.
G.M., Ford, Volkswagen and other multinationals continue to work with Chinese partners because the government here requires them to do so. Foreign companies must assemble cars in 50-50 joint ventures with local partners. Honda alone has a 60 percent stake in a factory: a plant in Guangzhou that makes cars only for export.
Chinese automakers are also buying modern technology and design themselves. Chery has hired some of the best-known Italian auto design firms to spruce up its cars. When the MG Rover Group of Britain entered bankruptcy proceedings last year, the Nanjing Automobile Group outbid Shanghai Automotive to take control of Rover and its fairly modern engine-producing subsidiary, Powertrain Ltd., and move it to China.
The Lifan Group, a car and motorcycle maker with headquarters several miles from the Ford plant here, is bidding to buy one of the world's most advanced engine factories, a joint venture of DaimlerChrysler and BMW in southern Brazil.
But running efficient factories can often be even more important than buying the latest, most expensive robots. The Hafei Group, an automaker in Harbin in northern China, discovered this when it installed expensive European and Japanese automated equipment four years ago, only to find that its disorderly factory layout was less efficient and less flexible than its aging factory next door, where workers used hammers and other hand tools in smoky air.
Inventory control is another matter. Many Chinese auto factories keep extensive, costly stockpiles of parts on hand, whereas new Western-designed factories, including the engine operation in southern Brazil, are designed to receive frequent but small shipments from suppliers. Chinese manufacturers are now learning from their Western partners how to operate with this just-in-time delivery of parts.
The best way to appreciate how car manufacturing in China has changed is to look at the Ford factory here, a 50-50 joint venture with the Chongqing Chang'an Automobile Company. The first production line was supposed to be simple, relying heavily on manual labor and producing a sturdy Fiesta sedan of older design. Teams of local managers and workers were sent to the Philippines and India to learn the craft.
But the second line now includes robots to weld the stiff bodies of the Focus sedans for a more precise ride. Another robot applies the adhesive that holds the windshield in place, as in Germany. One small difference is that a robot guides the windshield into place in Germany, while people do so here, said Mr. Li, whom Ford sent to Germany for four weeks to study the system there.
Wang Cheng-guo, a strapping 23-year-old with a two-year degree in computer hardware from a technical college, started working at the Ford factory in 2004. Each day, he had to strain to lift 50-pound seats by hand into sedans on the first production line here.
Mr. Wang said that with five eight-hour days a week and pay that has now reached nearly $200 a month, the job nonetheless looked good to him when compared with his father's job at a nearby Chang'an car factory. His father, 48, has worked from 7 a.m. until 11 p.m. at that factory, with few vacations, for almost 30 years. While his father still pushes racks of parts to the assembly line, the son earns more, even with a much shorter schedule.
"When I was young, I rarely saw him," said Mr. Wang, who with his first Ford paycheck bought his mother a thick green winter coat and took his parents to a traditional spicy dinner of Chongqing hot pot.
Three months after Mr. Wang joined the factory, Ford improved the first production line by installing an electrical boom to help him swing the seats into the cars. When he concluded that the boom made a time-consuming pivot in the wrong direction and asked that it swing into the car from a different angle, local managers soon made the change — an adjustment that might have languished for months in more bureaucratic factories in other countries.
Mr. Wang, recently engaged, is now making all sorts of plans, the kind that millions of Chinese want to make as prices fall and technology improves. "I want to get married," he said, "and get a car someday."
China's Workers See Thin Protection In Insurance Plans
March 14th, 2006http://www.amcham-shanghai.org/AmChamPortal/MCMS/Presentation/Resources/News/News.aspx?Guid={B63D581B-3024-4EEA-9D31-064C1284F996}
SHANGHAI -- Hu Cunxi thought he understood the financial risks of "big sickness" -- or "da bing" -- the common Chinese term for cancer, stroke and other life-threatening diseases.
He had edited a popular Chinese manual on household finances that encourages readers to load up on medical insurance. He himself had bought a policy from a unit of New York-based insurer American International Group Inc. He saw it as prudent backup to the government-mandated coverage he received as an editor at the state-owned Shanghai Financial News.
Five years ago, Mr. Hu's wife, Cao Meihua, a high-school teacher, was diagnosed with "big sickness." Then Mr. Hu himself fell ill. Now both husband and wife, who are in their late 40s, are battling advanced cancer, and occupy adjacent wards of a Shanghai hospital.
China's high-cost hospital system swiftly overwhelmed the insurance coverage they had through their state jobs. Mr. Hu's AIG policy wasn't designed to cover such medical calamities. Their treatments have consumed their life savings and his parents' retirement nest egg. They are now broke.
"We used to be white-collar workers," says Mr. Hu, who seethes with anger about the quality of his government insurance. "Now, we're in poverty."
More than two-thirds of China's 1.3 billion people have no health insurance at all, and many cannot afford any medical care. But under China's pay-as-you-go health-care system, even those with insurance are often forced to make agonizing decisions about whether they can afford treatment for serious illness. Problems with insurance coverage have become a crisis for China's growing urban middle class, eating into support for the ruling Communist Party.
As recently as the late 1970s, the Chinese government controlled all hospitals, employed all doctors, and offered almost universal health-care coverage. In the cities, the state provided insurance to civil servants, factory workers and their families. Collective farms provided care in the countryside. But the entire system began breaking down in the early 1980s as market-style reforms led collective farms to disband and money-losing factories to close. Tens of millions of workers were left without jobs or insurance.
A decade ago, Beijing began looking for a new health-insurance model. In 1998, government authorities introduced a national program called Basic Medical Insurance. All employers are required to provide employees with some coverage for both routine medical problems and "big sickness." To fund the plan, workers contribute 2% of their salaries, on average, and employers contribute an additional 7.5%. Family members, however, are not covered, and children must rely on limited insurance programs provided by schools. Authorities enforce the requirements for state companies, but large parts of the booming private sector ignore it.
The government plan has many gaps. At the end of 2003, it offered insurance protection to 109 million urban workers. That constitutes less than 20% of China's approximately 600 million urban dwellers. Coverage in rural areas is even spottier. Studies show that three-quarters of private-sector employees remain uninsured.
The Basic Medical Insurance itself is limited. Typically, it covers 70% to 80% of hospital charges. Patients must pay the rest, in cash. Seriously ill patients who cannot raise sufficient money are forced to check out of hospitals, or to opt for less expensive courses of treatment. Basic drugs are covered, but expensive new medicines such as powerful anti-cancer drugs are not.
"It's a real problem," concedes Mao Qunan, spokesman for the Ministry of Health. "People should consider commercial insurance."
Chen Ailian, a 65-year-old volunteer at the Shanghai Cancer Recovery Club, was diagnosed with breast cancer 17 years ago. "If I had got sick today, I would never have survived," she says. She needed surgery, so her state-owned sewing-machine factory sent a note to the hospital promising payment. The operation cost $500, but she didn't have to pay any of it.
Today, hospital emergency rooms demand cash up front, whether or not a patient has insurance. Insured patients pay for everything from gurneys to emergency surgery, then apply for reimbursement later. Those without cash are denied treatment.
A Wrenching Decision
In 2003, He Guofu turned up at a Shanghai emergency room six hours after suffering a stroke. The surgeon told Mr. He's wife, Sun Yuanzhen, that her husband needed surgery to relieve pressure on his brain. He told her it would cost $7,000 to operate, paid in advance, but warned her there was only a 50-50 chance the procedure would help.
Mr. He, who worked at a state-owned construction company, and his wife, a retired statistician, were not poor. They both had insurance. But they didn't have that kind of cash on hand, and Mr. He's employer refused to advance it, even though insurance was likely to reimburse at least some of it.
Ms. Sun hesitated. It was a Friday night. She decided to think about it over the weekend. The 50-50 odds worried her. By Monday, she had decided to borrow the money, but the surgeon told her it was too late to operate.
Her indecision still tortures her. Her husband, who is 54, is now bedridden and requires spoon-feeding, and Ms. Sun struggles to pay her teenage son's school fees. She regrets that she didn't scramble to raise the money and gamble on the surgery. "Everything was a blur," she says. "I was so confused."
Health-care costs in China are rising rapidly, turning hospitals into symbols of unfettered capitalism. Chinese and international health experts blame runaway costs in part on an effort to make treatment more affordable for the poor. Authorities capped prices for basic drugs and procedures at below-market rates. But they let hospitals compensate by profiting on almost everything else, from advanced drugs to sophisticated diagnostic tests.
That decision created an incentive to provide high-end treatment that has transformed Chinese hospitals, making world-class care available to those who can afford it. Even small-city hospitals, once technological backwaters, boast CT scanners. In each of the past five years, Shanghai hospitals have spent nearly $100 million on sophisticated medical equipment, says Hu Shanlian, a professor of health management at the city's Fudan University and an adviser to the Chinese government. Drug sales account for 45% of the revenues of Shanghai hospitals, he says. "The health system is really in a crisis," he says.
Doctors, many of them employees of state-owned hospitals, also have an incentive to steer patients toward high-cost treatments and drugs. The average monthly pay for Shanghai doctors is less than $400, not much more than a taxi driver working overtime can make. But they can double their incomes through bonuses earned by prescribing tests and by dispensing drugs with high profit margins. Few medical systems in the world link doctors' pay so directly to revenue from patients, health-care economists say.
Mr. Mao, the Ministry of Health spokesman, contends that market forces have gone too far. "If you only trust the market, you will have a disaster," he argues. The government needs to play a leading role, he says.
The practices of hospitals and doctors are only lightly regulated by Beijing, and there is little self-regulation. China lacks the kind of medical professional associations that set ethical standards, hear complaints and punish wrongdoers in the U.S. and other countries.
When Chinese authorities decided on the national insurance plan, they failed to recognize an inherent design flaw: The system reimburses hospitals for at least a portion of whatever care they choose to deliver. In effect, government economists acknowledge, the state has become a blank check for doctors. The system encourages doctors to overprescribe expensive drugs and tests, economists say, then to charge patients for whatever their insurance does not cover.
In the U.S., health insurers guard against that outcome through "utilization review," a process under which they evaluate the medical necessity of hospital treatment. Tests and procedures deemed unnecessary are not reimbursed. Although the effectiveness of such reviews varies, the process discourages blatantly unnecessary treatments. In China, there are typically no such review procedures.
Most health-insurance plans in the U.S. also set out-of-pocket maximums for patients facing medical catastrophes. In addition to protecting seriously ill patients from financial ruin, the caps provide another incentive for hospitals to control costs: Large bills have to be justified to the insurance companies responsible for paying them.
A World Bank study of China by economists Adam Wagstaff and Magnus Lindelow concluded that patients with insurance are sometimes persuaded to undergo far more expensive treatments than the uninsured. Chinese doctors have "strong incentive to favor high-tech care over basic care," which may be more costly and sophisticated than necessary, the report said. Insurance may "actually increase the probability of large out-of-pocket payments," the report concluded. There is no formal complaint procedure for patients, the economists added.
The Ministry of Health's Mr. Mao says the government has spent two years negotiating with hospitals over how to make drug prices and profit incentive systems more reasonable. "It's a very complicated issue," he says. "It takes time. We don't want to get it wrong and then have to start all over again."
The Chinese government's share of total health spending has plummeted. Between 1978 and 2003, private outlays as a percentage of total health-care spending rose from to 60% from 20%, government figures show. The shift comes as chronic diseases such as cancer, which are costly to treat, replace contagious ones like tuberculosis as the biggest burden on the medical system.
Chinese government officials have acknowledged that health care has become such a financial burden to people, even to those with insurance, that it threatens social stability. President Hu Jintao has pledged to increase government health spending.
The government is trying to expand state insurance coverage to more people in cities and the countryside. In cities, officials are trying to set up a network of government-funded community health centers as a first stop for patients. They would provide basic care and advise patients about treatment options, drugs and hospitalization.
Adding Coverage
Before "big sickness" struck in 2000, Mr. Hu, the editor, and Ms. Cao, his wife, were making nearly $5,000 a year. In China, that put them at the bottom edge of the middle class. They had married late and were childless, which gave them some financial freedom. They bought a two-bedroom apartment with a $25,000 mortgage from China Construction Bank.
They both had insurance through their state employers. Like growing numbers of upwardly mobile professionals, they decided to supplement it for extra peace of mind. Believing that his government insurance would cover any "big sickness," Mr. Hu turned to American International Assurance Co., a unit of AIG, for personal accident insurance.
Like other Western insurers, AIG is betting demand will grow for private health insurance to cover gaps in government coverage. Mr. Hu's insurance agent at AIG, Wu Caihong, does a brisk business selling "big sickness" policies that offer lump-sum cash payments to policyholders who fall ill. She says she tells her customers that extra medical insurance "isn't a nice-to-have, it's a must-have."
Ms. Wu says that after selling Mr. Hu the accident policy, she tried repeatedly to persuade him to buy "big sickness" coverage. But by then, Mr. Hu's wife had contracted breast cancer, and Mr. Hu had no spare money for premiums on a new policy.
Ms. Cao, who had retired from her teaching job, still had government insurance coverage, but it did not cover the expensive form of chemotherapy she needed. Mr. Hu went into overdrive to make ends meet. He set out to earn extra cash at night by editing books he hoped would sell to China's hobbyists. He dashed off 11 books in four years, including a history of Chinese teapots and a collector's guide to subway tickets. But sales were disappointing, and the extra work has earned him to date only $1,500.
Last year, doctors informed Mr. Hu that he had stomach cancer. He also learned that his government insurance would not cover the kind of chemotherapy he needed. To save money during his first year of treatment, he relied on a mixture of medicines covered by his insurance. This year, after the cancer spread to his liver, he switched to a more powerful drug regimen recommended by his doctor. The new drugs were much more expensive -- and he had to buy them himself.
The more aggressively they battled their cancers, the deeper he and his wife pushed themselves into debt. They borrowed money from friends and relatives. Mr. Hu tried to sell their apartment, but he found that superstitious Shanghai buyers shun houses where "big sickness" has struck. He says even old friends, worried that being around him would bring bad luck, stopped dropping by.
So far, they have spent about $25,000 for her treatment and $12,000 for his. "When you get this disease, there's no bottom line," says Mr. Hu, a scholarly man who now has dark rims beneath his eyes. A Communist Party member, he is furious that so few drugs are covered by his government insurance.
In desperation over their illnesses, Mr. Hu and his wife have turned to religion. He became a devout Christian after a group of elderly women from a local church stopped by his hospital bed to pray. A black Bible sits by his pillow in the hospital ward. These days, he relies on donations from members of his congregation to help foot his hospital bills.
Ms. Cao's breast cancer has spread to her lungs, leaving her close to death. "We're both intellectuals. We're supposed to know about insurance," she says. "But we realize now that insurance just doesn't work. If you want to stay alive, you have to pay yourself."
Shortage of Managers In China Sends Recruiters To India And Philippines
March 14th, 2006http://www.amcham-shanghai.org/AmChamPortal/MCMS/Presentation/Resources/News/News.aspx?Guid={42A31EE1-8559-48A3-8B39-7364BB94B6FF}
SHANGHAI -- Tired of the revolving door of Chinese managers and the rise in salary with each new hire, Paul Stepanek decided it was time to find cheaper talent elsewhere. So he went to India.
For roughly the same salary his previous Chinese quality-assurance manager received, Mr. Stepanek recruited 32-year-old Indian engineer Sandeep Sharma, who speaks English and has about a decade of experience.
"We've had a new manager every year for the past seven years. When you lose a manager...you lose all the history that you've had and all the training that's gone into it," Mr. Stepanek says. His company, USActive, helps U.S. firms buy metal and plastic machine parts in China and helps manage their factories, including that of Milwaukee-based manufacturer Jason Inc., where Mr. Sharma works.
As foreign companies like Jason set up Chinese factories in droves, there is an increasing shortage of competent managers capable of dealing with foreign clients. With English-language skills more important than a mastery of Chinese for these positions, companies are recruiting from India and the Philippines -- a trend that is expected to get bigger before enough local Chinese are trained by multinational companies in English and other skills to begin filling the gap.
"Anybody in Shanghai can go out and look for a job tomorrow and get a job that's going to pay 20% to 100% more than their current salary, because there are so many companies that are coming into China every week, every month," says Mr. Stepanek, an American who speaks fluent Mandarin Chinese and has lived and worked in Taiwan and China for 18 years.
During the next decade or 15 years, China will need 75,000 executive-level managers who can work both in China and in a global setting -- compared with an estimated 3,000 to 5,000 now, predicts Andrew Grant, who last year published a report, "China's Looming Talent Shortage." Mr. Grant leads the Greater China practice of global consulting firm McKinsey & Co.
"A lot of people had the somewhat superficial assumption that China's a very large place with lots and lots of people. Therefore the notion that there is a talent shortage in any way, must just be a misnomer," Mr. Grant says. "But now they are taking the challenge seriously."
For Mr. Sharma, who hails from the northern Indian state of Himachal Pradesh, China's booming growth has been a door to the world. His departure for Shanghai in November was his first trip out of India and his first time on a plane.
"I [didn't] want to be a frog in a well. I wanted to dive into the sea," says Mr. Sharma, who calls Shanghai "a city of dreams." He hopes his work there will eventually lead him to the U.S. or other locations where Jason has operations.
Mr. Sharma doesn't speak Chinese, but is taking lessons. Some of the Chinese staff who speak a bit of English help him, or he manages with body language. The inability to speak Chinese wasn't an issue in hiring Mr. Sharma, Mr. Stepanek says, as most of Jason's client base is in the U.S.
Technology-related companies and those in the service industry that deal with the West are also bringing in employees from India and the Philippines.
Filipino managers and staff are visible in some Shanghai clinics and high-end restaurants. Most don't speak Chinese.
Jesus Yabes, the Philippine consul general in Shanghai since 2002, says he has seen a noticeable rise in Filipino professionals coming to China for work. An increasing number, especially those with some ethnic Chinese background, are learning to speak Chinese, he adds.
But Mr. Yabes doesn't expect demand for Filipino employees to stay strong in the long term, as more Chinese people learn English and receive training or a Western education. Mr. Yabes also hopes for an improvement in the Philippine economy that could support the return of professional managers back home.
Sareet Majumdar, President of IC Intracom Asia, a trade-consulting firm, has a Filipino manager who oversees export projects in southern China. "Eventually, I hope to replace all my foreign managers with local Chinese talent," he says.
It might happen sooner than he expects.
McKinsey's Mr. Grant says he has seen a strong push in the past year by Chinese state-owned companies to hire consulting firms or work with multinational firms to start training employees. Multinationals are hiring smart local Chinese who don't have fluent English skills, and training them, he says.
"That should help close the gap in the short-term," he says. But for China to cope with the demand for managers that can work in an international environment in the long term, Mr. Grant says, a fundamental change is needed in the education system to raise the quality of university graduates.
In the meantime, smaller companies with tight costs may have to find creative solutions. Mr. Stepanek is on his next recruiting search -- this time to the Czech Republic and Slovenia.