Category: "News of China"
3-year local rules suspension in pilot zone
September 29th, 2013Local regulations on foreign investment in Shanghai’s free trade zone will be suspended for three years from next Tuesday, in line with the state’s temporary adjustments on related laws to ease legal barriers for foreign participants.
The pilot free trade zone is due to open on Sunday.
The Shanghai People’s Congress, the city legislative body, said local regulations in the zone would be further adjusted if they were inconsistent with national laws and regulations and the overall plan for the zone. The suspension aims to maintain the unity of the national legal system and to push forward with the construction of the free trade zone, according to the SPC Standing Committee.
China’s top legislature last month authorized the State Council to suspend administrative approvals for foreign-funded enterprises, Chinese-foreign equity joint ventures and Chinese-foreign contractual joint ventures in the free trade zone, in a move to decentralize government power as part of the reform and opening up policy.
“The management system, operating mechanism and supervision system in the free trade zone will be quite different and will inevitably have conflicts with the current regulations,” said Ding Wei, director of the Legislative Affairs Commission of the SPC.
“The decision to adjust local regulations will lay a legal foundation for the introduction of ground-breaking reforms,” Ding said.
Covering a total of 28 square kilometers in the Pudong New Area, the free trade zone is expected to be a testing ground for major policy reforms involving government function transformation, trade facilitation and financial innovations such as free yuan convertibility and liberal interest rates and foreign exchange.
Wang Xinkui, director of the city’s Counselor’s Office and the city’s WTO Affairs Consultation Center, said at a forum yesterday that the pilot free trade zone is not about preferential policies but is a place for the exploration of institutional innovation.
Wang said the transformation of regulatory methods from administrative approval to management through a registration system will be a major part of reforms within the zone.
Chinese Premier Li Keqiang said earlier that a negative list approach will be explored in the free trade zone and priority will be given to easier investment and greater openness.
The establishment of the pilot free trade zone in Shanghai has raised hopes that China will deepen its economic reforms as part of a broad strategy to shift the world’s second-largest economy toward a mode driven by domestic consumption, replacing investments and exports.
On Sunday, the Shanghai government will publicize some detailed rules for the zone.
Shanghai’s long-awaited Free Trade Zone opens Sunday
September 29th, 2013China’s Big Bang or just the first of a bunch of loud pops? asks Asia Sentinel’s Steve Wang
On Sunday, China’s State Council is due to set in motion a long awaited pilot plan for the 28.78 sq km Shanghai Free Trade Zone, marking a major milestone for the country’s cautious, step-by-step economic liberalization that began 30 years ago.
It is a Big Bang that has Hong Kong officials looking nervously over their shoulders. Shanghai has been talked about as China’s financial capital since at least 1995, prior to the takeover of the former British crown colony by the Chinese government, when Fortune Magazine carried a cover story titled “The Death of Hong Kong.” The tycoon Li Ka-shing, Asia’s richest man, for instance, warned publicly recently that the impact of the Shanghai FTZ will be much bigger and come much more quickly than the territory anticipates.
Critics have said Hong Kong, still saddled with the colonial mentality that characterized the territory prior to 1997, will have trouble meeting a competition characterized by the ability to act fast and without the hobbles of an often-fractious Legislative Council and a chief executive’s office that has been steadily losing public support for a variety of reasons.
The territory’s main attributes, however, remain the enforceability of contract and the rule of law, both of which are absent in the mainland, and a communications and transport infrastructure that rank among the best in the world although parts of China are catching up fast.
Some of the details of the FTZ plan were released Friday to allow experiments within the zone, in Shanghai’s Pudong district, including easing restrictions on yuan, investment, trade and business management.
According to Xinhua, the state-owned news service, the opening permits reforms in six different fields including financial services including banking, health insurances and leases. Logistics are to include shipping and port management. Commercial enterprises include telecommunication and gaming services, professional services refer to a closer working with HK law enterprises, credit surveyors, travelling agencies, recruitment companies, investment managers and construction. Cultural and entertainment imply performer agencies and entertainment resorts. Social services mean education, vocational training and medical care.
“Under the preconditions that risk can be controlled, China will create conditions to test yuan convertibility under the capital account, market-set interest rates and cross-border use of the Chinese currency in the zone,” according to the plan. Regulations in the zone will also be eased in 18 sectors from finance, shipping, commerce to culture.
The zone is to be modeled on existing free trade businesses in the country’s economic hub – Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone, allowing domestic banks to provide services to depositors who are residents in other countries, according to Xinhua. It will also allow eligible foreign-funded financial institutions to set up banks and team up with qualified private banks to establish joint-ventures.
Alibaba denies IPO venue rumors
September 27th, 2013E-commerce giant Alibaba Group Holding Ltd dismissed as untrue published reports that it has decided to hold an initial public offering that could raise up to $75 billion in New York instead of Hong Kong.
In an interview with China Daily, an Alibaba representative in Beijing repeated the company's statement earlier this month that it has made no final decision on the timing, location or terms for the IPO, projected to be one of the world's biggest this year.
"Reports claiming that Alibaba has chosen the US over Hong Kong are not true," said the representative, who asked not to be identified.
Alibaba Chief Executive Jonathan Lu also attempted to diminish the reports. Through his account on Laiwang, a mobile chatting app recently launched by the company, Lu replied "not yet" to a China Daily reporter who asked whether Alibaba had chosen to list in the US rather than Hong Kong and whether the company had received a final response from the Hong Kong stock exchange on its request for a change in board-nomination procedures. He did not say whether his response was to one question or both.
Alibaba has been in talks with the Hong Kong exchange's listing panel to establish a system whereby founder Jack Ma and other top executives could nominate most of the company's board and submit the proposed directors' slate to shareholders for a vote. The managers' goal is to retain voting power over Alibaba's strategic direction and culture.
Hong Kong doesn't allow the dual-class structure favored by Facebook Inc, Google Inc and other US-listed technology companies. The Hong Kong exchange's charter says shareholders should have equal rights.
Published reports said that if Hong Kong regulators failed to approve Alibaba's board-nomination request, the company would switch the listing venue to New York, where such a corporate structure is allowed.
That change of venue would come as Hong Kong needs a heavyweight such as Alibaba to revitalize its faltering IPO market. The territory was the top global destination for IPOs from 2009 to 2011, but a slowing economy has caused many companies to postpone their IPOs.
There's no guarantee holding its IPO in New York would translate into a big payoff for Alibaba, despite its prominence in China. Recent accounting scandals involving US-listed Chinese companies have created a chilly climate for IPOs from the country, resulting in few IPOs from China seeking listings on US exchanges and hurting the share prices of Chinese companies which already trade on the US stock market.
But Alibaba would be the most widely anticipated IPO since Facebook's $16 billion offering in May 2012 - the third largest in history.
Hong Kong, in comparison, has had fewer legal battles and a long record of hosting Chinese mainland companies incorporated overseas and listed in Hong Kong. Alibaba is incorporated in the Cayman Islands.
Hong Kong media outlets reported that the listing committee of Hong Kong Exchanges & Clearing Ltd, at its weekly meeting Thursday, discussed the IPO and decided not to make rule changes to accommodate Alibaba's corporate structure. A spokeswoman for the Hong Kong exchange declined to disclose the substance of the committee's discussions, saying they are not public information.
Hong Kong exchange CEO Charles Li suggested that the exchange might not compromise its rules for Alibaba. Li wrote in a blog post on Wednesday that "as enshrined in our charter, in the event of a conflict, public interest is put ahead of shareholder interest at HKEx".
Praxair China Opens Global Technology Centre In Shanghai
September 27th, 2013The new Praxair China Technology Centre is a state-of-the-art facility for applications engineers and Research and Development
Praxair China Investment Company, a subsidiary of Praxair, Inc. has announced the opening of its state-of-the-art Global Technology Centre in Shanghai, supporting the company’s development and implementation of innovative applications technologies.
Praxair supplies gases such as nitrogen, hydrogen, arsine, phosphine, silane and ammonia used in III-V and III-nitride MOCVD growth.
The Praxair China Technology Centre is located in the Jinqiao Development Zone of Pudong New Area.
The centre houses laboratories, including pilot and demonstration facilities, to support a growing team of Praxair engineers and scientists who work with customers in China in the steel, combustion, metal fabrication, metals and materials processing, pharmaceuticals, water treatment and electronics segments.
“The new Praxair China Technology Center is a state-of-the-art facility for our applications engineers and R&D organisation,” says Minda Ho, president of Praxair China.
“These laboratories enable us to work closely with our business partners and customers to develop innovative products that meet their unique needs. In addition, Chinese regulations for emissions reduction are becoming more stringent and are world-class in several areas. Praxair’s experience will allow us to quickly replicate our applications technologies to contribute to our customers’ needs for cleaner air and water. We look forward to delivering novel gas applications from this centre to our customers across China,” adds Ho.
“The inauguration of the Praxair China Technology Centre builds on our rich tradition of innovation,” comments Amitabh Gupta, executive director of Praxair Asia R&D and Applications. “Praxair technical teams are developing applications to help customers increase productivity, achieve energy savings and improve environmental performance through emissions reductions. The development and application of these innovative products and services enables sustainable development, while truly making our planet more productive.”
“China is our largest and fastest growing market in Asia and this center is developing technology that will not only be used in China but also in Praxair’s businesses around the world,” adds Ray Roberge, Praxair’s senior vice president and chief technology officer.
“In addition, we are collaborating with several respected universities across China on important areas of research, which is a strategic advantage for Praxair. The innovation stemming from these projects and our ability to attract and recruit top talent from these and other educational institutions are key reasons we chose to open our facility here,” he continues.
Sogou sues Qihoo 360 over dirty tricks
September 26th, 2013China's Internet giant Sohu's search engine arm Sogou on Wednesday filed a lawsuit against Qihoo 360, a New York-listed Internet security company, for unfair competition.
Qihoo 360 is accused of using its free Internet safety products to "induce and cheat users, prevent them from using the Sogou browser through destructive technical means, and damage Sogou's service integrity to Internet users," according to Xi'an City Intermediate People's Court in northwest China's Shaanxi Province.
Sogou is demanding an open apology from Qihoo 360, and compensation of 45.5 million yuan (7.4 million U.S. dollars).
The court accepted the case, but did not disclose when the trial would open.
Also on Wednesday, Qihoo 360 announced it would sue Sogou and its CEO Wang Xiaochuan for unfair competition and damaging its reputation at two separate courts in Beijing, requesting total compensation of 51 million yuan. The courts have not confirmed the lawsuits.
Established in 2005, Qihoo 360 was listed in New York in 2011, and has a current market value of over 10 billion U.S. dollars.
The company lost a lawsuit in April, when it was accused of malicious competition and fined 5 million yuan as compensation to China's Internet giant Tencent, the highest that has ever been ordered in an Internet competition lawsuit in China.
Airlines recruit 'kind' older flight attendants
September 26th, 2013Chinese airlines are recruiting older cabin crew as they believe they are more patient and considerate than the younger flight attendants traditionally preferred.
The trend is seeing more married women over 35 being taken on as domestic airlines raise their upper age limits.
“Married women look kinder, are more considerate and can serve passengers better than their younger counterparts,” said Zhang Wu’an, spokesman for locally based budget carrier Spring Airlines.
Demographics also play a part in the trend, as flight attendants already employed by the airlines get older, he added.
Spring Airlines launched a recruitment campaign yesterday, mainly targeting married women up to 45. Some 3,000 women — including 2,000 mothers aged around 35 — have applied, said officials.
“We will mainly evaluate their kindness and patience, while their appearance won’t be so important,” said Xiao Fei, human resources department director with the airline.
With Spring Airlines, a flight attendant can be promoted to chief attendant within two years with annual salary of more than 100,000 yuan (US$ 16,338), Zhang said.
Among those seeking a job with the airline is 34-year-old Lang Xiaohua, who has worked as a travel agency manager.
“My 10-year-old daughter is growing up and it’s time to realize my own dream,” Lang said.
She said she felt confident her work and life experiences would stand her in good stead.
Among other Chinese carriers, China Eastern Airlines has upped the age limit for new flight attendants to 32.
Chinese airlines are short of cabin crew due to the rapid expansion of routes and fleets.
A downside of the airline industry boom is frequent flight delays, leading to conflict between staff and passengers.
Last month, two Beijing passengers were detained for 10 days for pushing flight attendants and damaging boarding gates during a five-hour delay.
And in Shanghai, a crew with locally based Juneyao Airlines claimed last month that a flight attendant was slapped by a passenger during a delay.
Shanghai elderly open to house-for-pension plan
September 25th, 2013More than 70 percent of elderly people in Shanghai are open to a house-for-pension program, a survey showed, despite a recent public outcry against the idea raised in a central government document.
According to the Shanghai investigation team under the National Bureau of Statistics, the program was supported by 73 percent of respondents as a possible means to ease the burden on elderly people in an aging society where people are choosing to have fewer or no children.
Under the program, an elderly person who owns a property could deed the house to an insurance company or bank, which would determine the value of the property and the applicant's life expectancy, and pay out a fixed amount of money every month.
The survey of 2,248 residents aged from 60 to 79 who have lived in Shanghai for more than one year found only 27 percent of respondents were firmly against the idea, the bureau's investigation team said in a report.
Those against the program cited various reasons including the possibility of family disputes, and that they don't need the program because their children will care for them in their old age.
Respondents in rural areas said the program is impossible because the land used for building rural houses cannot be traded.
Earlier this month, the State Council, China's cabinet, issued a document promising a complete social care network for people over the age of 60 by 2020.
The house-for-pension program, together with other policies such as encouraging private investment in elder care services, is dedicated to serving the world's largest population of elderly.
But the proposal drew wide criticism, with many suggesting that it shows the government is preparing to pay less attention to elder care services.
Experts said those respondents who said yes to the idea would not necessarily utilize the program.
"Intuitively, it is impossible to have such a high rate of people accepting the idea," said Feng Jin, a professor at Fudan University's Economics School.
"If you casually ask them, they may say yes to the program. But when they are requested to make the decision to mortgage their houses for a pension, it will be a different thing," she added.
In the United States, where a similar program has been in place for more than 20 years, only 2 percent of people aged 65 or above have mortgaged their houses for a pension, according to Feng.
In Hong Kong, only 11 percent of property owners accepted the idea, based on a survey in 2000 of 1,867 Hong Kong residents aged between 49 and 59.
A pilot program to test the idea by China Citic Bank in Shanghai proved unsuccessful because it did not comply with market demand, Feng added.
Yang Lei, founder of Huoban Jujia Homecare Service, said some elderly people showed interest in the program when she raised it.
All were childless or had children who had settled overseas, she said. "They accept the idea because they don't have a person to inherit their property," she added.
It is reasonable therefore that some oppose the idea in order to leave their house to their children, she said.
Wang Xiuzhen, 64, a retired worker, said a clear no to the proposal. "We are not Westerners. Asian culture promotes that you need to leave some heritage for your children."
The Shanghai survey also found 87.5 percent of respondents agreed with the concept of "raising sons to help in old age", and 67.3 percent supported the traditional concept of the family supporting its elderly members.
The respondents expected the authorities to provide more beds at care centers, improve community-based caring services and enhance the service level of those engaged in the sector, the survey found.
By the end of 2012, Shanghai had 3.67 million people aged 60 or older, accounting for 25.7 percent of its total registered population, according to Shanghai Civil Affairs Bureau. Shanghai also has millions of migrants who are not registered in the city.
China to inaugurate Shanghai FTZ on Sept. 29
September 25th, 2013China will officially launch the pilot free trade zone (FTZ) in Shanghai on Sept. 29, taking a solid step forward to boost reforms in the world's second-largest economy.
Preparation work is going smoothly, sources with the Shanghai municipal government said on Tuesday.
Covering almost 29 square kilometers, the zone will be created modeled on existing free trade businesses in the country's economic hub -- Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone.
Chinese Premier Li Keqiang said earlier this month that for the pilot FTZ, a negative list approach will be explored and priority will be given to easier investment and greater openness.
China's legislature has given the green light to the State Council, or the Cabinet, to modify laws related to foreign enterprises in the zone.
As authorized by the National People's Congress Standing Committee, the State Council will suspend administrative approvals covering foreign-funded enterprises, Chinese-foreign equity joint ventures and contractual joint ventures.
The State Council approved the pilot Shanghai FTZ on July 3. In the pilot zone, goods can be imported, processed and re-exported without the intervention of customs authorities.
Bribery claims infect drug companies’ dealings in China
September 24th, 2013It began as a rumour on a Chinese social media site in July, but the impact has swiftly spread around the world: allegations that GlaxoSmithKline was the “godfather” of a system of bribery in the country totalling up to $500m.
The corruption claims, which have since expanded to other multinational pharmaceutical companies including Sanofi, Novartis and Eli Lilly, have created a growing sense of concern among executives, investors and doctors alike.
They raise the prospect of a squeeze in future sales growth, and a repetition of the escalating fines imposed on the industry in the US for illegal marketing and overpricing which have exceeded $30bn over the past two decades, according to Public Citizen, a health watchdog.
Last year, GSK paid a record $3bn to settle claims the US Department of Justice described as including “cash payments disguised as consulting fees, expensive meals, weekend boondoggles and lavish entertainment”. Abbott paid $1.6bn for illegal marketing of its bipolar disorder drug Depakote, and Johnson & Johnson paid $181m to settle some claims over marketing of its antipsychotic Risperdal, while the final bill could reach $2.2bn.
Now western companies face accusations in China covering everything from offering doctors luxurious trips to foreign medical conferences and visits to massage parlours, to payments disguised as research fees. All remain unproven and only scantily described. The sources are often anonymous – and potentially disgruntled – whistleblowers.
They also come in a country where commissions to doctors are viewed as a necessary way of supplementing low salaries. “If a doctor is paid no commission at all to use a particular drug, no one will ever prescribe it unless it has no competitors,” says a former drug representative for a mid-level Chinese pharmaceutical company.
But the Chinese probes have caused a drop in marketing activities as companies and the physicians they target seek to understand the new rules of behaviour, against a broader backdrop of concern over price cuts.
Marc de Garidel, chief executive of Ipsen, says some companies have stopped promotion in China, while hospital doctors did not want to meet sales staff. “In certain cities, in certain areas, there is a toughening of the marketing conditions,” he says. “We are monitoring this very closely. We don’t know how long it will last.”
Many investors have shrugged off the US fines, given the relatively modest financial impact compared with the revenues the companies’ drugs generate. They express more concern over costlier product liability litigation sparked by the side effects of drugs such as the painkiller Vioxx, which alone cost Merck more than $5bn.
Even so, the US clampdown has sparked fresh interest by regulators in other countries, who have been considering imposing their own fines.
This threatens to compound the drug companies’ problems. US and UK anti-corruption legislation – the Foreign Corrupt Practices Act and the Bribery Act respectively – raise the prospect of fines in those two countries being imposed on top of local penalties in the markets where bribery occurred.
Johnson & Johnson in 2011 paid nearly $80m to the UK and US for its activities in southern and eastern Europe and Iraq, for instance.
More fundamentally, investors have grown concerned in recent weeks about the impact of the Chinese probes on future sales practices and prices. Jo Walton, pharmaceutical analyst at Credit Suisse, says: “It seems clear that the breadth of the investigation into marketing practices is likely to slow growth for all of the majors.”
Few predict any withdrawal from China, given its strong growth. But they see pressure for price cuts after a period of adjustment to new rules. Deutsche Bank last month predicted the anti-corruption investigations in China would be “longer and larger” than expected, depressing sales growth into the first half of next year.
That also applies to many regional and local companies, perceived to be more aggressive in marketing than their western counterparts. One senior drug company sales representative in China says: “Everyone is afraid of getting caught, everyone. Before GSK, commissions were half public and half hidden, but now everything has been forced to go totally underground.”
“Doctors are trying to avoid drug sales reps, and many companies have put reps on half-time, or sent them for training,” she says. “Before, drug reps were given a quota of doctors they had to see every day; now you still need to go to the hospital, but if someone looks at you suspiciously, you should leave.”
Another multinational company rep said she still pays regular visits to doctors. “We try to avoid unnecessary trouble by hiding our company logo when we enter hospitals, but I am not too worried because what we are doing is legal. Doctors have to find out about our drugs somehow, and it is our job to inform them.”
Others are more critical of the industry’s role. One middleman in Shanghai said he recently began a business for multinationals conducting “phase IV” clinical trials, conducted after a drug is approved – and which critics claim are often for marketing purposes.
He described how over 15 years working for four foreign drug companies, he regularly filled out fake “clinical research forms” on trials that never took place, allowing kickbacks to be paid to the doctors who were on record for conducting the trials.
A medical student in a leading Shanghai hospital says: “The supervising doctor in my department sees as many as 80 patients in a morning, and prescribes as much as Rmb100,000 worth of drugs. She definitely takes commissions from drug companies, but that only affects what she prescribes when there are two similar drugs. It doesn’t affect the quality of care.”
Industry executives argue the multinationals are again reviewing compliance. “There is a real fear right now about doing business in China,” says Gregory Lovas, in charge of life science clients in Asia with CTPartners, an executive recruitment agency.
He says companies which previously saw China postings as a way of exposing their future leaders to an expanding market are now seeking greater existing “language, cultural understanding and market knowledge”. For middle level marketing staff, they want background checks and references stretching back as far as 10 years.
The industry is braced for a squeeze on pricing and tougher marketing rules in future. But given the sluggish growth in their traditional markets, China’s expanding healthcare demand will probably still be worth the price for most.
More Foxconn Woes: Huge Fight Breaks Out
September 24th, 2013Foxconn may not be in the news like it once was, but not for lack of woes, it seems. The company revealed that a major fight erupted Thursday at a Foxconn campus in eastern China, and the firm says 11 people were injured. The fighting reportedly started as workers drank to mark a public holiday, the Mid-Autumn Festival. Pictures on social media show dozens of shirtless men carrying pipes and sticks, the Wall Street Journal reports. Unconfirmed reports say three people died, and ZDNet puts the number of those injured badly enough to require hospitalization at 27.
The company characterized the feud as "of a personal nature," but ZDNet reports a conflict between provinces. The tech site says more than 200 armed workers from Guizhou province targeted dormitories at the Yantai campus, in Shandong province; they reportedly chanted, "Beat all that are from Shandong." Either way, labor activists are speaking out after a summer that, the Journal notes, saw 183 strikes and protests at Chinese factories in general; that's double last year's tally. "Large-scale fights simply do not break out at well-run factories with a contented and well-paid workforce," says one activist. The fight comes nearly a year to the day after a massive riot at another Foxconn factory.
China improves transparency for graduates recruitment
September 23rd, 2013China's educational authorities have vowed to improve transparency for recruiting graduate students, especially those recommended for admission, in order to safeguard fairness.
The Ministry of Education said in a circular on Wednesday that schools should ensure an open recruitment process by publicly stating selection criteria and publishing the lists of admitted students on their website for no less than 10 days for public scrutiny.
"Applicants whose names have not been made available to the public must not be admitted by schools," it said.
Any issues should be investigated and rectified and supervision should be stepped up on recruitment, said the circular.
Applicants for graduate programs in Chinese universities or academic institutes should attend national exams, or recommended by schools where they pursued bachelor's degrees for admission to graduate schools.
Cheating in exams should be prevented by ensuring smooth operation of the anti-cheating system including monitors and metal detectors, the circular urged.
Schools' autonomy should be further expanded in recruiting graduate students and professors' role should be given full play in selecting outstanding applicants, it added.
China Raises the Heat on Glaxo
September 5th, 2013BEIJING—GlaxoSmithKline GSK.LN +0.03% PLC came under new pressure as Chinese state-run news outlets ran reports of employees purportedly detained in a government bribery investigation of the drug maker saying that company executives created a sales culture that led to corruption.
China's national broadcaster on Tuesday aired reports featuring what it said were detained employees saying that managers pressured sales representatives to get drugs to Chinese customers faster. The identities of the people, whose faces were blurred, couldn't be verified.
A person identified as sales manager Huang Hong, who China Central Television said was one of four Glaxo employees detained in July, said in the report that former Glaxo China chief Mark Reilly told workers to enter hospitals to develop relationships with administrators to speed drugs' entries into pharmacies.
Mr. Reilly couldn't be reached for comment. Glaxo Chief Executive Andrew Witty in July said authorities hadn't alleged wrongdoing by Mr. Reilly.
"Upper management came from sales, so they should have realized what they were doing," the person identified as Ms. Huang said in the report.
Glaxo said the issues mentioned in the reports "would be a clear breach of our corporate values and we have zero tolerance for any behaviour of this nature."
Chinese officials have alleged that Glaxo transferred three billion Chinese yuan, or about $490 million, through travel agencies since 2007, creating fake invoices to help the company generate money that could be used to bribe doctors. Officials in July said that some of the travel agencies offered Glaxo employees bribes in the form of sexual favors to keep the company's business. Authorities didn't disclose further details.
Glaxo has said that some senior executives may have violated Chinese laws and that it is cooperating with the probe.
The person identified as Ms. Huang said in Tuesday's report that management instructed sales representatives to approach clients from the biggest and most powerful hospitals at least once a week and provide them with travel opportunities and gifts. The Wall Street Journal reported similar information last month, outlining information on trips and kickbacks that Glaxo allegedly offered to doctors.
Chinese authorities in July said Mr. Reilly left the country as they began investigations. Glaxo said Mr. Reilly left China on a preplanned business trip.
Glaxo in late July replaced Mr. Reilly as head of China with Hervé Gisserot, who had been co-head of Glaxo's pharmaceutical business in Europe. Glaxo said at that time that Mr. Reilly would remain with Glaxo in London, helping the company respond to the Chinese investigation.
A report from China's state-run Xinhua News Agency on Tuesday quoted Ms. Huang as saying that Glaxo management set sales growth goals of 25%, much higher than the industry standard of 7% to 8%. "Mr. Reilly's company objective was, 'Sales are king,' " Ms. Huang said.
The official People's Daily quoted Glaxo's head of recruitment in China, Guo Jianhua, saying that company executives shrugged off responsibility when authorities made bribery allegations. "When the problems were exposed, the company pushed all responsibilities to individual employees," Mr. Guo said.
China Life-AMP JV takes shape
September 4th, 2013Australian fund house AMP Capital could be selling its range of equity, fixed income and multi-asset mutual funds to Chinese investors by February through its new joint-venture with China’s largest insurance company.
AMP will have a 15% stake in the Bejing-based JV, China Life AMP Management, with China Life controllling the remainder. Pending approval from the China Securities Regulatory Commission (CSRC), the JV will begin operations within the next six months, says Anthony Fasso, international CEO and head of global clients for AMP Capital, which oversees A$131 billion ($117.9 billion) in AUM.
Eventually, China Life AMP may consider multiple avenues to invest in the mainland, such as through the qualified foreign institutional investor (QFII) programme, although there are no firm plans at the moment, Fasso tells AsianInvestor.
The firms are focused on receiving authorisation from the CSRC to begin operations in Beijing, he adds.
At the moment, foreign financial institutions can only acquire up to 49% of a JV on the mainland. However, under proposed regulations by the Closer Economic Partnership Arrangement, foreign firms could own over 50% of a JV, allowing them to take a controlling stake.
If passed, this could have a significant impact for firms such as AMP. The firm declined to elaborate on potentially increasing stakes in the future.
“It’s been talked about for some time across many industries but I haven’t seen an update on it,” says Fasso. “We’re happy with the stake we have with the right partner.”
This JV marks the first time a foreign fund house will have partnered a Chinese insurance firm, and follows a new law coming into effect in June allowing mainland insurers to run and sell mutual funds.
Meanwhile, it offer AMP Capital a different means of distribution from the typical channels offered by Chinese banks.
Foreign fund houses seeking to set up an office on the mainland previously partnered with Chinese banks, securities firms or trust companies. The funds are dispensed through the banks’ platforms, which are becoming increasingly crowded.
The big four – Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank – account for 70% of fund sales on the mainland.
Insurers, which have large sales forces with both retail and institutional investors, long-term relationships with their clients and extensive data, are an appealing alternative.
“Our mutual funds are primarily aimed at retail investors, so historically they’ve been sold via bank channels,” Fasso says, adding that China Life, with one of the largest distribution platforms in the world, will “open up a broader geographic footprint” for AMP Capital.
“[Chinese insurers] have never sold mutual funds before, so it’s going to take time [before it takes off],” he notes. “But this is a very exciting platform to be involved in.
“Chinese investors are still becoming used to investing in mutual funds. There’s still low penetration. But as they become more sophisticated, they are looking for more choice, particularly around fixed income, equities and multi-asset funds,” Fasso says.
AMP and China Life executives are now working on staffing up the firm’s office in Beijing with executives in sales and marketing, client services, registry and record-keeping, compliance, risk management, finance, operations and regulatory issues.
Once the office is set up with staff later this year, CSRC will do an inspection and then award full authorisation.
Home prices keep rising in August
September 4th, 2013New home prices in 100 major cities averaged 10,442 yuan ($1,706) per square meter in August, rising for 15 consecutive months in month-on-month terms, and indicating the recovery of the property sector, a survey has shown.
Of the 100 cities tracked by the China Index Academy, the research arm of Soufun, China's largest property website, 71 cities posted month-on-month increases, with 31 of them seeing prices rising at a pace above 1 percent, two cities fewer than in July.
The other 29 cities saw monthly declines, 10 cities fewer than in the previous month. Of those, 14 cities saw drops more than 1 percent.
On an annual basis, new home prices in those 100 cities increased 8.61 percent on average, 0.67 percentage point higher than in July.
Among the 10 largest cities, Beijing saw the biggest property inflation with a 3.22 percent month-on-month increase in August, trailed by Wuhan, Hubei province, which posted a 2.16 percent month-on-month increase.
On a year-on-year basis, new home prices in the 10 top-tier cities grew 12.18 percent in August, extending the period of gains to 10 months and pointing to robust housing demand.
"It's increasingly less likely that we'll see new tightening measures in the property market, and investors and homebuyers are returning to the market and pushing up prices because of the limited supply," said Huang Zhijian, chief analyst at Shanghai Uwin Real Estate Information Services Co.
Loosened purchase restrictions in Wenzhou, Zhejiang province, and Wuhu, Anhui province, have sent signals lately that a relaxed policy environment might be in the works by local governments, and trading is now more active than a few months ago, said the report.
In August, Wenzhou quietly loosened purchase restrictions in the housing market by allowing local and non-local residents to buy second homes, while Wuhu decided to abolish transfer taxes and start paying a 20,000-yuan subsidy to undergraduate homebuyers with three-year work experience in the city.
Zhang Dawei, research director at real estate company Centaline Group, said there will likely be more cities following those moves across the nation to ease purchase restrictions. Local governments rely heavily on the property market, a key driver of economic growth and a cash cow for them, Zhang added.
However, Hui Jianqiang, research director of Beijing Zhongfang-yanxie Technology Service Ltd, said that Wenzhou and Wuhu tweaked the policies to stop the continuous fall of home prices in the two cities.
Wuhu saw the heaviest losses in the home price list after shedding 2.29 percent month-on-month, while Wenzhou saw home prices decrease 0.31 percent.
Xu Shaoshi, minister of the National Development and Reform Commission, said in a report delivered to a meeting of the Standing Committee of the National People's Congress on Aug 28 that the government will launch pilot property tax programs in more cities.
"There will be between six and eight more cities with trial property tax programs this year, with some of them possibly levying the tax on pre-owned homes," said Chen Sheng, vice-president of the China Real Estate Data Academy.
Most opposed to increasing retirement age
September 3rd, 2013An overwhelming majority of those questioned in an online survey expressed opposition to a proposal pushing back the retirement age.
Nearly 95 percent of some 25,300 polled netizens said they were against the prospect of the retirement age being increased, according to the survey jointly conducted by the Beijing-based China Youth Daily and Sohu, a leading news portal.
The retirement age in China is 60 for male employees, 55 for female officials and 50 for female workers. Retirees can claim a pension immediately.
Delaying the pension age would relieve the State's financial burden in supporting a rapidly aging population, according to a proposal released by Tsinghua University earlier this month. It suggested that the government should lift the pension age for workers, both men and women, to 65 from 2030.
Yang Yansui, director of the Tsinghua Center for Employment and Social Security and one of the drafters of the proposal, said it is a matter of urgency for China to lift the pension age given the accelerated imbalance between the working-aged population and the number of senior citizens.
Currently, it takes about seven workers to support one pensioner over 65.
If there is no change to the system, in 2035, it will take two workers to support a pensioner and this would place a heavy burden on the economy, Yang said.
However, about 91 percent of respondents said that they were unwilling to work until 65. Most of the surveyed were aged between 24 to 53, according China Youth Daily on Thursday.
Some 60 percent believed they would be physically incapable of working up to 65 and half of them said increasing the retirement age would make it harder for younger people to get work.
Ma Chenkai, department manager of a toy company in Dongguan, Guangdong province, said it is unrealistic to require blue-collar workers to postpone retirement.
"It's physically demanding to work in manufacturing workshops, eyesight and energy levels deteriorate," Ma, 43, said.
"Plus, their wages will not rise that much even if they continue to work. So the option of looking after their grandchildren at home becomes even more attractive."
More than 60 percent of those polled believed China should introduce more flexible retirement arrangements for people from different walks of life.
Li Guizhen, associate chief technician from the department of laboratory medicine in the Tianjin Academy of Traditional Chinese Medicine Affiliated Hospital, said she would be happy to prolong her working life, as she believes it is a waste of medical expertise to let female paramedics retire at 55.
"It takes years of education and training to become a senior medical professional and I feel energetic, so I prefer to contribute more to society," said Li.
There is no one-size-fits-all solution in terms of the retirement age and the government should allow people to have more options, based on health and their attitude, Li said. She also agreed that the retirement age for government officials should not be pushed back as this would increase the taxpayers' burden.
China to expand employment for the disabled
September 3rd, 2013BEIJING - At least one disabled person should be employed in China's provincial-level Party or government organs and municipal working committees for the disabled by 2020, according to an official statement.
Those bodies are asked to offer more preference to help the disabled get employment and ensure their rights to apply for the civil service, according to the statement posted Thursday on the website of China's Disabled Persons' Federation (CDPF).
At least 15 percent of disabled people should be employed in provincial-level disabled persons' federations, according to the statement.
The statement was jointly issued by seven departments including the Organization Department of the Communist Party of China Central Committee, the Ministry of Finance and the CDPF.
China has more than 85 million disabled people. The number is expected to exceed 160 million by 2050, according to the federation.
China's National Human Rights Action Plan (2012-2015) provides that the country will stabilize and expand employment for the disabled.
Innolux hopes to boost touch screen use
August 29th, 2013Innolux Corp aims to increase the penetration rate of its touch panels used in notebooks and all-in-one PCs to 50 percent next year, a company executive said yesterday.
Only a very small portion of PCs worldwide are currently equipped with touch panels because of their high price and unattractive Windows 8 operating system, Innolux said.
It believes about 10 percent to 15 percent of notebook computers around the world will have touch screens at the end of this year, Innolux said.
To boost the penetration rate, the world’s No.4 LCD panel maker has developed low-cost touch screens by integrating touch sensors and LCD glasses, Jeffrey Yang, an associate vice president, told reporters during a touch screen trade show in Taipei.
Innolux plans to begin shipping the new low-cost touch screens later this quarter and expand its monthly output to around 200,000 units next quarter, Yang said. The low-cost screens are made on one-glass-solution technology, he said.
Innolux installed a new production line in a Chinese factory to produce the screens and is working to overcome a labor shortage problem to increase the factory’s output, Yang said. The company plans to recruit 3,000 workers, he said.
However, Harris Po, an analyst with local research firm Topology Research Institute, is less optimistic, saying Innolux’s target was “too aggressive.”
“It could only be reached after touch screens become standard products, which can help drive the cost of touch screens to an affordable level,” Po said.
Local rival AU Optronics Corp, which is showcasing 19.5 inch and 21.5 inch touch screens at the touch screen show, has predicted that about 20 percent of its notebook computer panels will be touch screens at the end of this year.
Yang said the company is also set to ship new energy-saving touch screens using Indium Gallium Zinc Oxide (IGZO) technology by the end of this year.
As an IGZO screen only consumes one-third the power that average LCD screens consume, an “IGZO [panel] is important for tablets,” he said.
IGZO panels have been under the spotlight amid growing speculation that Apple Inc will have its new-generation iPhone, iPad and Macbook laptops equipped with the screens.
Japan’s Sharp Corp is the major IGZO panel manufacturer.
Innolux, which holds a 70 percent global share of the 4K2K TV panel market, expected 50 percent of its TV panels would be such ultra-high-definition panels next year, up from 10 percent estimated for this quarter, Yang said.
The company plans to more than double its output of 4K2K TV panels to 500,000 units a month by the end of this year, from 200,000 units currently.
Separately, Innolux and AUO yesterday said they did not plan to lower factory utilization because they expected demand to return soon, driven by the holiday shopping season in October in China, shopping for Christmas shopping in the US and Europe and then the Lunar New Year demand from Asia.
Innolux has seen demand recover this month and expects customers’ inventories to return to normal next month.
“We hope to keep our equipment loading rate at a stable and reasonable level,” Innolux spokesman Lin Chen-hui said. “The fourth quarter will be a better period than the third quarter.”
The company plans to maintain a factory utilization rate of more than 90 percent this quarter and next quarter, Lin said.
Telstra China chief executive Xiaowei Chen exits
August 28th, 2013Telstra’s China chief executive Xiaowei Chen has left the company for “personal reasons” and not been replaced.
The move is potentially a blow to Telstra’s plans to expand into Asia to offset falling domestic fixed-line profits.
Chen Xiaowei’s departure was first revealed by industry publication Communications Day. A Telstra spokesman said she had left the company several months ago and not been replaced.
The McKinsey & Co consultant and former TV presenter for China Central Television was responsible for Telstra’s assets in China and tasked with growing the telco’s business in China both organically and through acquisitions.
The executive was appointed in May 2011 with Telstra’s then group managing director of Telstra International Tarek Robbiati describing her hiring as “a significant milestone in our drive to recruit the very best people throughout our operations.”
The company runs several popular websites in China including Autohome.com.cn, which is a leading site for car-owners looking for products and services.
Chinese national Tim Chen quit the board of Telstra in October 2012, ostensibly to pursue opportunities away from the telco. But he re-joined the company as its head of international operations exactly one month later at the behest of chief executive David Thodey.
Telstra has a presence in several Asian countries through its submarine cable assets and is actively using them to expand its footprint in the region. Earlier this month it appointed Singapore-Chinese executive Chin Hu Lim to the board as a director to drive growth.
But it also faces significant competition from home-grown rivals in the region who offer similar products and services.
In Hong Kong, High-Skilled Jobs Decline
August 27th, 2013Hong Kong is facing an expansion of low-skilled employment at a time when the number of high-skilled jobs is contracting, reflecting a torpid environment for the territory’s financial services industry and other white-collar sectors.
In the second quarter, the number of high-skilled jobs slipped by 0.9% from a year earlier, following a 2.4% drop in the first quarter. By contrast, non-professional jobs surged 3.8% in the second quarter after rising 4.7% in the first.
Overall, total employment rose 2.5% year-on-year to 3.75 million positions in the second quarter. Of these, 1.38 million are high-skilled jobs while 2.37 million are in the low-skilled segment.
The reason for a contraction in the number of high-skilled positions, according to human resources professionals, is weak hiring in the financial sector. The financial-services industry contributes about 20% of employment and just under a fifth to national output but it’s share has been falling. That’s in contrast to rapid growth of the retail sector and other blue-collar industries that have driven GDP growth lately as more mainland Chinese shop here.
Hong Kong’s GDP grew 3.3% in the second quarter, a healthy clip. The jobless rate also remains a relatively low 3.3%. But economists are concerned the increasing reliance on low-skilled sectors could hurt productivity growth and drag on the economy in the future.
“I believe the contraction of Hong Kong professional sector is more related to financial deleveraging over the global economy,” said Hang Seng Bank economist Ryan Lam. “Financial centers like Hong Kong are more vulnerable to the end of the credit-driven era than Singapore, which has a diversified manufacturing base.”
Hong Kong’s recruitment agencies said they’d witnessed a decline in middle-management jobs, especially in financial services.
“The global financial headwind has made companies more cautious in creating permanent headcount or making replacement hiring, especially mid to senior positions,” said Lancy Chui, regional managing director for Greater China at ManpowerGroup.
She noted some financial institutions continue to downsize and restructure operations following the financial turmoil in 2008.
“I don’t see any new posts for professional jobs in financial services this year,” said another senior consultant for a recruitment agency in the city. “It’s only job replacements filled by a junior post, with lower pay.”
Some recruiters point to cost-cutting in the financial-services industry globally as a factor contributing to Hong Kong’s changing employment landscape.
“Managing costs is still the top priority for most organizations in financial services, and this is the main factor behind the current cautious hiring environment,” said George McFerran, Asia Pacific managing director of eFinancialCareers, a recruitment firm.
GDP has gotten a boost in recent quarters from the rising tide of spending by cashed-up Chinese mainlanders visiting the territory to hunt for everything from daily necessities to luxury goods. Between 2007 and 2011, the contribution of tourism, including the retail trade, to the city’s GDP rose to 4.5% from 3.4%.
Alexa Chow, managing director of Centaline Human Resources Consultant Ltd., said she expected demand for non-professional jobs in the retail and services sectors to remain strong for years to come as tourism from mainland China continues to boom.
Still, some economists worry that the trend toward lower-skilled employment may push down economic growth in future quarters.
“A structural shift of employment toward this low-profitability, labor-reliant sector could cause a gradual slowdown in GDP growth,” said Hang Seng Bank’s Mr. Lam. “If this trend continues, Hong Kong could turn into another tourism city filled with low-skilled labor instead of being an international financial center.”
Best Buy CEO indicates company will stay in China
August 26th, 2013In a memo to employees, Hubert Joly said Best Buy International, including China, remains critical to the company’s future.
Best Buy Co. Inc. CEO Hubert Joly suggested Friday that the company will stay put in China despite speculation on Wall Street that it will eventually sell off its operations in the world’s most populous country.
In an internal memo that announced international President Shari Ballard also will lead human resources, Joly said the company remained committed to its foreign businesses, which includes China, Mexico and Canada.
“Our international businesses are a significant part of our company, and leadership of those businesses remains critical,” Joly wrote.
In some ways, Joly’s memo is his strongest endorsement of China yet. Since joining Best Buy last fall, Joly has conveyed skepticism toward the company’s struggling international operations. The chief executive has devoted most of the company’s resources toward stabilizing its core U.S. retail business, which generates most of its $50 billion in annual revenue.
Last April, Best Buy agreed to sell its 50 percent stake in Best Buy Europe to joint venture partner Carphone Warehouse for $775 million in cash and stock. Analysts suspected Best Buy also would divest its Five Star business, a local electronics chain that Best Buy acquired in China a few years ago. The business has struggled of late, due to a slowing economy and the end of China’s stimulus program.
At the same time, however, China still holds considerable opportunity. The country has overtaken the United States as the world’s largest smartphone market. Of the top five smartphone vendors in the world, two — Huawei and ZTE — are Chinese firms selling smartphones mostly in their home country.
With Five Star, Best Buy seems uniquely positioned to benefit from this growth. Although the company has shut down its big-box stores in China, Best Buy has continued to open Five Star stores and is testing a Best Buy Mobile store-within-a-store concept in some Five Star locations.
“Shari and I recently traveled to China and Canada, meeting with the new business leaders there and spending time in our stores,” Joly wrote in his memo to employees. “I am encouraged by the progress we are making and look forward to continuing to work closely with Shari and our country leaders.”
In May, Best Buy named Meng “Max” Zhou, a longtime retail executive in Asia, as its new China CEO. Still, Wall Street continues to doubt Best Buy’s future in that country with some analysts speculating that the company hired Zhou as a type of caretaker to prepare Five Star for a sale.
Of China and Canada, it makes more sense for Best Buy to stay in the latter, said David Strasser, a retail analyst with Janney Capital Management. Canada’s stores are profitable, and many of Joly’s strategies toward fixing U.S. retail can also apply north of the border, he said.
“Canada was always going to be a part of Best Buy,” Strasser said. “It’s a legitimate and good part of the business.”
China, however, is a different animal, Strasser said. The country has not yet generated the necessary returns to justify Best Buy’s continued presence there, he said.
“I still believe China is a question mark,” Strasser said. “Over time, China will either work itself out or it won’t.”
Joly, though, seems like he wants to remain in China — at least for the immediate future. Earlier this summer, Joly visited China and Canada, Best Buy spokesman Matt Furman said.
“He is personally engaged in our international business,” Furman said.
In the memo, Joly revealed that Carol Surface, the current HR chief, is leaving Best Buy to join an undisclosed Minnesota company. Joly also sought to refute the idea that appointing Ballard to run human resources would somehow detract from her duties as international chief.
“To be clear, Shari also remains responsible for our international business,” Joly said. “The addition of HR to Shari’s responsibilities does not, in any way, diminish what is expected of her as President, International.”
That might seem a lot of work for one executive but it fits Joly’s preference for a lean, efficient management structure. For example, Chief Financial Officer Sharon McCollam also is chief administrative officer charged with revamping Best Buy’s supply chain operations and real estate portfolio.
In addition, the sale of Best Buy Europe and the appointment of Zhou will help ease the burden on Ballard, a company veteran who formerly led human resources and served as co-head of North American retail.
“I think she is competent, a good executive,” Strasser said.
Shanghai’s free trade zone trial gets official go-ahead
August 23rd, 2013China has officially given the green light to setting up a pilot free trade zone in Shanghai, the Ministry of Commerce said yesterday, and an overall plan for the zone will be announced after legal procedures are completed.
“The State Council has proposed to adjust some laws in the free trade zone in an effort to accelerate transition of government functions, explore management of foreign investment through drafting a negative list for foreign investors, and seek innovation in the opening-up model,” according to a ministry statement.
The proposal is pending approval from the Standing Committee of the National People’s Congress, China’s top legislature.
“The free zone will benefit China with new advantages in international competition and provide a new platform for the country to cooperate with other countries and thus help it to explore economic potential and build an upgrading economy,” the statement said.
China plans to suspend some laws on foreign companies and joint ventures in free trade zones, including Shanghai, according to a statement released after a meeting presided over by Premier Li Keqiang on August 16.
The central government approved a draft plan in July, which involves further opening up the country’s service sector, speeding up transformation of trading methods, promoting openness and innovation in the financial sector and building a suitable regulatory system for the zone.
In a free trade zone, goods can be imported, manufactured and re-exported without the intervention of Customs authorities, thus improving convenience and efficiency and facilitating the free flow of commodities and capital.
Shanghai’s current bonded areas allow companies to import goods without paying tax unless they enter the Chinese mainland for sale in the domestic market.
The pilot free trade zone, the first of its kind on the Chinese mainland, will be in the Pudong New Area.
The 28.78 square kilometer area will cover Waigaoqiao Free Trade Zone, Waigaoqiao Bonded Logistic Zone, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone, where a series of preferential policies is already in place.
The Shanghai Financial Services Office said the trial will focus on facilitating trade and investment activities, promotion of cross-border yuan use, and decentralization and improvement of foreign exchange management.
The trial program and implementation will be designed with Shanghai’s own characteristics to pilot China’s new financial reform, opening up and innovation measures, the office said.
Some measures to be implemented in the trial are related to credit asset securitization and foreign direct investment by individuals.
Sun Lijian, head of the Finance Research Center at Fudan University, said: “The approval of the trial free trade zone in Shanghai indicates the government’s resolution to rebalance economic development from a government-led and policy-supported pattern to a deregulated and more market-oriented mode.”
Lu Zhengwei, chief economist with the Industrial Bank, said that building a free trade zone that follows international standards is expected to bring breakthroughs to China’s service industry, which is set to be a new engine for the Chinese economy over the next decade.
51job print job ads fall by half in China as demand drops
August 21st, 2013Chinese recruitment services group 51job, one of the country’s fastest growing companies, is seeing demand for print advertising dropping substantially.
The firm’s results for the second quarter of 2013 show print revenues down 50% to RMB11m (£1.15m) compared with Q2 2012, with the estimated number of print advertising pages it generated in 2012 declining 47% to 355.
51job says it has taken a “strategic decision to discontinue certain newspaper editions”, thus reducing the number of cities where its supplement 51job Weekly is distributed to five – half the number of cities covered in the same period last year.
In Q2 2012, print had made up more than 6% of the group’s revenue. As revenue has grown, this figure is now less than 3%.
Group-wide revenues of RMB404.4m grew by 12%, with online recruitment, representing two-thirds of the business, growing slightly above that rate.
The firm’s president and chief executive officer Rick Yan says: “Recent feedback we have received from enterprises continues to be favourable regarding their hiring plans for white-collar workers.
“We remain optimistic about market outlook as we focus on strategy execution and capturing opportunities in the evolving HR services industry in China.”
See next week’s August edition of Recruiter for the Global Spotlight on China, and stay tuned for more online on recruiter.co.uk, including thoughts from Totaljobs director Mike Booker, also the managing director of global job site alliance The Network.
Foxconn on mass recruitment in China, puts 'robot' plan in question
August 21st, 2013Foxconn reportedly is looking to recruit more than 90,000 workers for its Shenzhen factory, putting more question marks on the company's previous plan to deploy 1 million robots by 2014.
According to a Yi Cai report Friday, the Taiwanese electronics manufacturer is beefing up its pool of skilled workers. It cited a staff at Foxconn's Shenzhen recruitment center who declined to be named: "We are keeping things very low-key during this recruitment drive."
The latest development follows another massive recruitment exercise for its inland factory in Zhengzhou earlier this year, which seems to contradict Foxconn CEO Guo Taiming's plan to replace manpower by installing 1 million robots across its factories.
"There are huge hurdles if Foxconn wants to push forward its 1 million robot plan," a robotics technology provider for Foxconn noted in the Yi Cai report. He estimated Foxconn probably installed fewer than 100,000 robotic pieces since Guo shared his vision for factory automation in 2011, with plans to increase the company's robot count by 100-fold from 10,000 to 1 million by 2014.
The source from Foxconn said the company needed more time to push forward the automation process and, for the time being, would choose the comparatively cheap labor in mainland China as its first choice.
Premier encourages students to find work in western China
August 20th, 2013Premier Li Keqiang told new graduates to be enterprising and innovative in hunting for jobs in what some say is the toughest time for them to find work in recent years.
At Lanzhou University in Gansu province on Sunday, Li assured students that the government will spare no effort in helping them succeed in the difficult job market.
"Young people should be resolute and brave to start their own businesses. By doing so, you create jobs not only for yourselves but also for many others," Li said when he met a crowd of students. "Confidence and enterprising spirit are your biggest assets."
Li said he's been inspired to know that some graduates from the university have taken the initiative in shouldering social responsibility by setting up their own businesses.
Huang Zheng, a 25-year-old graduate, told the premier he has just given up a job offer in administrative management in Guangzhou to set up an Internet company in Lanzhou that will help local students find jobs.
Huang said by doing so he could follow his passion and hone his skills in the real business world.
"You've made a good choice," Li told Huang. "Don't be afraid of failure."
However, Huang told China Daily that he now lacks capital and resources and he hopes the government can help.
Under the incentive policy for new graduates who are setting up enterprises, entrepreneurs can receive a two-year tax waiver.
"But we still need about 300,000 yuan ($49,000) start-up capital," Huang said. "We're applying to set up our company in the local venture industrial park so that we can have a free office site."
Venture capital and social resources are harder to come by in a western city, he said, than in big cities like Beijing or Shanghai.
During his visit to the university, Li urged students to be confident in the job market.
This year might be the toughest time for college graduates to enter the workforce in recent years. A record 6.99 million students are leaving universities in summer, a 2.8 percent increase, to hunt for jobs at a time when employers are cutting back on recruitment due to a slowing economy, according to the Ministry of Education.
"Though the number of graduates is huge, the unemployment rate (in China) is still low compared with some developed economies," Li said.
"Young talent is the future of the nation, and the government will try every way possible to help them."
The premier also encouraged students to work in western and remote areas of China, as the western region has become a growth engine for the country, but it still lacks innovation and talent.
In 2012, the region's GDP increased by 12.5 percent year-on-year, much faster than in the eastern and central parts of the country.
To help graduates find jobs, the State Council has called for the implementation of existing policies favorable to graduates' employment.
The central government has also encouraged graduates to turn toward self-employment and start their own businesses, promising to provide training subsidies, small loans, tax breaks and other incentives.
However, setting up businesses might not be easy. "Starting up a company is challenging for fresh graduates as they have no social experience or capital," said Chen Yu, deputy director of China Association of Employment Promotion.
Entrepreneurs on average are between 35 and 44 years old when they launch their companies, according to a report on entrepreneurship released by the management committee of Zhongguancun, China's Silicon Valley. It said lack of access to capital and experience are strong barriers for young entrepreneurs.
"When jobs are unavailable, new graduates may have to create opportunities by themselves," Chen said. "But this is difficult for many because it is not what they have been trained to do."
He said traditional education teaches students how to perform a job that already exists, but fails to encourage broad and creative thinking.
Market open for bilingual job seekers
August 20th, 2013Zhang Daojian, vice-president of the Confucius Institute in Islamabad, said he has had numerous requests over the past year from Chinese businesses that want to hire local Mandarin-speaking students.
"Studying Chinese is a great help to Pakistani students because many Chinese companies here want to hire people who can speak English, Urdu and Mandarin," Zhang said.
Urdu is the national language of Pakistan, and both Urdu and English are the official languages.
"Last year a Chinese company asked me to recruit such talent, and I apologized because we had no students available," said Zhang, a former teacher at Beijing Language and Culture University. The university established the Confucius Institute in Islamabad in 2007.
Zhang said some of the students who are fluent in Mandarin went to China for further studies, and the rest were hired in Pakistan.
"Generally, their jobs are really good, and most of them are working in banking or for leading Chinese enterprises," he said.
The Confucius Institute gave Mandarin lessons to 6,000 students in 2012 amid the nationwide drive to learn the language.
"Mandarin lessons are compulsory in the leading elementary schools here," Zhang said.
The Confucius Institute also co-hosted a series of cultural events to boost public diplomacy. One such event last year impressed Zhang with the Pakistani public's enthusiasm for Chinese culture.
Local enthusiasm
"We participated in a cuisine festival last year, and China's booth attracted many people.
The traditional friendship between the two neighbors is one of the reasons Pakistanis want to learn Chinese, he said.
"Economic, political and cultural exchanges are frequent between the two countries, which naturally provides a major boost to the demand for learning Mandarin."
Traditional Chinese culture also appeals a lot to the local people, Zhang added.
Although Pakistanis have a strong desire to learn Chinese, Zhang said maintaining that enthusiasm is difficult.
"Some students have been brought up in well-off families, and they went to Britain or the United States for further studies after abruptly ending their Mandarin lessons," he said.
Others who get posts at branches of Chinese companies in Pakistan are not interested in furthering their studies, Zhang added.
Security concerns
The security situation in Pakistan also is a concern, Zhang said. The media seldom reports good news about Pakistan, and the country has been depicted as being overwhelmed by bombings and earthquakes, he added.
One recent explosion several kilometers from the institute killed more than 20 people.
One of the institute's teachers was giving lessons near the site of the bombing, but no one with the institute was hurt.
The security issue is a concern for some teachers from Beijing before they leave for Islamabad, Zhang said.
But the situation in Islamabad is relatively safe compared with elsewhere in the country, and one will be all right if he or she takes precautions, he said.
No Chinese teacher may leave Islamabad without Zhang's permission, and he suggests that they finish their shopping early in the morning.
"I told them to leave at 7:30 am to buy fruits and vegetables and ensure they return before 8:30 am. The fewer people there are on the streets, the safer it is."
Ministry of Human Resources and Social Security Seeks Comments on Regulating Labor Dispatch
August 16th, 2013China’s Ministry of Human Resources and Social Security issued provisions that align closely with recent changes to the PRC Labor Contract Law in order to help standardize labor dispatch in the country. The draft calls for a clearer definition of auxiliary positions, which will affect employers that historically employ a large amount of dispatched employees. However, a grace period is also provided so that employers can adjust their employment models in China.
On 7 August 2013, the Ministry of Human Resources and Social Security of the People’s Republic of China promulgated “Several Provisions on Labor Dispatch (Draft for Comments)” (the Draft) to solicit public opinion on how to regulate the labor dispatch in the country. This effort is intended to echo the Decision of Amendment of the Labor Contract Law (the Decision), effective from 1 July 2013, for the purpose of detailing the rules for labor dispatch and providing implementation guidance.
Highlights
Union Involvement
The Draft echoes the Decision’s recommendation that labor dispatch shall only apply to positions of temporary, auxiliary and substitutive nature (Three Characters). In addition to the established definitions that a temporary position applies only to a position lasting no longer than six months, and a substitutive position applies to a position vacated for off-work studies, time off, etc., the Draft specifies that an employer shall propose the list of auxiliary positions in line with industry features and business operation needs, and confirm the list upon consultation with a labor union or employee representative meeting before making it public.
The Draft further reinforces the supervisory function of the labor union in that if an employer violates the provisions—especially regarding Three Characters—or the maximum ratio of dispatched employees, the labor union is entitled to raise concerns and ask for corrective actions.
Maximum Ratio of Dispatched Employees
The Draft mandates 10 per cent as the maximum ratio for dispatched employees among the total employee pool of an employer. That said, an employer cannot unlimitedly set auxiliary positions and should be limited to the ratio ceiling at 10 per cent. Such limitation would have a great impact on companies that have a large amount of dispatched employees, and certain adjustments would be accommodated in order to comply with the law, as well as optimize the benefits for the business.
Expanded Coverage of Labor Dispatch Services
According to the Draft, if an employer subcontracts certain business operations to a third-party contractor but still takes direct control and management of the employees of the said contractor, such subcontracting behavior shall be regarded as labor dispatch, and therefore subject to the regulations on labor dispatch.
This expanded definition of labor dispatch is meant to prevent an employer from taking advantage of the subcontract to circumvent the restrictions and limitations for labor dispatch, including, but without limitation to, the maximum ratio of dispatched employees. Therefore, it requires special attention and due consideration when an employer intends to adopt the subcontracting model for certain parts of its business operations.
Liability
The penalty for violating the rules on labor dispatch is RMB 5,000 to RMB 10,000 per person. It is worth noting, however, that if an employer violates the relevant rules on labor dispatch, especially those of “Three Characters” and the ratio ceiling of auxiliary positions, and makes no rectification within one month of being given administrative penalty, the dispatched employees will be deemed to have established an employment relationship with the employer, and the employment contract will be deemed to take effect one day after the end of the one-month period after receiving the penalty.
Grace Period
The Draft provides a grace period for employers to be compliant. That said, any labor dispatch duly established prior to 1 July 2013, when the Decision took effect, shall continue to be in force until the expiration of the term period, which is up to two years. If the existing labor dispatch does not follow the "Equal Pay for Work of Equal Value" principle, it is further proposed that the amendment shall be made accordingly and immediately. Further, for any employer that has a large amount of dispatched employees exceeding the 10 per cent ratio ceiling, it shall not recruit any new dispatched employees, even for auxiliary positions.
Conclusion
To summarize, the Draft calls for clear identification of the auxiliary positions through participation in either a labor union or employee representative meeting followed by the strict 10 per cent ratio ceiling for all auxiliary positions in any event. This gives little room for an employer to maneuver if such employer historically has had a large amount of dispatched employees. However, the Draft also provides for a grace period so that an employer could take time to consider and adjust its employment model in China.
High-tech firms encouraged to recruit more graduates
August 15th, 2013Chinese high-tech enterprises have been encouraged to find more vacancies for graduates due to the country's mounting employment pressure.
High-tech companies are working hard to recruit more than 950,000 of the record-high 6.99 million graduates this year, according to science and technology minister Wan Gang.
More than 3.62 million university graduates have been employed by the country's 49,000 high-tech companies since a regulation dedicated to develop such firms was introduced in 2008, according to the Ministry of Science and Technology.
"High-tech enterprises should actively bear social responsibility and take the lead in terms of providing graduates with more suitable positions," said Wan.
The number of Chinese graduates will rise 3 percent year on year during the 12th Five-Year Plan period (2011-2015), said Xin Changxing, vice minister of human resources and social security.
China's high-tech enterprises are largely located in the country's first-tier cities such as Beijing, Shanghai and Guangzhou.
Influencing China's healthcare industry
August 14th, 2013Allegations that British drugs giant GlaxoSmithKline has paid millions of dollars in bribes to increase its market share in China have thrown the spotlight on the country's murky pharmaceutical industry.
China's health spending is projected to soar from $357bn (£232bn) in 2011 to $1tn in 2020, according to a report by McKinsey, the global management consultancy group.
And with sales slowing in the West, the global drugs giants want a share of the booming profits in China.
But now the Chinese authorities say they are investigating up to 60 pharmaceutical firms in an effort to curb drugs prices.
Chinese doctors who spoke on condition of anonymity to the BBC - fearing they would lose their jobs for speaking out - say the healthcare system is awash with corruption.
They say that the pharmaceutical firms, both foreign and Chinese, have enormous influence.
'Bribery chain'
That is because Chinese hospitals traditionally rely on pharmaceutical sales as a major source of income.
Government funding is often barely enough to cover basic operational costs at most hospitals.
So doctors rely on drug prescriptions - and the kickbacks that come with them - to bulk up their pay.
But the doctors we spoke to stressed that they were at the "very end of the bribery chain".
"State and food administrators need to decide if the drugs are safe," said one doctor.
"And then, when the drugs reach the hospital, the directors get involved. Everyone takes their cut. And by the time it reaches the doctors there is very little money to be made."
While Chinese companies will offer incentives in the form of cash to prescribe certain drugs, foreign companies will offer lecture fees or conferences at hotels, the doctors claim.
The medical staff we spoke to say they depended upon the income. Despite China's booming economy, they receive meagre salaries.
"My basic monthly salary is about $600," said one surgeon with 30 years of experience. "Without bribery I could not live a decent life."
But increasingly, doctors in China are bearing the brunt of public anger over bribery. Patients often complain of being given tests they do not need and being prescribed expensive drugs.
According to Chinese state media, there were more than 17,000 violent incidents in Chinese hospitals in 2010. Several hospitals in Beijing have also reportedly beefed up their security.
Market survival
Fixing the system is one of the priorities of China's new leaders. The Chinese government has promised to rein in soaring health costs as the authorities roll out a national health insurance plan.
They plan to introduce national reforms to lower drugs prices and pay doctors more.
Tackling the powerful pharmaceutical industry also fits with President Xi Jinping's pledges to do more to root out widespread corruption, which is a source of enormous public anger.
James McGregor, a businessman and author who has spent more than 20 years in China, said foreign companies make a convenient first target for the authorities.
"It's all about market survival for foreign firms because there are local businesses that want their market share," he said.
"At the same time there are political reforms that look like they are going to happen in the state sector. And I think the authorities are going to be going after some very tough players. So if you go after the foreigners first it may soften the way a little bit. "
But the doctors we spoke to said the healthcare system needed a total overhaul. They said the key problem was that the government was not spending enough money to guarantee decent healthcare.
But they all agreed there was no easy fix.
"I'm a Communist Party member," said one doctor. "I probably shouldn't say this but the system is rotten to the core. It's hard to cure a deeply ingrained disease."
Boost for private capital in banking industry
August 14th, 2013Rules remove capital adequacy ratio requirements, limits of equity investment for financial institutions
The Chinese government is loosening its reins on private capital's entry into the banking industry to encourage more lending to small businesses, according to a draft of new rules released by the China Banking Regulatory Commission.
In a statement dated Aug 9, the commission said it has revised rules regarding administrative licenses for Chinese lenders and is seeking feedback from the public until Sept 9.
According to the rules, it has removed the capital adequacy ratio requirements and upper limits of equity investment for domestic financial institutions that will initiate the establishment of a commercial bank.
Instead, it added a requirement that the initiator must possess a good social reputation, have no record of illegal behavior and have no big issues regarding improper internal management.
Zhou Dewen, the chairman of the Wenzhou Small and Medium-sized Enterprises Development Association, said the new rules will further open the door for private capital to enter the financial field because it lowers the threshold for private companies.
He said a large proportion of private capital is in the hands of individuals instead of with an organization that has registered at an administration for industry and commerce, therefore the removal of the previous requirements would facilitate such capital to enter the banking business.
"We noticed the new rules have also added some restrictions, such as private players only using their own capital to hold banking shares, instead of purchasing shares on behalf of others. This is necessary for containing the risks of private banks," Zhou said.
The new rules also loosened the requirements for banks wanting to set up branches in China and overseas by removing the standards for banks' allocated capital for their branch operations during the application.
Lower thresholds to establish a bank in China would encourage some large financial institutions to extend their footprint in small, medium-sized and regional banking services and thus promote financial support for small businesses, said Guo Tianyong, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics.
He said the commission has also increased the capital adequacy requirements for banks' overseas institutions, to prevent overseas risks from spreading to domestic sectors.
On Monday, the State Council, China's cabinet, vowed to improve financial support to small businesses, in a statement released on its website, while the economy continues to falter and the government is curbing over-rapid credit expansion.
The development of small financial institutions will be further encouraged to improve financial services to small businesses - and the threshold at which small companies can raise funds directly on the capital markets will be lowered, it said.
"We would encourage large and medium-sized banks to develop special institutions and outlets for lending to small businesses at a faster pace and improve the scale and standardization of such lending," said the State Council.
The commission figures show that only 45 percent of the total shares of joint-stock commercial banks were in private hands at the end of 2012.
China is stepping up its efforts to get private enterprises into more businesses, said Standard & Poor's Ratings Services in a report published on Monday.
"For the third time since the Asian financial crisis, the country is in the midst of another major push to get private enterprises into more businesses," said Standard & Poor's credit analyst KimEng Tan. "If the reformers prove to be third-time lucky then strong economic growth could continue to be a key sovereign-rating support for the foreseeable future."
CEO of Recruitment Firm Zhaopin Sees Strong Job Market in China
August 13th, 2013Worried about China's slowing economy? Evan Guo, chief executive officer of Zhaopin Ltd., has more than 2.5 million reasons not to. That's the number of job opportunities posted on Zhaopin.com, one of China's largest recruitment websites.
Despite sharply slower growth, the world's second-largest economy continues to create jobs, he says.
Zhaopin, which is majority-owned by Australian job site Seek Ltd., SEK.AU +2.16% chalked up revenue of $138 million in 2012 with a workforce of 3,200, benefiting from a growing economy and an increasingly Internet-savvy, job-hopping young workforce. But they also face challenges from rival Chinese job sites such as 51job Inc., JOBS -1.54% and from the rise of social networks. Mr. Guo, who previously worked at management consultancy McKinsey & Co. and helmed a state-owned enterprise in China's logistics sector, sat down with The Wall Street Journal in his Beijing office to discuss the evolution of China's Internet and why the models you learn at business school don't work in China. Edited excerpts:
WSJ: What did you learn at McKinsey that has helped you in your current role?
Mr. Guo: At McKinsey you learn ways of thinking, analytic frameworks. But often they are not applicable to the entrepreneurial world in China. In the Western approach, you look at key performance indicators, you check the data. But in China you have to respond very quickly to changes in policy, what employees are thinking, often based on little data. You have to act based on gut feelings; if you act according to what the text books say, you will get it wrong.
WSJ: There is a lot of concern about the slowdown in China's growth. How concerned are you?
Mr. Guo: We won't see a return to 10% growth. Expectations now are for something around 7%. But that's not a disaster. If I look at our own business, employment is still growing. High-tech, logistics, services, health care are all recruiting. We're also seeing rapid growth in job opportunities in third- and fourth-tier cities. I've spoken to a lot of small firms and they are growing fast and adding workers.
WSJ: Do you see any sectors that are doing less well?
Mr. Guo: We see fewer job opportunities in manufacturing, and also in retail. Retail is worrying because the government wants to boost Chinese consumption. But when we look at how shopping malls are doing, they are not doing so well. E-commerce explains some of it, but not all of it.
WSJ: In the U.S., social networks like LinkedIn have been a major challenge to recruitment websites like Monster. How will that play out in China?
Mr. Guo: In the U.S., LinkedIn has overtaken Monster but so far it has not had much impact in China. Chinese are very practical when it comes to switching jobs. You can see that in how Chinese talk about salary. In the U.S. it's considered rude to talk about how much you earn, but in China people are quite open about it.
Zhaopin tells Chinese job seekers what they want: "Can I get more money in this job?" LinkedIn is through social networks, so it's very indirect.
We survey students about where they most want to work. A few years ago, they all wanted to work at multinational firms like Google and Microsoft. Now they see Chinese firms doing well and see them as more desirable, so I am not too worried about competition from overseas firms.
WSJ:Guanxi, or personal connections, is meant to be very important in China. But that's not how Zhaopin works.
Mr. Guo: Job seekers always want the best opportunities. Guanxi can tell you about some of the opportunities, but recruitment websites can tell you about all the opportunities and give you salary comparisons. At the entry-level or the midlevel that's important. For top executives, then it's about personal connections again—they won't be using the website.
WSJ: There is a wave of consolidation in China's Internet. What does that mean for Zhaopin.com?
Mr. Guo: The Internet giants can drive big traffic, but traffic doesn't resolve marketplace issues. In verticals like recruitment or real estate, you need deep knowledge of what customers are searching for to succeed, and that's not easy to develop. I don't worry too much about whether we have this business model or that business model—if I did that I would never sleep. It's more important to think about what customers want and how to give it to them.
WSJ: How much space does Zhaopin.com still have to grow?
Mr. Guo: We are already covering 100 cities so that is already quite wide. But in terms of depth we are quite shallow, covering about 20% of the marketplace. The price employers pay to advertise with us is also quite low by international comparison, so in volume terms and in price terms we have room to grow.
WSJ: Is an initial public offering on the agenda?
Mr. Guo: We are considering an IPO in the future. That depends on capital-market conditions, our own strategy and execution, and what employees want—they see an IPO as a source of pride and a landmark for the firm.
WSJ: How receptive do you think foreign investors are to Chinese firms right now?
Mr. Guo: You have to distinguish between private and public markets. In the private markets, I see private equity and venture capital investors are hungry for deals. But there are less and less good deals and they become more and more expensive. On public markets, high-quality Chinese companies still get attention. Some big funds are interested in Zhaopin.com. But for individual investors, it's more difficult to understand the opportunity when they can't even pronounce the name of the firm.
Résumé
Education: Northwestern University Kellogg School of Management, 1999, with a master's in business administration.
Career: In 1994, Mr. Guo was one of the first analysts in China employed directly by McKinsey, a firm he left as a global partner. He started a software outsourcing firm and headed state-owned logistics operation Sinotrans Air Transportation Development Co., before joining Zhaopin as chief executive in 2010.
Corrections & Amplifications
In an earlier version of this story, the credit accompanying the photo of Zhaopin Ltd. Chief Executive Evan Guo misstated the source of the image as Zhaopin Ltd. The photo was taken by Lilian Lin, a Wall Street Journal researcher.
Employment pressures affect young Chinese love lives
August 13th, 2013For 22-year-old college graduate Han Xiaolei, the upcoming Qixi Festival, also known as Chinese Valentine's Day, is doomed to be a heartbreaking one.
The native of central China's city of Wuhan just broke up with his girlfriend, who had to go back to her hometown in south China's Guangxi Zhuang Autonomous Region after failing to find a job in Wuhan, as Han did.
"I cried a lot on the day we broke up and it still hurts. We were together for three years, but our love had to surrender to reality," Han said.
Soaring living costs and the growing difficulty of finding a job have made it difficult for young Chinese to maintain healthy romantic relationships. Even those who are fortunate enough to find a job are often overworked and underpaid, leaving them with no time or money to sustain a relationship.
"The reality for graduates in China is that their relationships are directly affected by their employment status," said Fan Xianzuo, a professor at Central China Normal University who has been studying the post-college lives of the school's graduates.
According to a nationwide employment survey conducted by Wuhan University, about 43 percent of China's graduates may be unemployed in 2013 as a result of the country's weakening economy.
An employment report issued by the Beijing Youth Stress Management Service Center in May showed that the average monthly pay for this year's new graduates is 2,000 to 2,500 yuan (327 to 408 U.S. dollars), accounting for 60 percent of the average monthly salary for new grads in 2012.
Although Beijing resident Yang Lijun managed to nail down a job in the same city as her boyfriend after graduating from Tsinghua University, she is still having difficulty in keeping their romance alive.
"We have no time to be as romantic as before, as my job's night shifts basically deprive me of the opportunity to see him," Yang said.
"We have no time or money for regular celebrations. Life has made us the most unromantic people in the world," she said.
Yang now lives with three roommates in a 60-square-meter apartment and only sees boyfriend during weekends. Her monthly rent is 2,400 yuan, nearly two-thirds of her monthly pay.
It is customary for young Chinese couples to purchase a home before getting married. Many women even refuse to marry a man before he has obtained a home. However, growing housing prices have made it difficult for young men to do so.
The average transaction price for a single square meter of housing in Beijing in July was 25,292 yuan, as estimated by HomeLink, a property brokerage firm.
"When I think about the down payment on our future apartment, my mood for romance is immediately gone," Yang said.
Fan said he believes new graduates like Han and Yang need the care and support of all of society, as young people will play a significant role in China's future development.
"Unlike their parents, this generation was born and raised during an economic boom. Few of them have had difficult life experiences, so they need time and support to become strong and independent, both financially and mentally,"Fane said.
Li Tonggui, a social psychology professor at Peking University, said more social services should be offered in order to help graduates adapt to post-campus life.
Although things have been difficult so far, Yang said she is still confident in the future of her relationship.
"The days when we work hard together for our future can be a lifetime fortune for us. It doesn't matter how we celebrate the Qixi Festival. A phone call or a text message could be the best gift, as long as we are together," she said.
Beijing teams investigate Sanofi for alleged bribery
August 12th, 2013BEIJING city corruption and health officials have launched an investigation into allegations that staff at French pharmaceutical giant Sanofi paid bribes totaling some US$280,000 to 500 Chinese doctors.
The joint investigation will probe claims reported in China’s 21st Century Business Herald newspaper that company staff paid 503 doctors in 79 hospitals bribes totaling 1.69 million yuan in a bid to increase sales.
The paper, citing documents provided by an anonymous whistleblower, said Thursday that in 2007 Sanofi paid doctors 80 yuan every time a patient bought its products, with the largest payment being 11,200 yuan.
The products named in the report are two drugs for high blood pressure.
Most payments were made to medical staff in hospitals in Beijing, Shanghai, Guangzhou, capital of southern Guangdong Province, and Hangzhou, capital of eastern Zhejiang Province, said the newspaper
The report claimed these were listed as “research expenses.”
The Beijing municipal health bureau will coordinate with the disciplinary authorities to investigate, a spokesman told Xinhua News Agency yesterday.
Define the boundary
How to define the boundary between a “research expense” and bribery is key to the case, industry insiders said.
Investigators will seek to find out whether clinical research programs had lists of patient names and medical reports, said a Beijing health bureau official.
On Friday, Guangdong Province health bureau summoned the heads of 16 hospitals named in the report, vowing to carry out a thorough investigation.
Sanofi said that it took the allegations “very seriously” and has begun relevant procedures to investigate the allegations.
“We have zero tolerance to any unethical practice,” it said.
Sanofi added that it has “processes for reviewing and addressing such issues in a manner that is consistent with our legal and ethical obligations.”
The allegations come after four executives from British drug firm GlaxoSmithKline were arrested last month for alleged bribery and other offences.
China’s top economic planner is investigating 60 foreign and domestic pharmaceutical companies over their prices.
UN official sees Chinese economic growth 'stable'
August 12th, 2013President of the United Nations General Assembly Vuk Jeremic said Friday that the Chinese economy is one of the strongest performers worldwide and offers optimism to the world economy.
Jeremic, president of the 67th session of the UN General Assembly, made the comments in a joint interview with Chinese media in Beijing.
He said one of the most significant reference points to the world economy is China's economic situation. If China is going in the right direction, the rest of the world will be going in a good direction economically. If China is having difficulties, everybody is going to have difficulties.
In the first half of the year, China's economic growth slowed to 7.6 percent.
"The growth, which some people question that whether this is good enough or strong enough... I don't really think that there are too many countries in the world that can have 7.6-percent growth, a very stable one," he said.
"I understand that of the 7.6-percent growth rate, 7.5 percent can be attributed to domestic demand, so we are talking about really 'solid' growth, perhaps not 10 percent like China used to have," he added.
Jeremic praised China for showing the strength and resilience in the face of international challenges.
As to the global political and economic landscape, he believed the UN remained key to resolve the challenges in the 21st century by engaging everyone equally in the General Assembly. Although important organizations like the G20 are emerging, without the UN and UN General Assembly, there is no chance to resolve challenges in a satisfactory manner, he said.
The role of the emerging markets and developing countries will become stronger and the most significant element in this new geopolitical puzzle and the new landscape, as part of the wider global development, he noted.
The Millennium Development Goals will expire in 2015 and they need to be replaced by a new vision for world development for the next 20 to 30 years, he said.
World leaders at the Rio+20 conference in June 2012, agreed for the General Assembly to draft a development agenda for the 21st century. Over the next 24 months, the assembly will need to complete negotiations, achieve a consensus so the world will develop in a sustainable way, not exacerbate social differences and tensions in a country and between countries, and make the gap between the rich and poor smaller.
Jeremic said China plays a critical role in this process and looks forward to working with the country, hoping it will continue to play a constructive role in the UN.
Jeremic will be replaced by John William Ashe, ambassador to the UN for Antigua and Barbuda, for the 68th session in September.
Pharm giant says it takes bribery claims 'seriously'
August 9th, 2013Allegations by a whistle-blower that French pharmaceutical giant Sanofi-Aventis bribed more than 500 doctors in China in late 2007 to boost its sales are being taken "very seriously" by the company.
An anonymous whistle-blower on Thursday told the 21st Century Business Herald newspaper that Sanofi staff paid about 1.69 million yuan ($276,000) in bribes to 503 doctors at 79 hospitals in Beijing, Shanghai, Hangzhou and Guangzhou in November 2007. The company also allegedly bribed 43 doctors at five hospitals in Beijing in the form of cash payments and gifts each month from May to October in 2007.
The allegations come after four Chinese executives from British drug firm GlaxoSmithKline were detained last month for suspected bribery and tax-related violations. China's top economic planner is currently investigating 60 foreign and domestic pharmaceutical companies over their prices.
British drugmaker AstraZeneca and Belgian drugmaker UCB recently admitted they are being investigated by Chinese authorities.
The 21st Century Business Herald, based in Guangzhou, Guangdong province, surmised that the whistle-blower worked in Sanofi-Aventi's upper management in China based on the nature of the content provided to the publication.
The whistle-blower said the bribes were given in the name of research spending and would only give the name "Pei Gen" to the newspaper.
"Sanofi is confident in our business operations in China and committed to conducting its business globally with integrity. We are determined to respect the ethical principles governing our activities and are committed to abiding by the laws and regulations that apply in each country where we operate. We have zero tolerance to any unethical practice," the company said. "At this time, it would be premature to comment on events that may have occurred in 2007."
The National Health and Family Planning Commission recently passed a plan to fight what it called inappropriate behavior in selling medicine. Li Bin, head of the commission, stressed in July that medical reform is needed to combat bribery in an industry where many Chinese hospitals rely on the sale of medicine.
Currently, the central government sets a pricing standard for medical services provided by public hospitals. Many experts believe the policy keeps the price of services at an artificially low level and puts pressure on hospitals and doctors to sell more medicine and possibly accept bribes.
In 2012, Beijing introduced new regulations on public hospitals to emphasize quality medical services and discourage hospitals and doctors from relying on the number of prescriptions they dole out.
As part of the reform, some hospitals are required to sell medicine at cost, but they are allowed to charge 42 yuan to 100 yuan in consultation fees (health insurance companies are required to reimburse the 40 yuan to the patient). Before the reforms, a consultation would cost between 5 yuan to 14 yuan.
But Niu Zhengqian, deputy director of the Chinese Pharmaceutical Enterprises Association, said the key to preventing doctors from excessively prescribing medicine lies in changing the way the healthcare insurance industry pays hospitals.
"Currently the public healthcare insurance sector pays hospitals based on each item of the service they provide, encouraging them to choose more expensive items, from which doctors can get more illegal kickbacks," Niu said.
An advanced payment system is also effective, said Wang Hongzhi, a healthcare industry consultant. With this plan, a local government healthcare agency pays a hospital a specified amount of money to cover healthcare fees. If there is a surplus, the hospital pockets it; if there is a deficit, it must share the costs with the local agency.
"If the market is more competitive and there are more private healthcare providers, that will also help solve problems in the industry," Niu said.
Tough job market for over three million college students: official
August 9th, 2013A dismal job prospect is expected to unfold itself for China’s numerous college graduates, as over three million college students could fail to land a job this year, some official estimated in a press conference yesterday.
The figure was revealed by Wang Yujun, a senior official of the Ministry of Human Resources and Social Security, in the media briefing for the annual report of the reform and development of China’s social security.
Against the backdrop of a record high number of graduates nearing seven million this year, more than three million college students could probably not find a job before graduation, said Wang.
She claimed that the estimation is made by taking into account of the initial employment rate which exceeds 70 percent in previous years.
The initial employment rate refers to the percentage of graduates who have secured a job before leaving the campus, which also encompasses those who have enrolled as post-graduates or by a foreign university.
The employment difficulty is caused not only by the nation’s education mode and students’ career vision, but also the quantity and quality of the job vacancies at present, Wang added. She predicted that the situation can hardly get better in a few years to come.
Sanofi cuts 2013 goal, authorities visit China office
August 8th, 2013* Sees FY earnings down 7-10 pct at constant currencies
* Says one office visited by authorities in China
* Says not aware of visit purpose
* Q2 business net income down 23.4 pct to 1.48 bln eur
* Shares down 6.2 percent (Adds details, CEO comments, background)
By Elena Berton
PARIS, Aug 1 (Reuters) - Sanofi SA cut its 2013 earnings forecast as it reported a steeper-than-expected drop in second-quarter profit, hit by the effect of patent losses, currency fluctuations and an inventory setback in Brazil.
The French company also said one of its 11 regional offices in China had been visited by the State Administration for Industry and Commerce (SAIC (NYSE: SAI - news) ) in Shenyang, but added it was not aware of the purpose of the visit from the agency.
A probe by Chinese authorities into the activities of GlaxoSmithKline (Other OTC: GLAXF - news) led to allegations of a wide-reaching bribery scandal last month and prompted speculation that other international companies could be drawn into the investigation.
"We are not really aware of the purpose of the visit, we are working with," Chief Executive Chris Viehbacher told reporters on Thursday. SAIC is one of China's anti-trust regulators in charge of market supervision, which also looks into low-level bribery cases.
Viehbacher added that the French group's local head office in Shanghai had not been contacted by Chinese authorities.
China's 21st Century Business Herald earlier reported Sanofi (NasdaqGM: GCVRZ - news) and U.S. drugmaker Eli Lilly & Co had confirmed visits to their offices by the Shenyang bureau of the SAIC.
Sanofi said in an emailed statement to Reuters that the agency visited its offices on July 29, but said the purpose of the visit was unclear.
Eli Lilly said in a statement to the newspaper that the visit was a routine inspection by the relevant government departments that occurred in early 2013, and was completely different to previous industry investigations led by the public security bureau.
"Regarding this inspection, we have fully cooperated," the U.S. group told the paper. Lilly representatives in China did not respond immediately to a request for comment from Reuters.
China remains a priority market for Western drug makers, which can command hefty price premiums for their medicines even though they are no longer protected by patents.
TOO EARLY
A promise this week by GlaxoSmithKline to make its drugs more affordable in China in the wake of the bribery scandal could be a lever for Chinese authorities to start redressing the balance.
Viehbacher said it was premature to say what repercussions the scandal would have on Sanofi's business in China.
"We are examining the issue closely and we are examining our business in China, but I think it's too early to draw any conclusions," he said.
Sanofi also predicted earnings this year would be between 7 and 10 percent lower than in 2012 at constant exchange rates, but said it continued to expect to return to growth in the second half of 2013.
Sanofi had previously forecast that annual profit would be flat to 5 percent lower at constant currencies.
Its shares were down 6.2 percent at 75.13 euros by 0758 GMT, the biggest losers in the CAC 40 (Paris: ^FCHI - news) index in Paris which was up 0.3 percent.
"Whilst this is disappointing, the one-time nature of most of the areas of weakness now creates even easier comparatives for the growth rebound expected in the second half of 2013 and beyond," analysts at brokerage Jefferies said in a note to clients.
The group's closely watched business net income, which excludes items such as amortisation and legal costs, declined 23.4 percent to 1.48 billion euros ($1.96 billion), below an average of 1.79 billion in a Thomson Reuters I/B/E/S poll of nine analysts.
Sales shrunk 9.8 percent to 8 billion as last year's patent expiry on anti-clotting drug Plavix, once the world's second-best selling prescription drug, sliced 481 million euros off revenue in the quarter.
The group's generics business in Brazil was hit by much higher-than-planned inventory levels during the second quarter, Sanofi said.
As a result, Sanofi had to adjust sales by 122 million euros and book an additional provision of 79 million to write off the inventory and other related costs. ($1 = 0.7531 euros) ($1 = 6.1289 Chinese yuan) (Additional reporting by Michael Martina in Beijing; Editing by Christian Plumb and David Holmes)
Job opportunities in China at lowest level since 2010
August 8th, 2013Employers in China are decreasing their expected hiring, shows a recent report by the recruitment firm Hudson. They estimate an index, measured through interviews with employers, that tracks the expected hiring for the next quarter.
The figures for the third quarter of 2013 are reported as the lowest since the beginning of 2010.
Fewer jobs and more applicants
Bi Lin, joint general manager for Hudson in Shanghai explains the reasons he sees for such a reduction. In an interview with China Daily he says, “The government’s support of quality growth has resulted in a slower rate of growth, as many organizations are focusing on achieving internal efficiency and productivity gains in the first instance rather than adding headcount.” Of the 816 companies interviewed by Hudson, 13.2% said they would reduce their headcount in the next quarter. This is a 6.2% rise over the previous quarter.
The problem for job applicants is twofold. Along with the predictions from Hudson of declining recruitment, there are also a rising number of applicants for positions. This is blamed on several factors, including the closing of a number of export-focused companies amidst economic difficulties globally, and also an increase in the number of Chinese currently overseas returning to China due to the same economic difficulties.
Differences across the sectors
The hiring and job situation is quite mixed amongst the different sectors of the market. The Hudson report identifies stronger hiring intentions for highly qualified and specialized workers, in particular those in research and development, chemicals, healthcare, laboratory roles, and digital marketing.
The property and construction sector is seen as the industry with the most opportunity, with strong growth in hiring. This is due to the continued strength of commercial and retail property, with a strong domestic demand unaffected by overseas economic difficulties or tightening regulations for overseas capital in China.
Healthcare, too, has strong potential. 71.2% of respondents in this sector indicated increased hiring intentions for the next quarter. Bi explained that this is due to the upcoming plans of a number of global pharmaceutical companies currently establishing research and development centers in China increasing their demand for employees.
Specialized newsrooms abuzz on WeChat
August 7th, 2013Social media cater to public demand for concise, customized information
Lu Jiuping starts working at 4 am every day, but the retired 50-year-old businessman has never made a cent from his current occupation.
He starts his day by reading several financial websites, picking out valuable bits of business or IT news.
Not satisfied to digest the information alone, he posts these news items on "Tearoom 90", an official account he registered on WeChat, a popular mobile social networking platform developed by Chinese IT giant Tencent.
Since it was set up in February, Lu's free subscriber service has attracted a readership of more than 14,000, quickly turning it from a "tearoom" to a "newsroom", much to the delight of the amateur media strategist.
"I am working as the chief editor of an e-magazine," Lu said.
The Official Account is one built-in WeChat function that offers broadcast messaging. Operators of each account can share anything in any format with their subscribers and receive instant feedback.
According to Tencent's website, the platform was originally created for big brands, such as airlines, banks and celebrities, but it has unexpectedly struck a chord with the public and citizen reporters, like Lu, who are taking advantage of the platform to develop specialized storytelling styles.
In the past few years, Sina Weibo, China's most popular Twitter-like service, has exploded in popularity. Millions of Weibo users use the service to speak their mind.
Platforms such as Sina Weibo and WeChat are changing the way media work, with netizens now discovering and discussing social events online.
However, spam and misinformation have grabbed onto the coattails of the service, and people are getting tired of irrelevant or boring micro blogs that pop up on their screens all day.
Lyu Xin, dean of the New Media Department of Animation and Digital Arts School at Communication University of China, described this as the "parabola" of social media development.
He said that the rise of micro-blogging inspired people from all walks of life to voice their opinions on social issues, breaking down traditional media's long-held domination over the spread of information and speeding up information transmission.
As they become increasingly immersed in social media, however, users find that it gets "boring" to sift through massive amounts of irrelevant information to find news that interests them. Instead, they prefer to spend their time perusing concise and well-organized information delivered to them directly.
"The parabola has reached its peak, and it will go down," said Lyu, "but people's demand for social media will go up."
The professor attributed the popularity of WeChat to the platform's ability to push content that meets public demand.
"In the social media age, no dish suits all tastes. People need more information to serve their personal interests. The Official Account on WeChat provides a venue for both institutions and individuals to publish their personal information," one blogger wrote.
Lu's case helps to illustrate that point.
He describes his "Tearoom 90" as a professional business magazine. "My target customers are industry insiders, and those gossip girls or boys have little interest in following."
The customized information helps to attract people with shared interests to subscribe, but subscriber-only content, which only subscribers can read or comment on, could be used to broadcast false information.
Many national newspapers, magazines and websites have also landed in the platform.
In April, China Central Television, a State-owned broadcaster, launched its official WeChat account "CCTV News" to spread news reports and photos, as well as receive reader comments.
Government departments have also opened accounts for hearing opinions from the public. According to a report released in May by Tsinghua University, the number of government accounts on WeChat has reached 1,000 across China.
Spending linked to social security
August 6th, 2013Many people were surprised to find that China's average individual savings had reached 77,623 yuan ($12,645). But no matter how high or low the figure is, Chinese people are not likely to exchange happiness for consumption, says an article in Beijing Morning Post. Excerpts:
The announcement of the national average individual savings data could be demoralizing for people who don't have that sort of savings. In fact, many netizens have made fun of the latest savings data by saying that they will try to catch up with the national average by surviving without food and drinks.
The average savings rate may not mean much in times of wide differences in consumption, financing, investment and earnings, especially when depositing money in banks has become the least lucrative means of wealth management.
As a country that tops the global savings rate, China has a huge number of people who are reluctant to spend more and thus boost domestic consumption to help the country's economic growth. If savings is only about mere accumulation of money in banks, wealth management will not help national economic development.
Chinese people will really feel happy when they have enough in bank deposits even after spending more than usual, which means they should have enough cash in hand or bank to deal with emergencies, such as paying for housing, medical care and their children's education.
Therefore, only if the government increases its input in social security will Chinese people spend more instead of depositing their money in banks.
Jobless graduates may exceed 3 million
August 6th, 2013Over 3 million graduates in China are struggling to find jobs this year, according to a report on China's social security, released on Sunday.
With nearly 7 million graduates this year, and adding on the unemployed students from previous years, the number of graduates struggling to find jobs before leaving school is estimated to have reached over 3 million, said Wang Yujun, from the Ministry of Human Resources and Social Security, at a press conference for the "2012 China Social Security Reform and Development Report".
The report also said that delayed retirement is not a viable option at present, as the current conditions are insufficient.
The job market is unable to fulfill the demands of job hunters, with 30 percent of new job vacancies coming from the retired, according to Professor Deng Dasong of Wuhan University.
In China, calls are being made to delay the retirement age from 60 to 65, as the aging population continues to grow rapidly.
Plight of Chinese hawkers highlights impact of downturn
August 5th, 2013Every year the scorching Chinese summer brings throngs of unlicensed vendors out on to the streets, hawking everything from pirated DVDs to watermelons.
Given their lowly and illegal status they are often treated poorly by the authorities, but this year has been particularly bloody for this army of mobile shopkeepers.
Two weeks ago, Deng Zhengjia, a 56-year-old watermelon vendor, was killed and his wife knocked unconscious after they were attacked by the local “chengguan” – an auxiliary police force tasked with keeping city streets clean and orderly.
Since then there have been a dozen similar incidents reported across China in which “melon-peasants” (as they are referred to in Chinese), street hawkers, journalists and even police officers have been beaten up by locally-employed chengguan.
Chengguan brutality is not new, but experts say rising unemployment, particularly in the low-end export-orientated manufacturing sector, is driving up the number of vendors and prompting many more confrontations on the streets.
“The economic downturn has caused an increase in the unemployed and low-income populations and they have to return to the labour market which inevitably increases the conflict between chengguan and street vendors,” says Qiu Jianxin, an expert on the chengguan at Nanjing Aeronautics and Astronautics University.
Official Chinese unemployment data are virtually meaningless as they do not count the country’s hundreds of millions of migrant workers. According to a government manufacturing sector survey published on Thursday, however, employment in the sector has contracted for 13 months. A separate survey published by HSBC showed that the number of workers in the manufacturing sector shrank in July at its fastest pace since March 2009, with expectations of further job cuts.
The government has said 7.25m jobs were created in the first half of the year. But another survey from the Ministry of Human Resources and Social Security found that the number of new urban jobs fell by 5.7 per cent in the second quarter from the same period a year earlier.
“The employment situation is weakening in China,” says Zhu Haibin, chief China economist for JPMorgan. “The service sector is creating some jobs to hold up the overall labour market conditions but low-skilled manufacturing employment is particularly weak.”
A researcher at a government think-tank, who asked for anonymity, estimated that in some export-orientated manufacturing zones in south China one-third of migrant workers were still employed in factories, another third had switched to employment in the services sector while the final third had returned home to the countryside.
This balancing effect means China has not yet seen widespread net lay-offs despite three years of steadily slowing growth – from almost 12 per cent expansion in early 2010 to 7.5 per cent growth in the second quarter this year.
Without the pressure of massive unemployment the government has been unwilling to launch a major stimulus package to boost the economy as it did in late 2008 in the face of the global financial crisis. But the overall employment figures disguise the shifts that are occurring in the labour market and the potential dangers for China’s stability-obsessed government.
As news of Deng’s death in central China spread on social media, it caused outrage throughout the nation that was even expressed in official media outlets.
Local government officials in charge of the chengguan initially claimed he had “suddenly fallen to the ground and died”. But Beijing soon ordered the arrest of the officers involved and arranged for his family to receive a large payout.
“The government paid off the family quickly to shut them up because they are very worried this incident could spark wider protest or some sort of popular movement,” says Yang Jisheng, deputy editor at the reformist magazine Yanhuang Chunqiu.
Apart from there being fewer available jobs in the manufacturing sector there is also a mismatch between the jobs available and the skills and ambitions of those entering the workforce.
“There are studies that show a connection between unemployment and the number of street vendors in China,” says Ye Tan, a popular columnist who has written extensively about the chengguan. “But for many vendors the problem is not that they can’t find a job, but that they are unwilling to work long hours in high-risk manufacturing jobs.”
Because street vending is the main source of income for many of these migrants, the stakes are high when they are caught by chengguan, who regularly confiscate all of their wares and income. The chengguan often ask for protection money from vendors and regularly conduct street raids that can sometimes turn violent.
Just one day after Deng was killed, another melon vendor in northeast China was beaten up by chengguan in his city, in an incident that was captured on camera phones by witnesses. The footage was replayed by a regional state-controlled TV station whose journalists were themselves attacked by chengguan on camera when they went to the chengguan’s offices to check the facts of the case.
A week later, a police officer was reportedly beaten and had his pistol grabbed by a group of chengguan in western China after he was called to an incident in which the chengguan were attacking people.
China’s high employment levels: adapting their workforce to a fast-changing market
August 5th, 2013China’s quickly evolving job market is booming and the results of Antal’s 2013 Q2 employment survey on various companies reflect an intent on increasing work efficiency and discovering fresh talent.
In the latest ‘Global Snapshot’ survey, 10,000 organisations in Europe, Africa, India, China and the USA were asked whether they were currently hiring or firing at professional and managerial level.
The survey then went on to identify if businesses planned to do so in the coming quarter.
The results for China were very positive, with a massive 75 per cent of Chinese employers recruiting or replacing staff at senior levels this quarter and 74 per cent planning to hire next quarter, in stark contrast to only 54 per cent expecting to hire in the Q1 edition of the survey.
This demonstrates a significant increase in hiring confidence for replacement and growth positions, as employers clearly defined their intentions and goals for the year.
However, with such an active recruitment market, there was also an increase in the number of companies firing employees.
Consistently high recruitment growth combined with increased labour costs has made employee performance as important as ever, and subsequently replacement recruitment is increasing.
During this quarter, the number of businesses firing staff rose from 14 per cent to 26 per cent, and the numbers are expected to continue increasing over the next three months.
On average, they remain 5 per cent higher than that of APAC. However, this should only be considered in tandem with similarly high hiring levels.
According to James Darlington, head of Asia at Antal International, “there is an increase in cautiousness among job seekers and employers which, together with a changing economy and the necessity for more adapted profiles, explains high recruitment and lay-off rates.”
In a globally stabilised job market, employers prefer higher quality talent, rather than higher quantities.
Furthermore, in many multinational corporations (MNCs), the repatriation of foreigners holding management positions is a significant phenomenon, and many businesses have not found local replacements yet, meaning employee quality is of the utmost importance.
Notably, some industries are booming, while others are lagging behind. The nationwide salary increase over the last two years has led to higher disposable incomes, with the performance of consumer-led sectors having benefited the most.
According to the survey, this quarter’s hiring champions were as follows: the automotive industry (92 per cent), retail & luxury goods (91 per cent), and health care (88 per cent).
Interestingly, the health care industry plans to fire 27 per cent of its employees this quarter, followed by the automotive industry (20 per cent) and luxury goods (8 per cent).
Clearly, specialists in these fields are highly sought after in the country. Demand in these areas is expected to remain high, with sales and marketing, IT and accounting, and R&D being the most demanded positions.
The automotive and aerospace industry “needs specific technical profiles who are bilingual in English” as well as “[a] high level [of] experienced sales talent, professionals with innovative views of the market and marketing experts with challenging and international vision”.
In the luxury good industry, “employers attach great importance to English skills compared to other professional skills” as many youth brands are booming in Beijing and Shanghai.
Due to a growing economy and “more products [are] produced to satisfy people’s daily lives”, the health care industry is “hiring more staff to support business expansion and the influx of foreign companies [into] China.”
As disposable income continues to rise, it is natural for auto and retail industries to continue performing strongly.
This, combined with persistent stagnancy in European markets, means that the major players in these industries will continue focusing their attention on China, thus leading to potentially increased hiring.
The survey reflects accurately what we see and hear from our clients on a daily basis. The talent war in China is continuing to heat up, with many companies prepared to break budgets or head count freezes to hire top level talent.
However, as the market gains in maturity, both employers and candidates are expected to put more emphasis on training and development rather than salary when negotiating a package.
As the world’s second largest economy and a quickly developing labour market, China is now hiring fewer, but “better” people, with HR managers having a clearer vision of their demands for this year and higher expectations on the talents that will drive their business into this challenging but formidable market.
HR company highlights top employers
August 2nd, 2013More than 150 government officials and representatives of the business community gathered in Beijing on Friday for the 11th ChinaHR Best Employers Award Ceremony.
The event was organized by ChinaHR.com, a leading Chinese recruitment website, with the aim of highlighting the 50 most popular employers in China, based on a recent survey conducted by the company.
According to the survey results, the five most popular employers are China Mobile Communication Company Ltd, Bank of China Ltd, Baidu Inc, Lenovo Group Ltd and Microsoft China Co Ltd.
The survey polled more than 100,000 employees and university students looking for work, and asked people to identify their preferred employer, industry and location, and whether they preferred private or public sector employers. Specific rankings in 16 industries, including hotels and restaurants, construction, education and culture, were also given.
The list of 50 most popular companies reflected preferences for jobs in finance, the Internet, real estate, communications, and energy and chemical resources.
About 30 percent of the companies on the list are in finance and the Internet. The financial sector is seen as being well paid, while Web-based companies are seen as developing steadily and providing a good service to customers.
In a break with previous years, 30 percent of the top 50 employers are State-owned enterprises. More than half of the surveyed university students would prefer to work in government departments, institutions and State-owned enterprises because these jobs are considered more stable.
Among university students hunting for a job, 15 percent are aiming to work in Beijing, with 5.1 percent preferring Shanghai and 1.7 percent targeting Guangzhou. The percentage of university students willing to work in the three cities is less than in 2012, but Beijing is still the most appealing of all locations.
"The survey is a perfect platform for job-seekers and employers to find excellent employers and to present the strength and culture of the enterprises. Therefore, there will be perfect matches between the two parties," says Ciaran Lally, CEO of ChinaHR.com.
"It's incredible how China's economy had continued to grow in the past few years. Online recruitment in China is promising, so we see huge opportunities in China," says Leslie Buckley, chairman of Dublin-based Saongroup, which acquired ChinaHR.com in February.
Lally points out that micro blogs are a very useful tool in recruitment because job seekers and employers can exchange information in a meaningful way.
"Online is becoming more and more dominant as a way to search for and find a job in the world. In recent years, as there are so many jobs online, we moved from the phase of searching for a job to trying to find the right job. ChinaHR allows the companies to use our technology to make the right decision," Lally says.
Employment outlook weak
August 1st, 2013Job supply falls as gdp growth slows, say experts
Chinese employers' hiring intentions will weaken in the second half of 2013 but the employment rate is not a problem yet in China, human resources agencies say.
"China's net employment outlook slipped to its weakest level since the first quarter of 2010 after employer hiring plans fell in all industry sectors and all regions," Manpower Group, a global workforce provider, says in its employment outlook survey for the third quarter of 2013.
The firm uses its net employment outlook to describe employers' hiring intentions.
The Chinese mainland's net employment outlook is 12 percent in the third quarter of 2013, declining by 5 percentage points compared with the same period of 2012, Manpower says in its report.
Statistics from the survey show that 14 percent of the employers expect to increase payrolls in the third quarter, 2 percent anticipate a decrease and 45 percent forecast no change.
Zhaopin.com, one of China's largest providers of human resource services, says recruitment growth in the first half of 2013 was 20 percent, falling by 6 percentage points compared with 2012.
The job supply is related to the country's gross domestic product growth, so as China's GDP growth slows down, so does employment, experts says.
Some institutions have different opinions on China's GDP growth in the second half of the year. Nomura Securities, the most pessimistic, forecast a 30 percent possibility that China's GDP growth will fall below 7 percent in the second half of the year.
However, China's employment market is still steady because the workforce supply is declining alongside falling demand.
"China's employment market will be steady in the short term because China's working-age population is also reducing," says Du Yang, a professor with the institute of population and labor economics at China Academy of Social Sciences.
Statistics from the National Bureau of Statistics show the working-age population in the mainland fell by 3.45 million in 2012 compared with the end of 2011.
There is a risk that if economic growth keeps slowing down, the human resource costs will rise and then the labor-intensive enterprises will be under heavy pressure running their businesses, Du says, adding it will lead to job cuts.
Economic transition is a fundamental solution to making sure new technology-intensive and capital-intensive enterprises will offer job opportunities after labor-intensive businesses are eliminated.
This year's graduate employment is a result of unrealized economic transition, Du says.
College graduates with higher technology skills can meet the demand to improve productivity but there are not enough jobs for them because labor-intensive enterprises still account for the main part of the economy, he says.
On the other hand, the employment in different industries reveals contrasting situations.
"The real economy reflects obviously whether the economic development is healthy, which means secondary industry is affected most by macroeconomic growth," says Hao Jian, chief consultant at Zhaopin.com.
Manpower's report also shows that hiring intentions will weaken in the finance, insurance and real estate sectors with a 20 percentage point decline year-on-year in the third quarter of 2013. Mining and construction sectors will suffer an 11 percentage point year-on-year fall.
"Much of the (employment) weakness stems from considerable declines in China's finance and construction sectors," Manpower says in its report.
Recruitment in the telecommunication, consulting and information technology sectors will increase slowly this year compared with 2012, Hao says.
Tertiary industry will contribute more to the employment market. Urbanization is good news for job opportunities in tertiary industries.
Job growth in healthcare, retailing and luxury goods sectors will keep going up, Hao says, although these are not main sectors in the employment market traditionally.
Some human resources management companies have moved their businesses to the rising industries.
"Antal has conducted business in the consumer goods and service-related sector since two years ago," says James Darlington, head of Asia at Antal International, a United Kingdom recruitment and training consultancy.
He says it is easier for the consumer-related industries to cover the rising cost of human resources in China.
Employment in the third quarter will remain very strong in the sectors, Darlington says. July could be the firm's best month this year in terms of recruitment numbers.
The fourth quarter may have some seasonal slowdown but the majority of its clients in consumer-related industries are still very optimistic about the job market, he adds.
Top foreign brands in China revealed
August 1st, 2013BEIJING: Major global companies are increasingly heading to China in a bid to boost sales among the nation's burgeoning middle class, with growth remaining sluggish in Europe and North America.
Market research company Millward Brown identified the top 20 foreign brands in China for a BBC report, and the UK broadcaster has analysed why they have been success stories.
Millward Brown found that 13 of the top 20 brands are from the US, two each from Germany and France, one from Italy, one was the Anglo-Dutch consumer giant Unilever, while the South Korean electronics firm Samsung was the only Asian brand to make the list.
KFC, the US food group, topped the list, followed by Procter & Gamble's Pampers babywear brand and Colgate Palmolive's Colgate toothpaste, while Apple was the leading technology brand at No6.
Unilever's Omo laundry product and French retailer Carrefour were the only non-US entrants in the top ten, at eight and 10 respectively.
Millward Brown's study found that opportunities for foreign companies are rising rapidly in China, as consumers move away from purchasing by price and trust in Chinese brands rapidly falls away.
For McDonalds, the US drinks giant, the key to Chinese success is to “work with changing social attitudes and continuous aspirational trade-ups,” while Unilever carried out extensive consumer research before entering the market with Omo.
The opportunities for successful companies are immense, with KFC planning to add another 700 outlets to its estate of 4,400 restaurants in 850 cities this year, while McDonald's is opening 10 new restaurants a week and Coca-Cola is to invest $4bn to expand, the BBC reported.
Outside the food and drink market Apple is to double its outlets in China, while Volkswagen, the German carmaker has seven new production plants in preparation to cater for its biggest market, with China representing a third of all its sales.
Understanding micro-markets is also important, and L'Oreal and Samsung told the BBC that they tailor their approach to different regions of China.
All the companies said that the key to their success is to recruit local talent and engage in joint ventures with local parties to better understand the consumer.
Chinese Game Developer Quits Job, Sells Street Food, Doubles His Salary
July 31st, 2013With the potential to make a lot of money as a developer, especially since it is pretty easy these days to create your own app for mobile devices, we’re sure that there are many kids out there whose dream is to one day become a developer of software and games. However in China it is a different story as developers are typically referred to as “Ma Nong”, or number crunchers if you’d rather, since their job involves very long hours and apparently very little pay. Interestingly it seems that over in China, one developer has had enough of the long hours and bad pay, and when he quit his job, he decided at the urging of his girlfriend to start selling street food known as “shaobing”, a type of flatbread.
While it was a means to an end, it turned out that his endeavor proved to be more profitable than he had imagined and according to a report on Tencent, the developer (or ex-developer) now pulls in about $3,259 a month, which is reportedly double that of what he used to make as a developer! Of course $3,259 might not seem like a lot of money stateside, but over in China it is a pretty big deal. This by no means reflects the type of pay that all developers receive, since some employers can be fair while others can be quite stingy, it is an interesting twist on things.
GlaxoSmithKline admits some staff in China involved in bribery
July 31st, 2013GlaxoSmithKline has admitted that some of its senior Chinese executives broke the law in a £320m cash and sexual favours bribery scandal.
Abbas Hussain, the drug maker's head of emerging markets who was dispatched to Shanghai to oversee the crisis, apologised to the Chinese authorities and promised the company was taking the charges "extremely seriously".
"Certain senior executives of GSK China who know our systems well appear to have acted outside of our processes and controls which breaches Chinese law," Hussain, the brother of England cricketer Nasser Hussain, said on Monday. "We have zero tolerance for any behaviour of this nature."
Hussain's apology and admission comes a month after Britain's biggest drug company said a four-month internal investigation had found "no evidence of corruption or bribery in our China business".
The Chinese public security ministry welcomed Hussain's apology and issued a fresh statement saying GSK's executives "violated China's laws and damaged markets by engaging in bribery to raise drug prices, expand sales and reap inappropriate profits".
Andrew Witty, GSK's chief executive, who was paid £3.9m last year, will repeat the apology on Wednesday when the company announces its half-year results.
The Chinese authorities have arrested four senior Chinese GSK executives as part of the investigation into claims that doctors were bribed with cash and sexual favours in return for prescribing GSK's drugs.
One of the arrested executives has confessed to the allegations on Chinese state television from what appeared to be his detention cell.
GSK China's British finance director, Steve Nechelput, has been prevented from leaving the country. The leading Chinese investigator has raised questions over why Mark Reilly, the UK head of GSK's Chinese operations, left China for Britain just before the charges were announced and has not returned. GSK said Reilly is not scheduled to return to China.
Chinese police have also detained Peter Humphrey, a British private investigator who has worked with GSK in the past. Humphrey, founder and managing director of risk advisory and investigations firm ChinaWhys, was arrested in Shanghai on 10 July.
The ChinaWhys website boasts: "Combining detective skills with our understanding of business operations and financial management, we assist multinationals to prevent, detect or investigate fraud, employee corruption or other white-collar crime to protect their bottom line, reputation and regulatory integrity, as well as providing support for dispute resolution and other business crises."
GSK has a long history of problems in China, and conducts up to 20 internal audits in the country every year. Last year more than a sixth of the 312 staff it sacked worldwide for breaching policy violations were in China. China accounts for just 3% of GSK's £27bn annual sales.
A GSK spokesman said Humphrey was "never a GSK employee", but refused to say whether or not it had contracted Humphrey, who has previously worked for corporate investigations firm Kroll.
The Foreign and Commonwealth Office (FCO) said it was aware of Humphrey's arrest and said diplomats are providing consular assistance to the family.
Hussein said GSK shared the Chinese authorities' desire to "root out corruption wherever it exists" and said the company would "take all necessary actions required as this investigation progresses". GSK is also regularly briefing the Serious Fraud Office (SFO) in London.
GSK also promised to radically change its business model and pass on the savings to Chinese consumers by reducing drug prices. One of the arrested GSK executives, Hong Liang, told Chinese state TV last week that bribes paid to doctors and officials pushed up the prices Chinese patients pay for GSK drugs by as much as 30%.
The Chinese investigation appears to have widened to other western pharmaceutical companies. AstraZeneca said [on Mondayits Shanghai office was raided by police and one employee was detained for questioning. Belgian drug company UCB has also been visited by the police.
GSK last year paid a $3bn (£1.9bn) fine in the US to settle claims that it tricked and bribed doctors into prescribing dangerous antidepressants to children.
GlaxoSmithKline's China network caught in massive bribery scandal
July 30th, 2013Hong Kong (CNN) -- An investigation by Chinese authorities into the activities of GlaxoSmithKline has allegedly turned up a bribery network that involves government officials, doctors, hospitals and at least 700 travel agencies.
The U.K.-based GlaxoSmithKline, one of the world's largest vaccine makers, is now attempting to distance itself from its China arm -- which has been accused of using hundreds of millions of dollars in bribes to encourage the use of GSK products and artificially boost prices.
As Chinese authorities and GlaxoSmithKline reveal new information, here is an overview of the probe, the parties involved and the potential penalties.
What is GlaxoSmithKline?
Pharmaceutical giant accused of bribery GlaxoSmithKline probe could widen Pharmaceutical giant accused of bribery
GlaxoSmithKline, headquartered in London, is one of the largest pharmaceutical companies in the world. The firm is known for its wide range of over-the-counter and prescription medicines and vaccines including its popular anti-depressant Paxil and diabetes drug Avandia.
GSK, as the company is also known, says it employs some 97,000 people in more than 100 countries.
In the last fiscal year, GSK reported more than $11.5 billion in pre-tax profits and ranked #231 on the Fortune Global 500.
What are the accusations?
On July 11, China's national police agency accused GlaxoSmithKline of bribing government and medical officials in some of China's biggest cities -- including the country's financial hub of Shanghai and Hunan's provincial capital Changsha -- to encourage the use of GSK medicines and to push prices higher.
The bribes totaled nearly half a billion dollars, according to media reports.
On July 22, GSK executive Abbas Hussain admitted that some of the company's senior executives in China appeared to have violated the law. Hussain, the company's president of Europe, Japan, emerging markets and Asia-Pacific, had been dispatched to China to contain fallout from the alleged scandal.
On July 24, China's state media reported that 39 hospital workers were being punished for taking more than $450,000 in kickbacks from pharmaceutical firms over a three-year period.
Nine of the doctors involved had been suspended or had their licenses revoked, and a case involving a trade union official was referred to the judicial system.
Who has been caught up in the scandal?
Chinese authorities have barred GSK China's Vice President for Finance, British national Steve Nechelput, from leaving the country since late June. At least four Chinese executives have also been detained.
Chinese state media have identified these executives as Vice-President of GSK China's investment company Liang Hong, Vice-President and human resources director Zhang Guowei, GSK China's legal affairs director Zhao Hongyan and the company's business development manager Huang Hong.
Chinese state television also broadcast an apparent confession by Liang Hong. It is unclear whether his statement was made under force or duress.
Liang explained how conferences were faked in order for travel agencies to create receipts for services never performed. Funds were then used to pay off bribes encouraging the use of GSK products.
How have drug prices been affected in China?
In Liang Hong's alleged confession aired on Chinese state television, the executive explained that the bribes could have encouraged corrupt government and medical officials to raise prices 20-30%.
Liang added the cost for medication would be substantially inflated by the time it reached patients.
How important is China to GSK?
In the company's just-released second quarter earnings statement, GSK revealed net losses in Europe and Japan, with flat turnover in the United States in the first half of the year.
The only regional growth occurred in emerging markets and the Asia Pacific -- of which China is core.
As China's investigation into GSK expands, the firm's profits from the crucial emerging growth market are expected to take a hit.
"Clearly, we are likely to see some impact to our performance in China as a result of the current investigation," said GSK CEO Sir Andrew Witty, "but it is too early to quantify the extent of this."
Sine the bribery allegations first surfaced, GSK's share price has slumped 3.5% in London and 2.4% on the New York Stock Exchange.
What are the penalties if GSK is found guilty?
China's investigation could expose the company to legal action in the U.K., and possibly the United States, under laws relating to the bribery of foreign public officials.
GlaxoSmithKline says it has informed the U.K.'s Serious Fraud Office about the bribery allegations but had not yet been asked to provide any further information. The agency, which investigates and prosecutes corruption cases, said last week that it could neither confirm nor deny an interest in the claims against GSK at this stage.
Chinese airline targets ‘Flight Aunties’ in recruitment drive
July 30th, 2013It seems that not only young and beautiful girls can make it into the competitive world of flight attending in China after all.
A recent move by Shanghai-based Spring Air, China’s biggest budget carrier, will give preference to hiring married women with kids, according to a Wall Street Journal report.
I think it’s good that the airline is doing this. It helps the dynamics of the crew because the older ones have more life experience, making them more mature and reliable, whereas the younger ones are more enthusiastic
These unusual conditions to hire what the airline terms ‘flight aunties’ points towards an attempt to diversify the profile of its 600-strong flight attendant workforce.
The public relations value of ‘flight aunties’ is significant, considering its departure from the airline’s controversial move earlier this year, when it dressed its flight attendants in coquettish maid uniforms.
It also goes against the greater trend amongst big Chinese state-owned carriers, which have hosted pageant-style competitions to choose new flight attendants.
Spring Air said that it is seeking college-educated females aged between 25 and 45, adding that those married with children are given top consideration. The previous age cap for new hires was 35.
Its decision follows the results of a recent survey on Weibo indicating that “72 per cent of internet users polled prefer to be served by experienced flight attendants.”
Wang Yan, a 36-year-old air hostess at Spring Air, is amongst the first batch of ‘flight aunties’ hired by Spring Air.
“I think it’s good that the airline is doing this,” she said. “It helps the dynamics of the crew because the older ones have more life experience, making them more mature and reliable, whereas the younger ones are more enthusiastic.”
The flight attending profession is considered prestigious, with thousands competing for coveted spots despite poor treatment, low pay, and gruelling conditions.
At Beijing Job Fair, China's Millennials Fret About Their Future
July 29th, 2013Beads of sweat roll down Yang’s face as he nervously fingers the stack of résumés in his hand. On a Sunday morning in mid-July, he and several hundred other recent college graduates—plus a smattering of anxious parents—swarm recruitment stands inside Beijing Worker’s Gymnasium at one of several mid-summer job fairs in China’s capital; the air feels hotter and muggier inside than out.
Yang, who gave only his family name, strolls quickly past white stalls for insurance companies, real estate firms, and the Beijing Auspicious Culture Communications Co. Posters outside each one describe the basic requirements for telemarketers, HR managers, and event planners, but Yang isn’t interested. He graduated from Beijing Technology and Business University this spring with a degree in international business, and still hopes to find a job with a multinational company in that field. He estimates half his peers from the Class of 2013 are still seeking employment—all well aware that China’s state media have already repeatedly dubbed this year the “hardest job-hunting season for college graduates.”
Over the past decade China’s government has pushed for rapid expansion of higher education; the country’s leaders aim to upgrade the labor force and tilt the economy away from low-wage manufacturing. This year, 6.99 million students graduated from universities in China, up 190,000 from last year. There are nearly four times as many graduates in 2013 as there were 10 years ago. But the demand for young professionals in China hasn’t risen nearly as quickly. One government study from last winter indicated that the unemployment rate among 21- to 25-year-old college graduates was 16 percent, four times the official urban unemployment rate.
This spring, China’s economy slowed to an apparent 20-year low; GDP growth in the second quarter slipped to an estimated 7.5 percent. Hiring seems to have slackened as well. The Ministry of Education surveyed 500 large Chinese firms in February about their recruitment plans. The ministry estimates that 15 percent fewer positions will be offered to new graduates this year than last, as Xinhua reported.
Ms. Cai, a wiry woman in her 50s wearing a prim green blouse and brown dress pants, also strolls around Sunday’s job fair—unbeknownst to her daughter, a recent graduate in finance. But Cai feels compelled to help, or try to help, her only child’s prospects, to the bemusement of some recruiters. She is busy collecting pamphlets at one stall when gray-haired Mr. Zhang walks by; he is a father making the rounds, with his son’s résumés in hand.
Yang, the international business major, says he is hoping for a starting monthly salary of 3,000 renminbi ($487). Another job-seeker, who studied software, said 2,500 renminbi ($405) would be OK. That figure is comparable to the average monthly wage of migrant factory workers, which the government-led All-China Federation of Trade Unions calculates as 2,290 renminbi ($372) in 2012. The low salary expectations are also indicative of how an apparent oversupply of college graduates in China has torpedoed their value in the marketplace.
Even with job fairs packed, it’s still common to hear recruiters in China complain they can’t find suitable candidates. Mr. Gao, a bespectacled recruiter for a high-end clothing distributor, stands beside a poster of the company’s founder shaking hands with President Xi Jinping. (Judging from the waistline, it appears to be a much younger Xi.) Gao is looking for sales reps and has collected dozens of résumés in a few hours, but he laments the caliber and attitude of applicants. The most essential factor in the hiring process is not the student’s major, but his or her “capacity”—or willingness to work hard and learn new skills. “China has many talented people, but it is hard to find persistent ones,” he says.
A frequent refrain among recruiters is that China’s educational system ingrains rote memorization, not problem solving, which creates better test-takers than office workers. In a 2013 survey (PDF) of American businesses operating in China, respondents told the American Chamber of Commerce in Shanghai that the “shortage of qualified employees” and “shortage of qualified managers” ranked as their third and fourth greatest concerns, respectively (following only worries about rising labor costs and a Chinese economic slowdown).
One booth at the Beijing job fair is advertising positions for translators and logistics managers in Africa; right now it isn’t drawing a crowd. However, Ms. Pan, a petite recruiter fanning herself with a brochure featuring a map of Africa, isn’t too worried. “Each year most of our recruits come in the late summer and fall,” she says, “after graduates get very desperate and feel they have no more options.”
China Rongsheng shares suspended after job loss reports
July 5th, 2013Trading in shares of China Rongsheng Heavy Industries Group Holdings Ltd (1101.HK), China's largest private shipbuilder, was suspended on Thursday in the wake of media reports that said it had laid off 8,000 workers in recent months.
The company, suffering from a downturn in the global shipping industry as well as China's own economic slowdown, said it had sought the suspension pending clarification of the news articles, according to a filing to the Hong Kong stock exchange.
No further details were available and China Rongsheng declined to comment, but analysts said the company's balance sheet was under pressure. On Wednesday, its shares closed down 10 percent at HK$1.06.
China's shipbuilding sector has struggled and consolidated since a major shipping market slump in 2008 that saw shipping orders shrivel.
Local media reports said a large number of small to mid-sized shipping firms went bankrupt during the past year due to major overcapacity in Chinese shipyards and the economic slump.
The holding orders of Chinese shipyards dropped 23 percent in the first five months of this year compared with a year earlier, according to the China Association of the National Shipbuilding Industry. New orders meanwhile dropped to a seven-year low in 2012.
"The problem is that their order-books are now running down, creating massive over-capacity," said Singapore-based Vincent Fernando, an analyst with Religare Capital.
"Moreover, Rongsheng has been suffering due to a major receivables past due problem, thus liquidity is a major concern. I think they are being forced to slash their workforce due to the extreme circumstances the company finds itself in."
The Wall Street Journal said the job cuts at China Rongsheng represented some 40 percent of the firm's workforce. The cuts sparked protests by workers earlier this week, according to media reports.
A company executive told The Wall Street Journal the layoffs were not a sign of financial distress but the result of a restructuring aimed at making more specialized vessels used in the offshore oil-and-gas industry.
China Rongsheng is a major supplier of bulk carriers that ship iron ore from producer nations such as Brazil to China. Brazil's Vale (VALE5.SA) is one of its customers.
"We expect a continuing deterioration in the balance sheet given weak overall demand growth for bulk vessels, Rongsheng's core product," Barclays analyst Jon Windham said in a report.
ECONOMIC DOWNTURN
China's economic downturn is shaping up to be the worst in at least 14 years, with growth possibly missing Beijing's 7.5 percent target this year.
And an unprecedented cash crunch in China's financial markets last month, which saw interest rates briefly spike to record highs, may further drag on the economy.
According to its December 2012 annual report, issued on March 26, China Rongsheng's cash and cash equivalents fell to 2.1 billion yuan ($342.53 million) from 6.3 billion yuan a year ago. It had borrowings of 16.26 billion yuan that were due in less than a year, said the report, the latest financial statistics available on the company's website.
In the annual report, the company said it had "significant" cash outflows since some customers had sought to delay the delivery of new vessels.
Indeed, receivables pending for more than six months rose to 83 percent from 21 percent a year ago, the annual report said.
The industry slowdown was also taking its toll on sales, with inventory turnover up to 136 days from 73 days.
"Short term debt is seven times cash resources. That to me is a liquidity red flag. Industry conditions are terrible, freight rates have been low for the past 2-3 years and ship owners are behind on payments," said a Hong Kong based analyst who declined to be identified as he is not authorized to speak to media.
China Rongsheng is the country's largest private shipbuilder by accumulated order books. It is based in eastern Jiangsu province, near Shanghai, and went public in Hong Kong in 2010.
It posted a net loss of 572.6 million yuan ($92 million) in 2012, its worst-ever, despite receiving government subsidies of 1.27 billion yuan.
WILL GOVERNMENT HELP?
The Chinese government has been trying to support the domestic shipping industry since the 2008 financial crisis, and local media reports said this week Beijing was considering policies to revive the shipbuilding business.
The shipping industry downturn cut new ship orders for Chinese builders by about half last year.
Underscoring China's employment challenge, growth in the country's vast factory sector slowed to multi-month lows in June on faltering new orders.
The official purchasing managers' index (PMI) showed a sub-index measuring employment dropped slightly to 48.7 in June from 48.8 in May. A HSBC survey showed factories shed jobs last month at the quickest pace since August.
China's Sany Heavy Industry (600031.SS) laid off more than 10,000 people in the first half of 2012, although China's overall job market has been fairly robust so far, explaining in part Beijing's ease with the country's slowing economic growth.
($1 = 6.1308 Chinese yuan)
Hong Kong restaurateurs at breaking point amid labour 'intervention'
July 3rd, 2013Government intervention in the labour market is making it hard to run a restaurant business and more regulations will only make it tougher, says one of the city's leading restaurateurs.
Simon Wong Kit-lung, executive director of the LHGroup his father founded about 40 years ago, said he supported the statutory minimum wage as it protected workers. He said some cleaners, for example, got as little as HK$5 an hour beforehand.
But further measures would not be good for business, he said.
"In the past few decades, because of the so-called 'small government, big market' vision, the government did little to influence the business environment," Wong said. "But in the last few years, I feel that this is changing.
"The government is obviously rendering changes in the business environment with its policies, such as the statutory minimum wage."
Wong's group has 10 restaurants, including The Banqueting House in Kowloon Bay's MegaBox mall, and he is managing director of the Kabushikigaisha chain of 16 Japanese restaurants.
The 39-year-old businessman is also one of the 12 members of the Minimum Wage Commission, which reviews the lowest statutory pay rate - set at HK$28 an hour in May 2011 and raised to HK$30 in May this year.
While some intervention was needed to prevent injustice in the workplace, he said, too much intervention, such as a standard working hours law and statutory paternity leave, would not be "ideal" for the city's business environment.
"In some third-world countries, some people, including young people, are forced to work 18 hours a day. A standard working hours law is needed in those cases, but not in Hong Kong," Wong said.
"And when France legislated standard working hours, it was because the unemployment rate was so high that the government wanted to split one job for two people," he added.
In the 1980s and 1990s, Wong said, new restaurants could break even in their first half-year. But now it took about three years, if it happened at all.
He quoted government figures as saying that 30 per cent of investments in Chinese restaurants barely break even, while 40 per cent have never broken even by the time the restaurants close down. That meant that only 30 per cent of people investing in Chinese restaurants could make a profit.
Making it even harder, he said, restaurant rents had doubled in the past five years while the price of ingredients had risen 50 per cent in three years.
Since the minimum wage law became effective in 2011, monthly pay for the job of pushing a dim sum trolley had risen from HK$4,000 to HK$7,000, he said.
This had caused a ripple effect, with staff who had been making well over the minimum wage also demanding a raise. Salaries for waiting staff and managers had risen 15 per cent and 10 per cent, respectively.
"And it is now very hard to hire restaurant staff," Wong added. "Some of us in the restaurant business have a WhatsApp group where we ask for help in recruitment if it is urgent. But everyone is saying they need help, too."
China begins oceanauts recruitment process
July 3rd, 2013China on Tuesday kicked off a five-month recruitment process for oceanauts to serve in its deep-diving submersible Jiaolong.
Six individuals, including two women, will be selected to train as oceanauts for Jiaolong's future missions, said a National Deep Sea Center statement.
"We have very strict physical, psychological and professional requirements for selecting oceanauts," said Liu Baohua, the center's Party chief. "The strict requirements can compare to those for astronauts."
The center is looking for male candidates aged between 22 and 35 and female candidates between 22 and 30, who should be college graduates or postgraduates having majored in engineering, electrical science and technology, or naval architecture and ocean engineering, the statement said.
There is not much room inside the submersible, which means candidates have to be of moderate height and weight, Liu explained.
Male oceanauts should be between 1.65 and 1.76 meters high while females have to be between 1.6 and 1.7 meters, according to Liu.
Candidates have to be mentally and physically stable as they will be spending several hours in darkness inside the submersible.
"People who suffer claustrophobia and seasickness are definitely not suitable," Liu said.
Besides physical requirements, oceanauts should be skilled in engineering and have an academic background of ocean sciences.
Chinese citizens can sign up for selection through the center's website, www.ndsc.org.cn.
The selection will last for five months and applicants will go through a number of tests, interviews and medical examinations in order to make the final list.
However, to be a qualified oceanaut, they will have to receive training for at least two years, Liu said.
"It will take time and hard work from being a trainee to becoming an oceanaut," he said.
So far China has only two oceanauts, both male. They took the Jiaolong to a record depth of 7,062 meters in the Pacific Ocean's Mariana Trench in June 2012.
This year, the Jiaolong completed four deep-sea dives from June 17 to 20, collecting rare creatures and mineral samples, and has entered a five-year trial operation before it goes into regular service.
Ease Employment Discrimination on College Graduates
July 2nd, 2013About 7 million students are graduating from China's colleges this year, marking the hardest job-hunting season in the country's history. However, widespread employment discrimination in the job market has made the situation even tougher for China's youth.
CRI's Zhou Jingnan finds out more.
A fresh graduate of Guangdong University of Finance surnamed Ge, complains about discrimination as employers raise their requirements based on academic background of applicants, such as their degree and alma mater.
"I attended a job fair recently. Most of the employers there told me they only recruit students graduating from about 110 top-notch universities from the country's Project 985 and 211. I was so depressed because I believe I am just as able."
Project 985 and Project 211, similar to Ivy League universities in the US, was launched by the Chinese government to promote the country's higher education. However, it has been often used by those companies hiring as a reference when it comes to recruiting.
Macroeconomic researcher Liu Xiao, from the consultancy firm Anbound analyzes the phenomena.
"The supply of job-hunters has exceeded the demand of the job market among university students in recent years. Thus, whether a graduate comes from an elite university or not, it is natural for enterprises to select potential employees from a large number of applicants."
Some experts think that the discriminatory recruitment practices infringe upon the rights and interests of ordinary college graduates. It is also believed that such discrimination might cause students to shy away from the job market and instead pursue higher education rather than attempt to promote their ability and efficiency through employment.
Liang Chen, a junior college graduate, talks about why he chose to pursue a higher degree from China University of Petroleum.
"Nowadays, it is impossible for me to find a job with a junior degree. I believe there's a larger chance of success to land a decent job with an undergraduate degree."
In order to make the job market fairer, the Ministry of Education recently issued directives banning recruitment advertisements with discriminatory requirements.
Researcher Liu Xiao suggests ways to eliminate discriminatory employment practices in the long run.
"The spontaneous regulation of the job market is the most effective way. Employers will change their prejudices against lower-educated students when they realize that degrees and gender have nothing to do with a graduate's capability and efficiency."
Liu suggests that graduates lower their expectations for the first job. Individuals are more likely to land a decent job after gaining rich work experience and becoming an expert within a certain industry.
For CRI, this is Zhou Jingnan.
China's labor force in a conundrum
July 2nd, 2013When demand exceeds supply, costs are bound to rise.
China’s economy is slumping. According to the China National Bureau of Statistics, China’s economy grew 7.7 percent during the first quarter as reported by the Wall Street Journal (April 14). This is supported by government subsidies, but much less than our Federal Reserve Bank’s bond buying.
With last year’s growth of just under 10 percent, these high continued growth rates have dramatically impacted the country’s labor force, causing the government to worry about inflation.
Giant wage increases
Jobs within the government had an 11.9 percent wage increase over 2011 — rising to yuan 46,769 ($7,543 nominal). That followed a 2011 increase of 14.4 percent over 2010. Adjusted for inflation, the percentages are 9.0 and 8.5, respectively — nearly 18 percent in just the last two years.
These wages increased 71 percent in the past four years.
Wages at privately owned companies rose even more — up 18.3 percent over 2011 (nominal). Adjusted for inflation, 2012 was up 14 percent and 2011 was up 12.3 percent.
Productivity doesn't keep up
China’s productivity, while improving every year, is insufficient to match wage escalation. During the past four years when wages increased 71 percent, productivity rose just under 36 percent.
Most countries would be pleased with an average annual productivity increase of almost 9 percent, but it doesn’t appear impressive when compared against double-sized wage increases.
While garment workers in China make less than the $7,543 average government pay, those garment workers in Bangladesh are being paid about $40 a month, according to the Wall Street Journal (May 12).
Labor is bifurcated
Unskilled Chinese workers are losing their jobs to much lower wage countries such as Bangladesh, Cambodia and Vietnam, but a shortage exists for skilled labor.
Zhaopin.com, one of the largest Chinese recruitment websites, advertised in April for 24.6 percent more jobs than a year ago (Wall Street Journal, May 16).
China suddenly finds itself between a labor rock and a hard place. They are losing unskilled jobs to the Southeast Asian countries; at the same time, they cannot find enough skilled labor.
They are paying the price of a three-decade one-child policy, which will only become more severe.
Labor in China is now a seller’s market. Samsung and Hewlett Packard report that bargaining with employers has started. Although unions are illegal in China, both companies say that workers are starting to achieve success in winning concessions (New York Times, Feb. 8).
A new strategy
It is becoming clearer that China’s economic model is unsustainable. This is resulting in two strategic changes:
1) Emphasize and increase the domestic service sector of the economy, and
2) Initiate a significant penetration of the U.S. auto market.
As is the Chinese style, they have a long-term plan which will be very slowly implemented so as to avoid resentment or rejection by American consumers.
Their strategy starts with both auto parts exporting and with the acquisition of U.S. auto parts manufactures. The New York Times (May 12) reported that last year, the Chinese quietly exported $13 billion worth of parts to the U.S.
Those exports seem like a drop in the bucket compared to the quarter-trillion dollar U.S. auto market. But, China views it as a foot in the door. China is way behind — compared to when Japan started — in exporting cars to America. Back then, the Japanese auto industry not only knew what size engines or brakes were required for a given size car, they also knew how to manufacture them. China is still learning.
President Obama has filed a formal complaint with the World Trade Organization claiming the Chinese government wrongfully subsidizes the Chinese exporters of parts.
A hidden agenda
Their actions look way beyond exports, as Chinese companies are repeatedly acquiring American parts manufacturing companies.
This is done quietly, but the practice is gaining traction to supply U.S. auto assembly plants with original equipment parts. They are using this approach to learn what is required — quality, price and delivery — in the American market.
After gaining know-how from former American-owned parts plants, you can expect to see Chinese cars being sold here within a decade.
Scamehorn is Ohio University’s executive-in-residence emeritus and former president of Diamond Power.
Stay or leave? Question for overseas students of Chinese origin
June 28th, 2013"Many of my classmates and I want to stay in China after graduation because of its fast economic development; and also because we have Chinese origins, and our 'roots' are here", Yuan Yirui, a Chinese Argentinian student from Tsinghua University told China News service.
Despite this year being labeled as "the hardest year" to find a job due to the growth of graduates and a decline in the number of job postings, Yuan still decided to stay in China after graduation. "I've got used to living here and I just cannot cut my emotional ties with China," Yuan said.
Yuan has been studying in Beijing for five years and speaks Spanish, English and Chinese.
"Most of the overseas students speak several languages. We are more competent when finding a job no matter whether it is in China or back in our own countries," Yuan said.
Unlike Yuan Yirui, Chinese Malaysian student Li Meici from Beijing University of Aeronautics and Astronautics is preparing to go back to her country.
"I was offered a part-time job in a bakery, but the company took away the offer after finding out that I'm a Malaysian," Li said.
After that, Li tried several other companies, but all of them rejected recruiting her because she is not a Chinese national.
Another Chinese Malaysian student Cai Huichuan, who studied in Peking University, experienced the same obstacle during her job hunting.
Statistics show that there were 328,330 overseas students in China in 2012. Now those who are going to graduate this year are in the same situation as the local students - facing the hardest year to get a job.
The overseas students who decide to stay in Beijing are more likely to work in foreign companies, especially the Beijing branch offices of their own countries' companies, China News Service reported.
Many companies in China are not allowed to recruit foreigners according to local regulations. Even those having qualifications may not choose to hire them for a number of reasons, given the complicated situation this year.
Foreign graduates of Chinese origin may prefer to stay in China, but they will have to face various obstacles as Li Meici and Cai Huichuan have discovered.
Post-90s Grads Confront Nepotism
June 28th, 2013Summary: With record numbers of college graduates and an economic slump, fresh college grads are beginning to favor jobs in civil service or at state-owned enterprises rather than at foreign and other private companies. But they’re finding nepotism to be a critical barrier to entry.
The majority of university students graduating this year were born in 1990 and 1991, meaning the “Post-90s Generation” is entering the real world. But this entrance hasn’t been a very welcoming one.
A record 6.99 million-strong graduating class paired with an economic slump has resulted in what’s been deemed the worst job-hunting season in history. As of the beginning of June, only 33 percent of these graduating seniors had signed employment contracts.
Many of those Post-90s graduates are still watching and waiting. In order to satisfy their families (and perhaps potential spouses) they need to find a good secure job. Surveys show that the most preferred jobs are civil servant posts or in state-owned enterprises. However, these jobs often depend more on personal connections than actual skills.
“The challenges are big for individuals relying on their own efforts to find their ideal work and life,” said Tang Jun , secretary-general of the Social Policy Research Center at the Chinese Academy of Social Sciences. “Most people don’t feel much hope.”
The Nepotism Hurdle
Chen Ming was born in 1991 in a village near Nanchong, Sichuan Province and is graduating from China Agricultural University in Beijing this year. He was recently struggling to find a job and contemplating whether to stick it out in Beijing or go back to his hometown. He failed the entrance exam for graduate school and had been rejected by several companies he applied to.
“My parents didn’t have good opportunities in their time,” Chen said. “They’re hoping for me to make a change.”
A survey by the William Mercer consulting agency shows that the number of graduates this year increased by 190,000 compared to 2012, but company recruitment has dropped. Of the companies surveyed, 45 percent have no campus recruitment plans this year, and among those who are recruiting, only 70 percent are offering as many jobs as they did last year.
Meanwhile, the scale of civil servant recruitment is expanding. The number of civil service positions was 9,763 in 2011, 10,486 in 2012 and 12,927 this year. The number of people taking the civil service exam went from about 900,000 in 2011to 1.12 million this year.
Zhao Qi, another graduating student in Beijing, doesn’t feel the same pressure Chen Ming does. His father is an official in a northeastern Chinese city. This summer Zhao plans to travel in the U.S. for a month and then continue his study in Hong Kong for a year.
One of Chen Ming’s classmates has had similarly good luck. The classmate’s father, also a government official, has secured him a job in Jiangsu at China Construction Bank. But obviously Chen’s father, who lives in a simple village, can’t provide similar assistance.
“There’s nothing to envy,” Chen said. “Destiny is controlled by our own hands.”
When he’s applying for jobs, Chen tries to choose those that require real skills and don’t rely on nepotism; like sales positions. Chen figures that even if others have guanxi (connections), they won’t go for jobs with heavy sales performance pressure.
Finally, Chen found a job with Beijing New Building Material (Group) Co., Ltd., an A-share listed company subordinate to a state-owned enterprise. The pay is about 40,000 yuan annually plus sales commission. Chen is very satisfied with the offer and is optimistic about the company’s promotion mechanism.
Is Guanxi a Skill?
Su Fan, who works for a state-owned bank in Guangzhou, has been assigned some special “interns” to work for her over the past four years. These interns have included the daughter of a public security bureau head in Xiangtan and the son of a government agency head in Zhuhai. “I wouldn't dare make them work overtime,” Su said. “If they did something wrong, I didn’t dare say anything about it.”
Su points out that the fathers of the Post-90s generation were born in the 1960s. And when those born in the 1960s came of age in the late 1970s, they ran into many great opportunities - like the reopening of the Gaokao college entrance exam and Reform & Opening Up. Those who seized the opportunities have now become society’s elite. “This means those born in the 1960s who are doing well can provide more opportunities for their children,” Su said. “On the contrary, for those born in the 1960s who aren’t doing well, their children have difficulty competing with others.”
Su got her job at the bank through open recruitment in 2007. She’s noticed that since then, people have rarely been hired this way.
University students’ employment hopes seem to be going back “within the system.” Data from ChinaHR.com showed that a year ago, 21 of the 50 employers that university students said they were most satisfied with were foreign companies. But this year, only 3 were foreign, with most of the rest being state-owned enterprises.
Young people whose parents are officials are often called guan er’dai, or “second generation officials.” When Zhao Qi, the student who will study in Hong Kong, heard people calling him this, he said, “It’s not like that,” and then after a short pause, “it’s not like my parents are ministerial-level officials or anything.”
Zhao admitted though that his parents have provided him with broader opportunities and a smoother path to success. After he finishes his study in Hong Kong, he plans to let his parents arrange a job for him in a state-owned enterprise. “Compared to places like foreign companies that rely purely on ability, I have more advantages,” he said.
Zhao says that personal effort is the most important thing while in school, but when you go out into the real society, guanxi is more important than anything. He also says it’s reasonable to get help from parents. “I have these resources, so why not use them?” he says. “Resources also reflect one’s ability.”
Tang Jun from the Social Policy Research Center disagrees. “Guanxi cannot be regarded as personal ability,” he said. “Young foreigners aren’t willing to do this, even if their parents have money, they don’t want to rely on their family.”
“Guanxi is social unfairness,” he added.
A report on China’s social mobility released by the Chinese Academy of Social Sciences in 2004 found that children of cadres were 2.1 times more likely to become cadres themselves than those whose parents weren’t officials. And a 2012 Tsinghua University survey showed that the starting salary for university graduates with officials for parents was 13 percent (about 280 yuan per month) higher than those whose parents weren’t officials.
Returning to “Inside the System”
Every year there are many fresh graduates like Chen Ming who have no guanxi but still want to get “inside the system”. However, their route tends to involve starting at entry level positions, working tirelessly and tolerating inferior treatment compared to those who inherited their position “inside the system.”
Zhou Boyu graduated four years earlier than Chen and also comes from Sichuan. He worked for a company under China National Petroleum Corporation for two years, but wasn’t ever able to become a formal employee. He resigned his job in anger and proceeded to write a long novel criticizing nepotism within the system. His novel was only circulated among his classmates, and in the end, he went to work for the district government of his hometown, thanks to the help of contacts his family had.
Chen Zhiwu, an economics professor at Yale University, says that in societies with a high proportion of the economy controlled by state-owned interests, there’s a wider wealth gap and more severe social unfairness. That’s because such a society relies more on power and connections to allocate resources.
“This is the source of our struggles and pains,” said Zhou Boyu. “If you don’t get ‘within the system’ through guanxi, then you’ll live a very bad life. But if you do enter the system you’ll find a serious conflict of values.”
Tang Jun says that in the 1990s, especially in Guangzhou, leaving a secure job in order to do business was a good choice. “Now that people see the economy slowing, the advantage of private enterprises has gradually become smaller,” he says. “The salary isn’t much higher than that of civil servants, and the job isn’t stable.”
Wang Qiu, who was born in the 1980s, said that while she was at university she always looked down on those who took the civil service exam. She had been determined to become a lawyer since she was a child and after graduating from law school she managed to become an assistant at a big law firm. However, the long working hours and low pay killed her enthusiasm. Two years later, she decided to take the civil service exam.
At a class reunion, she joked with her former classmates saying that she never thought she’d make this move. Unexpectedly, many of them had the same feeling. One of her classmates had chosen to work as a civil servant in a prison in Yibin, Sichuan rather than work for a private company in the provincial capital of Chengdu.
This year the MyCOS research institute released its 2013 employment blue book. It reported that for those who graduated from university in 2009, the work units with the highest degree of employment satisfaction were government agencies and scientific research institutions.
Fang Xiaoya was born in 1984 and now works in the human resources department of a privately-owned education institution in Guangzhou. Lately she’s gone to several cities to recruit, but has only received a few CVs. In the beginning, she didn’t understand why. “Shouldn’t Guangzhou be a popular coastal city that many people yearn for?” she wondered.
Later though, several parents of graduating seniors called her to ask if Guangzhou’s home prices were high and if the company would help subsidize the purchase of a house. Fang came to realize that the importance of a house was greater than the work itself.
The Adventurous
Wang Hongting graduated from the architecture department of South China University of Technology and rejected an offer from a state-owned enterprise. He chose instead to work at a private real estate company since the boss valued him and there was more room for promotion and development. “Perhaps the income of officials comes more quickly, but it doesn’t suit my personality and lifestyle,” Wang said.
The father of Li Yijie, a third year student at Beijing University of Posts and Telecommunications (BUPT), works at an oilfield in Dongying, Shandong Province. The oilfield offers a favorable hiring policy for children of employees, so many of Li’s old Dongying classmates chose to study at China University of Petroleum so they could be assigned good jobs after graduation. Li’s parents wanted her to go this route, but she refused. “I don’t want to go back to my hometown,” Li said. “I want to leave this place and see the world.”
Li chose to study information engineering at BUPT. Most of her department’s graduates have gone to work for China Mobile, China Telecom or China Unicom. But Li chose an unusual path. She fell in love with internet entrepreneurship and started a small website with a few classmates. It was later unexpectedly bought by an e-commerce company in Beijing. Now Li is developing products in a new company while she finishes her studies. “My parents now support me very much,” she said. “They think I’m very brave.”
Li plans to stay in Beijing after she graduates since it has a good environment for starting an online business. With her qualifications, it wouldn’t be hard to get a job for a well-known internet company like Baidu, but she has more of an inclination toward entrepreneurship. “In a newly-founded company you can do everything,” she said. “It forces you to learn. One can grow rapidly.I like this kind of situation.”
Her colleague Wang Dong has the same idea. He just graduated from BUPT and gave up a job offer from Baidu for 200,000 yuan per year so he could go to the company where Li works. He says the most important reason is that he’d be no more than a cog at Baidu, whereas at a newly founded business, he can create important technology and seriously impact the company’s development.
(At the interviewees’ request, Chen Ming, Su Fan, Zhao Qi, Wang Hongting and Wang Qiu are pseudonyms.)
Warning on college majors
June 27th, 2013University majors such as animation, law, biology, mathematics, physical education and English have been listed as the "red-card" majors - fields in which supply exceeded demand for employment in 2012, according to a report.
Graduates with these majors were found to have low incomes and a high unemployment rate. These majors made the "red-card" list each year from 2011 to 2013, according to the 2013 Chinese College Graduates' Employment Annual Report released by MyCOS, an education consulting and research institute in Beijing.
"Many parents and students taking college entrance exams know little about college majors, and they might be making blind decisions in choosing 'well-known' majors from TV serials," said Wang Boqing, who worked on the report, at a press conference.
"Also, these majors are easily set up, so that almost all Chinese colleges have them and recruit a large number of students each year. However, most of the programs are weak in quality," he said.
Wu Zhongjiang, vice-president of Nanjing Institute of Technology, agreed with Wang. "Too many colleges offer these majors and recruit too many students, but these students usually cannot meet the high demands of the market after they graduate.
"Another problem is that market demand is changing all the time, but recruitment and student cultivation lags behind and cannot catch up with the change," said Wu, who also attended the conference.
"The release of the red-card majors is a warning to parents, students and colleges that students should stop blindly flocking to these majors and colleges should consider bettering their programs or changing their curricula altogether," he added.
Besides "red-card" majors, there are also "green-card" majors, ones for which market demand is increasing and the rate of employment and incomes are correspondingly higher. These include geological engineering, oceanographic engineering, petroleum engineering and mining engineering.
However, graduates are reluctant to pursue jobs in these fields because of the harsh working conditions.
Under such circumstances, changing the attitude of college graduates is really important, said Hu Ruiwen, the former president of Shanghai Education Scientific Research Institute.
"With 10 times more students, college is no longer a place to train senior talent and elites," he said. "Parents and students should learn to lower their expectations and find suitable positions for college graduates."
The report is based on a questionnaire of 529,000 2012 college graduates from 972 majors in 31 provinces, autonomous regions and municipalities on the Chinese mainland. It is the fifth time the consulting institute has released the annual report.
According to the report, from October to April the proportion of graduates signing a contract for a job was 35 percent, 12 percentage points lower than the same period last year. The contract-signing process in 2013 is slower than that of 2012, indicating that the employment situation for graduates is tougher this year.
Scant jobs for record number of Chinese graduates
June 27th, 2013A record number of graduates will come out of China’s colleges and universities this year, but many will rue the timing of their entry onto the job market as recruitment is slowing nationally, reports news agency UPI Asia.
At 6.99m, the number of grads is up 2.8% from 2012, but UPI says that the number of jobs for new hires has decreased around 15% year-on-year. However, China continues to recruit strongly at managerial and professional level.
One problem noted is that many new graduates prefer to work in the civil services, public institutions or state-run companies, rather than in smaller and medium-sized companies, with such firms reporting difficulties attracting these grads.
There is a parallel between this and the UK, where a recent survey of British university graduates selected the NHS as graduate employer of choice, with the BBC, the Civil Service and the United Nations also featuring in the top 10.
Click for more on logistics talent shortfalls in China. - See more at: http://www.recruiter.co.uk/news/2013/06/scant-jobs-for-record-number-of-chinese-graduates/#sthash.hXoHxk1U.dpuf
Tough job market for Chinese college graduates
June 26th, 2013Having sent out more than 110 job applications but getting no more than 10 interviews, chemistry graduate Yi Feng gave up on the idea of landing a decent job. He had traveled around a number of major Chinese cities trying his luck for four months.
Yi, who graduates from Jiangxi Normal University in east China's Jiangxi province this month, decided to join the army to avoid what seems to be the country's most toughest job market in a decade. He will wait for more opportunities to become available in two or three years time.
The 22-year-old said serving in the army is very appealing, adding he will get a fair allowance and enjoy favorable policies when pursuing a graduate degree or a post in the civil service later on.
"Joining the army is not a bad option for me. It has relieved my stress to find a job and will probably make me more competitive," he said.
Although the job market in China is still much better than many other parts of the world, it is a tough market for graduates. Many job seekers have decided to shy away from the rat race and try other options.
A record-high 6.99 million Chinese students are leaving universities in 2013, a 2.8 percent increase year on year, to hunt for jobs at a time when employers are cutting down on recruitment, according to government figures.
The number of jobs for new hires this year has dropped about 15 percent year on year amid slowing economic growth in China, according to a Ministry of Education survey carried out among nearly 500 firms in February.
"The shrinking job market is the result of the sluggish world economy and tempered domestic growth," said Yang Lin, director of the career guidance center of Beijing Technology and Business University.
New posts in many large state-owned enterprises have declined dramatically this year after economic reform or restructuring was performed in order to achieve efficiency, Yang added.
Out of 178,000 college graduates in Shanghai, 44.5 percent had signed up for employment as of May 10, while the figure for Beijing was only 33.6 percent at the beginning of May, according to government figures.
The grave employment situation has concerned China's leadership. Chinese President Xi Jinping talked with college graduate representatives during his visit to a vocational training center in Tianjin in May, urging efforts to help graduates find employment.
China's central government outlined measures to help college graduates in their job search, including the implementation of existing policies favorable to graduates' employment, providing training subsidies, petty loans and tax breaks for self-employment.
Despite of the great pressure in the job market, many small- and medium-sized businesses are facing difficulties in finding employees due to a preference to seek work in the civil service, public institutions or state-run companies among young job seekers.
"We're keen to hire college students with an education background in marketing, advertising or human resources, but it's really difficult to attract them," said Wang Zhong, manager of a small private company based in eastern China's Shandong Province.
"It's my first choice to seek employment in a large state-owned enterprise or foreign company, because they usually have a better promotion system and motivation mechanism," said college graduate Gao Xinwei, adding it might be better to work at small firms after gaining enough experience at larger companies.
It is common for many young graduates to want to get their dream job straight away, but career planning is a long-term process and needs constant adjustment and improvement, said Yang Lin, adding that young people should not shy away from working at grassroots level.
"College students should have appropriate self-examination and be ambitious as well as down-to-earth in their job search," said Zhang Libin, with the Ministry of Human Resources and Social Security.
Chinese workers holding American boss hostage over back pay
June 26th, 2013Chinese workers keeping an American executive confined to his Beijing medical supply factory said Tuesday that they had not been paid in two months in a compensation dispute that highlights tensions in China’s labour market.
The executive, Chip Starnes of Specialty Medical Supplies, denied the workers’ allegations of two months of unpaid wages, as he endured a fifth day of captivity at the plant in the capital’s northeastern suburbs, peering out from behind the bars of his office window.
About 100 workers are demanding back pay and severance packages identical to those offered 30 workers being laid off from the Coral Springs, Fla.-based company’s plastics division. The demands followed rumours that the entire plant was being closed, despite Starnes’ assertion that the company doesn’t plan to fire the others.
The dispute highlights general tensions in China’s labour market as bosses worry about rising wages and workers are on edge about the impact of slowing growth on the future of their jobs.
Inside one of the plant’s buildings, about 30 mostly women hung around, their arms crossed. One worker, Gao Ping, told reporters inside an administrative office in the plant that she wanted to quit because she hadn’t been paid for two months.
Dressed in blue overalls and sitting down at a desk, Gao said her division – which makes alcohol prep pads, used for cleaning skin before injections – had not been doing well and that she wanted her salary and compensation.
Workers in other divisions who saw how badly her division was doing thought the whole company was faring poorly and also wanted to quit and get compensation, said Gao, who had been working for the company for six years.
Starnes, 42, denied that they were owed unpaid salary.
“They are demanding full severance pay, but they still have a job. That’s the problem,” he said, still in the clothes he wore when he went to work Friday morning.
Chu Lixiang, a local union official representing the workers in talks with Starnes, said the workers were demanding the portion of their salaries yet to be paid and a “reasonable” level of compensation before leaving their jobs. Neither gave details on the amounts demanded.
Chu said workers believed the plant was closing and that Starnes would run away without paying severance. Starnes’ attorney arrived Tuesday afternoon. Chu later told reporters that there would be no negotiations for the rest of the day.
Starnes said that since Saturday morning, about 80 workers had been blocking every exit around the clock and depriving him of sleep by shining bright lights and banging on windows of his office.
The standoff points to long-ingrained habits among Chinese workers who are sometimes left unprotected when factories close without severance or wages owed. Such incidents have been rarer as labour protections improve, although disputes still occur and local governments have at times barred foreign executives from leaving until they are resolved.
Starnes said the company had gradually been winding down its plastics division, planning to move it to Mumbai, India. He arrived in Beijing a week ago to lay off the last 30 people. Some had been working there for up to nine years, so their compensation packages were “pretty nice,” he said. Then workers in other divisions started demanding similar severance packages on Friday, he said.
Kevin Jones, who advises U.S. companies on Chinese labour and employment law, said it is better if American executives stay at home and let their local managers lay off workers.
In a case last week, Jones said the chief financial officer of a U.S. telecommunications equipment maker wanted to come to Beijing to explain the situation and give 41 white-collar workers their termination notices.
“We told him to stay in America,” said Jones, who chairs the Shanghai-based Faegre Baker Daniels labour and employment practice. The company’s lawyers met with six employee representatives in a hotel. “We had two bodyguards but that was just in case things got out of control,” Jones said.
Christian Murck, president of the American Chamber of Commerce in China, said Chinese labour law specified a minimum severance pay in the event of a layoff due to economic necessity or if someone is dismissed due to cause, but not a maximum one.
“There is a kind of structural weakness in the way the labour law is set up that leads to negotiations and disputes when departures occur,” Murck said.
Lower expectations
June 25th, 2013Beijing college graduates expect a monthly salary of 3,684 yuan ($600) as they hunt for jobs, which is around 1,000 yuan less than graduates in 2012 expected, the Beijing News reported Thursday.
The Beijing Youth Stress Management Service Center said that based on its analysis of its survey of 16,000 graduates and 1,015 valid questionnaires, the average monthly salary expectation has decreased to the lowest level in three years, 2,000 yuan less than expectations in 2011, the report said.
PhD students expect the highest salary, at 6,000 yuan, 1,160 yuan less than 2011's expectation.
White Collars Overworked
June 25th, 2013Salaried professionals are facing greater pressure and growing anxieties
Updated criteria for identifying workers labeled "white collar" have been widely discussed among netizens in China in the past few months.
Drafted as of early 2012, the new criteria set the financial requirements for a white collar: a monthly salary exceeding 20,000 yuan ($3,260), owning an apartment with at least two bedrooms and a car worth around 150,000 yuan ($24,450).
The new standard put entry to the club out of reach for most earners.
"Four years ago, people with an annual salary of 100,000 yuan were regarded as white collar. As I finally managed to earn that money, the standard has more than doubled," said an online post by Tangbo Xiaohu.
An online survey conducted by the Beijing-based Legal Evening News and Chinese recruitment website 51job.com in May showed that only three of 562 participating office workers reported to have met all the new requirements.
"The criteria show there is a big gap between Chinese white-collar workers' expected salaries and reality, which put them in a constant state of insecurity and anxiety," said Xia Xueluan, a professor of social psychology at Peking University.
Uneasy life
The definition of white collar in China has evolved a lot since the term was first introduced to China in the 1990s. Decent pay, well-fitted suits and fashionable lifestyles have been the typical impressions of white collars among the Chinese public. But in recent years, the phrase has carried more burdens than benefits.
"If you asked a college graduate in the late 1990s and early 2000s about his or her ideal job, more than 50 percent would list white collar as the first," said Xia. "But now, less than 10 percent would make that choice."
Kong Ranran, a college student majoring in accounting at Peking University's Guanghua School of Management, said that her first job choice is definitely not accounting powerhouses including PriceWaterhouseCoopers (PwC), Deloitte & Touche, KPMG and Ernst & Young.
"Those accounting firms used to be my ideal work destinations and I had dreamed of working there since I was a fresh student in university," said Kong. But she completely changed her idea after a three-month internship at PwC in the summer of 2012.
About a year earlier, Pan Jie, an auditor working for PwC in Shanghai, died of fever-induced illness due to overwork at the age of 25.
"I saw the tough situation behind the halo and it was definitely not appealing," said Kong. "The work hours are endless and it is impossible to squeeze any time for leisure or anything else."
Kong's first choice now switched to civil service, which is the ideal choice among many of her classmates, especially the females. "We need to get married and have babies but we see no hope if we just work, work and work every day," she said.
Ning Xin, working in a law firm in Beijing, recently quit her job and decided to go to the United States for further study. "With so many graduates coming back from abroad every year, it is not the best choice as I might have a hard time looking for jobs after my graduation in the United States, but I can't think about that much as my present work is driving me mad," said Ning.
Ning, for her two years of work in the law firm, enjoyed no vacation at all. On most weekends, she is either working in the office or flying to another city on business.
"Business trips are not as fancy as they sound; we just stayed in hotel rooms and worked on projects day and night," said Ning, who has been to Hangzhou, a famous tourist destination in east China's Zhejiang Province, at least 10 times, but hasn't gotten a chance to walk around West Lake, the most-visited site in the city, for more than one hour.
Even on her last day at work, Ning worked till 11 p.m. to hand over all her projects to workmates. "I don't even have time to enjoy the relaxation," said Ning.
Guomao, a bustling area in Beijing's Central Business District where Ning worked, is the gathering place of taxi drivers after 10 p.m. as they all know people working in companies there often stay late, so it is easy to get passengers.
"We get trapped at work," said 30-year-old Jin Jian working in an advertisement company at Jianwai Soho community in Guomao. "The whole advertisement industry means endless working anyway and we cannot live in this city without salaries since the living cost in Beijing is rocketing."
Jin used to be satisfied with his salary, which is more than 10,000 yuan a month, but it is not enough at all for him. "The mortgage is about 6,000 yuan ($978) a month and the basic living cost is about 3,000 ($489)," said Jin. "If I get married and have a baby, this salary is far from enough."
It is not only the youngsters who feel under pressure. The first generation of white-collar workers in China, mostly in their 40s or 50s, are also in an awkward situation.
David, who declined to reveal his Chinese name, has been working in foreign-funded companies for 20 years and lives a stable middle-class life with the title of marketing director of the Asian-Pacific region.
Since January 2013, the financial report of the company said that some employees would need to be cut due to the slowing economy.
"Foreign companies are no longer glorified places to work, as state-owned and private companies in China are improving very fast with the development of the economy," said David. Some of his contemporaries have started their own businesses with some success, but his time for such entrepreneurship has passed.
"My wife is a housewife and I have two kids studying at an international school," said David. As the only bread winner in the family, he doesn't want to take risks.
Money vs. health
On May 13, 24-year-old Li Yuan died of a sudden heart attack at the office of Ogilvy & Mather Beijing after working overtime for a month prior to his death.
The final message Yuan posted on Chinese social media site Weibo.com shows a photo of the young ad man saluting the camera, presumably as he left the office for the day.
Two days later, a young IT employee working at 17173.com, a Web game operator in Fuzhou City, capital of Fujian Province, died of viral myocarditis due to overwork.
Karoshi—the Japanese term for death by overwork—used to happen mostly in manufacturing factories or construction sites, but is more frequently claiming the lives of people in white collar professions in China. According to a report on China Youth Daily, almost 600,000 people die of work exhaustion in China each year.
According to a survey conducted by the China Moderate Labor Study Center, founded in September 2012, about 70 percent of the white collars working in the Central Business District of Beijing show signs of overwork and 38.4 percent are under serious pressure.
"It is highly competitive nowadays and some workers have to work overtime to compete with their counterparts," said Yang Heqing, director of the center.
Since 1995, China has adopted a standard work week of 40 hours. "But sometimes it is the employees who want to work extra hours, so it is hard to control," said Yang. "It has become a common phenomenon that working long hours turns out to be proof of working hard, while it is not the length of work that matters, but the quality."
"We have the belief that work always comes before life, which also contributes to the stress of working," said Peng Guanghua, a professor at Beijing-based Renmin University of China. "It is a topic for both employers and employees, and the research also shows that working overtime can sometimes lower productivity instead of improving it," he said.
GM investing billions in China to tap lucrative luxury car market
June 24th, 2013General Motors has chosen the world’s second-largest luxury car market — China — to pit itself against automakers from Japan and Germany, despite the industry's lagging fortunes there.
The US-based carmaker said on Wednesday that it would invest $11 billion in the country in hopes of grabbing a larger share of the lucrative sector as it broke ground on new facilities.
“We are also sending a strong message about the important role of Shanghai and China in GM’s global operations,” GM chairman and CEO Dan Akerson said in a news release.
The Detroit manufacturer made the announcement as it broke ground on a new Cadillac plant and a new research facility. The structures represent a total investment of $1.3 billion and will occupy a total area of about 8 million square feet.
More from GlobalPost: Why China will implode
Cadillac has set goals of tripling its annual sales in China to 100,000 units by 2015 and increasing its share of China’s luxury car market to 10 percent by 2020.
To achieve its goals, it will introduce new models every year until 2016. GM now has about 2.5 percent of luxury sales in China.
GM sold about 30,000 Cadillac vehicles in China last year, but that's still a small number compared to brands like BMW and Audi, Agence France-Presse noted.
“There are generous profits in the luxury car market,” industry analyst Cui Dongshu told AFP.
“GM has to make an investment targeted at the segment and build this plant in Shanghai to localize its products, in order to effectively seize a place in the high-end segment.”
China’s market will continue to grow, with AFP reporting it will climb about 2.5 percent annually to 30 million vehicle sales by 2020.
Only Americans buy more luxury cars and SUVs than the Chinese.
GM’s projections come despite slower growth in the luxury segment, the Wall Street Journal reported.
Audi, for example, enjoyed 41 percent growth during the first quarter of last year, but just 14 percent this year.
“The luxury market right now looks like it’s going to grow at about 4 percent this year. At the beginning of the year, I think it was much higher,” GM China president Bob Socia told The Journal.
Looking for work becoming a career in itself
June 24th, 2013New graduates forced to adjust dreams to tough realities of nation's weak employment market
Xie Dong, who will graduate from Xi'an University of Architecture and Technology this month, had to give up his career ambitions and accept a job his aunt arranged for him.
"I did not get any reply after sending over 20 resumes to the enterprises I am interested in," said the 24-year-old. "I did not even have the opportunity to show myself to the enterprises."
With his family's help, Xie will go to work in a small State-owned company as soon as he graduates at the end of June.
Not every fresh graduate is as lucky as Xie. Most of them have struggled amid what is being called the most difficult year for fresh graduates' employment ever.
By April 10, only 35 percent of this year's graduates had signed job contracts with their future employers, which was 12 percentage points lower than the previous year, according to a survey from MyCOS HR Digital Information Co Ltd, a consulting company dealing with higher education.
The employment rate of postgraduates was even lower, at 26 percent, the report said.
Many companies have cut their recruitment plans for fresh graduates, amid slowing economic growth.
"Our company cut more than 30 percent of graduate recruitment," said a human resource manager from a State-owned bank.
The increasing number of college graduates is a primary reason for the most difficult employment year. There will be 6.99 million fresh college graduates in 2013, the most since 1949, according to the Ministry of Education.
"It is the worst year ever," said Gao Hua, an assistant professor from the finance school of a key university in Beijing.
Only two graduates in his postgraduate class of 32 students had received job offers as of the middle of June, one month away from graduation, said Gao. In the past, most of his students got jobs before they graduated.
Graduates' employment pressure will continue, since the number of fresh graduates will remain at about 7 million annually in the next five years, said Minister of Human Resources and Social Security Yin Weimin, the Beijing Times reported on Tuesday.
Economic growth is the way to resolve the employment problem, Yin said, and China's service industry has great potential, as the industry contributes only 36 percent of employment, which is much lower than the developing countries' average level.
Many Chinese firms encounter recruitment problems because of the mismatch of human resource supply and demand, experts said.
Large State-owned companies and public institutions are the fresh graduates' favorites, while small private ones are often ignored.
Li Fengyun, a postgraduate student at Beijing Foreign Studies University, is still waiting for a job offer from a primary school in Haidian district, although she already went through orientation at a listed educational service provider in Beijing.
The 26-year-old sent out more than 100 resumes in the past five months, targeting public schools and institutions.
"I want an easy life with more time to study," she said, because she still plans to apply for a doctoral program in the future.
Salary is not too important to Li. Her only requirement is housing. "It will cost too much to rent an apartment in Beijing and I prefer jobs providing dorm space," she added.
A report by Zhaopin.com, one of China's largest providers of human resource services, found that college graduates prefer big cities such as Beijing, Shanghai and Guangzhou.
But staying in the big cities is an involuntary choice, some graduates said.
"Both my family and I want me to go back to my hometown, but I would have to work in a totally different industry from my major," said Wang Ting, a fresh graduate majoring in advertisement design at a college in Beijing.
Wang said there is no real advertisement company in her hometown, a small city in Henan province, but such companies are everywhere in Beijing.
Actually, the structural contradiction is a real problem for China's human resource market, Zhaopin.com said in its report.
China's professional job market is still booming, and 75 percent of Chinese employers are recruiting or replacing staff at senior levels, Antal International, a United Kingdom-based recruitment and headhunting company, said in its latest global snapshot survey.
Antal International said automotive industry, retail and luxury goods and healthcare specialists are highly sought after in China.
Sales and marketing as well as research and development specialists are also in demand, according to its survey.
"Sales and marketing remains strongly in demand within companies as they focus on acquiring market share in tier-two, three and four cities in China," said James Darlington, Antal's head of Asia.
Yang Ziman contributed to this story.
Millennium BCP opens new branch to enhance business opportunities
June 21st, 2013The Portuguese bank Millennium BCP (Banco Comercial Português S.A.) yesterday celebrated its new branch in the territory, located at the Finance and IT Center of Macau building, in Avenida Comercial de Macau. In a launching ceremony held yesterday at MGM Macau, the CEO of BCP, Nuno Amado, emphasized the new branch “has more space and provides an excellent environment to further develop businesses.”
With branches in Macau, China, Angola, Mozambique and Poland, the Millennium BCP is hoping to enhance business opportunities within Portuguese-speaking countries. “This new branch allows the further development of BCP not only in Macau, but also in other countries we are represented in,” Amado explained. Nuno Amado revealed there are two main goals and areas of business behind the new branch launch: “We wish to develop our operations within the triangle China-Africa-Portugal, as we have a language and history in common. We also intend to see the Renminbi market evolve, since it is a business which is not that developed yet, so I believe we should focus on this area.” Moreover, he added that “there are more and more Chinese companies investing in Macau, so this is definitely an area where BCP could evolve.”
The CEO of Banco Comercial Português S.A. emphasized that the Macau branch recorded “a significant growth” in 2012, almost tripling the results of the previous year. Following such results, the bank plans to increase its workforce.
“We need to recruit more staff and we are able to expand by having these new facilities,” he added.
Furthermore, Nuno Amado highlighted the role of the Macau branch as a platform “to promote business opportunities between Chinese enterprises and companies in Portugal, Brazil, Angola and Mozambique.” Building a bridge between the East and the West seems to be one of the challenges the Macau branch is ready and willing to face.
The new branch launch ceremony included a ribbon cutting formality with the presence of several personalities, such as Wan Sin Long, a board member of the Monetary Authority of Macau, Vítor Sereno, the Consul General of Portugal in Macau and Hong Kong, the director of Banco Comercial Português S.A., José João Pãozinho, the Senior Assistant Director-General of Economic Affairs Department of Liaison Office of the Central People’s Government in the Macau and Conceição Lucas, the Executive Director of BCP, among others.
Results of Millennium BCP in Macau tripled in 2012
The results of the Portuguese bank Millennium BCP in Macau have tripled in 2012, the director of Banco Comercial Português S.A., José João Pãozinho, revealed yesterday. During the new branch launching ceremony, held yesterday at MGM Macau, the director of BCP announced the bank made MOP 177.7 million in profit, more than MOP 11 billion in deposits and MOP 10 billion in loans. According to José João Pãozinho, “the results have tripled” compared to numbers from the previous year. In his opinion, the great results are mainly the outcome of “a significant growth in the credit portfolio and good results in terms of clients’ deposits.” He concluded saying that “the branch registered extraordinary results following the development of a business platform that Portuguese companies have put in place in Macau and China”.
51Job: An Attractive Chinese Small-Cap Pick
June 21st, 2013As the global economy takes a route to recovery, a bullish momentum prevails in the markets worldwide. However, in China things are a little different as analysts fear that the authorities can no longer sustain the high growth rates. The Shanghai Composite Index fell by more than 2% in the past year. The security regulators in the Chinese economy have taken measures to keep up with the global trend as it gears the economy towards a wave of IPOs. This provides investors with an opportunity to take advantage of the low stock prices to add value to their investment portfolio.
The services sector of the economy has been one of the fastest growing fields; however, the growth has somewhat stagnated in the recent past. In May, there were signs of weak growth again raising concerns about sustainability. According to Shen Lan, an economist at Standard Chartered, the economy is facing a stimulus lag that will soon payoff in the coming quarter. The employment index improved to 50 prior to an index of 49.6. With more firms willing to expand especially in the green technology sector, the employment index is expected to improve sharply. 51Job Inc. (JOBS) is one of the companies that will benefit greatly from the recovery in the aforementioned index.
This article will discuss the upside potential in 51Job by analyzing in detail the internal as well as external factors that makes this small cap stock an attractive pick.
What Does 51Job DO?
51job is a leading provider of integrated human resource services in China aiming to capitalize on recruitment related services. Through online recruitment services at 51job.com and print advertisements in 51job Weekly, it enables enterprises to attract, identify and recruit employees and connects millions of job seekers with employment opportunities. 51job also provides a number of other value-added human resource services, catering to business process outsourcing, training, executive search and compensation and benefits analysis. 51job has a call center in Wuhan and a nationwide sales office network spanning 25 cities across China.
The company has collaborated with six material group entities namely 51net, Tech JV, Qian Cheng, AdCo and Adco Subsidiaries and WFOE. The joint venture provides advertising, consulting services and online recruitment and value-added telecommunication services.
Revenue Generation
The enterprise reports its earnings based on three core segments i.e. online recruitment services, print advertising and other human resources related revenues. The majority of the revenues are derived from recruitment and advertising services.
Online recruitment services share in the total revenue increased significantly in the last two years from 50% to 62.4%. Revenues through this segment are obtained by charging companies with advertisement and recruitment fees at the website. The website also provides companies with a facility to download resumes and management tools services. Print advertising share in revenues declined significantly in the past two years from 25% to a mere 7% as the management adjusts to the boom in the IT sector.
Again, employer companies are charged with a recruitment and advertising fee placed at 51Jobs Weekly across China. Contracts in this segment vary from single to multiple advertisements and are generally more short-term. The last segment, like the online recruitment services, experienced an increase in revenue share from 25% to 31%. The human resource related revenues as the name suggests generate revenues via catering to the employees of the company's corporate clients.
Financials
The company reported an increase in its consolidated revenue of 11.3% in 2012 consistent with the average 3-year growth in revenue of 23.2%. However, the recent quarter revenue of 2013 amounted to $61.2 million, showing a decline of 0.1%. Analysts expect the decline to quickly reverse given the forward market expectation. Net income of the company also showed an increase of 21.4% in 2012 keeping up with the 3 year growth 61.1%. The company has managed to beat the industry trend as the industry ratios lingered in single digits. Given the competitive nature of the industry, 51Jobs upholds its competitive edge by relying on operational synergies to cut down costs. The EPS% for the 5 years touched 34% as per Reuters estimates.
The capital structure of the company is more geared towards financing from within. The company has not resorted to debt financing in its operations and has no plans to do so. Thus the company's operations are well-cushioned against market risks. The liquid assets at the end of 2012 consisted of $408.6 million in cash and short-term investments. The recent quarter announcement marks an improvement in the liquidity position of the company. Thus 27% growth in asset base of the company is financed through growth from within.
Growth Strategy
Rick Yan, CEO of 51Job, announced that based on current market conditions and the declining share of print advertising revenues, the Company's revenue target for the second quarter of 2013 is in the estimated range of $63.6 million to $66.0 million, an expected increase of roughly 6%. The stated increase in its revenues will be brought about by pursuing a multi-dimensional growth strategy.
Firstly, the management seeks to capitalize on the anticipated growth in the Chinese economy. As the employment index touch 50 and the expansive path undertaken by the firms, increase in revenues is inevitable. On the supply side, skilled and educated workers now comprise a major portion of the labor force. Secondly, the Chinese economy is still undergoing a development transition with more workers willing to accept new recruitment channels and human resource services. Growth in the IT sector will translate into an increase in customer base for the company.
According to CNNIC estimates, the number for internet users has showed an increase of 662% in the last 9 years making China the largest Internet user of the world. It is for this reason that the management has decided to increase its provision of online recruitment services. The claims can be authenticated by an increase in capital expenditure from $60 million to $138 million in the last year. It should be noticed that the free cash flows remained constant despite this increase. Lastly, mobile Internet website has been developed to increase access through mobile devices and utilize most functions available on the website. The construction of a call centre in Wuhan is anticipated to triple its catering capacity. Expenditure on sales and marketing also remained roughly constant for the recent quarter despite a decline in earnings. The company relies on the former to build a strong customer base and repute for itself. Thus, 51Jobs is all set to cater to the growing demand in the economy.
Competitive Advantage
As stated earlier, the enterprise operates in an extremely competitive environment facing competition from Adecco, Randstad ADR and Paychex Inc. It has been able to maintain its competitive edge by relying on operational synergies to maintain an operating margin of 32.5% as compared to an industry average of 2.5%. In the online recruitment service segment, a wide array of audience is catered to. The websites are updated on hourly basis which helps attain a high turnover. The idea to open up the websites to mobile users is expected to generate higher earnings in the near future. Also, the company is able to charge multiple prices based on the diverse customer base. The company mostly caters to large multinational corporations as well as local Chinese enterprises of all sizes. In the print advertising segment, publications are more city specific and short-term. Thus, the management is able to maintain relatively stable stream of revenues using the aforementioned techniques.
Risks
The risks associated with this small-cap stock are centered more towards economic factors. One of the potent risks that the company is exposed to is seasonality in its operations. The recent transition towards the provision of IT services makes the earnings of the company more volatile. Seasonal fluctuations in the demand for human resources add to the fluctuations in its operations. Inflation (although not currently) poses a threat to the earnings of the company. Inflation rates of 5.4%, 3.6% and 2.1% put an upward pressure on the costs of the company and if continued, can lead to a substantial decline in earnings. Lastly, the exchange rate risk associated with the stock cannot be ignored. Investment in derivative securities by the management does mitigate the associated risks nonetheless it cannot be disregarded.
Conclusion
The stock currently trades at $64.89 with the total market capitalization of $1.9 billion. The current P/E ratio for the stock is 25.8; however, the ratio is projected to decline to 17.7. The enterprise multiple ratio for the 12 months is expected to reach 31.41 while the current ratio stands at 33.72. The P/B and P/CF ratio equals 4.1 and 20.6, above the industry trend. The stock is up 39% year to date, and keeping in mind the growth potential, the upward trend is expected to continue.
After the careful evaluation of the company, I believe JOBS is an attractive investment and the stock will return handsomely over the short term as well as long term. The company is expected to benefit from the recovering economy offsetting the minor weaknesses. The management has been able to maintain its strategic position by adjusting to the changing market trends and is expected to do so in the future.
Money talks in sluggish economy
June 20th, 2013During an economic downturn, job seekers tend to attach greater importance to the overall compensation and cash incentives they can earn, according to a report by the Hong Kong-founded executive recruitment firm MRIC.
Of the 3,820 professionals interviewed on the Chinese mainland, 35.9 percent requested an increase in overall compensation or commissions, which outweighed other relevant concerns, such as finding a clearer career track or having the opportunity to face more challenges, the report found.
Meanwhile, the number of Chinese mainland respondents dissatisfied with their current level of compensation rose from 54.2 percent last year to 57.8 percent in 2013. Only respondents from Taiwan reported a greater level of dissatisfaction with their current earnings.
A lack of satisfaction with compensation may be tied to mounting living costs and lower bonuses this year. Many people aim to earn higher salaries in order to improve their housing conditions and achieve a higher quality of life.
With a score of 99, Shanghai ranked 30th of 131 surveyed cities in terms of living cost in 2012, up 11 places from a year earlier, according to a survey by the Economist Intelligence Unit. It fell just short of matching New York, which scored 100. Just five years ago, Shanghai ranked 53rd on the list.
"Respondent sentiment is generally more conservative, with a lowering of job-change intentions from the previous year, while stress has taken its toll on professional talent, who are increasingly aware of their quality of life," said Christine Raynaud, chief executive officer of MRIC.
Workers will change jobs if it makes financial sense, but many of them have become more averse to risk and require a major salary hike to make a move, according to the report.
Taking stock of China’s logistical shortfall
June 20th, 2013Employers in China face such a severe shortage of logistics staff that one British company is offering work to 20% more candidates than it has jobs.
Paul Brooks, sales director of Unipart Logistics, said that the company regularly offered employment to between 10% and 20% more candidates than it had jobs because they knew that within a week this number of candidates would take up job offers from other employers. The firm employs 250 staff in China.
At a press conference during a recent visit to Unipart in Oxford by a Chinese delegation of logistics and education officials to the UK, Brooks said that staff retention was also a major issue, with the industry experiencing an annual staff turnover of more than 50%. Even a small wage increase would entice employees to move to another employer. “They will leave for 30p more, they will just not turn up,” said Brooks.
Haoxiang Ren, vice-president of the China Federation of Logistics and Purchasing, told Recruiter that in China “the skills shortage is for every subject and every position in the sector.”
Ren explained there was a fundamental mismatch between the demands of employers and what the Chinese education system is turning out. “Demand is like a pyramid,” he said, with many more lower level operative-type jobs at the bottom, and relatively few jobs for managers at the top.
Despite this, he explained that around 400 universities in China provided 100,000 graduates a year studying logistics as a major part of their degree, leading to a glut of people looking to enter the sector at managerial level.
The problem is made worse, “because more and more parents are looking for their children to go to university and not college”, he added.
In contrast, Ren said that only 90,000 graduates with a relevant qualification left 800 secondary vocational colleges (for 15-18-year-olds) — an insufficient number to fill the far more numerous lower-level roles. “It [the education system] doesn’t fit the nature of the industry demand,” he said.
Tech and execs see least talent movement in China
June 19th, 2013China’s technical workers in IT and engineering roles saw the lowest rate of people changing jobs in 2012 of any business function, at 18% and 24% respectively, followed by board-level staff at 27%.
The highest degree of movement was seen in government affairs (55%), construction (50%) and production (42%), according to Chinese recruitment firm RMG Selection.
A survey from the company of 2,000 Chinese workers shows that for 2013, 61% of IT workers have a greater desire to change jobs. Engineers (52%) were also seeing renewed keenness to move, as were production workers (57%) and supply chain professionals (52%).
The full Talent Flow Survey 2012-2013 is available via the RMG website. "http://www.rmgselection.com/downloads/RMG-China-Talent-flow-Survey-Report-2012-2013.pdf"
New working visas for China lack clarity, says Baker McKenzie
June 19th, 2013New regulations for employing foreigners in China do not identify eligibility criteria for high-level and in-demand professional talent, says global law firm Baker McKenzie.
New proposals to China’s Entry and Exit Control Law, published last week, take effect on 1 July and come after February’s announcement of new laws that raise questions over the future of agency work in the country.
In draft form, the laws do not “identify the eligibility criteria” for a new ‘R’ visa, which will be introduced for high-level personnel and professionals in short supply in the country, Baker McKenzie says.
The current ‘F’ visa for business use will be moved to a new ‘M’ category.
The new laws will also reinforce the illegality of working without a valid employment and residence permit, and redefining the rules for students interning in the country.
Insight on China's college graduates' employment report
June 18th, 2013The Chinese education consulting firm MyCOS has published its 2013 Chinese College Graduates' Employment Annual Report. The report looks at the job situation of graduates from this year and last, who are just starting off their careers. The report offers important insights for Chinese students choosing their majors.
Q1: What does the report tell us?
A: Mangmang, what we have seen from the report is very alarming. The employment rates for 2013 are far lower than last year. By early April, only one out of three graduates with bachelor degrees have landed jobs. Just last year the employment rate was almost 50 percent in April, and over 90 percent by the end of the year.
For master's degree graduates, the prospects look even gloomier. Only one of out four were recruited by early April. People are beginning to ask how much is your diploma worth in the job market. And interestingly, in sharp contrast to university students, vocational school graduates are having much less trouble moving into the labor market. We visited one leading vocational school, and were amazed at how easy it was for students to find jobs.
Rural youth encouraged to become self-employed
June 18th, 2013Many young people in rural China hold the belief that earning money in a city is the only way to be able to afford a home and family. Not Li Shuhua.
The 30-year-old, who was born in Xishan Village of Lianhua County in east China's Jiangxi Province, decided to run his own ecological farm in his hometown after four years of work experience at horticultural companies in Guangdong and Zhejiang provinces.
"I decided on the farm because of people's growing awareness of food safety which has made green agricultural produce more competitive," said Li, who was educated at Jiangxi University of Science and Technology.
Li's farm covers an area of 1.3 hectares, primarily growing ecological grapes and breeding pigs with an annual income of about 200,000 yuan (32,660 U.S. dollars).
More than half of the 1,000 villagers in Xishan have swarmed to southeastern coastal cities to seek better-paid jobs in the past year.
This is typical of villages in China.
However, with the current record-high 6.99 million graduates struggling to secure decent jobs in cities, Li's self-employment experience is an inspiration for many.
As the pressure of finding a job grows, more graduates are choosing to go back home to realize their dreams.
The Chinese government has promised to recruit more university graduates who have taken on leadership roles in the countryside in a bid to encourage more college students to work in rural communities after graduating.
About 10 to 12 percent of newly recruited public servants in the country this year will be college graduates who will have had experience of working as "village officials," according to the State Administration of Civil Service.
The number of university students with official positions in rural communities is expected to increase to 600,000 by 2020 from the current 200,000, according to the administration.
Wu Yongming, vice chairman of the Jiangxi Provincial Academy of Social Sciences, said that more talent is needed in rural areas, especially those specializing in agricultural, medical and educational fields.
"In order to gather grassroots experience, it is also necessary for the Chinese youth to find employment or start a business in rural areas," Wu said.
During talks with young representatives on Chinese Youth Day on May 4, Chinese President Xi Jinping said he pinned his hope on the Chinese youth for innovation and national advancement.
The president expects the young generation to make great accomplishments, and encouraged them to work at the grassroots and the front line in order to hone their skills and enhance abilities required for furthering their career.
"Young people should emancipate the mind, advance with the times, forge ahead and innovate so as to gather experience and make achievements," he said.
Just like Li Shuhua.
Alibaba Plans Worldwide Intern Indoctrination Program
June 17th, 2013China's Alibaba Group announced the launch of an intern training plan, aiming to recruit 102 interns around the world and provide one-on-one training by business leaders and executives within the organization.
According to Alibaba, interns who participate in this program should have dreams and positive energy. Those dreams do not need to be related to e-commerce, said Alibaba.
The internship will last for one to two months. The first batch will include about 30 people, who can be students or those already having some working experience. Once admitted, they will gain meals, accommodation as well as a salary.
To ensure the efficiency of the internship, the classes of the interns will be led by Alibaba's executives and business leaders. In addition, those executives and business leaders will provide one-on-one trainings to interns. The performance in training interns will reportedly influence the promotion of the executives.
Alibaba said they will not require those interns to stay in the company after the training. They hope the interns can gain something from the training and become outstanding rural teachers, cooks, lawyers, entrepreneurs, or participate in politics in the future. The leader of this internship program said that during the program, the interns can learn the unique culture of a Alibaba and the company hopes more young people can access the ongoing huge changes of Chinese economy.
Antal International reports strong performance among professionals.
June 14th, 2013The Chinese professional job market is still booming this quarter, with higher employer activity levels and more focus on employee’s work efficiency. The news comes from Antal International’s latest ‘Global Snapshot’ survey which asked 10,000 organisations in major markets all over the world whether they were currently hiring or firing at professional and managerial level. The survey also seeks to identify whether businesses planned to hire or fire in the coming quarter.
According to the survey a massive 75 per cent of Chinese employers are recruiting or replacing staff at senior levels, despite only 54 per cent saying they expected to do so in the previous Q1 edition of the Snapshot. This shows a significant increase in hiring confidence for replacement and growth positions, as employers clarify their needs for the year.
However, the downside of the active recruitment market is that there is also a clear increase in the number of companies firing employees. The region has demonstrated high recruitment growth over the past years but this has occurred alongside increased labour costs so overall employee performance is becoming much more important which in turn is driving replacement recruitment. This quarter is seeing the number of businesses letting staff go rising from 14 per cent to 26 per cent, and firing levels are expected to further increase to 28 per cent in the next three months, five per cent higher than APAC’s average. According to Antal’s analysis however, this should only be considered together with similarly high hiring levels, and a stabilising job market, where employers now look for higher quality talents, rather than quantity.
“Jobs and opportunities are still available, but there is an increase in caution among job seekers and employers,” observes James Darlington, Antal’s Head of Asia. “The market is constantly evolving and companies are adapting to these changes and replacing people with the necessary new skill sets. Sales and Marketing remain strongly in demand within companies as they focus on acquiring market share with tier 2 / 3 / 4 cities in China. There remains to be strong hiring within the back office functions as companies improve their internal capabilities.”
Indeed, it appears growth is not consistent across the region. Some industries are booming, while some are being more conservative in their growth. The salary increase over the last two years brought more disposable income to the population and the consumer led sectors are performing very strongly. Among this quarter’s hiring champions, the survey revealed: Automotive industry (92 per cent), Retail and Luxury goods (91 per cent), and Healthcare specialists (88 per cent). Demand in these areas is expected to remain high, with Sales and Marketing, IT and Accounting, as well as R&D specialists highly sought after in the country.
Chinese fixed asset investment fall more-than-expected
June 14th, 2013China’s urban fixed-asset investment fell more-than-expected last month, official data showed on Thursday.
In a report, National Bureau of Statistics of China said that Chinese Fixed Asset Investment fell to a seasonally adjusted 20.4%, from 20.6% in the preceding month.
Analysts had expected Chinese Fixed Asset Investment to fall to 20.5% last month.
From the Chinese press
June 9th, 2013After failing 41 job interviews, a resident of Wuhan, Hubei province, guessed that she was being discriminated against by potential employers because of her marital status - married but without any child - so she decided to conceal the fact to get a job. Many netizens have narrated similar tales, says an article in Chongqing Morning Post. Excerpts:
The Wuhan resident couldn't find favor with any of the potential employers not because she is not qualified enough but because she is married but doesn't yet have a child. That she is married but doesn't have a child means she is eligible for a three-month maternity leave after being recruited, during which the employer has to pay her salary and welfare benefits.
Since companies without a sense of social responsibility see this as a financial loss and, therefore, are reluctant to recruit women like the Wuhan resident, many women have had to choose between a job and a child.
Many woman workers in a condition similar to the Wuhan resident's find it difficult to land a job. To protect women's reproductive rights, laws such as the Labor Law and the Law on the Protection of Rights and Interests of Women advocate "fair employment" and make discrimination in recruitment a punishable offense. For example, employers should not discriminate against woman employees, irrespective of their marital, social or ethnic status.
We can understand that employers want to lower personnel cost and increase productivity. But they should not infringe on the legitimate rights of women to get a job. Through enhanced annual supervision and inspection, the authorities should make sure that employers stop using unreasonable rules to recruit employees and that qualified candidates get jobs.
Workers' safety comes first
A fire in a slaughterhouse in Dehui, Jilin province, killed 120 people and injured 77. And although relevant authorities have conducted specific safety inspections in densely populated places, they have come at a huge cost, says an article in Changjiang Daily. Excerpts:
Tragedies like mine accidents, fires and explosions have been reported one after another in recent times. Investigations into such accidents show that grassroots workers are more prone to getting injured or dying in such accidents.
Even the healthiest workers could become the victim of an occupational disease or industrial accident after working to exhaustion under harsh and dangerous conditions. And we know how difficult it is for workers to protect their legitimate rights and interests in case of accidents.
A report on the condition of new-generation industrial workers' spiritual and cultural life shows the three main problems they face: A monotonous cultural life because of lack of entertainment channels, a narrow dating circle, and increasing pressure of work. In fact, not only the new generation, but almost every worker suffers from mental discomfort and limited exposure to spirituality. Most workers still have to strive to make a decent living instead of being content with the arrangements.
The problem lies in the daily situation of workers. Whether or not the production environment of a factory is safe and comfortable is closely related to workers' labor rights and interests. If it is hard for the authorities to guarantee the safety of workers, it would be impossible to discuss their higher interests.
Retail Investment in China
June 8th, 2013China’s retail development and investment opportunities are progressively spreading to large second- and third-tier cities – all with populations above 1 million – which puts added importance on building the right contacts and partnerships in China’s real estate market.
“Understanding a local market – its incomes and consumer preferences – is becoming the single most important challenge for developing and investing in China, and that is really only done with local partners,” said Rong Ren, chief executive officer of Harvest Capital Partners, a Hong Kong-based real estate investment, development and management firm that launched two successful retail investment funds in 2010. “You need to come to China with a longer-term vision and strategy. It’s not for speculators looking for quick deals,” said ULI member, Ren.
China remains one of the hottest economies emerging from the global recession, making it an increasingly favorable environment for property investment. China’s GDP is forecast to grow at a torrid 8%-10% pace during the next few years, and China is expected to surpass the United States in total commercial real estate development during the decade of 2009 to 2019, according to Pramerica Real Estate Investors, part of Prudential Financial Inc.
Retail is already playing a significant part in this growth. Across Asia, retail property deals jumped 38% in the first half of 2010 compared to the same period of 2009, and in China’s largest cities, retail sales surged on a year-over-year basis, rising 19% in Shanghai through May and up 16% in Beijing in the second quarter, CB Richard Ellis reported. Total retail sales in China are predicted to double in coming years, from $2.09 trillion (US$) in 2010 to $4.21 trillion in 2014, according to Business Monitor International’s third quarter China Retail Report.
“In the current climate, China’s retail market has greater potential as an investment vehicle than almost any other retail market in the world,” KPMG and property service firm Knight Frank concluded in an investment trends report earlier this year.
The main drivers of China’s retail potential are the country’s continuing urbanization and rising consumer culture. Although Chinese per-capita spending remains below U.S. levels, annual consumer consumption in China is forecast to grow six-fold during the next three decades, according to Goldman Sachs economists. Meanwhile, the proportion of China’s population living in urban cities has jumped from 19% in 1980 to an estimated 45% today. This is resulting in a dramatic shift in geographic distribution, with 200 cities in China now boasting populations of at least 1 million.
China has four giant first-tier metropolises – Beijing, Shanghai, Guangzhou and Shenzhen, along with Hong Kong off the mainland. The national government also ranks two-dozen other cities as “second-tier,” generally provincial capitals with populations near or above 10 million — places like Chengdu, Hangzhou, Suzhou and Zhengzhou. At an International Council of Shopping Centers conference in Beijing in November, many of those cities were viewed as under-retailed and ripe for development.
“Foreign investors are entering such cities to explore potential investment opportunities, as it’s much easier for them to find suitable investment inventories in those cities, and the continuous improvement in retail sales and consumer spending is also convincing them of the market’s potential upside,” Danny Ma, director of CB Richard Ellis’ China Research, said in an interview.
Developers and investment firms such as Turkey’s Star Mall Group, Singapore’s Keppel Land and Hong Kong investors Hang Lung Properties and Harvest Capital Partners have been actively pursuing projects in China’s so-called smaller cities. Harvest raised $600 million (US$) this year, primarily from North American pension funds and individual investors, to develop and manage family-oriented shopping centers. These centers typically involve 100,000 square meters (1,076,391 sq ft) in a 4- or 5-story building, anchored by a Wal-Mart or Sam’s Club and including electronics outlets, brand-name stores like Nike and Zara, a movie theater and sometimes a skating rink.
The concept is designed to appeal to children, and with China’s one-child-per-family policy, each child typically brings two or more adults. “Our type of shopping mall, the family destination mall, is a popular trend,” Harvest’s Rong Ren said in an interview.
Still, retail development and investment in China come with plenty of challenges. These include: long delays in the regulatory approval process; occasional government regulations to limit foreign investment; onerous requirements such as developing super-blocks instead of single sites; and lots of domestic competition – domestic purchasers accounted for more than three-fourths of Asian real estate deals in the first half of 2010, according to CB Richard Ellis.
In a nutshell, it’s difficult for foreigners to get a foothold in China, which is why Harvest’s Ren and others recommend establishing investment partnerships there to manage the risks. “If you have no contacts in China, it will be difficult for you to get the approvals,” said George von Liphart, managing director of Peninsula Real Estate Capital Advisors in San Francisco and a veteran China deal broker who is chairman of ULI’s Global Exchange Council. “It is still very much a question of who you know and how you cultivate that.”
Overall, retail development and investment in China promise the tradeoff of low initial yields – usually 4.5% to 6.5% – in exchange for greater longer-term asset appreciation. Harvest Capital Partners is trying to buck that trend, with its new retail investment funds targeting 15% and 20% net returns over 5 and 6 years, respectively.
“Overseas investors must have a business presence in China before they can make any actual acquisitions, while the Chinese government is posing stringent control over the approval of investment funds in China,” said CB Richard Ellis’ Ma. “Therefore, the most viable option for foreign investors would be to source an equity deal via an offshore structure, such as looking for an equity investment in Chinese developers that are listed (on the Hong Kong Stock Exchange) and have some investable-grade retail assets.”
Taking stock of China’s logistical shortfall
June 8th, 2013Employers in China face such a severe shortage of logistics staff that one British company is offering work to 20% more candidates than it has jobs.
Paul Brooks, sales director of Unipart Logistics, said that the company regularly offered employment to between 10% and 20% more candidates than it had jobs because they knew that within a week this number of candidates would take up job offers from other employers. The firm employs 250 staff in China.
At a press conference during a recent visit to Unipart in Oxford by a Chinese delegation of logistics and education officials to the UK, Brooks said that staff retention was also a major issue, with the industry experiencing an annual staff turnover of more than 50%. Even a small wage increase would entice employees to move to another employer. “They will leave for 30p more, they will just not turn up,” said Brooks.
Haoxiang Ren, vice-president of the China Federation of Logistics and Purchasing, told Recruiter that in China “the skills shortage is for every subject and every position in the sector.”
Ren explained there was a fundamental mismatch between the demands of employers and what the Chinese education system is turning out. “Demand is like a pyramid,” he said, with many more lower level operative-type jobs at the bottom, and relatively few jobs for managers at the top.
Despite this, he explained that around 400 universities in China provided 100,000 graduates a year studying logistics as a major part of their degree, leading to a glut of people looking to enter the sector at managerial level.
The problem is made worse, “because more and more parents are looking for their children to go to university and not college”, he added.
In contrast, Ren said that only 90,000 graduates with a relevant qualification left 800 secondary vocational colleges (for 15-18-year-olds) — an insufficient number to fill the far more numerous lower-level roles. “It [the education system] doesn’t fit the nature of the industry demand,” he said.
Less Chinese students taking tough college test amid job slump
June 7th, 2013The number of Chinese students taking the country's tough national college entrance test has declined by 10 per cent amid reports that most of last year's seven million graduates struggled to get gainful jobs.
Around 9.12 million high school students are registered to sit for China's national college entrance examination called 'Gaokao' which is being held all over the country today and tomorrow.
Despite the huge numbers, figures for those taking the test have declined year-on-year for five years, from the peak of 10.5 million candidates in 2008 to 9.15 million in 2012.
"Every year, about 10 per cent of high school seniors don't take the Gaokao, because some are pre-enrolled in university and some study abroad or go to work. The proportion hasn't fluctuated greatly in recent years," Xu Mei, spokesperson for the Ministry of Education told the media ahead of the test, regarded as toughest in China.
But the dwindling numbers are also attributed to the reports that the Chinese graduates who were in much demand when the country grew at over 10 per cent in the last several years are now struggling to get placements as the growth declined to 7.8 per cent last year.
The IMF also predicted that China's GDP may further decline to 7.5 per cent or less.
A recent report by state-run CCTV said the spectre of unemployment is haunting the youth as Chinese colleges are churning out over seven million graduates a year, far higher than previous years due to extensive development of educational infrastructure.
With job vacancies scarce, 2013 has been dubbed as "the toughest year of employment" for seven million graduates, the largest number since 1949, state-run Global Times reported.
In a bid to address the fears, Chinese President Xi Jinping recently attended a job fair to instil confidence while Premier Li Keqiang said high priority would be accorded to create more jobs.
Chinese economists directly relate GDP numbers to employment prospects as every percentage of economic growth produces few million jobs and the employment market shrinks if the economy declines with firms shedding jobs to cut costs.
Education experts said that some students from rural areas may also not bother with the Gaokao, as they see no hope of entering colleges, cannot afford the tuition fees and worry about finding jobs after graduation.
The average cost for four years' university study is about 75,000 yuan (USD 12,217) while the per capita income in rural areas was 7,917 yuan a year in 2012.
"For most rural families, supporting a college student is a big investment. They must consider both input and output," Lao Kaisheng, a professor with Capital Normal University said.
However, Xiong Bingqi, deputy director of the 21st Century Education Research Institute, said the bleak employment outlook is unlikely to mean more students will forgo the Gaokao.
"There is no better choice than the Gaokao, so most students will still attend universities even if they are uncertain about their future," said Xiong.
Employers struggle to find talent
June 7th, 2013Shortfall in skilled workers may threaten future growth, McKinsey says
Wu Hao doesn't think much of China's young people. Even college graduates, the Hebei factory manager says, don't have basic skills. "Smiling and shaking hands: I have to teach them this," he complains. "I thought it was cute at first, but it's really not funny."
Mr. Wu is hardly alone in thinking it's hard to find good help. In 2013, more than a third of employers in China surveyed said they struggled to recruit skilled workers. As China evolves from being the workshop of the world to, perhaps, being a services powerhouse, it will need more high-skilled workers. And it looks likely to run short.
According to new McKinsey research, in 2020, China will have about 24 million fewer high-skilled workers - those with university degrees or advanced vocational training - than it needs. If China does not bridge the gap, the costs, in the form of lower productivity and lost opportunities, could be more than $250 billion, which is about 2.3 percent of the country's GDP.
Two mismatches are contributing to this problem.
One is geographic. Major cities like Beijing and Shanghai draw in ambitious young people from around the country and thus have more high-skilled labor than they can use; mid-sized and smaller cities don't have nearly enough. This mismatch is particularly acute when one considers where future growth is likely to come as the character of China's urbanization process changes. Specifically, in the next two decades, most growth will take place outside the top 40 cities.
The other is between what employers want from graduates and what they are getting. Surveys consistently show that employers are not satisfied with the skills of their new tertiary hires, whether academic or vocational. The main complaints, according to McKinsey research - and a wealth of anecdotal evidence - are: lack of technical training, inadequate English, and deficient soft skills, such as the ability to work in teams, independent thinking, and innovative flair.
Larger social trends are exacerbating matters. Over the past generation, the key to China's remarkable productivity improvement has been the massive movement of people from country to city, from farms to factories. The apparently endless flow of new entrants to the labor force kept wages in check.
This strategy can no longer work. Official statistics show that the pace of migration is beginning to slow; at any rate, the generally low educational level of migrants means that they do not have the skills that companies need. Moreover, due to the one-child policy, the number of people in the workforce will fall in absolute terms, as it did in 2012, by 3.45 million.
In short, just when China needs many more skilled people, its population will be falling. China's fewer workers will therefore need to be better ones, with skills suited to faster-growing sectors, such as high-end manufacturing, wholesale and retail trade, health, and education.
To bridge the skills gap, China has two advantages. One is that this is an area where industry and the private sector have every incentive to step up efforts. The other is that there are good examples of what works, from countries rich and poor, and in just about every industry. These solutions can be readily adapted and scaled up. Here are some ideas that work:
Engage youth early. Where the required skill is rare or new, don't wait for the next generation to grow up and get interested: get to them while they are still in school. A number of industry-led programs, such as South Africa's Go for Gold, expose youths to particular professions during secondary school, then assist them in training and further education. South Africa's construction and engineering industry gets a pipeline of talent, and the young people, many of them from disadvantaged backgrounds, get a foothold in a fast-growing sector.
Run intensive boot camps. These are short programs that focus on delivering particular skills. One example is Dev Bootcamp, a United States-based for-profit computer-programming course that takes students of widely different ages and backgrounds; drills them intensively for nine weeks; and works with employers to understand exactly what they need. At the end of 2012, Dev Bootcamp said it had placed more than 90 percent of its graduates, at an average starting salary of $83,000. China is in a good position to develop boot camps because the for-profit education and training market is developing rapidly. Regardless of job or supplier, it's imperative to involve employers, emphasize learning through practice and simulation, and assess proficiency to ensure that graduates are ready to work.
Create your own talent pipeline. Some of the most powerful solutions are those where leading employers come together to define the skills that they need and then work with local education providers to shape the curriculum. That is the story behind the Automotive Manufacturing Technical Education Collaborative, a joint program of 30 community colleges and major automakers that operate in the US to prepare students for careers in high-end auto-manufacturing skills. Collaboration can also be done on a for-profit basis. China Vocational Training Holdings is a private company that works with automakers to provide training to 100,000 students a year. It provides more than half of the industry's new workers.
China can see the skills gap coming. If it fails to take the steps to close it, that would be a colossal mistake - on the order of $250 billion.
McDonald's hopes to wow Chinese with rice
June 6th, 2013With an eye on dinner tables in the Chinese mainland, McDonald's, the world's leading fast food operator, on Wednesday announced new rice products for the mainland market.
Starting from June 10, the new products, including chicken and beef rice wraps, will be sold in all 1,700 McDonald's restaurants on the Chinese mainland.
The core menu, including the chain's staples like the Big Mac and McChicken, will not be changed, Kenneth Chan, chief executive officer of McDonald's China, said in the press release.
"Our new dining options are examples of how McDonald's innovates to bring more options to our Chinese customers, because that's what they want," Chan said.
The company's strategy includes more efforts to develop the night consumption market from 5 p.m. to 5 a.m., thought it has put more emphasis on breakfast, lunch and afternoon snacks in the past, he said in an interview with Xinhua.
According to the latest data from McDonald's, dinner foods account for half of foreign food operators' sales in China and this market is growing at a double-digit pace.
Meanwhile, McDonald's will set a series of standards regarding rice quality and safety, Chan told Xinhua. McDonald's sources the rice it uses on the mainland from Harbin, capital of northeast China's Heilongjiang Province, one of the country's major grain production areas.
The company plans to maintain its competitiveness and boost its overall business growth by increasing the variety of the products it offers, he said.
McDonald's opened its mainland first store in Shenzhen, Guangdong Province, in 1990. It has currently more than 1,700 outlets and over 90,000 employees on the Chinese mainland. It plans to recruit 75,000 more this year, and the number of mainland outlets is expected to reach 2,000 by 2014.
The U.S.-based fast food giant has about 34,000 stores worldwide. In 2012, McDonald's same store sales rose 3.1 percent as revenues rose 2 percent to 27.57 billion U.S. dollars.
In 2013, the company plans to invest about 3.2 billion U.S. dollars of capital in opening 1,500 to 1,600 new restaurants and reinvesting in existing locations. It targets a system-wide sales increase of 3 percent to 5 percent and operating income growth of 6 percent to 7 percent.
China Faces Serious Brain Drain Crisis
June 5th, 2013China has the highest number of top talents moving overseas in the world, News.cn reports
According to the Office of Central Talent Work Coordination Group, about 87 percent of professionals regarded as top talents working in the science and engineering field have chosen to emigrate out of China.
A survey released by the Chinese Academy of Sciences shows that many innovative talents in the Chinese science & technology sector, especially in the fields of physics, mathematics and computer sciences, have served in high positions in the world organizations.
With the current fierce international competition for expertise from such personnel, many developed countries have been attracting talent by adjusting their immigration policies, and some developing countries have now also joined the global competition for talent.
Nearly one million Chinese overseas students returned to China through the "Recruitment Program of Global Experts" (1000 Talent Plan), including 20 thousand high-quality overseas professionals.
The report quotes a senior official with the Office of Central Talent Work Coordination Group as saying that China needs more flexible talent development policies and mechanisms to attract more talent coming back.
Beijing seeks govt executives on contract to boost growth
June 5th, 2013An annual salary of no less than 200,000 yuan ($32,640) will be offered to six new high-ranking government employees hired by Beijing on fixed-term contracts, announced the capital's public service authority.
The six senior executive positions, which are highly prioritized to boost the capital's growth, are with agencies including the municipal science and technology committee, the transport commission and the economic-technological development area.
However, those positions are not government jobs for life, often referred to as the "iron rice bowl," as the two or three-year-long contract not only has a probation period varying from three to six months, but also can be terminated should the person fail a performance test.
All Chinese citizens under the age of 45, physically and psychologically healthy with relevant qualifications and skills, can apply for the positions, reads the recruitment announcement.
Qualified candidates must file their application before 6 pm on June 24. Candidates have to pass a tailored written test, an interview, a comprehensive review and a seven-day public review period before being recruited.
Long before Beijing, Shenzhen already started recruiting government employees with a contract in 2007.
More than 3,200 of some 40,000 government employees are working there on a contract basis.
Contract-based recruitment, which smashes the permanence and stability of the "iron rice bowl," has also been expanded to cities and provinces including Shanghai.
Generally, a candidate has to pass a unified civil service exam and an interview before being hired by a State organ. In 2012, some 1.5 million candidates took the exam, with 75 competing for a position on average.
Mao Shoulong, a public administration professor at the Renmin University of China, said it is suitable to recruit intermediate and senior professionals through contracts, who may be unwilling to take the general exam and not work in one place for their whole life.
However, Mao said he sees no need to recruit all government employees on a contract basis, adding that neither of the systems is foolproof.
Zhejiang opens uninhabited islands to private developers
June 4th, 2013Individuals could apply for the right to use uninhabited islands in Zhejiang Province for business development, with the longest possible lease 50 years, according to new local regulations formally implemented on Saturday.
Among the 2,639 uninhabited islands in Zhejiang Province, 31 are listed in the first published batch of 176 usable uninhabited islands nationwide, said Liu Xiangdong, an inspector with the Zhejiang Province Ocean and Fisheries Bureau at a press conference on Thursday.
The islands can be used for purposes from tourism to industry. Individuals could choose one from the 31 islands and submit an application including a concrete development plan to the county-level maritime authorities, Liu said.
After receiving an application, the authorities will publish the applicant's name, the island involved, and the development plans to the public. They should also look for comments and receive approval from county-level governments, provincial maritime authorities and the provincial government, he said.
A bidding process will determine who gets the islands. If these islands have not been developed within three years, their rights could be withdrawn by the provincial government.
"The regulation is worth promoting nationwide," Dong Liming, a vice director-general at the China Land Science Society, told the Global Times Friday. "With individuals working on the inhabited islands, our maritime economy could be developed and national defense could be strengthened."
China Services Growth Slows Sharply, Adds To Recovery Risk
June 4th, 2013Growth in China’s services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday – fresh evidence of rising risks to a revival in the world’s No.2 economy.
The HSBC services Purchasing Managers’ Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.
Two separate PMIs last week had already shown that China’s manufacturing sector growth slowed, With the weakness spreading to services, which make up almost half of gross domestic product, the risk to the recovery may be increasing.
“The weak HSBC service PMI figure provides further evidence of a slowdown not only in the factory sector but also in the service sector,” said Zhang Zhiwei, chief China economist at Nomura Securities in Hong Kong.
“This confirms our worries about insufficient growth momentum in the economy, which we expect to slow to 7.5 percent in the second quarter.”
The HSBC services PMI follows a similar survey by China’s National Bureau of Statistics, which found non-manufacturing activity eased to 54.5 from 55.6. The official PMI is more weighted towards large state-owned firms.
Readings above 50 indicate activity in the sector is growing, while those below 50 indicate it is contracting.
The HSBC survey showed that the sub-index measuring new business orders dropped sharply to a 20-month low of 51.5 in April, with only 15 percent of survey respondents reporting an increased volume of new orders that month, HSBC said.
“This started to bite employment growth. All these are likely to add some risk to China’s growth in 2Q, as there’s still a bumpy road towards sustaining growth recovery,” said HSBC’s China chief economist Qu Hongbin.
The employment sub-index decreased to 49.6 in April, the first net reduction in staff numbers since January 2009, although HSBC said job losses were marginal, partially caused by firms down-sizing and employee resignations.
Employment is a decisive factor shaping government thinking because it is crucial for social stability. The services sector accounted for 46 percent of China’s gross domestic product in 2012, as big as the country’s better-known manufacturing industry.
China’s economic growth unexpectedly stumbled in the first quarter, slipping to 7.7 percent versus 7.9 percent in the previous three month period, as factory output and investment slowed.
The government has set a 2013 growth target of 7.5 percent, a level Beijing deems sufficient for job creation while providing some room to reform to the economy.
Any more weak data could spark a policy response.
“The risk of slower growth is rising, the Chinese government will probably take actions after April data come out,” said Jianguang Shen, chief China economist of Mizuho Securities Asia in Hong Kong.
“I see an increasing possibility for China to cut interest rates, but not likely any time in the near future, as housing inflation is a constraint.”
However a Reuters poll last month found that China’s central bank is expected to keep the benchmark one-year bank lending rate at 6 percent and the one-year bank deposit rate at 3 percent through 2013, as well as holding banks’ reserve requirement ratios (RRR) steady.
China's graduates enter tight job market
June 3rd, 2013BEIJING (AP) — Chemistry student Jiang Wenying graduated three years ago and decided the job market was so tough she might as well go back to school for a graduate degree. Now she's finding it even worse, in what looks to be China's tightest market ever for job-seeking graduates.
Jiang says she has sent out more than 1,000 job applications, netting no more than 10 interviews and not a single job offer.
Jiang, who received her graduate degree in chemical industry from the Harbin University of Science and Technology this year, recently traveled to Beijing to try her luck at a university campus job fair, but found no firm prospects there either.
"The job market has been getting worse by the year," said the young woman, who looked dejected as she slouched against a column at the end of the job fair. She spoke just loud enough to be audible above the din of workers dismantling booths.
"There are far more chemical industry students than needed," she said.
While the job market in China is still much better than in many other parts of the world, 2013 is being billed locally as the worst for young graduates. A record number of them — about 7 million — are leaving universities and graduate schools to seek their first employment at a time when companies are hiring fewer people. Women appear to be faring worse than men.
The stunning economic growth of the past dozen years is slowing, and gone are the days when graduates were assigned jobs in their respective industries — a system dismantled in the 1990s in China's fast-changing economy.
The issue is politically sensitive because China's urban, educated class has become outspoken about government shortcomings in dealing with ills ranging from endemic corruption to polluted air, and the tight job market could leave many among them disgruntled after more than a decade of economic expansion and rising expectations.
This year's biggest-ever graduating class is the fruit of many years of government policy to boost enrollment, but the number of jobs for new hires has declined about 15 percent compared with the previous year, said Yang Xiong, director of the Youth Research Center in Shanghai Academy of Social Sciences.
"With those two factors, you end up with the toughest job market this year," Yang said. "The global economy is not faring well, and China is part of the globalization. With closure of many export-oriented businesses and appreciation of the Chinese currency, employers have to slash on personnel."
Preliminary data reported in state media show about a third of the 2013 class had signed employment contracts by May, compared to more than 40 percent a year ago. The number of students applying for graduate schools has reached a new high of 1.76 million.
The notion that education provides the promise of success has ancient, Confucian roots in China. It continues today, perhaps even more so because of family planning policies that often put the burden of a family's future on a single child.
The country's policy-makers — aware that a lack of jobs for the young and educated could be seen as a failure to uphold the social contract — have been urging that every measure be taken to help newly minted graduates gain employment, including creating more community-level jobs, reducing paperwork, recruiting for the military and promoting entrepreneurship.
"The employment of the graduating class affects economic development, improvement to living standards, and social stability," said a central government document issued in mid-May when the issue was on the agenda of a state council meeting presided by Premier Li Keqiang.
Education Ministry spokeswoman Xu Mei told state media that the ministry and local education bureaus would offer more job fairs and online job-seeking services. "All sides are making efforts to ensure the employment rate of this year's class won't get lower," she said. AP's request for an interview with a ministry official on the issue was not immediately answered.
Some job seekers are lowering their expectations. Wang Yuan, an industrial design major at southern China's Hunan Industrial University, thought a design job would be waiting for her after graduation. But nothing has become of the two dozen job applications she has sent out since last fall.
"They were like stones sinking into the sea," said Wang, 23.
She has since changed her tack. "Any job will do, and choosiness will have to come later," she said.
Lynn Lee, a 21-year-old law undergraduate student at Huaiyin Normal College in Jiangsu province, tried to find work in legal affairs, media, sales and executive assistance before finally landing a job as a bank teller near her hometown. Her job search included nearly 100 applications and several out-of-town trips.
"There were rounds of interviews, and many candidates had impressive academic credentials," she said. "I was so nervous I couldn't sleep at night, and now I'm left with a migraine."
Lu Feng, an electronics senior at Xidian University in central Chinese city of Xi'an, said he was shocked to see a room filled with more than 1,000 applicants when he showed up for an interview with a technology firm from southern China recruiting for 20 jobs in his city. He got hired, and the job hunt took him only a couple of weeks.
Lu and several other male job seekers interviewed by The Associated Press said they feel they have better job prospects than females, and can even afford to be choosy.
China's job market is notoriously discriminating. Employers have openly snubbed women, out-of-town job applicants and graduates from less prestigious institutions. This year, the Chinese State Council has demanded that employers make no requirement on gender, ethnicity, age, residence and type of school when hiring graduates of higher education, but the directive is unlikely to be followed.
When compared with elsewhere, China's economy is still doing relatively well, with an overall urban unemployment rate of only 4.1 percent in 2012. That compared with unemployment rates ranging from 4.7 percent to more than 27 percent in European countries; the U.S. rate was 7.5 percent last month. However, a large share of China's population is in the countryside, and urban data only cover a portion of China's workforce.
Luo Xiaoming, editor-in-chief of the Chinese-language financial news site Caixun.com, said China's economic growth of 7.7 percent for the first quarter should be able to absorb the increase in job seekers, but the challenge in the job market reflects a flaw in China's investment-driven economy, which is expanding without job growth.
"This economic model has misled the market, resulting in excessive production capacity, and its lack of openness to the private sector has stifled innovation and entrepreneurship," Luo said in explaining the lack of jobs in China. "Economic transformation has been stagnant."
Some lay the blame on China's education system, which they say is a mismatch to China's job market.
Many jobs require only a polytechnical education, and perhaps China is currently producing too many university graduates, including doctoral-level students, said Yang, the youth research center director. That means many graduates end up with lower-level jobs that have little to do with their areas of study.
"Why would they want to take basic jobs? If they don't, they become unemployed," Yang said.
New Contracts for Civil Servants to go National
May 31st, 2013This is an extended abstract of an article that appeared in this week's edition of The Economic Observer, for more highlights from the EO print edition, click here.
By the end of 2013, numerous provinces and cities across China will have launched pilot programs implementing fixed-term contracts in the hiring of civil servants. By the end of 2014, the contract system may be implemented nationwide.
Shenzhen was the first city to launch the contract system, doing so in 2007. Shenzhen was followed by Shanghai in 2008, and Jiangxi, Henan, Fujian, Liaoning, and Guangxi provinces in 2012. Jiangsu, Sichuan, Shanxi and Shandong provinces are expected to launch contract systems by the end of 2013.
When Shenzhen initially implemented the contract system it hired 41 civil servants. Now, Shenzhen hires all new civil servants through the contract system. Currently there are 3,000 civil servants under the contract system in Shenzhen, with another 500 to be added later this year.
The new contract system allows for more flexibility in the process of hiring officials. Applicants can be recruited directly and might be able to avoid the extended series of exams and interviews that others hoping to land a public service job are forced to go through.
The new system also differs from existing hiring practices in relation to how the salary package for such civil servants are determined. Traditionally, renumeration for most civil service positions are centrally determined according to their level. Under these new fixed-term contracts, employees enter into a wage agreement with the department hiring them and thus have more room to negotiate. The final salary of public servants that have been recruited according to the new contract system are determined by the contract they sign with the department.
Zhu Lijia (???), a professor at the Public Management Teaching and Research Department and director of the Public Administration Department at the China National School of Administration, says that the lack of regulations covering the direct recruitment of civil servants and the process of negotiating a salary package means that the system is open to abuse.
The new contract system is mainly used for recruiting highly-skilled professionals.
Liang Yuping (???), director of the Civil Servant Management Department at the Chinese Academy of Personnel Science, and Peng Jianfeng (???), a professor at the School of Labor and Personnel at Renmin University of China, believe that the contract system helps to both motivate and supervise civil servants.
However, Li Jianzhong (???), a researcher at the Chinese Academy of Personnel Science, told the EO that preventing people becoming civil servants through direct recruitment and preventing local governments from providing unreasonably high wages to civil servants, is the best way to guard against corruption.
Last year over 1.5 million people registered to take the national civil service exam. They were competing for approximately 20,800 positions.
Liu Xin, a professor at the Institute of Organization and Human Resources at Renmin University, recently explained to Time Magazine why so many Chinese graduates are attracted to a career in the country's civil service. "As a civil servant in China, unless you quit or make a big mistake, you have a job for life," he said. "It's the iron rice bowl. That's especially important during an economic downturn."
The roll out of these new fixed-term contracts along with mounting job pressures, may begin to alter this perception.
Large tungsten mine discovered in E China
May 31st, 2013Geologists have discovered a large tungsten mine in east China's Jiangxi Province, officials said Thursday.
More than 1 million tonnes of tungsten and associated copper have been found at the mine in the Zhuxi mineral area of Fuliang County in the northeast part of the province, said Peng Zezhou, chief of the provincial geology and mineral resources exploration bureau.
The Ministry of Land and Resources confirmed the discovery on Wednesday on its website.
A maximum depth of 449 meters of tungsten and 30 meters of associated copper in the mine has been penetrated, said Peng.
The reserve explored is in the same province as the world's largest tungsten mine, which was found in Wuning County, Jiujiang City, Jiangxi. It holds tungsten reserves totalling 1.06 million tonnes.
Geologists said they expect to find more tungsten at the newly-discovered mine, which could oust the mine in Wuning County as the world's largest.
Alarming drop in Chinese graduates landing jobs
May 30th, 2013Yang Biao has spent every weekend for the past two months at job fairs. The 25-year-old, who will finish a Chinese literature degree at Beijing University of Technology in July, has also sent out nearly 200 job applications.
"I do feel like I'm running out of time and I'm getting more anxious as each day passes," he said. "But I can only cross my fingers and hope I will no longer need to live off my parents."
Yang is one of a record nearly seven million students who will graduate from mainland universities this year and enter the job market during a marked economic slowdown.
By early this month, 52.4 per cent of mainland students about to graduate had signed job contracts, down seven percentage points on the same time last year. In the industrial hub of Guangdong, the rate was 46 per cent, and in Beijing, home to such top universities as Peking and Tsinghua, it was just 33.6 per cent.
Graduates majoring in English, law, computer science and technology, accounting, international trade and industrial and commercial administration are finding it harder to find jobs.
President Xi Jinping made a high-profile visit to a job fair in Tianjin on May 14 to reassure jobseekers, pledging to create more jobs by boosting economic growth. Xi told the graduates he met that having a job was the foundation of people's livelihood and that employment struggles were becoming a global problem, Xinhua said. He was quoted as saying that only economic development could help improve the situation.
A day later, Premier Li Keqiang chaired a State Council meeting that outlined several measures designed to keep the employment rate for graduates no lower than last year.
The State Council also promised to tackle discrimination and inequality in the job market and to provide jobseekers from poor families with one-off allowances to help them find jobs.
Yang, from a rural family, said more than half his classmates were still looking for a job by the middle of this month. Because he was about to graduate from a less prestigious university, he did not expect a well-paid job, just one that could support him.
He said he had turned down a job offer from a Beijing kindergarten with a base salary of 1,700 yuan (HK$2,130) a month because it was not enough to make ends meet, given that he would have to move out of his parents' home on Beijing's outskirts to work in the city centre. Yang tried to get into a postgraduate school to further his studies and boost his competitive edge, but failed the entrance exam in February.
Another jobseeker, Ji Yinrui , said the cost of pre-employment accreditation courses in the computer and IT sector was a bigger problem for him than the tight job market. Ji, who will graduate from a university in Tianjin with a degree in computer science and technology, said many big-name employers in the computer and information technology sector required newly graduated jobseekers to take accreditation courses from privately run career training institutions as a condition for recruitment.
But such courses, which lasted up to six months and cost between 10,000 yuan and 20,000 yuan, were beyond the reach of jobseekers like him from poor rural families.
"I understand the employers' concerns about a general lack of workplace skills among graduates nowadays, but isn't that an issue about how we've been taught in universities?" he said. "Because what we're required to learn at the private training schools is exactly what we should have been taught at university, especially during our last semester."
Ji's hunt began in November and he has given himself another two months to land a job, even a part-time one, because he says it is time to stop relying on his parents and stand on his own feet.
Citing a survey by the National University Student Information and Career Centre, China Central Television reported on May 19 that demand for recruits by employers with more than 1,000 employees was down by 3.6 per cent compared with last year.
A university degree no longer guarantees a decent job on the mainland because a reckless, government-led push for expansion since the late 1990s has seen the number graduating each year more than triple in the past decade.
The prospects of landing highly sought-after positions at government agencies and state-owned enterprises are often linked to power and money.
Some 500 college graduates in Shanxi lost tens of millions of yuan between 2008 and last year to a rogue job agency in a scam in which they were each swindled out of between 200,000 yuan and 500,000 yuan paid in return for promises of jobs in the state-owned sector.
As competition in the job market gets fiercer, those from less privileged families also face all sorts of discrimination and administrative barriers.
Zhao Lili , a postgraduate student in Beijing originally from Henan , said she faced twin difficulties in job hunting - as a woman and someone without Beijing household registration, or hukou.
"Many recruiters have shown no interest in me after learning that I'm not a local resident because they think I'm more of a liability than a local applicant," she said.
Zhao, who is studying business management, said a far larger proportion of male students in her faculty had found jobs than had female students.
Xiong Bingqi , deputy director of the Beijing-based 21st Century Education Research Institute, said governments needed to play a bigger role in creating jobs, boosting transparency in recruitment and addressing inequality in access to sought-after positions.
Xiong also warned against a public preoccupation with statistics about the job outlook for university graduates, which could put pressure on universities to doctor their employment figures and force students to rush into jobs they disliked.
Studies by Mycos Data, a mainland consultancy specialising in higher education, show that 38 per cent of university graduates in 2009 left their jobs after six months.
"So job-creation efforts for college graduates are not a seasonal issue, but should begin shortly after students enter universities and continue all the way through the first three or five years of their career and even longer," Xiong said.
Tough task to get rid of job discrimination
May 16th, 2013Four years ago, emulating an Australian global competition for the "Best Job in the World," a lavender farm in Guangdong province launched a national search for two gardeners for the "The Best Jobs in China".
The requirements of Tourism and Events Queensland were simple: It wanted a caretaker for a local tropical island who could speak English, swim and blog. But the Guangdong advertisers required only "beautiful" women aged 18-25 and taller than 163 centimeters to apply to work on rolling lavender fields for a weekly salary of 20,000 yuan ($3,260). Candidates were also asked to specify their vital statistics and state "which part of your body you like the most" in the online applications.
The case shows how blatant and direct discrimination can be in China's job market. To understand how prevalent it is, one just needs to take a look at a recent directive of the Ministry of Education that bans universities from hosting recruitment exercises with discriminatory terms on gender, hukou (residency permit) and academic qualifications.
This is the first time the ministry has banned job advertisements inviting applications only from graduates of elite universities on special government support programs. Such universities account for only 6 percent of the total and accommodate less than 10 percent of all college students nationwide. With a record passing out of 6.99 million graduates this summer, discrimination against those with degrees from less illustrious schools may become even worse as the number of candidates far outstrips the jobs on offer.
Despite skepticism about the effectiveness of the measure that will only be enforced on campuses, advocates of equality and justice in China hope it would be the beginning of the end of a chronic social problem that denies many people the opportunity to realize their "Chinese Dream".
Employment discrimination has deep roots in Chinese history and culture. Often poorly educated people are not aware that their basic rights are violated when employers demand discriminatory preferences for jobs. It can be too subtle for applicants to realize that a decision has been made on the basis of personal features unrelated to work.
But on many occasions, employers explicitly discriminate against jobseekers with wide-ranging criteria on age, sex, personal appearance, disease, ethnicity, birthplace, marital status and hukou. The list has been growing, with the bias for "elite" colleges being the latest addition.
Better-informed jobseekers who stand up to the mistreatment may find the costs of lawsuits prohibitively high, and the existing laws and regulations don't necessarily work in their favor.
A Chinese employment promotion law passed in 2007 prohibits differential treatment of jobseekers based on the grounds of ethnicity, gender, religious beliefs, age or physical disability. But the law is difficult to enforce, because it lacks clear standards and does not specify how to deal with violators of the law.
Earlier this year, a jobseeker in Guangdong province was awarded 601 yuan in the country's first gender discrimination case to be ruled in favor of a complainant. However, her lawyer who provided pro bono legal service said the case had to be resolved through labor authorities because the court found it hard to prove discrimination on the basis of gender and to measure the victim's loss.
Public appeal has been growing for a law that provides clear rules on violations and standards for proving job discrimination. Until that happens, the onus will largely rest on the government to promote equality and responsible employment practices. The government can work out guidelines for job ads, like the Ministry of Education's ban on discriminatory hiring activities on campuses, to let people know that discrimination is wrong and should be stopped now.
It's embarrassing to see employment discrimination pervade the lower strata of society six decades after the workers were declared the masters of the country.
44% of university seniors secure jobs
May 15th, 2013More than 44 percent of university seniors in the city have secured jobs after graduation as of Friday, down 2 percentage points from the same period in 2012, the Shanghai Evening Post reported Monday.
The closely watched statistic, which local universities track annually, shows the proportion of graduating seniors who have signed employment agreements so far this year. The number has received a lot of attention recently from local media outlets, many of which have proclaimed 2013 as the toughest year in recent memory for graduating seniors seeking their first job.
The Shanghai Municipal Education Commission disputes that assessment. The commission called a press conference Monday to assert that the figure is in line with past years.
The situation is no worse than it was from 2009 to 2011, said Li Ruiyang, the commission's deputy director.
The gap between this year's and last year's figures gradually closed over the course of April, which is the month when many seniors begin signing employment agreements, Li said.
As of April 10, the agreement signing rate was 4.07 percentage points lower than the previous year, according to the commission. By April 25, the gap had shrunk to 3.17 percentage points.
There are 152,000 positions available for the city's 178,000 graduating seniors this year, though the commission predicts that about 48,000 graduates will choose to continue their education rather than enter the labor market.
Although there appears to be enough open positions for the graduates, it does not mean every student will easily find a job, said Chen Dongyuan, an official from the division of employment at the Shanghai Municipal Human Resources and Social Security Bureau.
The proportion of students who sign an employment agreement ultimately hinges on whether graduating seniors can meet employer requirements, and vice versa, Chen said.
Many students have not been satisfied with the salaries they have been offered, while many companies have found the experience of many graduates lacking, a commission official said. The mutual dissatisfaction has also contributed to the lower agreement rate.
"One reason why the signing rate is still below 50 percent is because some students are holding out for better offers," Chen told the Global Times. "The rate will probably rise over the next month."
Chen said the slowdown in economic growth has also caused a drop in the number of open positions as many companies have no plans to recruit new employees.
By comparison, the signing rate for vocational students has exceeded last year's by 1.2 percentage points. Some vocational school students have acquired an edge over university students because of the practical skills they have learned, the official said.
Chinese lessons for Yahoo’s boss
May 15th, 2013Marissa Mayer may want to take a leaf out of the Chinese HR manual when taking on the pyjamas-wearing home-workers as boss of Yahoo.
At many Chinese companies, even sinecures in the state sector, mid-level managers and above are required to keep their phones switched on and answer email within two hours – when they’re on holiday. That gives a new meaning to the concept of “work from home”: in China, it’s what you do when you ought to be on holiday.
Diligence like that comes with the territory, it seems: leisure has had a bad rap in China since the days of the iron rice bowl. And blurring the work-life boundary is nothing new either. Under communism, the party picked your job and your job determined almost everything else: where you ate, slept, birthed your offspring and even spent your dotage. Work and life were kept in perfect equilibrium – or else.
Even today, many Chinese workers find it hard to tell where work ends and life begins. Construction workers live on-site, in the same flimsy prefab shacks, festooned with seemingly the same pair of tattered underwear air-drying outside the window, throughout China. When the shack went up and the undies went out on the vacant lot opposite my home, I knew the cranes could not be long to follow.
And even after completion, Chinese apartment buildings are filled with live-ins – not maids but welders and plumbers and tilers and carpenters. Flats in China are sold as empty shells, and those who fill them with floors and walls and bathrooms and kitchens live there while they work (which is why the sound of drilling never takes a holiday either).
A few outliers in the business world have begun to sing the praises of something other than nonstop toil. Last week Jack Ma, founder of the e-commerce titans Alibaba and Taobao, used his swansong as CEO to announcethat “from tomorrow, my career is to enjoy life”.
Some Chinese companies have begun to offer lifestyle concessions to keep employees happy, says Jennifer Feng, chief HR expert at 51job, one of China’s leading recruitment agencies – such as allowing employees to refuse to take phone calls or answer emails for two to three days. Per week? Per month? “A year,” she says: two to three days out of 365.
And although that particular form of indolence known as “working from home” is out of fashion at Yahoo, where Ms Mayer has told staff to work from the office, it is getting its first tentative trials in China. One local government in Shanghai is trying to promote the concept by working with Ctrip, China’s largest, Nasdaq-listed travel agency.
Ctrip told local Chinese news that it had lowered its usual requirements for age and appearance, and focused more on honesty and responsibility when deciding which employees should be allowed to work without coming to the office.
The company’s CEO, James Liang, wrote up Ctrip’s nine-month experiment in home-working with Stanford University professor Nicholas Bloom, concluding that performance increased dramatically and attrition fell sharply – while the company saved about $2,000 per employee per year worked at home.
Half of the 1,000 studied employees stayed in the office as a control group, while the other half donned their telecommuting loungewear. Attrition rates among those in pyjamas were 50 per cent below the white-collar cohort. After the experiment ended, those who chose to continue telecommuting recorded performance that was 22 per cent higher than the work-at-works.
But Ms Feng of 51job says she thinks most Chinese workers and employers do not share Ctrip’s sanguine view of the supposed win-wins of telecommuting. Some Chinese IT companies banned working at home even before Ms Meyer got around to it and others that offered staff the chance to stay home one or two days a month have not found such offers to be that popular, she says.
Most telecommuters found they were working longer, not shorter, hours, says Ms Feng. “If they work at a particular place for particular hours, that gives them a reason to refuse after-work meetings, but when they work at home?.?.?.?they are required to reply to emails within half an hour, attend meetings and distance-learning courses at night,” she says.
At that rate, they might be better off on holiday: at least that way, they get a full two hours to hit the reply button.
Recruiting overseas judges the right thing to do for now
May 14th, 2013Our judiciary remains fiercely independent," Secretary for Security Lai Tung-kwok said at a luncheon address in London last week. "We uphold the rule of law and Hong Kong people enjoy a wide range of rights and freedoms."
An independent judiciary is one of Hong Kong's most positive attributes, especially now that the civil service's image is somewhat tarnished. However, while the quality of judges remains high, there is a troubling shortage of suitable candidates who can move up to the bench.
One reason is that Hong Kong did not develop legal education until very late. The Hong Kong College of Medicine for Chinese produced its first medical graduates in 1892 but the first law graduates from the University of Hong Kong did not appear until 80 years later, in 1972. Because of that, Hong Kong's first local judges were all British-trained. Even then, there were disincentives to serve as judges under the colonial system.
Simon Li Fook-sean, who died recently, was the first Chinese person to serve as a high court judge in 1971 and retired in 1987 when he was vice-president of the Court of Appeal. Throughout this period, he complained bitterly about the discriminatory treatment accorded local judges.
In those days, however, Hong Kong could draw on other sources for legal and administrative talent - not just from Britain but from its colonies around the world. Those expatriate judges served Hong Kong well but many are now retired or close to retirement.
None of the original judges on the Court of Final Appeal in 1997 was locally trained. Currently, only one - Patrick Chan Siu-oi - graduated from the University of Hong Kong, but he is retiring in October and will be replaced by another British-trained jurist, Joseph Fok.
Fortunately, China was pragmatic when it enacted the Basic Law. That document stipulates that only the chief justice of the Court of Final Appeal and the chief judge of the High Court must be Chinese nationals. Other judges - and other legal personnel - can be recruited overseas.
Since 1997, there has been a perhaps understandable reluctance to recruit overseas judges. But Hong Kong has no choice if it is to maintain its high standards. The city itself simply does not have the depth and breadth of legal talent.
Chief Justice Geoffrey Ma Tao-li has acknowledged the problem and said: "So far as I'm concerned, it is better to leave a position vacant than to get people who are not qualified or are not the right people." Of course, positions cannot be left open indefinitely. Already, the waiting time for both civil and criminal cases has lengthened beyond prescribed targets.
Overseas judges are at a disadvantage in not knowing the Chinese language and the local culture. But until Hong Kong can fill the void - by training top legal minds and perhaps also by widening the pool to include more solicitors and academics - there may well be a need to recruit judges from overseas.
Eliminating job discrimination is a tough task
May 13th, 2013Four years ago, emulating an Australian global competition for the "Best Job in the World," a lavender farm in Guangdong province launched a national search for two gardeners for the "The Best Jobs in China".
The requirements of Tourism and Events Queensland were simple: It wanted a caretaker for a local tropical island who could speak English, swim and blog. But the Guangdong advertisers required only "beautiful" women aged 18-25 and taller than 163 centimeters to apply to work on rolling lavender fields for a weekly salary of 20,000 yuan ($3,260). Candidates were also asked to specify their vital statistics and state "which part of your body you like the most" in the online applications.
The case shows how blatant and direct discrimination can be in China's job market. To understand how prevalent it is, one just needs to take a look at a recent directive of the Ministry of Education that bans universities from hosting recruitment exercises with discriminatory terms on gender, hukou (residency permit) and academic qualifications.
This is the first time the ministry has banned job advertisements inviting applications only from graduates of elite universities on special government support programs. Such universities account for only 6 percent of the total and accommodate less than 10 percent of all college students nationwide. With a record passing out of 6.99 million graduates this summer, discrimination against those with degrees from less illustrious schools may become even worse as the number of candidates far outstrips the jobs on offer.
Despite skepticism about the effectiveness of the measure that will only be enforced on campuses, advocates of equality and justice in China hope it would be the beginning of the end of a chronic social problem that denies many people the opportunity to realize their "Chinese Dream".
Employment discrimination has deep roots in Chinese history and culture. Often poorly educated people are not aware that their basic rights are violated when employers demand discriminatory preferences for jobs. It can be too subtle for applicants to realize that a decision has been made on the basis of personal features unrelated to work.
But on many occasions, employers explicitly discriminate against jobseekers with wide-ranging criteria on age, sex, personal appearance, disease, ethnicity, birthplace, marital status and hukou. The list has been growing, with the bias for "elite" colleges being the latest addition.
Better-informed jobseekers who stand up to the mistreatment may find the costs of lawsuits prohibitively high, and the existing laws and regulations don't necessarily work in their favor.
A Chinese employment promotion law passed in 2007 prohibits differential treatment of jobseekers based on the grounds of ethnicity, gender, religious beliefs, age or physical disability. But the law is difficult to enforce, because it lacks clear standards and does not specify how to deal with violators of the law.
Earlier this year, a jobseeker in Guangdong province was awarded 601 yuan in the country's first gender discrimination case to be ruled in favor of a complainant. However, her lawyer who provided pro bono legal service said the case had to be resolved through labor authorities because the court found it hard to prove discrimination on the basis of gender and to measure the victim's loss.
Public appeal has been growing for a law that provides clear rules on violations and standards for proving job discrimination. Until that happens, the onus will largely rest on the government to promote equality and responsible employment practices. The government can work out guidelines for job ads, like the Ministry of Education's ban on discriminatory hiring activities on campuses, to let people know that discrimination is wrong and should be stopped now.
It's embarrassing to see employment discrimination pervade the lower strata of society six decades after the workers were declared the masters of the country.
Expat fair offers more than teaching jobs
May 13th, 2013The country's major job fairs for foreigners have featured increasingly more high-tech and management-oriented positions than the formerly dominant teaching posts, said a senior official with the department that oversees attracting and managing international professionals.
Between 2005 and 2008, the majority of positions offered at top job fairs for foreigners were for language teachers, but the post-financial-crisis period has seen more enterprises seeking professionals with other expertise, Zhong Yanguang, deputy director of the Information Research Center of International Talent under the State Administration of Foreign Experts Affairs, said on the sidelines of a job fair on Saturday.
"In the past many enterprises hired foreigners mainly to show that they have international staff, but now as more and more Chinese enterprises are eyeing the global market, they tend to employ and efficiently use those international human resources," he said.
Zhong's organization has held major job fairs for expats every year in Beijing, Shanghai and Guangzhou since 2005.
In Beijing, most jobs at the fair tend to go to high-tech and management-oriented professionals; in Shanghai, financial talent is tops in demand; and in Guangzhou, enterprises need marketing professionals, according to Zhong.
At the Beijing job fair on Saturday, language-teaching posts accounted for less than 50 percent, which marked a major change.
Nearly 70 enterprises and organizations participated in the fair, posting more than 1,000 jobs.
China International Chamber of Commerce for the Private Sector looked for eight professionals to fill marketing and management positions provided by six private enterprises.
"Privately owned businesses, especially medium-sized ones, are thirsty for foreign professionals to help them explore the overseas market," said Qi Tao, a spokesperson for the chamber.
The CICCPS has more than 140 members, and they have participated in the job fair for five years.
At the fair, the foreign experts affairs bureau in Rizhao city, Shandong province, was organizing local enterprises to seek foreign talent.
"The city's high-tech industry is developing fast and we urgently need talent in fields such as agricultural-machinery manufacturing, biological medicine, environmental protection and seawater desalination," said Li Jianyun, who was in charge of the recruitment for the bureau at the fair.
Li's organization offered 70 positions in those fields.
Also at the fair, Hebei-based Great Wall Motor Co was looking for talent to manage overseas programs.
"We want to hire professionals from India and Thailand to manage our future projects in those two countries because we plan to set up factories there, and we need people who know local markets well," a staff member with the company said on condition of anonymity.
More than 1,500 job seekers were expected to pass through the fair by the end of Saturday, according to Zhong Yanguang.
Natalia Pozdeeva, from Russia, has been working in Beijing for four years and now works at a Russian logistics firm, but she wants to change jobs.
"I hope to find a job at a Chinese logistics company in Beijing, and the reason I want to stay in the industry is because trade between China and Russia continues to be prosperous," she said.
Pedro Hernandez, from Spain, studies computer science at the University of Alcala in Madrid.
Hernandez will graduate in July and he will end his exchange-student program in China's Shandong University in months.
"China's IT industry develops fast and there are many more job opportunities here than in Spain," he said.
The 30-year-old said he wants to find a software-development job in Beijing.
Reve Tardivel is from Cameroon, and he will complete his master's degree in economics and business management from a school in Beijing in July.
"I enjoy my life in China and I'm going to marry a Chinese next month. I also notice a lot of job opportunities here," said the 27-year-old.
51job Q1 Profit Declines 10% On Higher Expenses; Provides Q2 Outlook
May 10th, 2013Chinese integrated human resource services company 51job, Inc. (JOBS: Quote) reported Thursday a profit for the first quarter that declined 10 percent from last year, reflecting revenue decline and lower operating margins amid higher expenses. The company also provided earnings and revenue outlook for the second quarter of fiscal 2012.
"Although the late Chinese New Year holiday meaningfully delayed the recruitment peak season and affected the amount of revenues we were able to capture in the first quarter, we have observed a solid increase in hiring activity and improved sentiment among employers in 2013," President and CEO Rick Yan said in a statement.
The Shanghai, China-based company reported net income of 108.80 million yuan or $17.52 million for the first quarter, down 9.7 percent from 120.51 million yuan in the prior-year quarter. Earnings per share declined to 1.82 yuan or $0.29 from 2.03 yuan a year earlier.
On American Depository share basis, earnings increased to 3.64 yuan or $0.59 from 4.06 yuan last year.
Excluding items, adjusted net income for the quarter was 123.65 million yuan or $19.91 million, compared to 132.33 million yuan in the year-ago quarter. Adjusted earnings per share was 2.07 yuan or $0.33, compared to 2.23 yuan a year earlier.
On American Depository share basis, adjusted earnings was 4.14 yuan or $0.67, compared to 4.46 yuan last year.
Total revenues for the quarter edged down 0.1 percent to 380.38 million yuan or $61.24 million from 380.81 million yuan in the same quarter last year.
Online recruitment services revenues increased 8.3 percent, while average revenue per unique employer decreased 10.0 percent. From the year-ago quarter.
Other human resource related revenues grew 3.5 percent, while print advertising revenues dropped 48.1 percent from last year.
Operating margin contracted 430 basis points to 31.7 percent from last year as operating expenses as a percentage of net revenues increased 470 basis points, partially offset by gross margin improvement of 40 basis points.
The company noted that it discontinued the publication of 51job Weekly in Shenzhen in March 2013, but continued to maintain its facilities and all other operations in the city.
Looking ahead to the second quarter, the company projects adjusted earnings in a range of 2.20 to 2.35 yuan per share or $0.71 to $0.76 per ADS, on projected revenues between 395 million yuan and 410 million yuan, or $63.6 million and $66.0 million.
"For this year, we remain focused on expanding our customer base, deepening relationships with HR departments for cross-selling opportunities, and innovating new products to increase user engagement and effectiveness for our corporate clients and individuals alike," Yan added.
JOBS closed Thursday's regular trading session at $60.42, up $0.90 or 1.51% on a volume of 66,178 million shares. However, the stock lost a $2.42 or 4.01% in after-hours trading.
Calling all green talents
May 10th, 2013The Ministry of Environmental Protection and the world's largest brewer, Anheuser-Busch InBev, announced recently the opening of this year's recruitment of green talents in Beijing. The project aims to look for students dedicated to environmental protection and match them with green companies. Three student groups presented their green ideas involving recycling of boxes used in delivery and trading trash for vegetables. A leader of water saving in the beverage industry, the brewer said investment in green talents equals investment in the future.
Hong Kong Dockworkers Strike Attracts Huge Solidarity
May 9th, 2013After 40 days, the dockworkers have ended their strike with a settlement including a 9.8 percent wage increase. More details and an interview with a strike leader are here.
Five hundred dockworkers are facing down the richest man in Hong Kong (and, according to Forbes, eighth-richest in the world) in a strike that has entered its third week and brought transport in the world’s third-busiest port to a virtual halt.
Li Ka-shing, the billionaire behind Hongkong International Terminals (HIT), controls more than 70 percent of Hong Kong’s port container traffic and oversees a vast transnational network of enterprises including the oil and gas giant Husky.
Arrayed against this financial titan often referred to as “Superman” are dockworkers exhausted by 12-hours shifts lacking even toilet breaks, surviving in one of the world’s most expensive cities on wages that haven’t risen in 15 years, and now waging a labor battle that observers are calling pivotal.
The confrontation appears to have tapped a vein of indignation against the “greed economy” and its glaring inequalities, bringing the workers broad public support.
Strikes are rare in Hong Kong, and strikes that gain this much solidarity are unprecedented in recent memory. The dockworkers represent a new level of action among the fastest growing segment of workers: subcontracted, not yet unionized, hyper-exploited.
Fifteen days into the strike, union spokespeople say not more than 20 dockers have returned to work while 120,000 containers sit untouched, ships experience delays of up to 60 hours, and daily losses of half a million U.S. dollars mount.
On the other side of the fulcrum, thousands of Hong Kong citizens have rallied to “occupy” the Kwai Tsing Port, bringing vast quantities of food, water, and funds ($800,000 so far) to ease the strain on strikers.
Solidarity Sick-Out, Boycott
The dockers are holding firm in their demand for recognition of their newly formed Hong Kong Dockworkers Union, humane working hours, safety measures, and wage hikes of 15-20 percent. Under immense public pressure, Hong Kong’s pro-business government has had to intervene to make management negotiate.
A court injunction initially limiting strikers’ access to the docks was later amended, providing the right for 80 to picket at a time. But the sustained presence of hundreds of strikers and supporters camping out on surrounding streets has disrupted all normal flow of work, and a sympathy “sick-out” earlier in the week by port truck drivers reinforced the strike.
Meanwhile an activist student group, Left 21, has begun organizing a boycott of Li Kai-shing’s mega-supermarket chain Park and Shop, and the president of the International Federation of Transport Workers, the global organization of transport unions, traveled to Hong Kong for a solidarity event. The AFL-CIO’s Solidarity Center is donating $5,000.
While support floods in from students, other unionists, and citizens, buoying up the strikers, the solid commitment of the dockworkers themselves is driving this piece of history. The workers organized despite differences in craft and employer (at least four major contractors supply staffing to the Kwai Tsing Port), divisions between subcontracted workers and permanent port employees, lack of formal recognition of their union, and no precedent of collective bargaining.
The dockers have no illusions about the concentrated wealth and power of their ultimate boss Li Ka-shing, but they realize that they have in their hands something no one else controls: the ability to withhold their labor.
Repercussions on the Mainland
The colonial history of Hong Kong left little in the way of labor rights, and unions are rather weak, operating with limited legal rights to bargain or represent workers. Still, both of Hong Kong’s two major union federations are playing roles in this strike.
The larger, the HKFTU, has ties to mainland China’s official labor federation, the ACFTU, and is considered pro-business and politically conservative. In this strike its lack of legitimacy among workers was further weakened by revelations that one of its leaders holds a management position in Global Stevedoring Service, one of the contractors that employ dockworkers.
HKFTU tried to funnel management’s offer of a 5 percent wage increase to a subgroup of workers, but was shamed and now seems to have retreated entirely.
The smaller federation, the HKCTU, is considered a pillar in the pro-democracy movement in Hong Kong, and has taken the lead in supporting the strike: raising funds, organizing logistics, doing PR and outreach, making demands on politicians.
The conflicts between the two Hong Kong labor federations point to implications of this strike for mainland China. Though total reintegration of Hong Kong into China is still 35 years in the future, the two economies are already thoroughly enmeshed. Because of the strike, some portion of Hong Kong ship traffic will almost certainly be re-routed to the southern mainland ports at Shenzhen or Guangzhou, where labor conditions are way below those in Hong Kong.
A strike of crane operators at the Shenzhen port several years ago was met with swift government intervention and rapid agreement to workers’ demands, in an incident believed to show the government’s determination to prevent a spread of worker militancy—not through repression but through accommodation.
Given that there are already tens of thousands of wildcat strikes annually on the mainland, rising on 30 years of wage repression and an absence of union representation, the potential for this spark of Hong Kong labor militancy to jump the straits and ignite a prairie fire on the mainland may be on the minds of China’s leaders.
Ellen David Friedman is a retired union organizer, on the Policy Committee of Labor Notes, and a Visiting Scholar at Sun Yat-sen University in Guangzhou. Support the strike fund here.
Founder talks of IPO and beyond for Alibaba
May 8th, 2013China's biggest e-commerce company, privately held Alibaba Group, has become the most profitable Internet company in the country, as the company is considering going public and will continue to invest heavily in mobile technology.
Alibaba said on Tuesday that its net profit in the four quarter was $640 million on revenue of $1.84 billion. Net profit was 172 percent higher than the same period of the previous year while revenue growth was 80 percent.
The $6.4 billion profit beat Tencent Holdings Ltd's $550 million in the same period to become the most profitable Internet company in China.
Company founder and chairman Jack Ma said in a speech at Stanford University over the weekend that he doesn't care where or when an initial public offering is conducted for his e-commerce empire, which saw total transactions of more than 1 trillion yuan ($160 billion) last year. What he cares about most is whether an IPO will help the company sustain growth and benefit shareholders.
The 49-year-old Ma, known for eloquence and wit, compared the IPO to a wedding and said it is more important to think about married life after the ceremony.
"If an IPO is a wedding, Alibaba is more concerned about the marriage after. The result that we don't expect to see is the marriage becoming the grave of love," he said.
Alibaba Group owns China's largest business-to-business website, the online retail platform Taobao, and a PayPal-style online payment service, AliPay, among other services.
By itself, Taobao - a platform akin to eBay on which a variety of retailers sell products and services to consumers and small businesses - recorded transactions of more than 1 trillion yuan in 2012.
Yahoo Inc has a 23 percent stake in Alibaba after reducing its holding from 40 percent for $7.1 billion last year.
With explosive growth and huge potential in online retail in the world's most populous country and No 2 economy, an Alibaba IPO would be regarded as one of the biggest in the technology industry, and international and Chinese investment banks are vying to underwrite an offering.
Stock exchanges are also trying to attract the Internet giant. Alibaba.com had traded on the Hong Kong Stock Exchange but delisted last year.
Various investment banks have valued Alibaba at $40 billion to more than $100 billion. According to a survey by Bloomberg News of eight investment banks, the latest valuation is about $62.5 billion, based on 84 times the company's profit-to-earnings ratio.
Ma also said his company is an industry trend-setter and will continue to invest in operations.
Last week, Alibaba paid $586 million for 18 percent of Sina Weibo, China's most popular microblogging site with over 400 million users, and has an option to increase the stake to 40 percent.
The company has acquired many smaller Internet companies in businesses tied to Internet search software, group-buying deals, online coupons and even an online taxi-reservation service to build its mobile Internet portfolio.
"The mobile phone will become the device of data consumption and is changing people's lifestyles," Ma said at Stanford. "If the PC has changed the way we work and produce, the wireless Internet is a revolution in lifestyle, and China will see revolutionary changes with wireless Internet."
He said Alibaba will invest more in infrastructure including "big data", unlike its main domestic competitor Tencent. Hong Kong-listed Tencent is the third-most-valuable Internet company in the world, after Google Inc and Amazon.com Inc, and is investing in Internet applications.