Recruiting in China

Salaries across the Asia-Pacific region are set to rise an average 7% in 2014, with China and Vietnam leading the way in East Asia, after allowing for inflation and Japan seeing the smallest raises, according to an American global professional service firm, Towers Watson.

According to the survey, salaries in China are forecast to rise 8.5% and in Vietnam 11.5%, before inflation is taken into account, the global risk management and human resource consulting firm said.

It added that taking inflation into consideration both countries are set for 4.9% increase on an average. Meanwhile, the figure stands at 4.5% for Hong Kong and Singapore, 11% for India and only 2.3% for Japan.

What could be further interpreted from the findings is that many companies in the Asia-Pacific region are finding it harder to find and retain suitably skilled staff, as more than 80% of the companies surveyed say a larger portion of their salary budget increase allocation would go to high performers in 2014. Moreover, less than 1% of the companies anticipate a pay freeze, compared to nearly 4% in 2013.

Sambhav Rakyan, Global Data Services practice leader, Asia-Pacific at Towers Watson said that overall the data for 2013 and 2014 shows great similarity, which is assumable that companies should be budgeting for salary increases much in the same manner as last year.

However, he indicated that it depends on the affordability for the company. If the company is growing at a fast rate and revenue exceeds the cost by a huge margin, it is easier to be aggressive on salary budgets than low growth companies. He also noted that Employee Value Proposition (EVP) is strongly significant.

“People may say ‘it’s not about the money’, but the reality is that base pay is the number one drive for attraction and retention globally based on the Tower Watson 2012 Global Workforce Study. However, we also believe that a well-defined employee value proposition plays a very important part too”, said Rakyan.

Among the many areas that the survey looked into, the pharmaceutical sector is expected to see the biggest pay rises at 7.3% on average in 2014 for the region. While retail and media sectors are expected to see about 5.4% - 5.7% rise, down a touch from 2013.

Meanwhile, the anticipated salary rises in financial services are considered to be in an area of particular interest, given the sector has just come out of several years in the doldrums. The survey suggested that those working in the financial services sector could look forward to increases region-wide averaging 6.2%, compared to 5.7% in 2013.

The biggest raises are anticipated in China (8.8%), India (10%) and Indonesia (9%). Whereas, the major regional financial centers; Singapore, Hong Kong and Japan will see more modest raises – respectively 4%, 4.5% and 2.3%.

It is also important to note that Asia’s emerging economies, such as Indonesia, Sri Lanka and parts of Indochina, are the standard bearers for high pay increases, as these countries tend to have the highest economic growth rates of around 6%-8.5%. However, they also have the strongest inflationary pressures which take up much of those pay rises.

According to Jeffrey Tang, director of Towers Watson’s Talent and Rewards practice in Hong Kong, there are several factors that drive behind the increase of salaries throughout the region. The major ones are such as the great increase in demand for compliance staff to meet with the increased regulations and also the regional expansions by local players that seek to go beyond their domestic shores.

Intercontinental Hotels Group (IHG) is looking to double the number of hotels it has in China in the next two years and recruit more than 110,000 employees in the country.

This is according to UK newspaper City AM, reporting comments of chief executive officer Richard Solomons yesterday (19 November) ahead of meeting with investors.

The company has already doubled Chinese hotels to 200 in the last five years.

Earlier this year the firm announced a major recruitment drive in India – albeit quite not on the scale of its Chinese plans – and last year talent manager Claire Guberg spoke of IHG’s plan to “look at internal talent first of all” as expansion continued.

Alcatel Lucent SA's CEO says the company's selection by China Mobile Ltd as a primary supplier for the Chinese telecom operator's rollout of the world's largest high-speed wireless technology system "proves we are fulfilling the needs and requirements of Chinese telecommunications companies".

"We are proud to be part of the development of the telecommunications industry in China," Michel Combes told China Daily on the sidelines of the company's 2013 technology symposium.

Under the contract, announced during the conference in Basking Ridge, New Jersey, about 35 miles west of New York, Paris-based Alcatel-Lucent will supply Evolved Packet Core, or EPC, a framework for providing voice and data services in China Mobile's 4G long term evolution (LTE) network. Terms were not disclosed.

4G LTE is the standard for wireless communication of high-speed data for mobile phones and data terminals. Fourth-generation wireless networks achieve data download speeds of up to 80 megabits per second, four times faster than 3G networks.

The contract announcement - which will give Alcatel-Lucent a dominant 24 percent share of the Chinese telecom operator's 4G LTE network - came as Combes fleshed out a restructuring plan aimed at ending continuing losses at the company, created by Alcatel's 2006 acquisition of former AT&T Inc equipment arm Lucent Technologies.

In what he has dubbed the "Shift Plan", Combes has said he will slash 10,000 jobs globally and sell assets, while reorienting Alcatel-Lucent toward several businesses, such as cloud computing, broadband wireless networks and Internet protocol routing.

"We are all at a turning point in the industry", Combes told an audience of analysts and media at the symposium, held near Lucent's former headquarters in New Providence, New Jersey. It was there that the company's legendary R&D facility, Bell Laboratories, gave the world innovative technologies such as the laser, the transistor, and touch-tone telephone dialing. "What was working five years ago for service providers doesn't work anymore," the CEO said.

Through its ventures with China Mobile, the largest telecom operator in China with more than 750 million, or more than 60 percent, of the country's mobile subscribers, Alcatel-Lucent has played a major role in China's deployment of 4G wireless networks. As the nation moves closer to starting commercial service based on the technology, the number of applicants for 4G services is expected to surpass 100,000 in major cities, a China Mobile official told China Daily last month.

Combes said in the interview that China's leadership - which has said it is "preparing for the release of 4G licences" - has shown "a clear willingness to attract broadband services". Alcatel-Lucent is a major supplier to most of the nation's service providers, supporting such strategic industries as transportation and energy.

Rising demand in China for high-speed mobile services reflects a "clear understanding that there is direct link between investment in telecommunications and GDP growth", Combes said.

"China is keen to structure its own telecommunications industry as it reorganizes telecom as a 'sovereign industry'", he said. That's "not only because of growth in China, but because it gives it the ability to build an industry which allows it to export on a worldwide basis."

A growing appetite for services such as instant messaging also is driving demand, the CEO said.

"When you mix in the change in behavior of customers and also the (influence of) youths who run to this type of technology, that unlocks huge growth," Combes said. "On top of that you have a strong governmental commitment on the speed at which it has to be rolled out. You have all these ingredients to make it work".

China's size poses the biggest challenge in bringing high speed digital services to the country, Combes said.

At the end of the day, "China Mobile, like any customer, is looking for the best, the most talented company for them," Combes said.

Regardless of what business you are in or where you operate, it is great employees that make a great company. While hiring great employees can be a challenge anywhere, the process of recruiting, retaining and terminating employees is especially tricky in China.

First, let’s dispel the common misconception that labor is cheaper in China. That’s arguably still true for factory workers, but skilled staffers draw significant salaries. At first glance, the numbers may seem deceptively low. A skilled office manager, for example, is paid a monthly salary of $1,000 to $2,500 in China, compared to $3,750 to $5,000 for a comparable position in Arizona, where my American business is headquartered. But in China, employers pay additional taxes on these wages in the form of “social insurance.” The rates vary by province, but in Shanghai, where I do business, the cost is 44 percent above the base salary.

So for a worker earning $2,000 per month, the cost to the employer will actually be $2,880. Additionally, it is customary at the Chinese New Year to give employees a 13th month of pay — including social insurance — for 12 months of work. Amortize that over the year and it raises the monthly cost to $3,120, which is creeping up toward the American pay scale.

Some may argue that there’s a qualitative difference in employee abilities between the two countries, but my experience is that the best people in China are equal in skill to their American counterparts.

Another critical thing to note is that job descriptions in China need to be much more detailed than those in the United States. Being as specific as possible in the labor contract about your expectations is imperative to establishing good working relationships with your Chinese employees. Simply including a sentence at the end of a job description that says “other duties as directed by your supervisor” will not suffice.

For example, in the United States, we think nothing of requiring an American office manager to wash his or her own coffee cup at the end of the day, but in China, the expectation is that an “ayi” — literally, it means “auntie,” but we would call her a maid — cleans up after everyone. In addition, a male employee may view typing a report as woman’s work — and thus beneath his position. That’s why it’s critical to be completely clear about a job’s specific tasks during the job interview and contract negotiations.

Arizona is a right-to-work state, so adjusting to China’s employment-contract system has been challenging for me. I have found that the best bet is to keep a close eye on details. Here are two basics that should be checked carefully, because they change often, sometimes several times a year:

• Term length: All employees get contracts, and they are issued in one-, two- or three-year terms.

• Probation: The one-year contract allows a probation of 30 days for an employee, the two-year contract allows 90 days of probation and six months’ of probation on a three-year contract.

In the probationary period you can terminate an employee without penalty; however, changes to this system are coming soon, so it’s smart for you to have a system to check contracts when necessary.

The best resources to keep you on the good side of Chinese labor law are your labor lawyers, who will update you when rules change. You definitely need a lawyer to represent your company. Labor contracts tend to be one-sided, and they really only govern how you will treat your employees with little impact on how your employees will treat you.

For example, if an employee has a three-year contract, he or she is not penalized for leaving before the contract ends. But if you decide to terminate an employee, you will need to pay one month for every year remaining on the contract, plus a prorated annual bonus. If you fire a staff member in the ninth month of a three-year contract, you will pay four months of salary. Failure to do so will land you in labor court. I’ll cover that in my next entry.

It sounds temping to go with a short contract, but I’ve found that it doesn’t really allow enough time to judge whether a new hire has the necessary skills and will fit into the corporate culture. For management positions, we use a three-year contract – with six months of probation – and for other positions we use a two-year term.

Think of the time you and your staff spend writing up detailed job descriptions and combing through the contractual fine print as an investment in peace of mind. Proper planning will spare you sleepless nights.

The Chinese mainland will continue to levy anti-dumping duties on methyl ethyl ketone (MEK), an industrial solvent, from Japan and Taiwan for another five years, the Ministry of Commerce (MOC) announced on Wednesday.

The decision was made after a one-year review and will come into effect on Thursday.

The Chinese mainland started to levy tariffs ranging from 9.6 percent to 66.4 percent on MEK from Japan, Taiwan and Singapore on Nov. 22, 2007.

When the five-year anti-dumping measures expired last year, Singapore was delisted, while the other two regions came under review.

After the review, the MOC said domestic producers may again suffer losses to MEK from Japan and Taiwan if the anti-dumping duties were lifted.

MEK is a solvent widely used in making paints, dyes and lubricants.

With the arrival of the iPhone 5s, Apple regained its spot among the top five smartphone makers in China during the third quarter.

But the biggest gains in the period were made by market leader Samsung Electronics, which saw its smartphone shipments soar 156 percent year-over-year.

In China, Apple’s market share reached 8 percent as a result of a 32 percent year-over-year increase in shipments, according to research firm Canalys. Towards the end of the period in September, the company launched both its iPhone 5s and iPhone 5c models in the country.

The shipment growth gave Apple the fifth position in China’s smartphone market. In a first, the country was among the markets to receive Apple’s latest iPhone models the earliest. Previously, Chinese consumers had to wait months before the device officially arrived.

In another sign that demand has been strong, consumers buying the iPhone 5s from Apple’s China website must wait two to three weeks before the device ships out.
“I think the iPhone 5s was the main driver of the growth,” said Nicole Peng, an analyst with research firm Canalys. Demand for the phone has been so high that the gold-colored “champagne” model initially sold for 10,000 yuan (US$1,630) among unofficial sellers in China’s grey market, she added.

In another sign that demand has been strong, consumers buying the iPhone 5s from Apple’s China website must wait two to three weeks before the device ships out.

“The supply still cannot catch up with the demand,” Peng added. But whether or not the slightly cheaper iPhone 5c will catch on the market is still unclear. “I think in Q4 we will have a clearer picture,” she said. “But I expect the iPhone 5s to do very well.”

Unlike the iPhone 5s, the 5c model is readily available for order on Apple’s China website, which ships the device within a day’s time.

Peng, however, said the bigger story in the third quarter was that of Samsung, China’s largest smartphone vendor. The South Korean vendor widened its lead in the quarter to get a 21 percent market share. Trailing at second place was Lenovo, with a 13 percent share.

While Samsung may be best known for its Galaxy brand of premium smartphones, in China the company is seeing more demand for its low to mid-range handsets, Peng said.

In terms of features, many of these lower-end Samsung phones are comparable to other rival devices from local Chinese vendors. But consumers are attracted to the Samsung brand and its reputation for high quality, Peng said. In addition, Samsung has extensive retail channels in the country, and its phones are easy for buyers to find.

“Samsung has been able to stop the local players from growing as fast,” she added. “Even with the domestic vendors selling more phones, these companies have found it hard to challenge Samsung’s position.”

Behind second place Lenovo, was Yulong Computer Telecommunication with 11 percent market share. Yulong is a local handset vendor that sells phone under the “Coolpad” brand. Huawei Technologies was fourth with a 9 percent share.