Recruiting in China

Innolux 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’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.

High-calibre overseas talents will benefit from a faster visa application process, according to the Ministry of Human Resources and Social Security (MHRSS) on Tuesday.

The ministry said in a circular that various government organs and state-owned enterprises should submit details of their overseas talent introduction programs to the ministry or the State Administration of Foreign Experts Affairs (SAFEA).

These departments can apply for visas and residency permits via a priority procedure for talented people as well as their families.

Meanwhile, high-level overseas talents working in the country outside these programs will also enjoy a faster application process if they meet various conditions, said the circular.

The circular was jointly released by the MHRSS, the ministries of public security and foreign affairs, the Organization Department of the Communist Party of China Central Committee and the SAFEA.

Hong 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.”

In 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.

The plan to import 330 labourers for the Mai Po railway tunnel has come under fire by the unions who charge that the move would help bosses suppress the wages of local workers.

The Labour Department recently approved an application by the contractors of the high-speed rail link between West Kowloon and Shenzhen to bring in 330 people who have been working on the mainland section of the line to fill the job vacancies.

The chief executive of the Confederation of Trade Unions Mung Siu-tat said the "so-called" vacancies were created by the contractors suppressing the wages for the jobs.

"The job vacancy was such a lie," said Mung, adding that data from the Census and Statistics Department showed the unemployment rate in the construction industry was 6 per cent in the first quarter of 2013, which was almost double the city's overall unemployment rate of 3.4 per cent.

A department spokesman said the government would consult relevant unions before it decided whether or not to approve the import of non-local workers.

But Mung said his union was not consulted or informed until the authority officially approved the plan earlier this month.

Another unionist said the contractors had failed to recruit local workers for the project because they were offering a salary much lower than the average rate in Hong Kong.

Wong Wai-man, chairman of the Bar-bending Industry Workers Solidarity Union said employers were offering bar benders and steel fixers HK$1,076 a day, which is about 30 per cent less than the average of HK$1,514.

Wong said he was worried that importing the non-local workers would create a vicious cycle in the industry.

"The wages will stay low. Young people will then be reluctant to become a construction worker. In the end there will seem to be more job vacancies, and the employers will have more excuses to import workers."