Recruiting in China

Apple is reported to be hiring over 200 people in China and the hiring will be across environmental affairs, security and in its retail segment.

On its LinkedIn page for China the iDevice giant is ramping up its employee base, writes Wall Street Journal’s Digits Blog. In past few years the iPhone and iPad maker has been hit hard. Environmental activists have filed complaints frequently claiming its China-based manufacturing facility harms the environment. Foxconn is the largest manufacturing partner of Apple in the country and has suffered such complaints too.

Apple has lately come forward in improving the environmental-friendliness at its manufacturing partners including Foxconn and has regularly updated them of the efforts taken in those areas.

Digits blog writes further the environmental affairs program manager of Apple would be working out in Beijing to “ensure that Apple’s products and processes meet and surpass regional and national environmental regulatory requirements.”

The iDevice giant wants to recruit reliable and perfect employees in those positions to the earliest. About the other disciplines there are no words from either Apple or its manufacturing partners as of now.

Chinese manufacturing remained weak last month with SME businesses suffering a bigger share of the pain, two surveys showed today.

The official China Federation of Logistics and Purchasing's manufacturing index strengthened slightly to 50.3 from June's 50.1.

Separately, the private HSBC purchasing managers' index fell to an 11-month low of 47.7 from 48.2 in June.

Any reading over 50 signals expansion in a sector, while a figure under 50 signals contraction.

The unexpected rebound in the official survey offered a glimmer of hope that China's slowdown is stabilising. But analysts warned that it was still too early to conclude a decisive growth rebound because the pickup "is still far too modest.

The results also reflect how China's small and medium-sized private enterprises, which analysts say make up a bigger share of HSBC's survey, are more vulnerable to efforts to tighten up lending as well as to slumping global export demand for toys, clothing, electronics and other manufactured goods.

China's big state-owned companies have easier access to bank loans and hardly compete in export markets.

The HSBC report, covering 420 companies, said output at Chinese manufacturers fell as total new orders dropped at the sharpest rate in 11 months because of a decline in new business in both China and overseas. Export orders fell for the fourth month in a row, though at a slower pace.

Exporters said that new sales to Europe, Southeast Asia and the US fell from June. Chinese manufacturers also shed jobs at the fastest pace in four years.

The federation's survey of 3,000 businesses, meanwhile, found production, new orders and most other sub-indicators moved higher. New export orders improved but remained below an index reading of 50 last month.

Fallout from China's manufacturing slump may be felt globally, as declining orders result in less demand for commodities from countries such as Australia and Brazil and for industrial components from Southeast Asia, Taiwan and South Korea.

China has recorded five quarters of growth below 8% in a row - a substantial economic cooling for a country that previously grew at double-digit rates. Analysts said the survey results indicate smaller private companies may still be feeling the effects of a credit shortage that began in June as Chinese regulators try to rein in a lending boom over fears it could race out of control.

The credit crunch caused interest rates on loans between banks to spike to a record high. China's central bank wants to tighten lending standards, which should reduce risk but is likely to reduce financing for private businesses that generate China's new jobs and wealth.

China’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.

Chinese 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.

Allegations 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."

Rules 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."