Recruiting in China

Worried 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.

For 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 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.

President 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.

Allegations 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.

A 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.