Recruiting in China

Multinational companies continue to set up China and Asia-Pacific regional headquarters in Shanghai, according to the city's Municipal Commission of Commerce.

The commission reported that by the end of 2012, 403 multinationals had established regional headquarters in Shanghai, 95 of which serve as both China and Asia-Pacific headquarters.

"We were aware of this trend as early as 2000, when we entered the China market, but it has clearly increased in the past two years," said Sergio Picarelli, chief sales officer and member of the Executive Committee of Adecco Group.

He added: "A lot of companies are moving from Singapore or Hong Kong or directly setting up their headquarters for Asia Pacific in Shanghai. It will probably further increase in the next five years."

In Picarelli's view, Shanghai is China's foremost commercial hub and a key center for logistics, making it an ideal city for a multinational firm to base its China operations.

A joint venture may give a multinational company an edge in the China market, such as in the case of the Adecco Group, Picarelli said.

"Globally Adecco works with over 100,000 clients every day. Many of them are very interested in the opportunities offered by the Chinese market and want to fully understand the HR situation on the ground here. We can support them with our local know-how and our full range of services," he said.

Adecco has created an expert team and offers a special platform that supports multinational companies exploring the Chinese and Asia-Pacific markets as well as assisting Chinese firms going overseas.

"Outbound Chinese companies will have the same difficulties that multinational companies have when they come to China. They have to discover a new world and a new way of doing business," Picarelli said.

"We support them in their efforts to recruit good people. Once you have good people, you have a good organization," he said.

Prospects for job seekers on the Chinese mainland are expected to remain favorable in the second quarter of this year, according to the Q2 2013 Manpower Employment Outlook Survey released on March 12.

Among the 4,023 interviewed employers, 21 percent expect to increase their staffing levels in the second quarter, while only 3 percent plan to decrease the number of employees. And 41 percent of Chinese employers plan to "wait and see," with no intentions to change hiring levels in the quarter ahead.

The Manpower Group research reveals Chinese employers expect to grow staffing levels in all six industry sectors and all nine regions. Opportunities for job seekers are expected to improve by modest margins for the second consecutive quarter and China's net employment outlook of more than 18 percent is 3 percentage points stronger on a quarterly basis and remains relatively stable year-on-year.

"China's recovery remains on track, but we're not seeing clear signs that the current growth is on solid footing. The momentum of the current labor market is partly driven by increased infrastructure construction," said Zhang Jinrong, managing director of Manpower Group China. "For instance, the Ministry of Railways will invest 650 billion yuan ($104.39 billion) in 2013."

"But we're also seeing other signals that sustainable growth is being aggressively pursued. For instance, many enterprises in the coastal regions continue to search for the skills they need, and many are moving their search inland for management-level talent and technicians," he said. "A moderate recovery brings opportunities for companies to develop business and renew their search for talent. Also, it is probably a good time for companies to recalibrate their human resource practices to cope with the disappearing demographic dividend."

For instance, companies should consider implementing improved training systems and explore ways to increase employees' working productivity to prolong the demographic dividend and drive long-term stable development, he said.

Globally, Manpower Group's hiring confidence index reveals that second-quarter hiring plans are strongest in Brazil, Taiwan, Turkey, India and Panama while those in Italy, Spain, Greece and the Netherlands are the weakest worldwide.

Within the Asia Pacific region, employers in Taiwan report the most aggressive hiring plans while those in Australia have the most cautious.

In China, working at a multinational company (MNC) used to be seen as an ideal choice, offering job stability as well as a high salary and decent benefits.

But in recent months many MNC workers have become victims of layoff plans by their well-known foreign employers.

US-based Motorola Mobility, a hardware unit acquired by Google Inc in May 2012, announced a cut of 1,200 jobs worldwide earlier this month, and the cuts will be mainly in China, the US and India, media reports said.

Motorola Mobility China said on March 8 that "the new job cuts are a continuation of the reductions announced last summer," but did not reveal how many employees will be laid off in China.

A previous round of business restructuring at the company in August 2012 resulted in 4,000 layoffs globally, and an engineer at the Beijing office said that the company had closed all its other operations in China apart from the Beijing office, which currently has 700 employees. The firm has around 12,000 employees worldwide.

Media reports said that after the new round of job cuts, only 200 jobs will be saved in China, mainly in the areas of marketing and sales.

However, Motorola Mobility is not the only overseas firm downsizing its China workforce.

Who is firing?

Finnish mobile phone producer Nokia Corp cut about 100 staff at its Dongguan factory in South China's Guangdong Province in October, following job cuts at its Beijing-based research center and consolidation of its Chinese distribution centers in July.

US chip producer AMD laid off 15 percent of the staff at its Shanghai branch in November.

Also in November, Japanese electronics firm Panasonic Corp merged its Shanghai plasma display panel television plant with its liquid crystal display television factory in East China's Shandong Province, and shut down the Shanghai factory.

Some foreign supermarket chains such as Wal-Mart and CP Lotus have also reportedly cut jobs recently.

Past layoffs by large foreign firms have tended to focus on other countries, but the recent job cuts have been taking place in China too, and affecting higher-level positions such as in research and development (R&D) rather than sales and administrative jobs, Xing Zhiming, a business director of Beijing-based recruitment firm Career International Consulting Ltd, told the Global Times Friday.

"The mobile phone and chip firms decided to cut jobs because their industries have seen faster transformation cycles and more intense competition, resulting in losses at firms that are slower in adjusting to the market," Xing said.

Supermarket chains cut jobs due to excessively rapid expansion in China, but job cuts are a normal phenomenon and a way to adjust strategy for the market, he noted.

Most of the laid-off employees at these MNCs have been reemployed either at their competitors or at domestic private firms, which are aiming to learn standardized management from the MNCs, Xing said. "For example, some employees laid off from a foreign chip producer's server department now work at Chinese server providers or downstream producers."

Motorola Mobility closed its Nanjing R&D center in August, and some of the laid-off employees from the center have relocated to Shanghai or to Motorola's headquarters in the US, but most now still work in Nanjing at other software enterprises such as Lenovo and Samsung, a former employee at the center told the Global Times Saturday.

Who is hiring?

According to a survey of more than 1,000 firms in 12 key industries in China released by Career International on January 15, 2013, 58.8 percent of respondents said they would be hiring new staff in 2013, with only 26.1 percent planning for job cuts.

Owing to high costs and falling profits, just 46.5 percent of companies in the energy and chemical sectors said they would hire more staff in 2013, while 47.1 percent of machinery manufacturing firms planned for job increases in 2013 due to the sluggish global economy, the lowest two among the 12 industries, the survey found.

In contrast, 75.7 percent of the country's auto firms have plans to hire more staff, thanks to expanded production capacity and the need for more production and R&D staff, the survey said.

Foreign auto producers have strong confidence in the Chinese market and are also expanding and recruiting. German auto firm Volkswagen announced in November it would invest 14 billion euros ($18.3 billion) in China by 2016.

Domestic auto brands are also expanding into overseas markets, which will offer opportunities for marketing and sales personnel in these areas in 2013, the report said.

The second most confident industry in the survey was real estate, with 70.4 percent of respondents planning to recruit more employees this year, thanks to a rebound in the property sector in the second half of 2012 and good expectations for the sector in 2013, especially for commercial property projects, the report said.

Although the survey found that companies in first-tier cities are more willing to recruit new staff than those in smaller cities, some manufacturing enterprises have relocated to or expanded their recruitment in smaller cities such as Wuhan in Central China's Hubei Province, Chengdu in Southwest China's Sichuan Province and Xi'an in Northwest China's Shaanxi Province, Xing said, as a result of rising labor costs in coastal cities and production workers' increasing desire to work near home.

As China's State-owned enterprises and private firms have gained a more solid foundation in the market, their hiring is also increasing, Xing noted.

MNCs in China plan to recruit fewer employees than their Chinese peers, according to the Career International report, which found that 54.1 percent of MNCs have plans to increase jobs, compared with 61.7 percent of private Chinese firms and 62.4 percent of State-owned enterprises.

The hiring market in China is still strong, Jonathan Edwards, a partner at the Shanghai office of recruitment firm Antal International, told the Global Times Friday. Around 65 percent of Antal's clients are planning to hire staff in 2013, Edwards said.

"Occasionally companies might have a hiring freeze, but this tends to be short-term and due to organizational restructuring rather than other reasons. Most MNCs have a long-term plan for their business in China and the hiring of key staff remains an important component of this plan," Edwards said.

"We see strong pockets of demand in many industries, as diverse as healthcare and retail," he noted, predicting that consumer-led industries such as autos would continue to grow.

TAIPEI, Taiwan -- Roughly 41,000 job opportunities, including 31,000 full-time positions as well as 10,000 part-time jobs in the nation's retail enterprises, will open up this March, according to a survey conducted by 104 Job Bank.

The labor think tank released their March 2013 Recruitment in Local Enterprises survey yesterday, which showed the retail industry enjoying the most job growth compared to other sectors.

The retail industry has been quickly expanding over the past five years, according to the report, offering positions with monthly salaries ranging from NT$50,000 to NT$70,000.

Despite the abundance of jobs opening up in the sector, the report warns job seekers that positions in retail are known for tough requirements, and work-performance evaluations are often tied directly to sales goals.

Previously, the job bank said that local demand for new employees would increase after the Chinese New Year holidays. The statistics showed that demand for labor supplies was expected to increase in March, a month marked by the start of recruitment on college campuses.

According to the Directorate General of Budget, Accounting and Statistics (DGBAS), the unemployment rate in January this year was 4.16 percent, the lowest in the last six months.

Overall, strong demand for labor has been increasing since February as the job market has seen an expansion since the New Year holidays, said the DGBAS said.

The job bank said 24.5 percent of local enterprises are optimistic about the economy for March, while 17.2 percent of the enterprises surveyed are pessimistic over a possible economic recovery.

According to the report, 32.9 percent of enterprises are planning to take on new employees in March, while 44.6 percent of local enterprises will freeze hiring, and 9.7 percent will decrease their recruitment. Nearly 13 percent remain uncertain.

Since the economic reforms and opening-up policies, China's role in the world economy has been steadily on the rise. Even before the global crisis of 2008-2009, the mainland's contribution to global growth exceeded that of the United States or Europe.

In the coming years, China's economic dominance will continue to increase, assuming there is sustained internal cohesion and a peaceful international environment. However, the nature of this growth is shifting, and the pace of change may be significantly faster than anticipated.

China is moving closer to the Lewisian turning point. In 1954, Sir Arthur Lewis published a highly influential analysis on economic development with unlimited supplies of labour, which contributed to his Nobel Prize a quarter of a century later. It can be read as a story of the rise and decline of rapid growth. In East and Southeast Asia, all successful industrialisers have experienced it, in one way or another.

In the Lewis story, a "capitalist" sector (read: manufacturing) evolves by taking labour from a backward non-capitalist "subsistence" sector (read: agriculture). Initially, there seems to be "unlimited" supplies of labour from the subsistence economy, which allows the capitalist sector to expand without rising wages. Things change dramatically when the supply of surplus labour from the countryside tapers off and industrial wages begin to rise rapidly.

In China, the debates over the Lewisian turning point began in the early 2000s. The coastal export regions were experiencing migrant labour shortages, while there was anecdotal evidence of soaring migrant wages. Consequently, some observers concluded that the huge reserves of supply labour had been exhausted. After all, the growth of the working-age population was also slowing on the mainland.

At the time, I argued that what these observers saw in China was an evolving reality in some coastal regions, but the generalisations did not apply at the national level. Industrialisation had taken off in the first- and second-tier megacities of the coastal export regions. But it had barely begun in the lower-tiered cities, inland and the west.

When the reforms were initiated at the turn of the 1980s, the level of urbanisation was barely 20 per cent. When the Lewis debate began in China, it was in the low-30s. In most developed economies, the comparable figure is over 75 per cent. In other words, China still had huge reserves of "unlimited supplies of labour".

But things are changing. Today, more than half of China is considered urban. Since economic development is unbalanced on the mainland, however, different regions exhibit different realities.

If the focus is on the labour market developments at the aggregate level, the evidence is mixed. Wage developments do not signal the demise of surplus labour. On the other hand, employment, industrial relocation and policy shifts do reflect tightening labour-market conditions.

Most importantly, demographic realities are changing, driven by decades of modernisation policies, and the attendant declining fertility and ageing, which have been amplified by the one-child policy.

Until recently, the UN anticipated that the growth of the working-age (15-64) population would turn negative on the mainland around 2020, along with similar International Monetary Fund projections. However, the pace of change may be even faster. According to the National Bureau of Statistics, China's working-age population (15-59) registered a decline in 2012, decreasing by 3.5 million to 937 million.

The different population bases of these projections explain some of the differences. This is even clearer, if the focus is more narrowly on the young, as most industry employees are relatively young.

In 2010, the growth rate of the core 20-39 population in China shrank to zero. Furthermore, it is expected to decline faster than the overall working-age population until the early 2030s.

While these demographic facts cannot be ignored, they are not destiny, as evidenced by the recent debate and policy developments in China. During the government reshuffle, the task of the population development strategy and population policy was transferred to the National Development and Reform Commission. That allows the central government to assess the population policy from the standpoint of the overall economy.

Over time, Beijing could also take advantage of "pro-natalist" policies - for example, a one-time baby bonus, child benefit payments or tax reductions, paid maternity and paternity leave. It could also promote pro-growth policies, raise the retirement age, increase the share of the workforce and accelerate retraining.

Some observers have argued that rising migrant wages are a result of labour market segmentation - the household registration system, limited portability of benefits, rising rural reservation wages and so on. In that case, overcoming the limitations of such segmentation could support demographic evolution as well.

The huge size of China's population, coupled with a proactive central government, offer opportunities to revise the course of China's demographic future - given a successful transition from extensive growth to innovation-driven intensive growth. But with demographics, change takes time. As a result, policy interventions must be proactive and have a long-term perspective.

In the coming years, several advanced economies, including Japan and Germany, will face demographic decline. Their current growth and prosperity is not sustainable in the long term. It is based on the demise of the ageing rather than the birth of new life. In China, another growth path is still conceivable in the long-term - with proactive intervention.

Summary: Two senior executives from China's top futures exchanges have been detained after they allegedly received bribes from vendors supplying equipment for their companies' transaction systems.

Senior IT executives from two large futures exchanges in China have been detained for allegedly taking bribes from suppliers for their companies' transaction systems.

Yan Shaohui, who is in his 40s, and Zhang Guoyan, 38, were arrested and questioned by prosecutors, although it is not yet clear if they will be charged, Chinese financial news site Caixin Online reported Wednesday.

According to the report, Yan is the chief engineer of the electronic exchange system at Shanghai Futures Exchange (SHFE). Zhang, on the other hand, is the director of China Financial Futures Exchange's (CFFEX) technology center, which he joined in 2006. The amount of bribes the two are accused of taking was not stated.

The report cited several sources familiar with the matter as saying investigations into the two men were likely connected, as the two companies often shared technology and talent.

The sources added the bribes Yan and Zhang took were likely from suppliers for the exchanges' transaction systems. A large amount of capital is spent annually on updating the systems to meet demand of new products and trading techniques, so executives in charge of the systems' design and operations hold significant sway over suppliers, they said.

Last year, an anonymous online message accused a former SHFE executive of illegally making billions of yuan by taking advantage of the loopholes he created in the exchange's transaction system. But when SHFE examined the system, it found no such loopholes, the Caixin Online report noted.

Prosecutors said the investigations into Yan and Zhang are not related to the design of the transactions.

CFFEX and SFHE are the two largest futures exchanges in China in terms of transaction value. According to data from China Futures Association, CFFEX was placed first in 2012 with a turnover of 75.8 trillion yuan (US$12.1 trillion), followed by SHFE with 44.6 trillion yuan (US$7.1 trillion).