Recruiting in China

Yingli Group in Baoding of Hebei Province announced in the end of November that it would recruit 2000 workshop operators. A photovoltaic enterprise with 26,000 staff recruits 2000, which is not a message worthy of reporting. However, on the background that there are a lot of negative messages in the whole photovoltaic industry like loss, shutdown and downsizing, recruitment at this moment indicates that the photovoltaic industry in the "severe winter" is changing positively.

After learning such a message, the reporter decides to go to Hebei. When entering the workshop of Yingli Group, the reporter felt it was in 2010 when the workshop was in full capacity. "2000 is only a conservative number and the number of recruits may increase as required." Zhao Zhiheng, vice chairman of Yingli Group discloses that the photovoltaic market demand has begun to change from the fourth quarter and Yingli is making preparation for the "coming of spring".

According to the financial statement for the third quarter, all photovoltaic enterprises still makes a poor achievement and the photovoltaic industry is still in a cold winter, so where does the spring come? Yingli views that the demand is changing.

Quick increase of trading volume in the rising markets represented by China is the brightest spot in the market in the second half of this year. It is estimated that the delivery volume of Yingli will reach 2.2 gigawatts this year, which will top other photovoltaic enterprises in the world this year. Among the sales volume, the Chinese market will account for 22.63 percent and other rising markets will also rise to 4.03 percent.

Wang Yiyu, chief strategy officer of Yingli predicts that China is expected to surpass Germany and become the largest photovoltaic market in the world next year, which is mainly due to the series of encouragement policies issued by the state in the second half of this year. 21- gigawatt installed capacity, roadmap of distributed power generation and quickly-issued measures for the implementation not only offer a clear development prospect for the domestic market, but also stimulate the enterprises?? passion for the market and strengthen their confidence in development.

There are also new opportunities in the traditional European and US market. With deep industrial adjustment, the photovoltaic power generation cost reduces quickly and the generation efficiency increases constantly. European Photovoltaic Industry Association made estimation in the end of 2011 that the total installation cost of photovoltaic system would be $2 per watt in 2015. However, to the end of November this year, the cost had been less than $2. Due to such a change, the cost of photovoltaic power paid by some users in the market such as Spain begins to be equivalent to the one of traditional power generation with no need for government subsidy, which is commonly called grid parity in the user end. Wang Yiyu reveals that presently some investors have begun to plan for the projects next year with the aim of selling electricity to users or electric power company through direct supply. It will be the coming of times with huge demand for the photovoltaic industry behind such kind of change.

Yingli predicts that the global market demand will be about 40 gigawatts next year. Among them, the European market will increase a little, which is mainly due to the rising markets in the Europe and those projects with no need for government subsidy; the total amount in the US will continue increasing; the Chinese market will be about 7 to 10 gigawatts.

"The spring is coming slowly but not all photovoltaic enterprises will enjoy it." Zhang Tianze, general manager of Dalian Liancheng CNC Mechanic Co., Ltd., a photovoltaic equipment supplier, views that for enterprises in the whole industrial chain of photovoltaic production, only those enterprises whose brand, quality, technology, cost, etc. can satisfy the market requirement will not lag behind after such a round of adjustment and integration. The incoming spring for the photovoltaic industry is one with threshold.

A CONSTRUCTION ind- ustry project management specialist has got a firm foothold in the booming Chinese construction market.

Melton-based Sypro has secured a landmark contract to help build a network of substations in Hong Kong.

It has beaten international competition to supply its online project management system to China Light And Power, which is building seven electrical substations to power the massive data network needed by businesses in the region.

Now it has established an important foothold in the region, Sypro is hopeful of winning more orders from China Light And Power and the Chinese Government.

Managing director Simon Hunt said: "The deal with China Light And Power is very significant.

"We now have a foothold in the booming Chinese construction market, which bodes well for the future.

"Businesses in Hong Kong put a lot of trust in recommendation. If project A is using our software, project B is more likely to use it as are projects C, D, E and F.

"It could also help us win orders from other Government Departments."

Sypro, which was established in 2007 and includes Balfour Beatty, Mansell and Sir Robert McAlpine among its clients, is a supplier of project management software for New Engineering Contracts (NEC) – a family of contracts used in the management of construction projects in the UK.

The Sypro system has been used to project manage the A164 upgrade and the new Beverley Community Hospital, both in East Yorkshire, and the £840m Southern General Hospital in Glasgow, which is the largest healthcare building in Europe.

Mr Hunt said the business is currently in the process of having its product evaluated on one of the largest Government projects in the region – an £80m flood prevention scheme that will build an enormous storage tank under Hong Kong's Happy Valley Racecourse.

He said: "This was a competitive process where we have gone up against international businesses and won.

"The impact for the business is very positive. We are going to need to increase our headcount to make the most of this opportunity moving forward."

Mr Hunt said the China Light And Power contract was a "landmark" deal because it is the first time an NEC contract management system has been used in Hong Kong.

China Light And Power is one of the largest power companies in the Asia-Pacific region. The initial contract covers the first substation, which is costing £13m to build.

Sypro's board includes technical director and NEC consultant Dr Stuart Kings and director and investor Gerard Toplass.

The company, which is forecasting turnover of £500,000 for the year to December, is also currently working on a project to develop a generic form of Sypro which can be used on any type of project.

Mr Hunt said: "We are looking to recruit extra staff to help with administration and sales over the next few months."

China is gearing up to lure more foreign talent, especially those with experience in engineering, bioscience and information science.

In order to facilitate the recruitment of experts, the country would adopt more market-oriented measures, including cooperation with high-level expert associations and headhunting firms, Xinhua news agency quoted Zhang Jianguo, a general director of the State Administration of Foreign Experts Affairs as saying.

Zhang said the Chinese government has established a 10-year programme in August 2011, which aims to employ 500 to 1,000 overseas high-caliber experts to help increasing China's economic and social development.

He said every employed expert would be offered one million yuan (US$160,000) as living expense subsidies.

"For scientific researcher, they would be given another three to five million yuan research subsidy," he said.

Currently, 94 foreign experts have been recruited under the programme, he added.

In September, the largest factory in the northeastern Chinese coastal city of Yantai called on the local government with a problem – a shortage of 19,000 workers as the deadline on a big order approached.

Yantai officials came to the rescue, ordering vocational high schools to send students to the plant run by Foxconn Technology Group, a Taiwanese maker of smartphones, computers and gaming equipment.

As firms like Foxconn shift factories away from higher-cost centres in the Pearl River Delta in southern Guangdong province, they are discovering that workers in new locations across China are not as abundant as they had expected.

That has prompted multinationals and their suppliers to use millions of teenage students from vocational and technical schools on assembly lines. The schools teach a variety of trades and include mandatory work experience, which in practice means students must accept work assignments to graduate.

In any given year, at least 8 million vocational students man China’s assembly lines and workshops, according to Ministry of Education estimates – or one in eight Chinese aged 16 to 18. In 2010, the ministry ordered vocational schools to fill any shortages in the work force. The minimum legal working age is 16.

Foxconn, the trading name of Hon Hai Precision Industry, employs 1.2 million workers across China. Nearly 3 per cent are student interns.

The company “has a huge appetite for workers,” Wang Weihui, vice-director of the Yantai Fushan Polytechnic School, told Reuters during a recent visit to the city.

“It tightens the labour market,” said Mr. Wang, whose school sends its students to work at Foxconn and other firms.

Local governments eager to please new investors lean on schools to meet any worker shortfall. That’s what Yantai, in Shandong province, did in September when Foxconn had trouble filling Christmas orders for Nintendo Co. Ltd. Wii game consoles.

“It has been easier to recruit workers in the Pearl River Delta than some inland locations,” Foxconn told Reuters in written comments in late December.

Some companies cite rising wages in southern China for the shift elsewhere. Wages are a growing component of manufacturing costs in China, making up to 30 per cent of the total depending on the industry, according to the Boston Consulting Group.

Wages began to rise around 2006 as the migration of rural workers to Guangdong ebbed. China’s one-child policy, plus a jump in higher education enrolment, further depleted the number of new entrants to the work force, forcing up wages.

That prompted American car makers, Korean electronics manufacturers and private Chinese firms to look for new sites. Cheaper electricity, land and tax incentives as well as a growing consumer class in regions beyond the booming southern coastal provinces were other reasons to relocate.

Minimum wages in Yantai can be as low as 1,100 yuan ($180 U.S.) a month compared to 1,500 yuan in Shenzhen, a city near Hong Kong.

What makes vocational students attractive is they can be paid less than full-time workers, although some firms – including Foxconn – pay the same base wages.

Even if they pay the same base salary, employers can save 10 to 40 per cent per person because legally they do not have to pay health insurance or social security benefits for student interns.

Yantai was not the only local government to help Foxconn.

Two months earlier, Foxconn’s 100,000-worker factory near the city of Zhengzhou in Henan Province was racing to meet a deadline for Apple Inc.’s iPhone 5.

Henan authorities told its cities to find 30,000 more workers for Foxconn, according to a Zhengzhou city government notice reprinted by the Hong Kong-based labour rights group, Students & Scholars Against Corporate Misbehaviour, or SACOM.

Yantai shows how much China’s labour market has changed.

Zhang Weifang, head of human resources at the Yantai factory of LG Innotek estimates the city’s employable 16- to 18-year-olds has halved since her firm began production in 2004. LG Innotek is the components unit of South Korea’s LG Electronics Inc.

“It’s really hard to find people nowadays,” she said.

About 2,400 young workers staff Mr. Zhang’s factory, of which one-third are vocational students or workers contracted through agencies.

Students are sought after by plants which need extra workers during peak production periods, especially since China’s 2008 Labour Law makes firing employees cumbersome.

And students are plentiful. Vocational school graduation has surged 26 per cent in the past five years, to 6.6 million students in 2011. Parents whose children cannot compete in China’s exam-driven high schools look to vocational schools.

Such students made up such a large percentage of a Honda Motor Co. Ltd. plant in southern China that, when they went on strike for better pay in 2010, crippled Honda’s production chain. A Honda spokeswoman said the ratio of students to regular employees had significantly declined, but would not give a figure.

About 2.7 per cent of Foxconn’s workforce in China comprises vocational students, the company said in October. That works out to 32,400 teenagers.

“This program gives Foxconn an opportunity to identify participants who have the potential to be excellent full-time employees should they wish to join our company upon graduation,” Foxconn said in a statement at the time.

That month, Chinese state media said 56 minors under the legal working age were among students sent to work at Foxconn in Yantai. Foxconn removed the underage students from the plant after the reports.

Chinese law limits students to eight hours of work a day, with no night shifts. Vocational students in Yantai told Reuters they had worked up to 12 hours a day, and routinely did night shifts at Chinese and foreign-invested factories.

Foxconn has a program with Apple, one of its main customers, to pay interns the same wages as other workers, limit their work to eight hours a day, five days a week and allow them to quit if they want.

More than a dozen students interviewed by Reuters in Yantai had a mixed view of their internships, ranging from relatively positive to outraged. Many said it taught them to look for something other than assembly line work after graduation.

Most three-year vocational programs require a two-month internship in the second year, while the third is spent entirely at work. Even though students know they need factory experience to graduate, the assembly line comes as a shock to some.

“At the beginning I was really excited. I thought I could get experience and help out my family with some money,” said Yu, 17, an intern in Yantai. She asked that her full name not be used.

“To suddenly encounter 12-hour work shifts, standing, with only 40 minutes to rest and eat, our legs can’t stand it.”

Some students said they hoped the work would improve their prospects.

“Electronics is our major and so this will help in finding jobs,” said vocational student Sun Chuangjiao, a former Foxconn intern.

Companies defend the internships as educational as well as a useful recruitment strategy.

“The vast majority of our interns and the schools that sponsor them find their experience with us relevant and meaningful, and an important first step in their career development,” Emerson Electronic told Reuters.

It employs 40 interns for eight-month stints, out of a work force of 1,063 at its air conditioner compressor plant in the Yangtze Delta city of Suzhou. All are over 18, it said.

The shortage of labour means companies often search far and wide for vocational schools to supply workers.

Mr. Zhang of LG Innotek said she had contacted schools across China to find interns while Mok Jangkyun, an auditor with Samsung Electronics Co. Ltd., told Reuters he drove a full day after flying to Guizhou province in southwest China to vet a vocational school sending interns to its supplier factories.

Samsung did an audit of factories after activists found underage workers with fake IDs at one of the electronics giant’s 250 supplier factories in China. The South Korean company said it did not find underage workers at any of its suppliers.

Supplying vocational students can be lucrative.

Some students in Yantai said their school took 500 yuan from their monthly wage. Their school declined an interview request.

Some companies pay teachers directly to keep students in line in dormitories and on the factory floor, SACOM has found. In other cases, companies pay management fees or set up extra facilities at schools.

Foxconn says while it pays teachers who supervise students, it usually does not compensate schools.

“However, in some cases, we do provide compensation to meet their overall administrative costs,” it said.

Concordia announced Friday afternoon that it will end its contract with Orchard Consultants Ltd., the company used to recruit Chinese students for the university.

In September, The Link published a story examining poor homestay conditions experienced by some Chinese students recruited through Orchard.

The story prompted an internal investigation by the university of its recruiting practices, particularly with regards to recruitment in China.

The contract between Concordia and Orchard was up for negotiation, but after receiving a list of recommendations aimed at addressing the issue of questionable recruitment practices, the university has decided to issue a Request for Proposals to seek out a new recruiting company in February.

In an interview with The Link, Concordia VP Services Roger Côté said the university will aim to make the process transparent; in the interim, the agreement with Orchard will continue until Feb. 28 to allow Orchard to finalize and transfer open student applications.

In order to prevent similar issues in the future, the university said in a press release on Friday that it intends to use “a blended approach to student recruitment in China” that will combine “in-house and third-party” involvement in the process.

Côté also said that the university is looking to work with the Concordia Student Union, the Graduate Students’ Association and Concordia’s Housing and Job Bank going forward.

“What we want to do going forward is have a relationship with the students ourselves directly,” said Côté.

I thought hiring good engineers would be easy when I launched my startup, Julu Mobile, in Shanghai in early 2011. After all, China produces 600,000 engineering graduates each year, and as a former Google product manager I thought knew how to attract them.

However, I soon learned that hiring the best and brightest would be a lot harder than I thought. In my Silicon Valley experience, the best engineers look for audacious challenges, because the bigger the challenge, the greater their chance to prove themselves and reap the correspondingly larger rewards. Joining a startup company early is an exciting opportunity and potential path to glory for them.

In China, I have found that a different mindset dominates. When I started recruiting talent for my new company, before candidates asked about our strategy, they asked how much money we had. They wanted to know what my plans were for IPO. One candidate told me that he expected "a seven-figure package" (in US dollars). While there was some interest in our plans for China's mobile market, their primary concerns were economic and reputational: how could I prove to them that they would become rich, and that our company would be famous? I don't blame them for being skeptical of my tiny start-up, but I was struck by how much more risk-averse my prospects were than those engineers I'd worked with in Silicon Valley. Over the next months, I began to understand why.

Chinese young professionals today were born after the reform period of Deng Xiaoping, and have spent their entire lives in an economy that has grown 8 to 12 percent annually. They have seen astonishing growth in wealth around them, and expect the same for themselves. They are the legacy of China's one child policy, sometimes referred to as the "six pocket" generation, since they grew up with two parents and four grandparents (six pockets of money) focused on their educational and career success. Blessed with nearly unlimited resources from their elders, those who have succeeded in school join top International and foreign companies where they can expect rapid promotion and income growth.

However, this unprecedented opportunity has also generated high expectations from the elders and potential spouses of this new professional class. In China's family-centered culture, older generations depend on their offspring to provide for a significant part of their retirement, placing a strong expectation on these young professionals to do well financially.

Then there is the challenge of finding a spouse and starting their own families. On the Friday before one of my key hires, with an impressive background from a top global technology company, was scheduled to start work, I got a nervous sounding call from him. He hesitantly explained that he would not be able to join as agreed — his girlfriend's mother had decided that my company was too risky a proposition, and that he should keep his "safe" job. I was shocked. Shocked that he would make a decision on this basis, and shocked that he thought it was a sufficient explanation to reverse his decision.

However, for a young man in China, having a steady income and accumulating assets like an apartment is often a prerequisite for marriage, and even for dating. China's population has developed a significant gender imbalance, with 119 boys for every 100 girls.. This means that women increasingly have their pick, and they tend to choose men who are stable and successful — those who already own an apartment. This cultural emphasis on stability is at odds with the mindset often needed in an entrepreneurial environment. Young women in China don't face pressure to own an apartment like the males, but they do face pressure to find an affluent spouse. (Unfortunately, in China as in so many other places, there's a dearth of women in the engineering fields, so I encountered few female candidates in my recruitment efforts.)

In spite of rising affluence, accumulating assets has become increasingly difficult, as China's economic growth has also resulted in the runaway growth of prices. In a country where owning an apartment is a symbol of success, the ratio of real estate price to annual income is among the highest in the world. For example, in Beijing the price of an apartment has tripled since 2005, averaging 27 times the average annual household income, five times the international average. Those who do buy apartments typically do so with the considerable help from their "six pocket" families, increasing the pressure for financial success.

Unfortunately for entrepreneurs like me, it is hard to show prospective employees examples of local companies that have created extraordinary wealth for their employees. Even successful Internet companies like Baidu, Tencent, and Alibaba are closely held and most of the gains from their IPOs went to the top managers. For smaller companies like mine, there is less of a track record of acquisitions that would make employees optimistic that they would see an exit for themselves.

To overcome these factors, I learned to pay a lot more attention to the personal and family dynamics of hiring. I spent more time explaining how employees would benefit financially if we succeeded. We offer generous housing fund benefits to help employees save for their down payments, and invite girlfriends and significant others to all company events. I have also found ways to target candidates who have more interest taking on technical challenges than making money.

China is full of talent, and as there are more entrepreneurial success stories for the employees of startup companies, I suspect it will be easier to attract the best.

Posts by Doug Raymond(Doug Raymond is the founder and former CEO of Julu Mobile, a mobile advertising technology company based in Shanghai.)