Recruiting in China

GUANGZHOU, China — Two factories that make Microsoft Corp. products in southern China violated overtime regulations and failed to properly register the use of workers aged 16 to 18, officials said Monday.

The problems at the plants in the city of Dongguan were initially raised last week by the National Labor Committee, a New York-based nonprofit that monitors the treatment of foreign workers by U.S. companies. The group alleged that the teen laborers worked long shifts and were not allowed to use bathrooms during working hours at the plants, owned by Taiwan-based KYE Systems Corp.

The factories make Webcams, computer mice and Xbox controllers for Microsoft, the world's biggest software company.

Investigators with Dongguan's human resources bureau said in a report that factories are allowed to hire workers between the ages of 16 and 18 as long as the laborers are registered with the authorities. The KYE factories had 385 such workers — most supplied by vocational schools — and 326 weren't properly registered, the report said.

Employees were also forced to work an excessive amount of overtime in March, clocking about 280 hours, the report said. Copies of the labor contract also weren't given to employees, the document said.

But officials said that based on interviews with workers, there were no restrictions against using the restroom during shifts. The report said the company's policy was to give workers 10-minute breaks for every two hours worked.

KYE Systems Corp. spokesman Lai Jin-hui told The Associated Press, "Assembly line workers are allowed to go to bathroom only if they report the need."

Lai insisted that factories did nothing wrong regarding overtime and had followed regulations that limit the workweek to 60 hours. But Lai acknowledged that the factories failed to properly register workers and would now fix the problem.

The human resources bureau report said the factories have been ordered to comply with the law and would be monitored closely.

Last week, Microsoft said it does quarterly onsite assessments and gets weekly reports from KYE about certain labor and safety criteria. The software maker said a team of independent auditors would visit the factories and monitor the situation pending results of its inspection.

Associated Press writer Annie Huang in Taipei, Taiwan, contributed to this report.

SHANGHAI—Industrial & Commercial Bank of China Ltd. said Monday it appointed the chairman of Deutsche Bank AG's China operations as a vice president.

ICBC, China's largest commercial bank by assets, has been expanding its footprint outside its home market since it raised $22 billion in the world's largest initial public offering in 2006, such as through acquisitions and by opening outlets.

ICBC said the appointment of Zhang Hongli, who also served as head of the Asia-Pacific region for Deutsche Bank's Global Banking division, is still subject to the approval of China's banking regulator.

"The board of directors is of the view that Mr. Zhang Hongli is familiar with international financial markets and circumstances of the country and is experienced in the management of international banks," ICBC said in a statement on the Hong Kong Stock Exchange's Web site.

Mr. Zhang, 45 years old, joined Deutsche Bank in 2001. Prior to that, he worked for Goldman Sachs Group Inc., U.K. asset management firm Schroders PLC and computer maker Hewlett-Packard Co.

Officials at Deutsche Bank in China weren't immediately available for comment.

Deutsche Bank is the largest shareholder of medium-sized Hua Xia Bank Co., with a 17% stake. The German lender also owns one-third of Zhong De Securities Co. and 30% of Harvest Fund Management Co.

In September, ICBC agreed to buy part of ACL Bank PCL in Thailand. In 2007, it bought a 20% stake in Standard Bank Group Ltd., South Africa's largest banking company by assets, for $5.4 billion. That same year, it also bought a 79.93% stake in Seng Heng Bank Ltd., Macau's third-biggest bank, and a 90% stake in Indonesia's PT Bank Halim.
—Rose Yu

BOAO, CHINA (Dow Jones)--Deloitte Touche Tohmatsu International, one of the world's big four accounting firms, will put an additional $100 million in China in the coming years to support its business and staff expansion in one of the world's fastest-growing markets, the company's chief executive said over the weekend.

China is Deloitte's fourth-largest market in terms of employees, with more than 8,000 people in 13 cities across mainland China, Hong Kong and Macau. Its business includes auditing financial results of companies, helping companies to prepare tax returns, and consulting.

"Deloitte is committed to China. An 8% growth rate and the prospect of sustaining superior growth going forward makes it an attractive place for a professional services firm to want to be," CEO James Quigley said on the sidelines of annual Boao Forum, a gathering of government and business leaders on the southern Chinese island of Hainan.

"When I have made my investment decisions as the CEO of Deloitte, the market where we are investing the most is in China," he added.

In 2004, Deloitte announced a $150 million investment for its China business over five years, with the lion's share of the money having gone toward recruiting and retaining staff.

"We've now expanded. So another $100 million is coming this direction as we continue to want to grow our business here, and take advantage of the opportunities available to serve China companies and to serve companies outside of China who want to invest here," said Quigley.

He added the $100 million would be invested over three to five years.

Christopher Lu, Deloitte chief executive officer for China, said the company will continue to hire between 1,000 and 2,000 workers in China annually as part of its expansion.

"If you look at complex transactions, for instance, derivatives and others, you need to have experts that truly understand these areas," he said. "We spend a tremendous amount of our annual operation funds in training and developing people."

In June, Deloitte will set up a team in Hong Kong of senior managers from 16 countries to help Chinese companies with tax services for international investments.

Deloitte's main target clients in China are large state-owned enterprises, private companies, multinational corporations and high-potential rapid growth enterprises, particularly in the technology sector.

-Rose Yu contributed to this article, Dow Jones Newswires; 8621 6120-1200; rose.yu@dowjones.com

By SIOW LI SEN

DBS Group Holdings will be hiring 20 per cent more people for its business in China which currently employs 1,000 staff.

'Amid the significant wealth creation that rapid growth brings, this year, DBS China will ramp up its priority banking business, which caters to customers with at least RMB 400,000 in investible assets,' the bank said Tuesday.

DBS has been expanding rapidly in China - Asia's fastest growing economy for the last decade - and is competing fiercely with other foreign banks to increase its presence.

DBS forecasts that China's economy will expand 9.5 per cent this year.

HSBC China said this month the company expects to add 19 new branches this year to its existing 99 outlets, according to a Reuters report.

DBS China currently operates out of eight branches and seven sub-branches across China, has applied to regulators to open more branches, the bank said.

'DBS China also intends to add about 200 staff to its existing headcount of close to 1,000 employees this year,' it said.

More than half of the recruits will be for client-facing roles in priority banking, with the rest slated for positions in institutional banking, treasury and markets as well as support units to keep pace with rapid business expansion, it said.

DBS Bank, Southeast Asia's largest bank will commit over $1.5 million in the upcoming World Expo 2010 to raise its brand presence, it said.

Starting in June, the six-month World Expo which has drawn participation from 200 nations is expecting an estimated 70 million visitors.

Telecom equipment provider ZTE is likely to send 250 Chinese employees back as it is obliged to recruit Indian employees in all of its operations in India over the next 3 years.

The move has taken place in the wake of the release of the Government's directive, last month, which expects all the foreign telecom equipment companies in India to employ only Indian engineers.

At present, out of the total 2,300 staffers of ZTE in India, 15% are Chinese. The company has been planning to recruit another 1,000 engineers by March 2011.

The company's unit in India contributes to over 10% its global revenues, which was reported to be $8.8 billion in fiscal 2009-10.

DK Ghosh, Chairman, ZTE Telecom India, "It is part of our localization policy and has nothing to do with the department of telecom (DoT) directive".

Mr. Ghosh added that around 95% of ZTE's manforce in India constitutes engineers. The move, as directed by the Government, will reduce its Chinese staff strength to merely 3%.

The Government's directive, called DoT, was issued in March, asked for a strict adherence of the foreign operators to the new instructions.

By NICK WINGFIELD

Microsoft Corp. said it is investigating allegations of worker abuse at a factory in China that makes computer mice, cameras and other devices for the technology giant.

The move was prompted by a report published this week by a Pittsburgh-based human rights advocacy group, the National Labor Committee, which alleges a factory in Dongguan, China, operated by KYE Systems Corp. overworks young employees and houses them in harsh conditions.

Microsoft devices represent a significant portion of the products made at the factory, though KYE makes products for other companies there as well, according to the report.

"The factory was really run like a minimum security prison," Charles Kernaghan, director of the National Labor Committee, said in an interview.

In a statement issued in Taiwan, where it has headquarters, KYE Systems said it has never hired workers under 16, and that its employees get one day off every seven, with extra hours in peak season but never more than 12 hours a day. It said that while its wages are low by U.S. standards, they are in accordance with Chinese regulations. "We regret that the NLC reported a one-sided story without offering us a chance to explain," the statement said. The company's Web site says it employs between 3,600 and 4,500 workers in China, depending on seasonal demand.

In a blog post on Thursday, Microsoft executive Brian Tobey said, as a result of the National Labor Committee's report, the company has "a team of independent auditors en route to the facility to conduct a complete and thorough investigation."

Mr. Tobey said Microsoft auditors inspect KYE facilities annually and haven't detected violation of child labor laws for the past two years. He said worker overtime "has been significantly reduced" at the factory and that compensation is in line with labor standards for the area where the factory is located.

Mr. Tobey is corporate vice president of manufacturing and operations for the Microsoft unit that makes the Xbox videogame console, the Zune music player and other hardware.

The National Labor Committee report alleges KYE recruits employees many of whom are 16 and 17 years old to work 15-hour shifts six to seven days a week, paying them 65 cents an hour—or 52 cents an hour after deductions for food.

Workers are housed in cramped quarters in factory dormitories and prohibited from talking, listening to music or using the bathroom during work hours, the report says.

The report is another sign of growing scrutiny of the companies the technology industry widely relies on to make electronics products.

In February, Apple Inc. said an internal audit of its suppliers last year uncovered more than a dozen violations of the company's labor policies, including several in which contractors hired underage workers. Apple began auditing worker conditions after reports of worker abuses at Chinese factories that made iPods.
—Ting-I Tsai contributed to this article.