Recruiting in China

Lee Zhang set to become ICBC's vice president

* Zhang's appointment subject to Beijing's approval

* China wants influential Chinese to return to help SOEs

* Deutsche Bank shares up 0.3 pct in line with peers

(Adds sources' quotes, more details, background)

By George Chen and Zhao Hongmei

SHANGHAI/BEIJING, March 19 (Reuters) - Lee Zhang, China head of Deutsche Bank AG (DBKGn.DE), Germany's top lender, is set to take a senior role at Industrial & Commercial Bank of China (1398.HK), according to people familiar with the matter.

The sources said the appointment is expected to receive final government approval in the next few weeks, part of Beijing's plan to attract influential Chinese away from leading Western firms to drive expansion inside major state-owned enterprises.

Zhang has been in talks for several months with senior Chinese government officials and the management of ICBC.

"There will be more to come back as Beijing is eager to push the trend," said one of the sources.

"It does make sense for big enterprises like ICBC. You are already the No. 1 in the world (by market value) and of course you also need No. 1 talent to work for you," he added.

The departure is a blow for the Frankfurt-based lender which in December unveiled ambitious profit targets to reach 10 billion euros in pretax profit by 2011, in part based on its ability to drive revenue growth in Asia.

Deutsche wants to raise revenues in Asia Pacific excluding Japan to around 4 billion euros by 2011 from around 2.1 billion euros in 2008, mainly by focusing on organic growth. [ID:nWEA5547] [ID:nWEA5552]

Deutsche already has a joint venture in China with Zhong De Securities, with plans to reach a market share of 5 to 8 percent within three to five years. It recently raised its stake in Hua Xia Bank (600015.SS). [ID:nSHA137769] [ID:nSHA199464]

The sources said Beijing-based ICBC (601398.SS) agreed to hire Zhang as its vice president, but the appointment must be approved by the Organization Department of the Communist Party of China (CPC) Central Committee, a process that could still take several weeks.

Sources at Deutsche Bank told Reuters that Zhang is still working in the bank this week. Spokesmen at ICBC and Deutsche Bank declined to comment on the matter. Zhang's mobile phone went unanswered.

The sources declined to be identified because the hiring process is private and confidential.

WELCOME TO BEIJING

Zhang, a long-time banker for Western financial institutions, helped Deutsche Bank launch its investment banking joint venture in China, allowing the European lender to help Chinese clients underwrite shares and debt in fast-growing domestic markets.

Zhang, Group Chairman of Deutsche Bank China and Head of Global Banking Asia-Pacific excluding Japan, also helped Guangdong Development Bank, a mid-sized Chinese lender once in deep financial trouble, to strike a $3.1 billion deal with a Citigroup-led (C.N) consortium in a landmark foreign banking investment in China in 2006.

In Beijing, Zhang is already well known among top Chinese leaders since he is a delegate to the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body.

As a CPPCC delegate, an honoured political status very rarely offered to Chinese people working for Western firms, Zhang has opportunities to meet top government leaders and regulators annually and submit proposals on a variety of issues. If his appointment is approved, Zhang would be the highest profile executive to be lured to a state-owned company under Beijing's plan to lure top talent from Western banks.

Many Western banks were badly hit during the global financial crisis, and even influential bankers whose compensation has come under public scrutiny may be more open than previously to outside offers.

Meanwhile, China's fast economic growth has helped big banks such as ICBC grow even more and they are now ambitious for global expansion, providing opportunities for veterans such as Zhang.

Last week, Fred Hu, a high-profile Chinese dealmaker, stepped down as a partner of Goldman Sachs (GS.N) after 13 years with the firm to launch a new private equity fund with help from China Construction Bank (0939.HK) (601939.SS), another of the Big Four state lenders, and other parties. [ID:nTOE6290BD]

(Reuters) - The frustrations of companies in coastal China trying to hire enough workers may become a permanent headache, foreshadowing higher wages, according to a top labor economist.

CHINA

Labor shortages, especially in export hubs in China's coastal provinces, have intensified since last month's Lunar New Year holiday, when tens of millions of migrant workers headed back from coastal factories to their home villages.

Beijing regards the bottlenecks as a temporary, regional phenomenon. But Cai Fang, head of the Institute of Population and Labour Economics with the Chinese Academy of Social Sciences, disagreed.

"It's certain that the migrant worker shortage is here to stay in China," Cai told Reuters.

Factories are finding it tough to recruit even though China's working-age population, in the 15-64 age bracket, will not peak until 2015.

Cai said wages for China's 150 million or so migrant workers increased 19 percent in 2008 and 16 percent in 2009, even though exporters were hit hard by the global financial crisis and more than 20 million migrants lost their jobs.

The manager of a shoe factory in the eastern city of Wenzhou said he had been unable to hire 300 workers despite adding 200-300 yuan per month to last year's average salary of 1,500 yuan ($220).

"This year we have a lot of orders, but the problem is we don't have enough workers," he said. Raising prices was not an option because of competition from newly opened factories, so profits were being squeezed, the businessman added.

SHIFT INLAND

"There is little doubt about the long-term trend of rising wages in China," said Cai, a standing member of the National People's Congress, China's largely ceremonial parliament.

Economists at China International Capital Corp agreed that the end of China's demographic dividend would help increase labor's share of national income, driving up consumption.

"Judging from the experiences of Japan and Korea, we are particularly positive about urban consumption of such goods as vehicles, travel services, healthcare, culture and entertainment, as well as the fast growth of rural appliance sales in China over the next few years," they said in a report.

Labor typically accounts for less than 10 percent of manufacturing costs in China, but businesses, many working on thin margins, also face the risk of a rise in the yuan.

Businesses have been able to absorb higher costs by increasing productivity. More and more companies have also been shifting production inland, where labor costs are lower -- a trend that Cai expects to gather momentum.

"A monthly salary of 1,500 yuan in Guangdong may be too low to attract workers; but if that pay is on offer in an inland city, people are willing to take the job," he said.

Cost pressures will also force companies to climb the value ladder -- a key objective of the government's economic policies.

"Sweatshops in coastal areas with low wages, poor working conditions and narrow profit margins are set to go bust," Cai said. "The process of industrial upgrading will speed up."

And as workers become harder to attract, local governments will have to shift from being "pro-capital" to "pro-labor," for instance by raising minimum wages and making it easier for migrants to settle in cities with their families, Cai said.

In Guangdong, which accounts for about 30 percent of the country's exports, the local government plans to raise its minimum wage by more than 20 percent.

Beijing: In 2008 the US-based online job company Monster Worldwide Inc made headline news when it acquired all of ChinaHR.com, paying $174 million for a remaining 55 percent stake in the Chinese recruitment site.

The acquisition enhanced the strength of the local website and cemented its hold on the No 2 position in China's online recruitment market.

A ccording to leading domestic consultant company IResearch, ChinaHR.com's online recruitment income accounted for 17.9 percent of the industry's total last year. And it is expected to have stronger growth in the next few years, market observers say.

Further success and growth is expected in the years ahead because "Monster is committed to being at the pioneer in service technology and innovation in the sector", said Sal Iannuzzi, company chairman and CEO.

As well, Monster's global network gives ChinaHR.com a big boost because it is the only online recruitment company in the nation with a well-developed international talent database.

Cutting edge

Service, innovation-centered strategy and the global reach of Monster have all spurred ChinaHR's development, Iannuzzi said, noting its patent semantic "6Sense TM" search technology delivers precise matches to both job seekers and employers.

Standard key word search technology might cause a company that needs a veteran accountant to wade through resumes from people who worked as an accountant decades ago - but are now singers, salespeople or teachers.

With technology powered by Monster's 6Sense, recruiters can quickly and precisely find and target candidates who best meet their hiring needs, the CEO said.

The technology also enables job hunters to better fulfill their ambitions.
Iannuzzi said the technology can also significantly help people who have ambitions for a job transition between two disparate industries, a difficult search task for other online sites.

The combination of media, offline recruitment and campus recruitment all give ChinaHR an edge, he said.

Campus recruitment by ChinaHR.com, a key component of its business, has won applause from not only customers in China but also internationally.

Iannuzzi said Monster is promoting ChinaHR's approaches of campus recruitment to its branches throughout the world.

"We are keen on listening to our customers and offering tailored services to fulfill their needs efficiently," the CEO noted.

As well, resources from Monster in some 60 countries globally offer ChinaHR an advantage in aiding China's State-owned enterprises (SOEs) scout talent overseas.

As China has begun to encourage more SOEs and banks to branch out overseas, they face a challenge finding senior professionals.

An example was a bank last year. It took only three weeks for ChinaHR to find 14 qualified overseas professionals it needed.

Before such a search may have cost the bank millions of yuan by hiring senior consultant companies to travel overseas for months at a time.

Showing that Chinese businesses were slow to hire new employees in 2009, Chinese online recruitment company 51job Inc. just revealed its unaudited financial results for the fourth quarter of 2009 and for the fiscal year ended December 31, 2009, and stated that revenues fell 5% from 2008.

While total revenues at 51job.com for the last quarter increased 15.2% over the fourth quarter of 2008 to CNY226.0 million, total revenues for the entire fiscal year 2009 decreased 5.0% from 2008 to CNY817.1 million.

Rick Yan, president and CEO of 51job Inc. stated: "In light of the challenges we faced and overcame in 2009, we were especially pleased to end the year on a high note by achieving record profit in the fourth quarter. We have observed a strengthening trend in market conditions and believe our online business in particular has carried solid momentum into 2010. In addition, with the opening of our new call center in Wuhan, this business is well positioned to not only extend our geographic reach and addressable employer base, but also streamline our service network for greater efficiency and margin expansion. We believe the year is off to a robust start for 51job."

Net income for the fourth quarter of 2009 increased to CNY46.4 million from CNY6.8 million for the same quarter in 2008. Fully diluted earnings per common share for the fourth quarter of 2009 were CNY0.84 compared with CNY0.12 for the same quarter in 2008. Fully diluted earnings per ADS for the fourth quarter of 2009 were CNY1.67 compared with CNY0.24 in the fourth quarter of 2008. Net income for 2009 increased 46.9% to CNY112.5 million from CNY76.6 million in 2008. Fully diluted earnings per common share for 2009 increased to CNY2.02 from CNY1.35 in 2008. Fully diluted earnings per ADS for 2009 were CNY4.03 compared with CNY2.70 in 2008.

Print advertising revenues for the fourth quarter of 2009 increased 8.2% to CNY64.6 million compared with CNY59.7 million for the same quarter in 2008. The increase was primarily due to higher average revenue per page, which was partially offset by a lower volume of print advertising pages in 51job Weekly resulting from a decline in market demand. Although print advertising prices in each city remained relatively unchanged, overall average revenue per page increased 39.8% over the fourth quarter of 2008 due to an increase in page volume contribution from cities where print advertising prices are generally higher as compared to the same quarter of the prior year. The estimated number of print advertising pages generated in the fourth quarter of 2009 decreased 22.6% to 2,672 compared with 3,452 pages in the same quarter in 2008.

The estimated number of print advertising pages generated in fiscal year 2009 decreased 29.4% to 11,661 compared with 16,512 estimated pages in 2008. Unique employers using the company's online recruitment services grew 39.9% to 143,451 in 2009 from 102,562 in 2008. Employers who purchase online services multiple times or in multiple quarters throughout the fiscal year are counted as one unique employer for the annual total.

Online recruitment services revenues for the fourth quarter of 2009 were CNY97.3 million, representing a 33.7% increase from CNY72.7 million for the same quarter of the prior year. Other human resource related revenues for the fourth quarter of 2009 increased 0.5% to CNY64.1 million from CNY63.8 million in the same quarter of 2008.

51job Inc. (JOBS: News ) reported net income of RMB46.4 million or RMB1.67 per ADS for the fourth quarter, compared to RMB6.8 million or RMB0.24 per ADS in the prior year quarter.

Excluding items, non-GAAP adjusted income was RMB52.6 million or RMB1.90 per ADS, compared to RMB13.6 million or RMB0.48 per ADS in the year-ago quarter.

Total revenues for the fourth quarter increased 15.2% to RMB226.0 million from RMB196.2 million in the same quarter in 2008.

For the first quarter of 2010, the company anticipates non-GAAP earnings of RMB0.68 per share to RMB0.78 per share, and revenue of RMB230 million to RMB240 million.

US internet giant Google today posted ads for dozens of positions in its China business.

The move suggests it may be rethinking its threat to leave the country over cyber attacks and online censorship.

Google is seeking to hire 40 staff, including engineers, sales managers and research scientists in Beijing, Shanghai and the southern city of Guangzhou, according to advertisements seen on its website.

The job ads - the first since Google threatened to shut down its Chinese language search engine google.cn rather than bow to government censors - could mean the firm planned to stay in China, technology analyst Li Zhi said.

"They are in the process of resolving this issue (with the government)," said Li, a Beijing-based analyst at research firm Analysys International.

"Their business in China won't change too much this year."

Google threatened in January to leave China over what it said were cyber attacks aimed at its source code and at the Gmail accounts of Chinese human rights activists around the world.

Meanwhile, Google has continued to filter search engine results in China, which has the world's largest number of online users at 384 million.

A spokeswoman for Google China did not respond to emails or phone calls from AFP seeking confirmation of the recruitment drive and the status of Google's talks with Beijing.

Google representatives and Chinese officials were to resume talks in the coming days after a break for China's Lunar New Year holiday, the Wall Street Journal reported Tuesday.

The talks will centre on whether the US firm can deliver unfiltered internet search results in China, the report said.

Google China spokeswoman Marsha Wang told AFP yesterday she had no updates on plans for talks when asked about the report.