Recruiting in China

With Christmas spending just around the corner and memories of frozen annual bonuses lingering from last year, many companies in Beijing are calming employee concerns with news they will come through with cash regardless of economic woes.

"Though some companies said they won't pay out a bonus in 2009, the majority said they would pay no matter what the impact on the business was," said Tommy Li, a senior consultant at Mercer, one of the largest international HR consulting firms operating in China.

Li, who was the product manager for the China Monitor Report, a quarterly survey containing the most updated HR trends in China, said most companies froze or postponed yearly bonuses in 2008 due to the dire global financial situation.

The China Monitor Report, which surveyed over 290 companies, found that more than 69 percent confirmed they would pay yearly bonuses this year despite the global financial crisis. Only 4 percent of companies said they would not.

In addition to the return of year-end bonuses, the China Monitor index found that jobs are on the rise. In the fourth quarter of 2009, over 78 percent of business said they had plans to hire new employees and less than 10 percent said they would downsize.

One sales director of a Beijing-based metals business said that he fears his company will lose employees in the reviving employment market. With the exception of last year, he said he has noticed a trend of employees leaving his company after receiving their yearly bonuses.

"There's a joke in my office about it. Every year, out of the 15 people that report to me, I lose anywhere from three to five," he told METRO, requesting that he not be named.

He said employees feel less incentive to stick around after receiving the year-end payout.

Though the company gave out bonuses last year, much to his surprise, he said his salary had been frozen. "This year, with companies starting to hire again, I expect to see a lot of movement. Most people stayed at their jobs last year, grateful just to have a paycheck, but with confidence restored and hiring resuming, I think this year will be different," he said.

The Accor hotel group on the other hand is taking a different approach to distributing end of the year bonuses.

"The bonuses of our salaried employees engaged in the corporate office are assessed against several criteria - including the performance of the company," said Robert Murray, Senior Vice President of Greater China for the ACCOR Hotel group.

Murray, who has been working with Accor, a foreign public company listed in France, for more than five years has seen shifts in the market. He said Accor's system allows employees to share in both the good times and the more "challenging times", such as the 2009 economic crisis.

"Although it is yet to be determined, it is fair to say that bonuses for this year will be examined in line with results," Murray said.

He added that employees at the hotels, outside of the corporate office, are usually given bonuses based on individual successes of their hotel.

"There will be mixed outcomes of bonus payments to these employees," he said.

Spurred by the healthcare reform launched by the central government, healthcare has now become the hot destination for domestic and foreign venture capital (VC).

The buzz has been the most active in the bio-pharmaceutical sector which has raised funds to the tune of nearly $130 million in the first half of the year.

The sector accounted for 20 percent of the investment deals signed in China during the same period, according to a report by Zero2IPO, a leading domestic service provider for the venture capital and private equity industry.

"The ratio is pretty high. The passion (for bio-pharmaceuticals) has been ignited by the predictable growth potential in China's healthcare industry and the growing demand for biopharmaceuticals," said Zheng Yufen, senior manager for healthcare at the investment banking division of Zero2IPO.

"Talks are also on for a slew of other investment deals in the bio-pharmaceutical sector and hopefully they would be sewn up by the end of the year," she said.

"The bio-pharmaceutical segment often sees mega deals and would continue to catch the fancy of venture capitalists for some time to come."

In January, Kerry Bio-Science, a Zhejiang-based life science research pharmaceutical company, raised its second round of funding worth $13 million from KPCB China and some institutional investors. Kerry Bio-Science will use the funds to set up a new development and research center and expand its output capacity.

The Kerry Bio-Science deal sparked a flurry of investment in the bio-pharmaceuticals sector. Macrostat, a clinical research data provider on bio-pharmaceuticals, got investment, with no details available, from Tigermed Consulting and Qiming Venture Partners. In May, KPCB China made its second investment this year, in Nanjing-based Genscript Corporation, a leading bio-pharmaceutical research outsourcing company, at a price of $15 million, the largest this year.

According to Xiao Jun, executive vice-president of Genscript, the company got funding due to its "inherent strength in biotechnology research and its comprehensive service system".

"GenScript needs capital and mature management experience to help fulfill the goal of becoming a leading contract research outsourcing company," Xiao said.

Bio-pharmaceutical companies are those producing drugs using bio-technology. In early 2000, investors began to show interest in the sector, but the investment was not sizable given the limited scope of the medical market then.

"After China unveiled its healthcare reform, a huge potential for these products was unleashed," said Zheng.

Over the next few years, China's bio-pharmaceutical sector will continue to grow by 12 to 15 percent annually, and by 2010, the market will reach $100 billion.

With its strong talent pool, China is in a much better position to attract investment by international medical companies for R&D centers. In November, drug major Merck Serono and IBSA, a Switzerland-based bio-pharmaceutical company, announced plans to set up R&D centers in China.

Maurizio Dattilo, director of Strategic Marketing of IBSA, said: "China has a very strong scientific research team and employees to work for the R&D center."

This year, venture capital firms like International Data Group and SAIF are bolstering their teams and hiring more employees from hospitals and domestic bio-pharmaceutical companies.

"Both the companies are in negotiations for deals of over $10 million," said Zheng.

The joint venture (JV) of China-based LCD TV vendor TCL and Century Science & Technology Investment Corporation is headhunting talent from Taiwan's panel industry, according to sources in Taiwan.

TCL is recruiting people from panel makers including AU Optronics (AUO), Chi Mei Optoelectronics (CMO) and Chunghwa Picture Tubes (CPT), the sources said.

Employees of Taiwan's panel companies may be more motivated to defect to China competitors now that the local LCD industry is consolidating. Innolux Display is merging with CMO and TPO Displays, leaving minor players, such as CPT, in a more difficult position, the sources from Taiwan's panel industry commented.

The China government plans to attract LCD panel makers to set up production plants in the country by providing subsidies, the sources claimed. Panel makers will only need to shoulder 10-15% of the total investment, while the government will cover about 30-40%, with the rest coming from outside investors, the sources added.

More than 30 percent of college graduates choose postgraduate study over job hunting because they believe looking for work is too difficult, a study shows.

Zhang Xiaochu, director of Haidian human resource service center, said 33.7 percent of the 2,641 college students surveyed said they would study for a higher degree, including 8.58 percent of respondents who want to study abroad.

He said the employment situation remains challenging because of the financial crisis, intense competition and the gap between employers' expectations and the capability of graduates.

The Beijing municipal education commission said last week that there were about 209,000 university graduates in Beijing in 2009 and more than 10,000 graduates have still not found a job.

These people will continue to fight for jobs against 219,000 fresh graduates in 2010, making job hunting even more intense.

"We can not find satisfactory jobs and so many classmates of mine choose to study further," said Cui Yan, who graduated from Capital University of Economics and Business in the summer of 2009.

He said 10 out of the 34 people in his class who did not find jobs immediately are planning to study further.

Cui was employed at a public relations agency in July but quit because he thought the job was too hard and the wage too low. He said many of his classmates had similar wage expectations.

"I think our mentality has a little problem," Cui said.

He said they cannot put up with the busy work and are not satisfied with their salary.

The report from Zhang's center also found employers need employees who can work independently as soon as possible, but the biggest problems graduates face is a lack of experience.

The Haidian human resource service center and the Renmin University of China conducted the survey in July.

As many as 3,275 questionnaires were sent out to 36 colleges in Beijing and 2,641 effective replies were collected, about 70 percent of who will graduate in 2010.

AstraZeneca plans to move all production of the vital molecules in its medicines offshore, mainly to China.

The pharmaceuticals company’s cost-cutting drive, which will continue for some years, means that it will cease to produce or source active pharmaceutical ingredients (API) in the UK.

The manufacturing shift to Asia could lead to job losses and either plant closures or a sale to another company, but an Astra spokesman said no decisions had yet been made. “Over the next several years we would seek to outsource all of our active ingredients,” he said.

In the UK, Astra makes APIs for cholesterol and schizophrenia drugs in a factory at Avlon, near Bristol, which employs 300 people. An option for that facility could be a sale to a third party but no decision has been taken, the Astra spokesman said.

Astra has ended the production of active ingredients at its main UK factory in Macclesfield and has been building up its manufacturing presence in China with a big factory in Wuxi, which in addition to making APIs, also does medicine formulation and packaging.

The decision by Astra to shift offshore the entire process of making active ingredients will ring alarm bells in Britain’s chemical sector, which has suffered huge losses in the recent downturn.

According to figures compiled by the Chemical Industries Association, Britain’s trade in pharmaecutical ingredients moved into positive balance over the past year after a decade of deficits. Anecdotal evidence suggested some UK-based chemical companies were getting contracts from drug companies that had experienced quality-control problems in India and China.

The outsourcing of the active molecule in a medicine is an important trend among drug companies and is increasing, said James Knight, chemicals analyst at Collins Stewart, the broker. “There is a move to outsource more and more of the basic ingredients from Asia,” he said.

The threat to makers of pharmaceutical ingredients comes at a time when the UK chemical industry is reeling from a sudden fall in demand from manufacturers. A big chemical site, originally developed by ICI in the northeast of England, has come under threat after a decision by Dow Chemical, the American company, to cease production at its ethylene oxide plant. The integrated nature of the site means that the decision has put neighbouring plants, both suppliers and buyers, under pressure.

Robert Tyler, president of the Chemical Industries Association, said the pressure could become too great for some companies. “If the final decision on ethylene oxide is negative, then there will be more job losses. We have put a plaster on it for a year. A lot of companies will say we are returning to demand levels in 2005 and they will restructure.”

AstraZeneca last month reported that pre-tax profits for the third quarter rose 27 per cent to $3.4 billion (£2 billion), as revenue rose by 5 per cent to $8.2 billion.

Nearly nine out of 10 Chinese workers are under growing pressure at work as China leads the world toward economic recovery, a global survey has found.

The survey by Regus, a US-based provider of workplace solutions, polled 11,000 companies in 13 countries during August and September. It found 58 percent of companies worldwide had seen a rise in workplace stress during the preceding two years.

"Nearly 86 percent of Chinese people report that their levels of stress had become 'higher' or 'much higher' during the past two years," the survey noted.

The smallest increase in stress worldwide was felt in Germany and the Netherlands, with a respective 48 percent and 47 percent of workers saying they had experienced more stress.

With the World Bank forecasting China's GDP will grow by 8.4 percent this year, indicating the country is well on the way to recovery, Chinese workers are at the sharp end of the world's efforts to rebound.

"While their international counterparts feel stressed as a result of the global economic downturn, the stress faced by Chinese workers is twofold," said Hans Leijten, regional vice-president of East Asia for the Regus Group. "On the one hand, they must react fast to the new opportunities provided by a country that maintains a higher-than-8-percent GDP growth. On the other hand, they have to deal with the retraction challenges presented by the global economic downturn."

About 42 percent of Chinese workers said they were particularly stressed about the increasing focus on profitability.

Among the stressed workers, 28 percent said maintaining excellent levels of customer service was the main reason for their sleepless nights.

Another survey, from the Horizon Research Group, said respondents quizzed in June complained that the global financial crisis had contributed to rising pressure among Chinese workers.

About 34.2 percent of people interviewed for that survey said the crisis had increased workplace pressure.

Those most affected by the added stress were in the 24-30 age group and the majority worked for foreign-invested enterprises, the report said.

Most of the pressure at work came from career development, performance appraisal and salary issues.

In the midst of the downturn, employees were involved in fewer malpractices, were more likely to volunteer to do overtime and more inclined to postpone planned leave.

Both surveys reflect Chinese society, where many employees are inclined to put in long hours.

"Karoshi", or death from chronic overworking, is no longer a phenomenon reserved for the Japanese. In China, there have been reports of employees dying on the job. Early this month, a young software engineer at a video website died at his desk after putting in a series of 13-hour days.

"The pressure does not necessarily ease with different economic situations," said Sam Liu, a 31-year-old marketing strategy manager with a global company. "You have one kind of pressure in good times and another kind in bad times.

"I have time to sleep. But I have to sacrifice my hobbies and the time I would like to spend with my friends."

Among the reasons why some Chinese people work so hard is the massive competition within the vast workforce.

"There is always another guy who is willing to do 12 things when your boss has asked you to do 10 things.

"You deal with the pressure or you quit," Liu said. "It is up to you."