Can China Handle Massive Unemployment?
April 29th, 2009It's an understatement to say that the job market is getting tight in China. That's the inevitable conclusion from today's WSJ cover story "China Faces Grad Glut After Boom At Colleges." This corroborates a March article in China Daily that put on a positive spin on the situation with this headline: "More Teaching Jobs for Graduates." The gist there is that the government will pay for schools to hire more teachers to soak up some of the graduate pool (gotta love Chinese media for looking on the bright side of things). China blogger Michael Pettis commented on this trend last month with some optimism about what this could mean for China's future when he wrote:
"If more Chinese graduates are forced – by terrible job prospects – to consider starting their own businesses, the long term consequences for China should be positive although, as everyone running a small business in China will tell you unendingly, starting and running businesses here is extremely difficult and, what is worse, it is never easy to know when you are and when you aren’t legally compliant. Still, China really does need more entrepreneurialism and one of the unexpected benefits of the crisis may be to boost small businesses."
The simple fact is that China will benefit over the long-term if college grads actually leverage their education to create value and be entrepreneurial rather than just use it to get hired to work in the bullpen fielding calls for Ctrip.com (CTRP) -- see above photo. Though in the short-term, there could be some real pain.
So what
Now, if you're a regular reader of this blog, then you know our Global Gains mindset. We're immediately asking "Who benefits?" and "Who gets hurt?" by this big picture trend.
The losers, I think, are pretty obvious. They include companies such as 51Job (JOBS), which does job placement in China. Now, they'd be in a good place if they got paid by job seekers to help them find openings. Instead, 51Job gets paid by corporations who are looking to do recruititing...and there's not a whole lot of recruiting going on right now.
Other losers are companies that cater to urban working professionals. These, after all, are what college graduates become, and there are fewer of them this year than there were in previous years. A company like Ctrip, which helps Internet-savvy Chinese book travel, looks like a clear example despite the fact that it's well-run and a leader in the travel space in China. Its addressable market will just be smaller in the near-term, and the company may achieve lower growth rates as a consequence.
Winner winner chicken dinner
On the flip side, there are going to be companies that do benefit, and I think the obvious ones there are firms that help young Chinese people become more competitive job applicants. This quote from Jane Yang in the WSJ is illustrative: "There are no job prospects for someone like me," she said during a quick meal at the school's cafeteria. "I think I'll just go to grad school."
McDonald's To Recruit 10,000 Employees In China In 2009
April 28th, 2009Despite the economic slowdown fast food giant McDonald's has announced that based on its good performance in China, the company plans to recruit 10,000 new employees in the country, of which, 80% will be college graduates.
Kenneth Chan, the newly appointed CEO of McDonald's China, told local media that talent is very important for the company's continuous development in the Chinese market and recruitment is related to McDonald's business expansion and the promotion of its 24-hour services.
Chan said China is one of the fastest growing markets for McDonald's and the company's comprehensive service models, including breakfast, 24-hour services, and dessert stations, in this market play important roles in adding income to the revenue of the restaurants. But it also means they need more employees to do this work. In fact, McDonald's already started to select quality talents in 2008 and entered several famous Chinese universities, including Peking University, to attract their graduates.
In addition to the recruitment plan, McDonald's launched a China leadership development plan for the first time to provide professional training to its talent management team and outlet expansion team to make preparation for its further expansion.
Sanofi-Aventis to Invest USD90mn More in China
April 27th, 2009PowerRating -- Sanofi-Aventis SA (NYSE:SNY), one of the top pharmaceuticals producer in Europe, will additionally pour USD 90 million into China, and an insulin glargine pre-filled injection production line is scheduled to break earth in the Beijing Economic-technological Development Area.
Presently, the company still has great confidence in China's development prospect, so it decides to invest more in such a market with growth potential. Sanofi-Aventis intends to spend a lot of money building or expanding its factories and seeking more partners locally, in accordance with the country's increasing public health demand.
The Sanofi-Aventis CEO Chris Viehbacher also revealed that the European pharmaceutical giant and the Society of Diabetes of Chinese Medical Association would cooperate in a sizable type-2 diabetes gene research, in which about 46,000 diabetes patients and non-diabetes individuals are invited to participate.
So far, Sanofi-Aventis has invested more than USD 300 million in China, hiring over 3,300 employees, and its production bases are dotted in Beijing, Hangzhou, and Shenzhen.
China labour disputes rise as economy slows
April 24th, 2009BEIJING (AFP) — The number of labour disputes in China have soared amid the global financial crisis as laid-off employees seek salaries owed to them by suddenly defunct companies, state press reported on Wednesday.
A total of 98,568 cases involving labour disputes were filed in Chinese courts in the first three months of 2009, up 59 percent year on year, the China Daily said, citing figures from the nation's supreme court.
"Amid the global financial crisis, the number of businesses going into the red or going bankrupt continues to grow, leading to more disputes over salary claims," Du Wanhua, a top official with the court, was quoted as saying.
Du said the rise was also likely due to the introduction last year of a labour contract law that provided a more solid legal footing for complaints and increased workers' awareness of their rights.
The newspaper said the increase followed a 93 percent surge in such cases in 2008 to 286,221.
Chinese officials have repeatedly warned of the potential for widespread unrest if unemployment continues to grow.
The World Bank last month forecast China's economy would grow 6.5 percent in 2009.
That would be its slowest expansion in nearly two decades and well below the eight percent level that Chinese leaders say is needed to keep enough people in work and to avoid unrest.
The economy, which grew nine percent in 2008, has slowed sharply amid the collapse of overseas markets for China-made goods due to the world economic downturn.
Thousands of factories and other businesses have failed in recent months, throwing millions out of work and leading to protests in some areas as angry workers demanded back pay owed by failed companies.
L'Oreal still hiring fresh graduates amid tough times
April 23rd, 2009L'OREAL is still recruiting fresh graduates here amid the tough economic environment, as it opts to cut costs by improving efficiency instead of scrapping jobs.
'Clearly we have to look at cost cutting but we're not looking at cutting heads,' said L'Oreal's executive vice-president for human resources Geoff Skingsley.
'We are not stopping recruiting of graduates. We have a steady long-term approach to recruitment.'
L'Oreal has a long-standing relationship with the National University of Singapore, he said.
However, the international cosmetics group is scaling back on recruiting more experienced staff.
Other ways in which it is containing costs include cutting travel budgets.
Despite the downturn, Asia remains a bright spot for the group.
'It's a high-growth region,' said Mr Skingsley.
'It's clear from a population point of view, from retail sophistication, demographic trends - all of these things here work in the favour of the beauty industry.'
Markets such as China and Thailand deliver steady growth, while newer markets such as Vietnam offer lots of potential.
In FY 2008, L'Oreal's Asian sales jumped 16.3 per cent year on year to 1.84 billion euros (S$3.59 billion). It reported consolidated sales of 17.542 billion euros for the year.
Based on the group's strong brands and innovative efforts, Mr Skingsley is upbeat about L'Oreal's ability to weather the economic storm.
'Our industry is one that retains relevance even when times are tough,' he said. A portfolio of 26 brands means a weaker performance by some is offset by a stronger showing by others.
L'Oreal remains committed to nurturing local talent. 'We take pride in giving international opportunities to people so they can gain exposure in other markets and bring that exposure back to their own markets,' Mr Skingsley said.
For instance, L'Oreal Singapore's new managing director Chris Neo is a Singaporean who has been with the company for 14 years.
L'Oreal employs 63,000 people worldwide, including 350 in Singapore.
Bank of China goes on hiring spree in Switzerland
April 22nd, 2009Bank of China, China's second largest lender, has made seven senior hires for its new Swiss private banking office, with an emphasis of coverage on the Middle East and Latin America.
BoC became the first Chinese bank to open a private banking office in Switzerland last November, offering private banking and a fund management service.
The new hires were detailed in a press release from the bank. Fatima Al Arabi joins as head of institutional clients, the Middle East. Mohamad Bleik joins as co-head of private banking, in the Gulf Cooperation Council. Teresa Cheung-Constantin, joins as a senior private banker.
Jean-Pierre De Barro joins as head of sales. Julien Froidevaux is head of the independent managers department. Jose Luis Piccinini joins as head of institutional clients, Latin America. Daniel Alexander Rieber, joins as senior private banker, Latin America.
The new hires report to Jacques Mechelany, the former chief executive of Heritage Fund Management, who last November was hired to head the new private bank.
The private bank is a wholly-owned subsidiary of Bank of China (UK), which is itself a subsidiary of the Bank of China group.
A spokesperson for the bank did not immediately return calls.