Commentary: Stimulus package no solution to long-term development
April 21st, 2009BOAO, Hainan, April 19 (Xinhua) -- When the world's third largest economy is walking out of the shadow of economic downturn, it has found more problems that demand to be immediately addressed when looking into a long-term picture.
Government and business leaders attending the Boao Forum for Asia, a platform for regional cooperation, agreed that the crisis will be over, but China can not return to the former export-oriented development pattern that depends on the demand in the United States and Europe. Those days are over, and now the country should learn to walk with both legs -- domestic demand and exports.
When unemployment rate started to rise, the government adopted the 4-trillion-yuan stimulus package at the end of last year. It is true that government-sponsored infrastructure projects have created jobs for construction workers, but what will they do when the projects are over?
The stimulus package can not replace a long-term strategy for the country. With 1.3 billion people, China needs sustainable economic growth. Growth creates jobs. Jobs mean stability.
But where can China find the key to sustainable growth and stable employment? This question defies a simple answer.
As an emerging economy on the way of industrialization and urbanization, the situation is extremely complicated and diversified across the nation. However, the bottleneck that affects robust economic growth is more or less the same in many areas. To break them will definitely unleash enormous driving force for the economy.
The small and middle-sized enterprises (SME) in the private sector have sparked unprecedented economic boom since China adopted the reform and opening-up policy in 1978.
From Huawei to UTStarcom, from Baidu to Alibaba, these players -- not state-owned industrial giants -- are often fighting at the frontier of reform and development. As effective and efficient players in Chinese economy, the SMEs have been offering stable jobs for China's ever-growing labor force.
However, when the financial crisis comes, bank lending often goes more to larger state-owned enterprises instead of the SMEs, and the latter are often the first to go bankrupt. This is unfair, and definitely hinders the healthy development of the economy.
Reforms are already underway, and this problem should be addressed with concrete measures from both the government and the banking system.
Another way to make China's human resources better contribute to the economy should be the development of service industry. Instead of making things, people can do things to make money. More boosts should be given to information technology, telecommunications, medical care and education.
These sectors, rather than traditional factories, will give a platform for China's huge number of college graduates, who get the opportunity of using their education to make money and create wealth for the country.
The lack of talents in key fields such as the financial sector and management also restricts the development of the national economy.
Good practices have been made in larger and state-owned companies. Ever since 2003, China's State-owned Assets Supervision and Administration Commission (SASAC) have started recruiting executives for China's state-owned enterprises (SOEs).
The application was open to top talents worldwide, and some of the SOEs even cancelled limit to the nationality of applicants. From 2003 to 2007, the SASAC hired 91 executives out of 5,985 applicants, 11 of whom had overseas experience.
Other companies should take similar measures. Not only should they introduce management talents, but also hire more experienced financial staff. When the Wall Street is laying off employees, it is high time that Chinese companies bring these talents to China to boost domestic growth.
China needs reforms, in many fields. As a developing country facing varied challenges, China should be prudent in blending long-term economic reforms and short-term stimulus policies.
The two aspects should be carried out in parallel. And one thing should always be born in mind: No policy solves everything.
Novartis in hiring mood - in China
April 20th, 2009Big Pharma continues its march into emerging markets. Chinese newspapers are full of a Novartis expansion push into their country, which is expected to boost employment and lead to--gasp!--a recruitment push for sales reps. And Pfizer said today it would mount a tender offer for Pfizer India stock, seeking to buy another one-third stake in the publicly traded company.
Novartis is ploughing money into its Chinese operations, including R&D and sales and marketing. Joe Jiminez, CEO of Novartis Pharma, wouldn't say exactly how much the company is investing there, only saying that it's "a considerable amount," according to China Daily. The company plans to launch six new products in the country while boosting its clinical research, too.
China recently announced a healthcare reform initiative that would emphasize treatment for chronic disease; that's something Novartis could capitalize upon, too. The newspaper says Novartis intends to "further strengthen its cooperation with the Chinese government and hospitals" in light of that reform package. The upshot? More jobs. Novartis added about 500 to its Chinese workforce in 2008, and it aims to recruit even more this year, the majority of them in sales.
Next, Pfizer: The company now owns some 41 percent of its Indian subsidiary, with the rest publicly traded. The drugmaker wants to boost that stake to 75 percent, in a tender that could be worth about $136 million. The offer is expected to open in June, managed by HSBC Securities in India; it comes in at about an 8.6 percent premium over last week's closing price.
Wal-Mart rejigs jobs in China
April 17th, 2009Wal-Mart, the world's largest retailer, yesterday launched a job optimization and regrouping program to reduce labor costs in China.
Under the program, the company plans to relocate some of the mid-management staff at its stores to similar posts in the new stores that are being opened in China.
The company intends to start this by shifting five to six mid-management posts from each of its present stores, said Leally Huang, public relations manager, Wal-Mart China.
Wal-Mart had 144 stores across China by the end of 2008, and plans to open 23 new stores by the end of the first-quarter this year.
"Those who are unsatisfied with the program and want to leave would be given adequate compensation, but we will try and see if we can retain them," said Huang.
The company's decision come close on the heels of a report in National Business Daily that Wal-Mart was implementing a lay-off program in China, its largest since entry in 1996.
Around 10,000 staff including 2,500-odd mid-management personnel and many others at different lower levels from Wal-Mart's 144 stores were reportedly demoted or asked to leave with compensation.
Huang, however, has denied the report. "The program is not about job cuts. It is a corporate interior personnel reshuffle that has been necessitated due to the decline in our corporate business," she said.
Hurt by the economic slowdown especially in the US, Wal-Mart's global sales revenue dropped by 0.1 percent in the last five weeks of 2008, which according to the company, is far below its expectations.
The company, however, said markets like China, Brazil and Mexico are still showing robust growth.
Company executives maintained that they are still scouting for new opportunities outside of the US, especially in Asia-Pacific, with China figuring as one of the most prominent locations for growth.
Huang said Wal-Mart's China business grew in 2008, but refused to disclose details. "Wal-Mart's China expansion plan has not been deterred," she said.
In 2008, Wal-Mart opened 19 stores, compared to 30 in 2007.
It is reported that Wal-Mart's regrouping program has not gone down well with employees from the Guangdong and Hunan provinces turning to the local trade unions for protection.
"They are just special cases, and Wal-Mart will sort them out," Huang said.
Wu Ruiling, deputy secretary-general of China Chain Store & Franchise Association, said supermarkets are one of the few areas in the retailing sector that has not been negatively affected by the financial crisis.
France-based Carrefour said it will not cut jobs in China, while Wu-Mart, another leading player with 700 stores nationwide, said it plans to recruit around 3,000 to 4,000 this year.
Best Buy: No Plan to Slash Jobs in China
April 16th, 2009Best Buy China has not gotten a job cut scheme from the headquarters yet, said Ms. Qian, noting that the New York-listed company will continue its expansion in the country in spite of the global economic downturn. By far, the electrical appliances retailer has opened more than 100 stores in China, one of its most critical markets abroad.
Earlier this February, Best Buy unveiled its plan to eliminate as many as 250 jobs at corporate headquarters in the US, part of its efforts to pare costs amid the lingering financial crisis. In addition, the company and its UK partner have decided to put off the opening of their first outlet till 2010, months later than planned.
McDonald's to step up hiring in China this year
April 15th, 2009Fast food chain McDonald's will recruit more than 10,000 people, hike salaries of existing staff and set up training and development programs for employees this year, its country head told China Daily yesterday.
Kenneth Chan, the newly appointed chief executive officer of McDonald's China, said the chain will open more outlets this year to keep pace with rising business growth.
The company will also incorporate more performance-oriented metrics and raise employee salaries nationwide by at least 6.3 percent, Chan said.
This is Chan's first public announcement of the company's strategy for the year after his appointment last month following the exit of Jeffrey Schwartz, the former China chief who bid farewell to McDonald's after working with the chain for 40 years.
Chan's appointment comes at a time when the financial crisis has spared very few countries, including China. And, sustaining the growth momentum of McDonald's under Schwartz will be a key challenge for Chan when Chinese consumers are actually tightening their belts.
"Actually, I am not concerned about China, as I am confident about the long-term potential of the market," Chan said. "This year will mark the beginning of the company's most rapid expansion in China."
Last year, McDonald's said it planned to add 175 new outlets in 2009 to the current 1,000 it has in China, the biggest addition ever. In the interview, Chan refused to disclose new outlet numbers for the year.
In 2008, the head count at McDonald's China outlets grew by 8.9 percent, double that of the United States and the European Union, making China its fastest growing market worldwide.
Susanna Li, vice-president of human resources at McDonald's China, said besides recruiting more people, it will also invest in training and developing Chinese talent.
"McDonald's is not only a company that sells hamburgers, but also a talent-oriented enterprise. McDonald's has been trying to create training opportunities for different levels of staff," she said.
KFC is the largest fast food chain in China, with more than 2,300 stores in 450 cities. Company executives told China Daily last December that KFC would open more restaurants in 2009 than "the previous year's average of 400" new food joints.
Sources said KFC's annual recruitment figure for the year will also exceed 10,000 people.
McDonald's set up its Hamburger University in Hong Kong in 2000, also its seventh worldwide, to train its Chinese staff. The company plans to open another on the Chinese mainland next year.
The company also launched the China Development Leadership Program this year, which aims to develop skills that will help employees find the best location for new outlets.
Salary gap in China widening
April 14th, 2009Salaries grew slower and pay disparities between various industries rose last year, the National Bureau of Statistics (NBS) said yesterday.
Salary increases for urban employees were down 1.5 percentage points in 2008, with average salary before tax at 29,229 yuan (4,280 U.S. dollars). The survey did not cover private enterprises or individual businesses.
The salary growth is relatively high given the backdrop of a global economic slowdown," said Su Hainan, director of the wage committee of the China Association of Labor Studies.
"But as people earn more, they more than ever need an improved social security system so that they can spend more to expand domestic consumption."
Su forecast pay increases of 13 percent this year while a report by the Hong Kong based HR Business Solutions predicted salary rises of around 11 percent on the mainland.
The NBS report also showed that the gap between eastern and western/central regions is narrowing, which Su described as a "good sign".
This is partly because export-oriented enterprises in the eastern and coastal regions were the hardest hit in the financial crisis, leading to millions of layoffs.
The report also found the salary divide between the highest and lowest paid industries has widened, with the former 10 times more than the latter.
Salaries in the securities sector were 172,123 yuan, 5.9 times the average level. Employees in timber processing and wood and bamboo products were the lowest paid, with a salary of 15,663 yuan.