Recruiting in China

Macquarie Capital and Seek, one of the largest Australian recruitment Internet companies, have jointly announced plans to invest money into the Chinese online job recruitment website Zhaopin.com, which was started by expatriates over ten years ago.

Macquarie will buy a 29.1% stake in Zhaopin.com, while Seek will pay USD45 million to increase its stake from about 25% to near 43% on a fully diluted basis. Early in 2006, Seek invested USD20 million into Zhaopin.com.

Liu Hao, CEO of Zhaopin.com, is quoted by the Reuters that this round of investment will meet the demand of Zhaopin.com for future development. Liu says that the investment is only a financial investment and Macquarie Group and Seek will not participate in the operation of the company. Zhaopin.com will maintain long-term independent decision-making power.

According to Zhaopin.com, the finances will mainly be used to hire new workers and to supply better services to customers, but it will not be used for acquisitions. In addition, it will expand its business in China's second-tier cities is the company's another focus.

by Frank Mulligan

With a population of 1.3 billion, the continual assertion that there is a skills shortage for professionals and workers in China is difficult to comprehend – and even more so with the added contradiction of reports of a shortage of jobs for Chinese graduates.

Yet it is a serious problem. The Shenzhen Labor Bureau cites a shortage of 750,000 workers in Q3 for 2007 - that’s the best part of a million people in a city that has a total population just over 6 million.

Frank Mulligan, who will be talking at the forthcoming Online Recruitment Conference in China, in Hong Kong, takes a look at the good and bad news behind the hype.

Education
The Good - Educational opportunities in China are at an all time high. Teenagers about to leave school have never had it so good, and somewhere in the region of 30% of high-school leavers in the cities will have the option for further study.

The Bad - At the same time, this year will see 20 million new job seekers in China, among both high school and university graduates. They enter the market at a time when the overall world’s economy is drifting downward and they have gone through a rote learning education system that does not equip them for the workplace. Employers regard professionals with 1-2 years as their starting point, not graduates. Graduate unemployment is as common as multiple job offers for experienced hires.

Economic Growth
The Good - The Chinese economy has grown by 10% a year for 20 years, and tipped above this figure last year. Continued high growth is certain but just not at previous rates.
The Bad - The Chinese government has painstakingly put together a huge raft of measure to slow down its runaway economy. This includes everything from the abolition of export tax rebates, to additional taxes, to tighter monetary control. It hasn’t worked so far but the arrival of the sub-prime debacle in the US has created slowdowns around the world. This event, plus the measures in China, might all kick in together.

Unemployment
The Good - Paradoxically, continued strong growth is the more likely scenario in China. This would be in excess of ‘only’ 8%.

The Bad - It might not be enough. A slightly slower growth might look like a small price to pay for economic stability. But it might be not be enough to sop up the additional new workers, and those laid-off in the event of an export downturn (which appears to be happening). The stock exchange ‘correction’ we have seen lately, plus the slowdown of housing prices around the country will only exacerbate the problem.

FDI & Services
The Good - If we are lucky the expansion of services, especially banking, will contribute to solving the problem of declining industrial production. This is often cited as the way out. The idea is that the economy will continue growing, and FDI will continue coming in, because industrial investment and growth will simply be replaced by investment and growth in services.

The Bad - We cannot expect services to come in to save the day at exactly the point that manufacturing slows down. Services will develop, to be sure, but at their own rate. It’s also hard to see factory workers changing their industrial style boiler suits for suits ‘n ties. Not in the short term anyway.

Factory Losses
The Good - The loss of factories around China, but especially in the south, is focused on low-level production that the Chinese government says it wants to move away from anyway.

The Bad - The factory workers who are currently losing their jobs are in very low-technology sectors. Some of these jobs are on the margins of indentured servitude. It will not be so easy for these people to transfer across to semi-conductor plants.

The Labor Law
The Good - The new labor law.

The Bad - If we are not lucky the effect of China’s labor law will be to dampen enthusiasm for China, and cause Foreign Direct Investment to shift to cheaper countries for the long term. Currently we are witnessing the wholesale exit of low-tech factories from China, and these are moving to lower-cost countries like Vietnam. Let’s hope it’s a blip, and not a trend.

Whether good or bad, the new environment in China is certainly much more complicated and unstable than before. It needs workforce planning, not hiring, retaining-for-a-bit, losing. Maybe is it time for HR to take a lead from the government’s quality drive, and move up a notch.

China’s Recruitment Challenges will be debated in more detail at the onrec.com Online Recruitment in China Conference, in Hong Kong on 23rd September 2008. Learn more about the current trends and challenges, and learn about the best practice solutions being successfully implemented around the globe. For more information and to reserve your seat, please visit www.onrec.com/hk or email kelly@onrec.com. Availability is restricted so please book early to avoid disappointment.

BEIJING (XFN-ASIA) - China's urban registered unemployment rate was 4.0 pct at the end of June, unchanged from the end of March, the Ministry of Human Resources and Social Security said.

In a statement published on its website, the ministry said that the number of registered unemployed at the end of June stood at 8.35 mln, up from 8.25 mln at end-March.

The ministry said that 6.4 mln new jobs were created in cities in the first half of 2008, accounting for 64 pct of the full year target, while 2.82 mln laid-off workers found new jobs in the same period, accounting for 56 pct of the year target.

China set a 2008 urban unemployment target of 4.5 pct, with urban job creation projected at 10 mln.

At the end of June, there were about 210.29 mln and 249.07 mln people covered by pension and medical care respectively, the ministry said.

Meanwhile, the unemployment, work injury and paternity insurance fund had 120.1 mln, 130.25 mln and 84.52 mln people respectively covered at the end of June, it added.

Arizona lost 43,300 jobs to China between 2001 and 2007, according to a study by the Economic Policy Institute, based in Washington D.C.
The biggest job losses were in the computer and electronic products manufacturing industry, where nearly 18,000 workers were cut, the study says.

Rapidly growing imports of computers and electronic parts accounted for nearly half of the $178 billion increase in the trade deficit between 2001 and 2007, the survey shows. By contrast, the U.S. has a $15 billion trade surplus with the rest of the world in advanced technology products.

Nestle workers ended their strike this morning after a deal was reached with management over wages.

Workers said they accepted the company's offer and resumed work before 10am. Under the deal, the commission for drivers and workers delivering milk will increase by 6.5 percent, the workers said. Drivers and workers delivering ice-cream will get HK$46 and HK$36 respectively for every HK$10,000 worth of goods transported.

The workers will hold further discussion with the company over their basic salary by the end of the year. Hans-Peter Edelbluth, Nestle's head of ice-cream and chilled products unit (Greater China) said that the company was aware of inflation and that it would offer a package that would satisfy its employees.

BEIJING, July 28 (Xinhua) -- Urban workers' per capita salary averaged 12,964 yuan (1,878 U.S. dollars) in the first half of this year, up 18 percent year-on-year, China's National Bureau of Statistics said on Monday.

The per-capita salary for employees at urban state-owned enterprises was 13,800 yuan, up 17 percent, and that for workers at private entities, 12,610 yuan, up 19.2 percent.

Urban workers' per-capita salary was 24,932 yuan for all of last year.

The per-capita disposable income of urbanites rose 14.4 percent, or 6.3 percent in real terms, to 8,065 yuan in the first half.

The consumer price index, a major gauge of inflation, rose 7.9 percent in the first half.

Farmers' per-capita cash income stood at 2,528 yuan in first half, up 19.8 percent, or 10.3 percent adjusted for inflation.