Recruiting in China

TUDOU.COM, often regarded as China's YouTube, will reach its first profit next year thanks to increasing advertising income, the online video Website said yesterday.

The Shanghai-based firm confirmed it has completed a fourth round of financing recently, but it declined to reveal details. The latest investment in Tudou was reported to be between US$57 million and US$70 million.

Tudou will become profitable as early as 2009 but the figures of predicted revenue or profit are not available now, according to Tudou, which means potato in Chinese.

Tudou now has 60 million users every month, or one-third of China's total Internet population.

"The first users were students and the viewers now include white-collar people, especially young women," said Tracy Deng, Tudou's vice president of marketing.

They have greater money to spend and that helps to make Tudou's platform more attractive to advertisers, Deng said. Tudou has attracted advertisers like Microsoft, Intel, Adidas and Pepsi. It features popular products on its front page, which allows users to watch a more complete advertising video.

China's online video market revenue will reach 3.4 billion yuan (US$485 million) in 2010 compared with 900 million yuan in 2007, according to iResearch Inc.

Industry insiders, however, said it is still unclear if online video can make money in China.

Broadcasting rights and media are highly regulated and some of China's state-run media may launch their own Internet video services, which will affect privately-owned firms such as Tudou and Youku.com.

Tudou said it has applied for a license to operate an online video business.

The Website started operating in April 2005 with an initial combined investment of US$30 million.

CHINESE e-commerce firm Alibaba.com Ltd has teamed up with more than 300 universities to train e-commerce professionals, the Hong Kong-listed company said yesterday.

It will launch courses to teach online trading and aim to cultivate 10 million professionals over three to five years to boost the business mode. Earlier, Ma Yun, board chairman of Alibaba.com, said the firm will invest 10 billion yuan (US$1.42 billion) to build an e-commerce chain in the next three to five years.

In a survey by China Youth Daily last week, 67.8 percent believe a Beijing hukou or registered permanent residence is worth at least 100,000 yuan. Some 14.6 percent thought it should be worth 200,000 yuan.

A questionnaire asked 3,000 fresh graduates if they were given the choice of an annual salary of 100,000 yuan or Beijing Hukou, most chose the latter.

The hukou system is the central government's method of managing urban population. Registered permanent residence allows people to live, work and study in a specific city, but makes living in another city difficult.

In the survey, 77.1 percent said they would choose a job if the offer included applying for hukou; while 11.1 percent considered the hukou the deciding factor. In an online forum among students at Peking University, one student said a Beijing Hukou is worth about 100,000 to 200,000 yuan, making getting the residence permit even more crucial for those whose monthly salary are 2,000 to 3,000 yuan. But for a person with a high monthly salary of over 20,000 yuan, getting a hukou is not an issue.

"I will choose getting a hukou over a high salary," said a graduate student in Renmin University. “I have lived in Beijing for seven years. I have a sense of belonging to here.” She said she'd rather seize the chance to get a hukou than have a higher salary.

In the survey, 38.9 percent thought having a hukou will give them a sense of security and belonging. Graduates and students generally consider the Beijing hukou an important qualification in finding a spouse. "I will find a boyfriend with a Beijing Hukou, as long term, it help me avoid many worries."

A hukou is valuable because it is tied to many social benefits. “With a Beijing Hukou, you can buy affordable housing and apply for public accumulation funds for housing, enjoy relatively high endowment insurance, and your child will have a wider chance to enter a good university with a relatively lower score," A participant in the survey said.

In 1953, the central government began imposing limits on free migration to the cities to relieve the pressure of population growth and employment in urban areas. In 1984, the State Council implemented a rule which allowed some residents in countryside who had stable job in city to apply for a permanent urban residence permit.

But now the public hopes the hukou system will be reformed, and it was the focus of the NPC and CPPCC sessions. A participant in the survey said, "The talk about reforming the hukou blossoms every year in two sessions, but we are still waiting for its fruit."

NEW YORK, Apr. 21, 2008 (Thomson Financial delivered by Newstex) -- Linktone (NASDAQ:LTON) Ltd. Monday named Anthony Chia chief operating officer and Jimmy Lai chief financial officer.

The Shanghai, China-based company also named Muliawan Guptha to its board while announcing the resignation of five other directors - Colin Sung, Elaine La Roche, Allan Kwan, Agus Mulyanto and Sutanto Hartono. Each left because of 'personal reasons and other professional commitments,' Linktone said.

Chia most recently served as senior advisor to PT Media Nusantara Citra Tbk (OOTC:PTMEF) , which is Linktone's controlling shareholder.

Lai most recently worked as chief financial officer of Palm Commerce Holdings.

Shares of the provider of wireless interactive entertainment services rose 3% to $2.38 in late trades.

More than half (53 per cent) of UK managers are concerned they can find skilled staff to meet their business needs, according to research by the Confederation of British Industry (CBI) and exams body Edexcel.

The CBI/Edexcel Education and Skills Survey 2008, which covers 735 firms employing a total of 1.7 million people, found employers were concerned about employees IT skills as well as basic literacy and numeracy.

Fifty six per cent of employers are worried about employees' ability to use computers and 69 per cent are investing in training to raise IT skills of existing staff.

By 2014 it is expected that the UK will need to fill 730,000 extra jobs requiring candidates with science, technology, engineering and mathematics skills, making a net total of 2.4 million of these jobs in six years.

Yet, 59 per cent are having trouble recruiting. CBI blamed the drop in student levels, and said there has been a 15 per cent slip in engineering and technology graduates over the past decade.

Employers are increasingly looking abroad to find technology skills. A third, 36 per cent are recruiting from India, and 24 per cent are looking to China. Another 35 per cent will look at hiring in Europe in the next three years. Larger firms are twice as likely as smaller ones to recruit from the expanded EU, such as Poland.

CBI deputy director-general John Cridland says: "A worrying number of employers have little confidence that they will be able to plug their skills gaps. Too many firms also say poor basic skills are hampering customer service and acting as a drag on their business's performance."

From the point of view of a HR department in China you could just as easily be looking at the rise of salaries. But if you want a visual illustration as to why there is a War for Talent in China, this video comparison of exports in Asia over the past 14 years is just the job.

You can actually see China rising up like a Goliath, and dwarfing the other countries in the region.

This export increase is mirrored by the rise in China's Gross Domestic Product (GDP) which has been kept above 8-9% for about 20 years. Not too shabby, eh?

Inevitably there has been a lag in skills development, and as a consequence China's salaries are rising at about 16% per year on average. This is coming off an internal company awarded rise of about 9-10%, and a job change rise that ranges from 20% to 30%. For in-demand positions this can reach 100%.

(Note that the average city professional changes job every 18 months, according to Hewitt.)

City Salaries

The average annual salary for both professional and non-professional staff in China's cities is now about RMB 25,000 and at current rates equals roughly US$3,500. (By the time you read this it may be worth more dollars). According the National Bureau of Statistics this is an increase of 18 percent over 2006. It is also the biggest rise in six years.

Previous increases amount to 'only' 14% per annum, and at a compound rate of interest this means that in slightly less than six years the average salary in China's cities doubled. Tell that to your average European and he is likely to suffer a little Shock and Awe. Shock that salaries could be increasing so highly somewhere else in the world, and Awe at the size of increases and the rate at which China is catching up on the 1st World. But this would be tempered by a small degree of hope because each percentage salary increase lowers the possibility of further outsourcing of European jobs to China.

If the current rate of increase were to continue, salaries in Chinese cities would double in less than five years. Luckily, this is not a likely scenario, and the dark clouds of the world's economic troubles lead to a silver lining of lessening salary pressures in China. Please don't ask me to enumerate 'lessening'.

The details from NBS provides a little more insight into regional variations. The highest salary is to be found in Beijing which might come as a surprise to newly arrived foreigners, or business visitors, who see much higher levels of development in Shanghai, Shenzhen and Guangzhou.

These three locations would appear to have the strongest need for staff, and by implication be willing to pay the highest salaries. But these three cities are much more attractive and open than Beijing, so they end up with lower average salaries.

Information Lack

The NBS also note that the average salary in China shows a wide distribution of values, not just between cities but also between industries. They cite a lack of market forces but I would approach this from the point of view of information.

Put simply, there is not enough information around to help candidates and employers make rational hiring decisions. Candidates don't know how much to ask for, and companies are desperate to hire so they can be very flexible on salaries for the right person.

Meanwhile, for non-critical positions, companies must maintain internal pay equity so they are very motivated to keep salaries in these positions as low as possible. This results in somewhat schizophrenic hiring, and widely diverging salaries; even for the same job.

The fact that companies do not set pay ranges for jobs also leads to a more dynamic salary negotiation between potential employees and HR departments. The agreed salary figure is more closely linked to candidate/HR negotiation skills than is it to the requirements and key performance indicators in the Job Description. Those who push for more often get it.