Recruiting in China

Multinational companies in China face a special challenge in terms of finding their own way to adapt to the local environment. And finding the right staff to achieve this could prove critical to the survival of any start-up company. In today's interview, we speak with the President & CEO of Russell Reynolds Associates... about key issues in effective recruitment.

THE proportion of labor disputes involving private enterprises has dropped for the first time since 2003, according to the Shanghai Labor and Social Security Bureau.

Though a majority of labor disputes still involved private firms, accounting for 40 percent of the total number in the first half, it fell by 11.7 percent compared to the same period last year, the bureau said in its report for the first half of the year released yesterday.

"The number of cases involving privately-owned companies has seen a 20 percent increase in recent years, since many private enterprises were just starting up," Sui Wei, director of the bureau's arbitration division, suggested.

"But the decreased percentage this time implies that employers now have a better awareness of the labor law and pay more attention to protecting employees' rights," Sui said.

The arbitration division received 15,712 disputes in the first half of the year, of which 13,424 were cleared, a 16 percent increase from last year.

The number of disputes involving foreign-invested companies and those from Hong Kong, Macau and Taiwan rose by three percent, accounting for 23 percent of total disputes.

Meanwhile, stockholding companies saw their case number rise about four percent, making up 15 percent of the total.

According to the division, most of the disputes revolved around wages, social insurance and contract termination.

Among the 4,085 cases arbitrated in the first half, 34 percent were won by employees.

The report also estimated that social insurance disputes could rise next year, because a new labor law will go into effect on January 1, 2008.

The new law stipulates that employees can end their contract if companies fail to hand in standard social security fees.

"In such cases, firms violating the law should pay compensation to employees," said Sui.

THE city's first group of 270 patent management engineers gained their certificates yesterday after they passed training courses.

They will improve protection of intellectual property in local companies, said Shanghai Intellectual Property Administration officials, which plans to train 3,000 patent management engineers by 2010. Shanghai Intellectual Property Service Center, Shanghai University and Shanghai Institute of Politics and Law are the city's three training bases.

HONG KONG, July 13 - China Netcom Group Corp. (Hong Kong) Ltd. , the smaller of the country's two fixed-line operators, said its vice chairman Tian Suning had resigned due to a heavy workload from his other business.

Executive director Miao Jianhua also resigned and had taken a position at China United Telecommunications Corp., the company said in a statement late on Thursday.

Li Jianguo has been appointed to replace Miao as an executive director and chairman of the board's supervision committee with effect from July 12.

Li holds a senior management position in Netcom's parent, China Network Communications Group Corp. and was an executive director of China Unicom Ltd. .

By Cathy Chan

July 12 (Bloomberg) -- Goldman Sachs Group Inc., the world's most profitable investment bank, couldn't name the co-head of investment banking in Asia as chief executive officer of its Beijing joint venture because his knowledge of Chinese was too weak, three bankers at the firm said.

Richard Ong, an ethnic Chinese born in Malaysia, didn't write Chinese well enough to take a mandatory test for senior managers, said the bankers, declining to be identified as the matter is private. New York-based Goldman instead promoted Zha Xiangyang, deputy CEO of its China joint venture, Goldman Sachs Gao Hua Securities Co., in May.

Government rules requiring language skills may hurt investment banks' efforts to attract top employees to China, the world's fastest-growing major economy. New York-based Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co. are seeking joint- venture partners in the nation, where a record $16.3 billion was raised in stock sales during the first half of 2007.

``When you start putting a language requirement on it, it dramatically reduces the pool'' of talent, said George Fifield, managing director of Korn/Ferry International Consulting (Beijing) Ltd. ``It's going to diminish the quality of the team, whether it's on the board or the senior management.''

China began requiring senior executives to take the test in 2004. Managers in place before then have until 2009 to pass the exam before losing their titles.

Stricter Enforcement

The language requirement applies to CEOs, deputy CEOs and the heads of supervisory boards at locally incorporated securities firms, according to the industry regulator. The test includes both written and verbal components.

The China Securities Regulatory Commission has stepped up enforcement since December, though it can still grant exemptions for foreign executives. The financial watchdog said Nov. 30 it would punish securities firms that appoint managers who haven't passed the exam. The regulator wasn't more specific.

Goldman, the world's biggest securities firm by market value, moved Ong, 42, to Beijing from Singapore last year to head its China operations after former Asia co-head of investment banking Bill Wicker moved back to New York and Goldman China CEO Joseph Stevens quit in October to join Standard Chartered Plc, the London-based bank that makes most of its money in Asia.

Ong, who headed the Singapore office for about four years, declined to comment, as did Goldman spokesman Edward Naylor. The CSRC didn't respond to faxed questions.

Zha, 40, is a co-founder of Chinese brokerage Gao Hua Securities Co. Gao Hua owns 67 percent of Goldman Sachs Gao Hua and Goldman controls the rest.

Goldman and UBS

Goldman is the No. 3 foreign underwriter of stock sales in China and Hong Kong this year, after Morgan Stanley, the second- biggest U.S. securities firm, and Zurich-based UBS AG, according to data compiled by Bloomberg.

Goldman and UBS, Europe's largest bank by assets, are the only foreign investment banks licensed to underwrite domestic share sales in China, where the economy expanded at 11.1 percent in the first quarter from a year earlier. Executives at Citigroup, the biggest U.S. bank, JPMorgan, the third-largest, and Morgan Stanley have said the companies are seeking partners in China.

China's enforcement of language testing is part of a plan to give locals increased access to top positions at securities firms. The rule sets China apart from Japan, another Asian nation where English proficiency is low.

Mark Branson, CEO of UBS's Japanese securities venture, and Federico Sacasa, president of Aozora Bank Ltd., controlled by New York-based buyout fund Cerberus Capital Management LP, are among senior executives in the nation who don't read or write Japanese.

UBS has mainly hired locally. Chinese executives at its venture include Chairman David Li.

``Goldman shouldn't have appointed someone who doesn't read or write Chinese to head its China business in the first place,'' said Guo Ming, managing director of human resources consultant EAL Consulting in China.

BEIJING (XFN-ASIA) - Alibaba.com has appointed Maggie Wu as its new chief financial officer, a spokeswoman for the Chinese internet firm told XFN-Asia.

Wu will also join the company's board as an executive director, the spokeswoman said.

Wu will commence duties as CFO at the end of this month.

Before joining Alibaba.com, Wu worked as a partner in audit practice at KPMG in Beijing.

Previously, Alibaba Group CFO Joseph Tsai also acted as the finance chief of Alibaba.com's operations.

Following a recent reorganization, Alibaba.com became a wholly-owned business-to-business subsidiary of Alibaba Group that acts independently from its parent.

While Wu will take charge of Alibaba.com's financial affairs, Tsai will remain CFO of Alibaba Group.