Recruiting in China

Real wages in China saw an annual average growth of 10.6% in the last 8 years, the highest among the G20 countries, according to a research report by Korn Ferry Hay Group.

China’s salary growth was followed by Indonesia (9.3%), and Mexico (8.9%). The worst were Turkey (-34.4%), Argentina (-18.6%), Russia (-17.1%), and Brazil (-15.3%). Growth averages for all other developed nations fell in between these figures.

“In the countries that are seeing tremendous salary growth, the issue is supply and demand,” Benjamin Frost, Korn Ferry Hay Group Global Product Manager, said. “With countries like China seeing a whopping 75.9% GDP growth since the beginning of the recession, universities and corporations simply can’t train people fast enough. This leaves an acute talent shortage and points to the reason skilled employees are seeing steep pay increases.”

The firm’s research focused on the G20, nations with the world's leading economies, and compared inflation-adjusted pay and GDP in each. The US fared poorest in pay recovery among Western developed nations. Canada’s recovery was the best, with 7.2% real salary growth on average and a GDP gain of 11.2%. Other developed nations experienced flat to modest real salary growth, with Australia at 5.9%, France at 5.2%, Germany at 5%, Italy at 2.4%, and the UK down 0.1%.

“While global economists point to this recovery overall as one of the worst in history, there are political, economic, and social reasons for the disparate salary fluctuations in different countries,” Frost said. “It examined how salaries have fluctuated globally since Lehman Brothers fell eight years ago, marking for many experts the start of the worst economic crisis and recession in generations.”

The Korn Ferry Hay Group pay data was drawn from the firm’s PayNet database, which contains salary and job data for more than 20 million workers in more than 25,000 organizations across 110 countries.

Some see activity as way to expand overall business

The market value of third-party payment licenses, which help companies expand their business beyond online payments, will continue to grow in the short term in China, analysts said.

The People's Bank of China (PBOC), the country's central bank, stopped issuing new licenses in March 2015, and it has been enhancing its regulations of the third-party payment market. There are likely to be different impacts on different types of licenses, Mu Chu, an analyst from mpaypass.com.cn, a Shenzhen-based mobile payment intelligence provider, told the Global Times on Sunday.

"For example, a license for bill collection via bank cards will not be as valuable as before, as the profit margin in the bill collection business has been shrinking since the government lowered the bank card transaction fee," he said.

The PBOC cut commission charges and fees for bank cards on September 6, according to its website.

Under the new policy, card-issuing banks can't charge merchants more than 0.35 percent of the transaction amount for debit cards or more than 0.45 percent for credit cards, the PBC's document showed. Previously, the transaction fee varied among sectors.

The move will drive out some small online payment companies that make profits through counterfeiting point of sales (POS) machines with different categories to avoid transaction fees, according to an article published on domestic news portal sina.com.cn in September.

A license that has multiple functions will be scarce but the most in demand, Mu noted Sunday.

"For example, a license that covers online payments, mobile payments and bill collection via bank cards that can be used nationwide will become more and more valuable," he said.

At present, 269 third-party payment companies have licenses, and authorities have come up with more severe measures to crack down on illegal online transaction activities since 2014, according to a report by Beijing-based market consultancy Analysys International.

"Regulators will become more and more cautious in controlling existing licenses, but considering the added value that third-payment licenses can offer companies, their value will continue to increase," Ma Tao, research director of the finance study at Analysys International, told the Global Times on Sunday.

A license cost about 50 million ($7.5 million) to 80 million yuan at the beginning of 2015, but it now costs more than 400 million yuan, the China Business Journal reported on Saturday.

Many licenses have been bought and sold repeatedly as supply is limited but demand remains high, the journal said, quoting anonymous industry insiders.

"It's not a surprise that licenses are becoming so expensive, as they help companies access the online payment market initially then expand their business," Li Chao, a senior analyst at Beijing-based research firm iResearch, told the Global Times on Sunday.

More and more companies are willing to pay more for licenses as they see the importance of the online payment market, and mergers between companies are aimed at offering a complete line of payment services, Li Zijian, vice president of Beijing-based third-party payment provider fullrich.com, told the Global Times on Sunday.

"Online payments enhance the connectivity between companies and customers and increase customer loyalty, which implies marketing opportunities," Li said.

Since the beginning of 2016, 14 merger and acquisition deals have been undertaken to get online payment licenses, according to the journal. For example, Midea Group Co spent 300 million yuan to buy Shenzhen-based third-party payment service provider Shenzhou Tongfu in August, a way to enter the online payment market, mpaypass.com.cn reported in August.

However, the growth of China's third-party payment market will slow in the near future. Total transactions in 2016 are expected to be 23 trillion yuan, representing a year-on-year growth of 52.8 percent, compared with 800 percent growth in 2013, the Analysys International report showed.

Companies should not look at obtaining online payment licenses and providing related services as an end in itself, as the market is close to saturation, Li noted. "To get more profit from the license, they should do more than offer online payment services," he said.

The Chinese government on Saturday decided to streamline administrative approval, delegate more power to lower government levels and loosen rules on foreign investment in an attempt to revive the economy.

Premier Li Keqiang called for efforts to cut red tape and simplify procedures for new investment projects, according to a statement issued after an executive meeting of the State Council.

Provincial governments will approve investment projects related to container terminals, vehicle engines, urban transit systems and inland water transportation, according to the new regulations.

The China Railway Corporation will be allowed to make decisions regarding railways, bridges and tunnels, the statement said.

More private investment will be encouraged in various sectors, including medical care, education, culture and sports.

China will prohibit new projects related to industries struggling with overcapacity, such as steel, coal and electrolytic aluminum sectors.

In principle, no new gasoline-powered vehicle factories will be allowed to open.

In 2013 and 2014, the central government moved a raft of administrative approval procedures, and delegated approval power, to lower government levels.

The meeting stressed measures to improve the country's business environment. More efforts are needed to create a level playing field for both domestic and foreign companies, the statement said.

Following China's revisions to four laws regulating inbound investment last month, the meeting agreed that some administrative approvals will no longer be necessary for foreign investors setting up businesses on the Chinese mainland.

Such investors are now only required to report business plans to local regulators, as long as their business is not on a "negative list." The government estimates that this means more than 95 percent of procedures will be cut.

The practice has been proved satisfactory in pilot free trade zones in Shanghai, Guangdong, Tianjin and Fujian.

Despite an economic slowdown, China remains an attractive destination for foreign companies due to the country's continued opening up as well as the improving business environment.

Foreign direct investment in the mainland during the first eight months of 2016 increased 4.5 percent year on year to 85.9 billion U.S. dollars, up from 4.3 percent in the first seven months, according to the Ministry of Commerce.

Altogether 18,538 new foreign-funded enterprises were established in the country over the same period, up 10.2 percent on a year earlier.

The government will continue to improve services and supervision to expand the country's opening up, the statement said.

In addition, the meeting pledged efforts to modernize agriculture, encouraging diversified business models and the mechanization and informatization of the sector. Financing support will also be increased.

China will also curb agricultural pollution by adopting strict rules on the use of fertilizers and additives, and strengthen the supervision of farm produce.

The government will work to enhance farmers'incomes and guarantee their urban housing demands, the statement said.

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The fourth and final step is to start enjoying the unique experience of living and working in china as an English teacher.

Won't duplicate Google's emphasis on consumer products

Chinese telecommunication giant Huawei Technologies Co sees artificial intelligence (AI) as an effective way of solving its own problems, which is a different path compared with other companies such as Google, experts said on Tuesday.

Huawei is focusing on how to apply AI to its own network to establish a global technology service to ensure network maintenance and breakdown diagnosis, which is different from what Google is doing, Xiang Yang, an industry expert at Beijing-based CCID Consulting, told the Global Times on Tuesday.

"For example, by using AI, Huawei could solve a network problem in Africa via tele-control," he said, noting that the disruptive technology will become the company's troubleshooter and help it increase its effectiveness.

Xiang made the comment after Ren Zhengfei, CEO of Huawei, said that the company will use "American bricks to build a Chinese Great Wall." He made the comment during a speech at Noah's Ark Lab, the company's research lab, in August, according to a transcript of the speech posted on the company's unofficial WeChat account on Sunday.

A huge global market of the network inventory is the best "stage" for AI, Ren said in the speech, noting that the company's trillion-dollar market requires more skillful and experienced staff in maintenance. And given this situation, AI has much potential, the transcript showed.

AI could help experts save time and focus on 10 percent of all problems, leaving the rest to automation, Ren noted.

The global market scale of the AI sector will reach nearly 119 billion yuan ($17.9 billion) by 2020, and the Chinese market will reach 9.1 billion yuan, according to a report published by Beijing-based industry consultancy iResearch in February.

So far, nearly 100 start-ups are focusing on this disruptive sector, which covers industries like industrial robots, service robots, intelligent hardware and cognitive technology, the report said.

And BAT - the domestic technology trio of Baidu Inc, Alibaba Group Holding and Tencent Holdings - have already entered the AI field but with different focuses.

Huawei will focus on "a mainstream course" and not come up with some "consumer products to earn some money," Ren said during the speech.

Applying AI to a product designed for the public is not in line with the company's core business, Zhao Ziming, an industry expert at Beijing-based consultancy Analysys International, told the Global Times on Tuesday.

"The company is striving to use AI technologies to improve the user experience," he remarked.

Huawei holds a positive attitude toward working with other companies in the AI sector, not only Chinese counterparts but also those overseas, Zhao said, noting that foreign companies have more advantages in this type of technology.

There is no need to compare Huawei with US tech companies like Google in developing AI, Xiang said, as the Chinese company is more focused on the application of some technologies in its own field. Meanwhile, the US company is stepping up efforts to make technological breakthroughs.

"But the two, along with many others in this field, should make AI fit into their own corporate strategies," he noted.

"For example, Google sold its robotics division Boston Dynamics to Toyota a few months ago, which showed that the company has to first figure out the purpose of working on AI," Xiang explained.

A Borgward BX7 is displayed at an auto show in Haikou, Hainan province, on Sept 10.

More domestic car brands have demonstrated their eagerness for recognition as premium, although none of the Chinese peer group have yet revealed a strategy that will lead them to the top. Although there are previous failures that serve as lessons from which the industry can learn, some of them might still not find the keys to customers' hearts.

Geely Automobile Holdings Ltd expressed its ambition to build premium lineups on its first universal platform. Meanwhile, Beijing-based Beiqi Foton Motor Co Ltd is offering an SUV carrying the originally Germany Borgward badge at a price of up to 300,000 yuan ($44,979).

When companies talk about "premium", they usually mean a "premium pricing strategy", setting the price of a product higher than similar products, as an attempt to seek maximum profit in a segment where customers are willing to pay extra.

Theoretically, a customer would settle the bill when he or she perceived the difference between the product and other similar ones, when there are limited alternatives, or when production costs could not be lowered.

But Geely and Borgward, which are looking to climb up the premium ladder, need a halo effect to persuade customers during their decision-making process. In the automotive field, customers' feelings and thoughts reverse primarily due to trend-setting designs and cutting-edge technologies.

A well-known example of this comes from Volkswagen's China business. The company shifted its mass models well away from its peers after boasting its unique "T&D" powertrain, which consists of a turbocharged engine and direct shift gearbox.

Chinese customers perceived the difference, as T&D doubled the vehicle's fuel economy and so halved its petrol consumption. There is no comparable function in the market, at a time when the gasoline price has hit 8 yuan a liter. So, customers are willing to pay a higher amount for a compact Golf or Sagitar, as high as some other international brands' mid-size models.

There were of course other factors that helped Volkswagen move upward, as these models and the DSG feature stepped down from the altar. But can we name one or two factors helping Geely go premium? Does Geely possess any superior difference from other premium rivals to convince customers to pay much more?

Geely's jointly developed compact modular architecture platform and the input from a Swedish design lead team are impressive, thanks to its connection with Volvo Cars. Looking back, Geely Automobile has successfully become far more premium than it used to be. But, when we look around in the overall premium segment, at least in the eyes of the Volkswagen fans, Geely today remains in need of something new to match Volkswagen's T&D offering.

As for the revived Borgward brand, it is already a success for Beiqi Foton, a business vehicle maker who might not have expected much. The automaker could apply a strategy to enter the passenger car market, to become as high profile as possible. After it has attracted enough potential customers that understand the brand, a later downgrade could be possible to achieve greater volumes.

Also, Borgward could learn from the Sino-Israeli joint venture Qoros Automotive Co Ltd, which cut its suggested retail prices by as much as 50,000 yuan last year after claiming to be premium since it was established in 2007.