Recruiting in China

The All-China Federation of Trade Unions has set an ambitious target of having trade unions set up in more than 70 per cent of foreign-funded enterprises this year.

Wang Ying, an official with the federation's Grass-Root Organization and Capacity Building Department, said more than 60 per cent of foreign-funded firms had set up trade unions by the end of last year, a sharp increase from 2005.

The establishment of unions in Wal-Mart has given a big impetus to many other foreign enterprises, Wang said.

Employees in some multinationals such as Carrefour, McDonald's, Motorola and Nescafe soon followed suit.

Between July and September, all the 64 Wal-Mart stores in 30 cities established trade unions with the help of the federation, recruiting more than 6,000 members.

It is for the first time the US retail giant allowed its staff to form unions anywhere in the world.

"China's Law of Trade Union gives workers the rights to set up or join trade unions," Wang said. "Foreign enterprises must abide by China's laws if they do business in China."

According to the law, which was promulgated in 1992, trade unions are formed by employees on a voluntary basis. No organization or individual shall obstruct or restrict them from joining unions.

Wang admitted the federation has met with resistance from some companies, which subtly obstruct workers from setting up unions.

"Many of the foreign enterprises do not fully understand the role of China's trade unions," Wang said.

They not only safeguard the legitimate rights and interests of workers but also contribute to the enterprises' development and fulfil their production tasks, he pointed out.

"Trade unions can play a good role in building and ensuring harmony in enterprises," Wang said, saying some companies which were long opposed to unions have now changed their attitude.

Wang said unions in foreign enterprises have performed their duties.

For example, the Wal-Mart unions in Fuzhou, capital of Fujian Province, succeeded in persuading the management to raise part-time workers' wages to 6 yuan (75 cents) per hour, above the lowest wage standard, 5.5 yuan (69 cents).

The stores also agreed to abolish the probation period for part-time workers.

The Wal-Mart union in Shenyang, capital of Liaoning Province, successfully negotiated the right one day off a week.

Dong Yuguo, a spokesman for Wal-Mart (China), said: "The management and the trade union have been getting along with each other very well," Dong said.

"Our task is to raise workers' awareness and let them know that joining trade unions is the best way to safeguard their legitimate rights and interests," Wang said.

At the end of 2005, China had 1.174 million grass-root trade unions, with 151 million members.

FOREIGN investment is expected to continue to pour into Shanghai at a healthy pace after contracted funding paced by the service industry met forecasts in 2006.

The city approved 4,061 foreign-invested projects with contract value totaling US$14.6 billion last year, a 5.4 percent increase over 2005, the Shanghai Foreign Economic Relations and Trade Commission reported yesterday.

Among the new projects, 2,962 deals worth US$9.8 billion were in the service industry, the city's trade and investment authority said.

"Contracted foreign investment in the service industry jumped 33.5 percent in 2006," said the commission's Chen Zhangyuan.

The service sector contributed 67 percent of contracted foreign investment to the city's total last year.

Shanghai's foreign direct investment - the amount actually received - exceeded US$7 billion in 2006, compared with US$6.9 billion a year ago, the authority said.

"The retail sector, which featured a batch of world-famous brands landing in the city, some service outsourcing projects and rapidly expanding overseas financial service projects fueled the growth in the service sector," Chen said. "In addition, investments in energy, environmental protection, information technology and petrochemicals were very active in the past year."

Shanghai is no longer posting double-digit growth in attracting foreign funds as it focuses on attracting high-value-added investment projects that help optimize the city's industrial mix.

Shanghai is now home to 154 multinational regional headquarters and 196 research and development centers.

Previously employed by a major Korean consumer electronics company to supervise one of its production facilities, A is working for a Chinese electronics manufacturer (referred to as B) as an executive. After recruiting A, B copied the manufacturing system and even operational processes and organization of A¡¯s past employer. At the request of his current employer to ¡°bring talented workers from Korea at every opportunity,¡± A has recruited seven Koreans.

A¡¯s case reflects the ¡°talent war¡± waged between Korea, China and Japan. Given the cultural similarity among the three, it is relatively easier for them to capitalize on one another¡¯s talent pool.

Unfortunately, Korea is losing that ¡°war.¡± While China and Japan have rolled up their sleeves to attract as many talented workers as possible, Korea is losing a significant number of workers to non-Korean employers overseas due to job shortages. Moreover, Korean companies are not making enough systematic efforts to retain workers.

China is eying Korea¡¯s high-tech workforce who they think will boost its industrial growth. Grappling with an aging population, Japan is looking for workers who will help relieve itself of the burden of workforce shortages.

Outflow of Korea¡¯s Skilled Workers ¨C

The Korea Institute of Science and Technology Evaluation and Planning (KISTEP) estimates that about 9,000 skilled workers were employed out of Korea last year and that 3,000 to 4,000 of them went to China.

The number of job seekers who found work in China through the Chinese online placement agency China Tong more than doubled from 1,094 in 2001 to 2,232 this year. One third of them are estimated to have been hired by Chinese companies.

Japan is luring more Korean workers to enhance its IT competitiveness and resolve its workforce shortages problem caused by aging. Indeed, the Japanese government and businesses are making hard efforts to recruit Korean and Chinese IT workers under the second-phase ¡°e-Japan¡± project whose main objective is Japan¡¯s comeback as an IT powerhouse. Headhunters in Japan are so eager to find Korean IT workers who are willing to come to Japan that some call the whole situation an ¡°IT Korean wave.¡±

Potentially A Hard Blow Against Korea¡¯s Competitiveness ¨C

Compared to the two neighbors, Korea¡¯s record of attracting talented foreign workers is far below expectations. According to the Ministry of Information and Communication, non-national IT experts working in Korea are just 1,122, whom include only 87 Chinese and 41 Japanese. The combined number of non-national high-quality workers in Korea (excluding those at language institutes) stands at about 2,000.

The Koreans who chose China or Japan did so because companies in the two countries came up with more attractive employment offers, including better living conditions.

Korean programmers working in Japan say, ¡°I don¡¯t want to go back home because I feel mistreated there.¡± An employee of a Korean company in Beijing says, ¡°Recently, Korean companies reduce their staff in China to cut costs. So more Koreans in China are quitting to remain in China.¡±

FORTY Chinese mainland-listed companies may have their daily trading limits halved starting on Monday as they failed to meet a deadline to convert non-tradable shares, industry sources said yesterday.

Eighteen Shanghai-traded and 22 Shenzhen-listed companies will be subject to a trading ceiling of five percent per day, down from 10 percent currently, people familiar with the matter said.

The two mainland bourses over the weekend approved the latest batch of 32 companies to join in the shareholding reform, which was initiated in May 2005 to make all stocks at mainland-listed firms tradable.

Under regulatory arrangement, controlling stake holders must compensate minority investors with shares, cash or warrants in exchange for the right to float their previously locked ownership.

So far, about 97 percent of 1,300-odd mainland-listed companies have participated in the share overhaul, which regulators had hoped to finish by the end of last year.

Authorities have said companies escaping the stock conversion won't be allowed to raise additional funds or conduct any new businesses in the capital markets.

Sources said yesterday there's still a possibility for some of these 40 firms to be exempted from lower trading limits if they can rush to gain the regulatory nod for the share conversion by Monday.

But they also noted companies would face a 10 percent trading limit if they missed the stockholding reform deadline.

The Shanghai and Shenzhen bourses said in late December that firms which don't join the reform face being eliminated from major benchmark indexes.

The offending companies will also be subject to a different price-bidding system from other listed firms, the two bourses said, without specifying.

THE Industrial and Commercial Bank of China has signed an agreement to acquire a 90 percent stake in Indonesian lender Bank Halim.

The remaining 10 percent will continue to be held by shareholders of Bank Halim, but ICBC has an option to buy the balance in three years, the Chinese bank said on its Website. The purchase price was not revealed.

The deal represents ICBC's first takeover of a foreign bank, and it is also the first time for the bank to enter an overseas market via an acquisition.

The purchase is expected to produce valuable experience to help ICBC expand in the international financial markets, the Website statement said.

The two banks are now awaiting permission from their regulatory authorities before they can finalize the deal.

The agreement follows ICBC's October 27 simultaneous listings on the Shanghai and Hong Kong stock exchanges, registering the world's biggest initial public offering by raising US$21.9 billion. The ICBC share sale surpassed the US$18.4 billion raised by NTT DoCoMo Inc in 1998.

ICBC's total assets exceed seven trillion yuan (US$897.4 billion), and it has 2.5 million corporate and 150 million individual clients.

The privately held Bank Halim is based in Surabaya, on Indonesia's main island of Java. It had US$50 million in assets at the end of 2005, a capital adequacy rate of 57.88 percent and a non-performing loan rate of 1.32 percent.

DATON Securities Co has resurrected itself from bankruptcy and is searching for talent in its quest to move into the sector's first tier, industry sources said yesterday.
The Liaoning-based broker, China's first securities firm to revamp via bankruptcy, is recruiting a general manager and
four deputy general managers, according to people familiar with the situation.

The broker has received several dozen applications and may start interviews with candidates early next year, the sources said.

Daton re-registered recently with 500 million yuan (US$63.9 million) in capital after going bankrupt in August as part of a regulatory edict to reform troubled securities houses, the sources said.

The broker, which was set up in July 2001 with 1.12 billion yuan in registered capital, logged a loss of 133 million yuan in 2005, extending combined losses since it began operations to 1.11 billion yuan, the sources said.

Regulators decided to let Daton go bankrupt to facilitate its overhaul, they said. Original shareholders, including Beida Jade Bird Group, quit during the reform process, while new investors including Dalian Huaxin Trust & Investment Co have joined in, the sources said.

"Huaxin is now the broker's biggest stakeholder, but Daton's overall shareholding structure is still very fragmented," said a source close to the company.

After the restructuring, Daton has net assets of 505 million yuan and net capital of 445 million yuan, which still lags a threshold of 1.2 billion yuan required by regulators to become one of the country's top-tier brokers, according to the sources.