Recruiting in China

BEIJING - A skills shortage has emerged as the top challenge for US companies operating in China, according to a report from the American Chamber of Commerce in Shanghai.

The 2006 China Business Report was released on Wednesday after the organization polled 274 member companies throughout China.

Charles Mo, who heads human resources at the Chamber of Commerce, said the skills shortage had, for the first time in five years, overtaken bureaucracy as the No 1 headache for US companies in China.

"The vast majority of US companies said their China operations were suffering from challenges in recruiting capable Chinese managers and retaining them," Mo said.

They account for about 80% of those companies polled. The scarcity of entry-level and clerical staff has also had a negative impact on US companies.

"Controlling salary increases was also a problem for 82% of the companies," Mo said.

Mo said the growth in operations in China had outpaced the supply of desirable staff.

"US companies have to fight for talent against international and domestic competitors," Mo said.

Bureaucracy, lack of transparency and inconsistent regulatory interpretation were the second-biggest challenge facing US companies, the report showed. These challenges, along with other factors, are squeezing the profit margins of US companies in China, according to the report.

More than half of those firms polled said their China margins were threatened by price pressure from domestic competitors, price pressure from major customers, or changes in salary and wages in China. These factors have affected the bottom line of many US companies.

While half of those polled saw improved profitability in 2005 over 2004, most saw profit margins increase by less than 10%, and only a quarter reported higher margins for China than for their worldwide operations.

Nevertheless, US companies are clearly bullish about China, and the country is a priority for many. When describing their five-year business outlook in China, 94% of those polled were either "slightly optimistic" or "optimistic". And 79% were more optimistic about their business outlook in 2006 than a year before.

(Asia Pulse/XIC)

Electronic Arts (Nasdaq: ERTS) China president Erick Hachkenburg resigned in early September, reports 21st Century Business Herald. The newly named EA Asia president Hubert Larenaudie will replace Hachkenburg. Larenaudie was the president of Vivendi Universal Games Asia prior to joining EA. According to rumors, The9 (Nasdaq: NCTY) is the front runner to license EA's FIFA soccer due to Larenaudie's close relationship with The9 during his tenure at Vivendi. [Some online versions of the report were missing a paragraph, which may lead to the wrong assumption that EA will license its racing game Tales Runner to The9. .ed]

Chinanews, Beijing, November 3 ¨C Intel announced yesterday that it will help train 1 million Chinese teachers in the field of information technology to enable them to improve their teaching quality.

Intel has already helped with the training of about 72 thousand Chinese teachers and a large number of undergraduates.

This is Intel¡¯s biggest educational project ever, which will work as a supplement to its current educational cooperation program with the Ministry of Education.

Besides the training project, Intel will donate 10,000 PCs to schools in Chinese rural areas. With the help of Microsoft software and the effort of the MOE, all these PCs will be able to get access to the Internet before 2008. MOE will also provide courseware programs to these schools.

¡°Now our cooperation with the MOE is complete,¡± said Craig Barrett, CEO of Intel. Wu Qidi, Vice Minister of Education, was vocal in expressing China gratitude to the company.

Chinanews, Beijing, November 3 ¨C After its huge success in hitting box offices in China, Hollywood is ready to take Chinese home video market too.

Now Hollywood is working hard to release more DVDs in China. Currently at least 8,000 DVD shops have been set up in the country, and the number is likely to grow to 10,000 before 2007.

China¡¯s successful campaign against piracy has drawn Hollywood¡¯s attention and put its confidence back. Furthermore, the huge market needs for movies must be met after the eradication of pirated ones, thus it is a golden opportunity for copyrighted works to take their shares at reasonable prices.

Fortunately, Hollywood is determined to sell their DVDs at prices based on the consumption level in China, from 15 to 25 yuan.

China will continue to pursue a sound monetary policy, which will be more closely linked to its industry, taxation and foreign exchange policies, a top central bank official said Thursday."

In order to maintain stable and healthy national economic growth, we will continue to stick to a sound monetary policy," Su Ning, deputy governor of the People's Bank of China, said yesterday.

"And we will seek more and effective co-ordination with industry, taxation and foreign exchange policies when drafting our monetary policies," the deputy central bank governor said, without elaborating.

The central bank would continue, as it did before, to employ a host of measures to curb expansive money supply and credit growth.

The measures may include open market operations, as well as interest rate and bank reserve ratio adjustment, Su told the BusinessWeek CEO Forum in Beijing.

The central bank has so far raised the interest rate twice and bank reserve ratio deposits that commercial banks are required to make with the central bank once this year in a bid to cool the sizzling economy.

Su said that macroeconomic tightening measures had already succeeded in reining in red-hot economic growth.

The Chinese economy grew 10.9 per cent in the first half of this year, with this growth slowing to 10.4 per cent in the third quarter.

But the economy still faces several challenges if it is to maintain robust yet healthy growth, Su said, pointing to slumping consumption, the soaring trade surplus and escalating fixed-assets investment.

The overall proportion of consumer spending in the national economy has been on a downward spiral for some time, which may pose problems for economic development, Su told the forum.

The proportion, Su said, has slid from 62 per cent in the 1980s to 52 per cent last year.

Problems related to the international balance of payments remain serious, with the foreign trade surplus continuing to soar this year, he said.

And the risk still remains that fixed-assets investment, which is "still bigger than it should be," may rebound again, as local governments and enterprises continue to invest more money in projects, the deputy central bank governor said.

China's fixed-assets investment grew by a spectacular 29.8 per cent in the first half of this year and increased 27.3 per cent in the first nine months of 2006.

The central bank, Su said, will put expanding domestic consumption high on its policy agenda.

The bank will also work to improve the credit structure, Su said.

BEIJING (XFN-ASIA) - Google Inc is expected to set up a new China joint venture with Ganji.com by the end of the year, in order to qualify under Chinese rules governing Internet Content Provider (ICP) licensing, Sina.com reported, citing an unidentified source.

The two companies have already started recruiting staff for the joint venture, the report said.

The rules bar foreign companies from providing Internet services in China without an ICP license.

Google has a partnership with Ganji.com, using the latter's ICP license to operate the Google.cn service in China.