Recruiting in China

China will establish a 100 billion yuan (15.3 billion U.S. dollars) fund to assist those who are made redundant as a result of industrial restructuring, an official said Thursday.

Allocated over two years, the fund will cover training and job seeking, said Feng Fei, vice minister of industry and information technology, at a press conference.

The processes of dealing with poor-performing "zombie companies," and undertaking mergers and acquisitions mean that job losses will be inevitable. Thus, re-employing workers will be a major task, Feng said.

Cutting overcapacity was listed as one of the five major tasks in supply-side structural reform along with destocking, deleveraging, reducing costs and shoring up weak growth areas.

The government has stepped up efforts to slash excess production capacity in saturated sectors, especially steel and coal. From 2011 to 2015, 91 million tonnes of outdated capacity in the iron industry and 94.8 million tonnes in the steel industry were eliminated.

More skilled workers are needed in Dongguan, a traditional manufacturing base in Guangdong province, as local companies begin looking for qualified employees after Spring Festival to help transfer their businesses into the high-tech sector.

CKE-Tech, which focuses on production and sales of precision machinery, is looking for about 10 more engineers this year as the company increases its efforts in research and development.

"We are looking for more skilled workers, but it is really difficult to find the right ones," said Chen Guiping, a human resource manager with the company.

The company will provide about 6,000 yuan ($920) per month for a skilled worker, higher than the previous year.

A growing number of manufacturing companies have increased investment in research and development in recent years, resulting in the need for more skilled workers and engineers, according to Chen.

CKE-Tech is one of the hundreds of businesses ranging from furniture, garments, electronics and toys that are transitioning from traditional manufacturing to more service-oriented models.

By Feb 17, more than 77 percent of Dongguan workers had returned to their jobs, according to the local human resource authority.

In the past, some companies could not begin factory operations after Spring Festival due to a lack of workers.

"But now, a growing number of local companies have introduced high-tech processing equipment, including robots," said Li Guochen, a professor at Dongguan Polytechnic.

Some labor-intensive businesses, however, have still found it hard to recruit new workers.

According to the Dongguan human resources authority, companies involved in shoes, garments and plastics have a relatively larger shortage of labor for their processing lines.

Farmers wait for their potential employers at a roadside labor market in Shijiazhuang, Hebei province.

Wang Shuji is typical of the workers who gather each morning at local labor markets, the self-forming roadside gathering places for those seeking day jobs in Hebei province.

Wang, 43, is a farmer who seek short-term employment in towns or cities near his home. Capable of doing most kinds of odd jobs, he mainly works at construction sites, building walls or carrying materials.

Most mornings, he gets up at 6 o'clock, eats some instant noodles and rides his electric bike the 20-plus kilometers from his home in Dazhaicun village to Shijiazhuang, Hebei's capital.

"I usually rush there, not to punch in like company employees, but to be picked up by employers as soon as possible," he said.

After he gets to the market, he must wait for employers to arrive, then rush toward them.

"When an employer came, there would be a stampede toward him or her, just like fans toward singing stars," Wang said. "But we were not chasing after stars, we were scrambling for jobs the employer was going to provide."

He speaks loudly, trying to be heard over the other job hunters.

"What kind of workers do you need? How many workers do you want? How much would you pay me for a day? I can do it. Take me. OK, where is the workplace? How should I go? I have an electric bikes, so I can go by myself," Wang said, recalling the exchanges.

After the questioning, employers usually decide within five minutes whether someone was suitable for the job.

"There are scores of peasant workers there, so the chance of being chosen would be very low if you are not quick enough," Wang said. "If I came early, I would have more chance to compete for jobs and start a day's work early, which would lead to more money."

Yang Kang, manager of a local construction company, said it's convenient to find temporary employees from roadside labor markets and the pay is relatively low.

"There would be commissions to pay if I find workers through brokerage firms," Yang said.

Last Friday, Wang waited until 10:30 am, but still didn't get a job.

"It was common. I usually wait a whole morning or even a day, but get nothing," Wang said. "The numbers of employers coming here will increase to normal after the Lantern Festival."

When asked why he didn't find a steady job that could give him regular salary and spare him the daily competition for jobs, Wang said he didn't have much choice with only a junior high school education background.

"It's not that I don't want a steady and cushy job," Wang said. "I am very suitable for a stable job like a security guard at shopping malls or factories."

But he always refused such offers because the jobs are not well paid at just 1,500 yuan ($230) or so for a month.

"I can earn about 3,000 yuan a month on average by finding jobs from the market, though I'm more tired," Wang said.

Wang said he dislikes formal labor markets as they are far away and not as convenient as the roadside ones. "Besides, it's complicated for us to register or complete applications," he said.

On its launch day in China, Apple Pay saw over 30 million Chinese bank cards linked to the payment service, an achievement that impressed Apple Pay vice president Jennifer Bailey.

"We think China could be our largest Apple Pay market," Bailey told media last Thursday.

To lure more customers, some of Apple Pay's partner banks worked with Starbucks to offer discounts to customers who pay with Apple Pay.

With wages up and people accumulating wealth, the rising middle class is driving a major shift in China's consumption pattern, making the country a huge market that multinationals can ill afford to ignore.

Increasingly, Chinese are able to afford more than just the bare necessities. Instead, they spend on things they like but don't need, those "discretionary items."

According to data from consulting firm McKinsey & Co., discretionary spending is forecast to grow over 7 percent annually between 2010 to 2020, while seminecessities, including health care and apparel, will expand around 6 to 7 percent, all surpassing the growth rate of actual necessities.

The shift is already seen in satisfying results reported by companies selling high-end products, such as Apple.

While an iPhone costs almost five times the average price of a domestic smart phone, Apple has a substantial consumer base in China that not only pays for the phone itself but for the brand.

"There's an enormous number of people moving into the middle class and I think this provides us with great opportunities to win over some of these customers into the Apple ecosystem," said Tim Cook, Apple's chief executive during an earnings call.

"We remain very bullish on China, and don't subscribe to the doom and gloom kind of predictions frankly." Cook said.

The Chinese middle class for the first time outnumbered those in the United States in 2015, hitting 109 million at the American standard after purchasing power is adjusted, according to a report by Credit Suiss.

And the number continues to climb. In 2015, China's national per capita disposable income rose 7.4 percent from 2014 in real terms, outpacing GDP growth.

Seeing the opportunities of an increasingly well-off society, foreign firms are tapping into China's entertainment industry to monetize on the growing interest in the high-end recreational market.

American film studio 20th Century Fox, for example, told China Daily recently that it had chosen Beijing to be the destination of the world's first ever Simpsons store.

To be opened in March, the store will offer merchandises related to the American animated sitcom, which has proven to be very popular in China.

The decision followed a similar move by Walt Disney Co., which opened the world's largest Disney store in Shanghai in May 2015 to huge queues of customers.

The domestic entertainment industry is also taking off thanks to this shift. During the Spring Festival holiday, box office sales surged 67 percent year on year to 3 billion yuan.

Spending on recreational activities including travel, dining, sports, and gaming in China still lags behind the developed world, and "fun" has the biggest potential for growth, said a Goldman Sachs report on consumer research.

"There's a perception that China's consumption story has already played out," said Joshua Lu, co-business unit leader of asia consumer research at Goldman Sachs. "In the coming decade, in a way the story is even more exciting as hundreds of millions will see their income doubling and enter the middle class. That migration will continue to be a powerful driver of the China consumption growth story."

In 2015, consumption contributed 66.4 percent to China's gross domestic product, up 15.4 percentage points from 2014.

As China transitions into a more consumption-driven economy, global companies should make smarter, higher-quality products to adapt, too. After all, consumers are what really matter for most of them.

Shanghai-based Fosun has dropped a plan to buy a controlling stake in Israeli insurer Phoenix Holdings because certain conditions for the deal were not met, a statement said yesterday.

Fosun had agreed to buy 52.31 percent in Phoenix from Delek Group in June last year in a deal worth $462 million.

The Chinese company yesterday said the two parties decided to terminate the deal as "certain conditions" have not been "fulfilled or waived," Fosun International said in a statement filed to the Hong Kong stock exchange.

Neither party is obliged to pay a penalty, the statement added.

Shares of Hong Kong-listed Fosun International lost 1.14 percent yesterday, lagging the 1.03 percent fall in the Hang Seng Index.

In a separate statement yesterday, Delek said it is evaluating other options for the sale of its holding in Phoenix to potential investors.

The termination is the first major setback for Fosun after its chairman, Guo Guangchang, was briefly taken by authorities in December last year to assist an investigation as part of the Chinese government's anti-corruption campaign.

The Tel Aviv Stock Exchange suspended trading in Phoenix and its parent company Delek after Guo went missing.

Israeli newspaper Globes said last month the country's Supervisor of Insurance, Capital Market and Savings, Dorit Salinger, was not likely to approve Fosun Group as the controlling shareholder in Phoenix.

Fosun now has over one-third of its total assets invested in insurance, including Yong'an P&C Insurance, Pramerica Fosun Life Insurance, Hong Kong-based Peak Reinsurance, Portugal's Fidelidade Group, US-based Meadowbrook Insurance Group and Ironshore.

A man checks out a Shiseido Co Ltd's beauty products advertisement in Beijing. The Japanese company's China business grew by only 2 percent last year.

One of Japan's leading personal care companies has reported strong demand for its products from Chinese visitors to the country, despite weaker growth in the Chinese market itself.

The latest figures from Shiseido Co Ltd revealed its 2015 annual sales rose 12.6 percent to 763.1 billion yen ($6.7 billion). Analysts said that the increase was helped significantly by Chinese tourist sales.

The group's operating income rose 77.4 percent to 37.7 billion yen, but its China business grew by just 2 percent.

"We have seen a substantial increase, both in sales and income, mainly due to our major brands in the domestic market," said Norio Tadakawa, its corporate officer and CFO, who added both its operations in Beijing and Shanghai struggled last year.

Sales at its Shanghai outlet have been flat for several years, he said, adding the firm is now planning to reverse that with a targeted 10 percent growth this year in China.

In the medium to longer term, he said, "we are seeing more of the middle-class market, so we will keep on expanding consumption and diversification" of products, adding its e-commerce business is expected to grow 20 percent in China.

Tadakawa said Shiseido is also planning a new innovation center in China, which will help the firm grow market share.

He admitted, however, that competition from South Korean brands is intensifying, making its job in China harder.

According to Kantar Worldpanel China, sales of South Korean cosmetic brands are now growing faster than Japanese brands, at 33 percent compared with 11.6 percent, focused mainly on high-end products.

Shiseido's results followed closely on the heels of those from Japanese beauty care rival Kao Corp, which announced net sales increased 5 percent compared with the previous year to 1.47 trillion yen for the year ended Dec 31.

Its profits increased, said officials, due to the effect of increased sales of healthcare products in markets across Asia.

Net income increased 19.3 billion yen compared with the previous fiscal year to 98.9 billion yen, with beauty sales increasing 3 percent, while cosmetics sales decreased 2.3 percent.

Laurie Du, an analyst at Mintel Group Ltd, the United Kingdom-based research firm, said Chinese consumers have gained more awareness of international brands through frequent overseas travel, especially for Japanese goods bought in Japan.

Du said products made in Japan now represented 29 percent of all skincare product sales by Chinese travelers, which is higher than goods from both South Korea and France.

"Chinese consumers strongly believe in the competitiveness, quality and price of Japanese products," she said.

Jason Yu, general manager of Kantar Worldpanel China, said it had also seen a significant rise in demand for everyday Japanese fast-moving-consumer products by Chinese buyers in Japan.

But he added that it remains critical for Japanese marketers to expand their product offerings to avoid missing out on what are likely to be growing numbers of Chinese traveling overseas for goods.