Category: Announcements

06/16/14

Permalink 11:05:33 am, by dacare, 648 words, 94 views   English (US)
Categories: Announcements, News of China

Labor laws need to be overhauled

You see them everywhere in Asia.

They push street carts selling food and drinks, sell newspapers and water on busy intersections, and collect garbage for recycling while breathing in thick black smoke from the exhausts of trucks, buses and cars.

In the countryside they tend to small plots, growing just enough food to survive.

Despite Asia's massive economic gains over the last 30 years, very little of this new wealth has managed to trickle down to the grassroots, or what economists call the "informal economy".

The millions who work in the informal economy are not covered by formal employment agreements, which are so common in developed economies.

The International Labour Organization estimates the informal economy accounts for 60 percent of Asia's workforce.

The real challenge facing governments in emerging Asia is how to improve and protect those in the informal sector who have no protection from the non-payment of wages, and who can be retrenched at any time without notice or compensation.

They work in dangerous, low-skilled jobs with poor occupational health and safety conditions. None of them are protected by social security nets.

On the other hand, the formal sector - areas such as manufacturing, financial services and technology - is suffering from a growing skills shortage.

Asia reaped huge economic benefits when manufacturing migrated from many developed countries. Low-end manufacturing has even been migrating from China.

The World Bank has said the region's policymakers need to enact "labor regulations and social protection policies to benefit all workers, including those in the large informal economy".

Christophe Duchatellier, the Tokyo-based CEO of human resources firm Adecco Asia, says there has been a "significant deregulation of challenging labor laws" in many countries in Asia.

But he says that more deregulation still needs to be done if countries are to become "competitive from a labor perspective". Duchatellier says that over the last 20 years there has been a steady shift of industrial manufacturing from the West to the East.

Much of that shift was prompted by low productivity, high taxes and high wages in the West. "Companies need to do things cheaper and faster," he says, adding that the idea of a full-time job or 'job for life' is fast becoming a thing of the past in many global and regional markets."Young people want more options and will have more employers than we did in the past."

He believes Asian universities and schools need to better prepare young people entering the workforce with the right skills to help them get jobs.

"We need to remember that for the majority of the world, education is about preparing people to get a job. More 'later-in-life' retraining and re-skilling is needed for those in sunset industries and where new technologies are emerging. And companies need to encourage more apprenticeships," Duchatellier says.

A report released earlier this year by the World Bank, East Asia Pacific at Work: Employment, Enterprise and Well-Being, said: "Asia has seen rising productivity amid a brisk structural transformation, with large movement of people into cities and higher output in agriculture, manufacturing and services."

"Countries that were poor a generation ago successfully integrated into the global value chain, taking advantage of low labor costs," the report said.

Commenting on the report, Axel van Trotsenburg, regional vice-president of World Bank East Asia and Pacific, said: "The unprecedented economic development in East Asia Pacific has provided jobs and lifted millions of people out of poverty and has been a triumph of working people.

"It's time now to consolidate growth by adopting social policies that protect people, rather than any particular sector, location or profession."

When well-designed, those policies should make sure social protection and labor regulations benefit the most vulnerable workers in society."

The World Bank said that as economic growth is moderating and labor costs are rising, "constraints of the region's current labor market and social protection policies are becoming a more pressing issue".

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04/11/14

Permalink 10:22:56 am, by dacare, 812 words, 212 views   English (US)
Categories: Announcements

Wal-Mart to shut down outlet in Hangzhou


A customer shops at Wal-Mart's Zhaohui store in Hangzhou on Tuesday. Wal-Mart, the world's largest retailer by revenue, decided to shut down more than 20 outlets in China this year.

Closing part of company's plan to jettison underperforming stores

Wal-Mart Stores Inc, the world's largest retailer by revenue, plans to shut down another underperforming store?in Hangzhou, Zhejiang province?in late April, while a compensation dispute with employees from an inland store that closed in March remains unsolved.

Hu Yinghua, a saleswoman at Wal-Mart's Zhaohui store in Hangzhou, said they had a meeting on Wednesday afternoon as a formal notice of the closing of the store by the end of this month.

"The informal notification came on Tuesday night via text message. We have to choose before April 23 whether to be sent to other Wal-Mart stores in the city, or leave the company with a certain amount of compensation," she said.

Hu said upper-level managers explained during the meeting that the closure was strategically necessary.

There were a few customers at the store on Wednesday, but some shelves were already empty.

Shirley Zhang, media director from Wal-Mart China's Department of Corporate Affairs, confirmed that the store will close on April 23 as a part of the company's plan of shutting down those failing to make a profit.

The multinational company has opened about 400 stores on the Chinese mainland since it entered the market in the mid-1990s. The company decided to shut down more than 20 outlets in China this year because those stores comprise about 9 percent of the total, but have contributed only 2 to 3 percent of the total sales volume from 2013 to date, she said.

"We take these moves to achieve quality of growth, and we think the strategy adjustment will help us to better meet the demands of customers," she said.

Zhang said the company has tried to make proper arrangements for the employees affected by the closures, including allowing them to transfer to any outlet in China and subsidizing their relocation expenses, including transportation and accommodations.

However, the company's retreat from Changde was not seen as reasonable or fair by most of its local employees. More than 70 out of 135 employees from the store have asked their trade union to seek better compensation from the company after Wal-Mart told the workers on March 5 that the store would be closed in two weeks.

Huang Xingguo, chairman of the Changde store's trade union, said Wal-Mart did not provide an official notification to the trade union in advance for such a vital decision as the law stipulates and failed to show due respect to its employees.

"The day they announced the closure, employees from other cities arrived at the supermarket to replace our workers. It was humiliating and discriminatory," said Huang, whom employees elected as the trade union chairman in 2013.

He said the union has asked city authorities for formal arbitration to seek workers' rights in terms of collective negotiation, higher compensation for the mass layoffs, and pay for time not worked during the dispute.

"We ask Wal-Mart to double the existing compensation, but that is negotiable if the company is willing to resume dialogue," he said. "However, the company is busy removing its assets and has refused dialogue since late March."

Huang said Wal-Mart's tough stance was backed by inappropriate intervention from the local government.

He said the district's labor department provided written material to recognize that Wal-Mart closed its store in Changde legally, and police arrested several workers who took part in peaceful protests on March 21.

A labor inspection official surnamed Tan from Changde's Wuling district, who has been working as a mediator in the case, said the situation is "complicated" and urged workers to resort to legal channels to defend their rights.

Zhang, the media director from Wal-Mart China, defended the company's moves.

"Personally, I feel sympathetic toward these workers and understand their requirement for higher compensation, but our company has to handle that in accordance with the law," she said.

But Chang Kai, head of the School of Labor and Human Resources at Renmin University of China who participated in the legislation work for the Labor Contract Law from 2006 to 2008, believes Wal-Mart lacks legal justification for its behavior.

"The Changde outlet is just a branch of Wal-Mart, so it can't terminate employees' contracts under the name of disbanding the enterprise," he said. Under Chinese law, the company needs to provide an official resolution from a shareholders meeting to legitimize its decision to end its contracts with employees.

"What Wal-Mart did is actually a mass layoff, which requires the employer to inform workers one month in advance and listen to the trade union's suggestion for staff reallocation, which Wal-Mart has failed to do," he said.

Chang also said the trade union of Changde's Wal-Mart seeking better treatment for workers is significant, as it will set an example for similar cases in the future.

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01/14/14

Permalink 02:01:27 pm, by dacare, 766 words, 238 views   English (US)
Categories: Announcements, Investing in China

Guangdong outlines big FTZ plans


A booth showcasing Guangdong-based businesses at an expo in Guangzhou, the province's capital. Guangdong is currently seeking central government approval of a Guangdong-Hong Kong-Macao free trade zone. Provided to China Daily

Southern province aims to capitalize on links with neighboring regions

The Guangdong provincial government has vowed to realize liberalization of trade in services in the South China province and its neighboring Hong Kong and Macao special administrative regions by this year through CEPA (the Closer Economic Partnership Arrangement).

"It is a task assigned to Guangdong by the State Council," Vice-Governor Xu Shaohua told a Monday news conference. "We are striving for the central government's approval of specific preferential projects and policies.

"At the same time, we will open up more fields for investors from Hong Kong and Macao, including those in the service sector, using a 'negative list'."

Xu also said Guangdong is currently seeking central government approval of a Guangdong-Hong Kong-Macao free trade zone.

"We are talking with ministries about the construction plan and preferential policies," Xu said.

At a joint meeting between Guangdong and Hong Kong in September, Guangdong Governor Zhu Xiaodan said that the new free trade zone will focus on liberalizing trade and building a platform for the cooperation in the high-end service industry, capitalizing on Hong Kong's reputation as a premier international finance center.

A focus on liberalizing trade in services will set this free trade zone apart from the China (Shanghai) Pilot Free Trade Zone, which focuses on financial openness, according to Lin Jiang, dean of the public finance and taxation department of Lingnan College at the Guangzhou-based Sun Yat-sen University.

"The volume of trade in services has surpassed that of trade in goods in international trade," said Lin, who also is vice-director of the university's research center of Pearl River Delta, Hong Kong and Macao.

"The Guangdong-Hong Kong-Macao free trade zone is the pilot zone in China to make breakthroughs in fields such as offering tax refunds for service exports, which are intangible goods," Lin said.

"Liberalizing trade in services also answers the province's need for upgrading and transforming its processing trade. That's why the province doesn't stress liberalizing trade in goods," said Lin, who gave as examples of modern service industries high-end design and management consultancies.

Zhu also noted at the September meeting that the new free trade zone will help adapt the mainland's financial management mechanism to international practices in Hong Kong.

Lin said it will benefit the province to make business laws and regulations according to international practices in Hong Kong, since that will be one of the free trade zone's major incentives for international investors, compared with the Shanghai free trade zone.

Xu listed several items on the Guangdong government's action plan for liberalizing trade in services in the zone. They include: relaxing or canceling restrictions on Hong Kong and Macao investors' qualifications, shareholding ratios and/or scope of business; promoting mutual attestation of professional qualifications; and exploring possible business modes for individual professional services.

"The Hengqin New Area in Zhuhai, the Nansha New Area in Guangzhou and the Qianhai experimental zone in Shenzhen are the three areas opened up for Hong Kong service industry," Xu said. "In addition, Zhongshan, Foshan and Dongguan cities are proposing platforms to attract investors from Hong Kong and Macao."

The latest announced preliminary plan of the Guangdong-Hong Kong-Macao free trade zone includes the three new areas and experimental zones plus Guangzhou Baiyun International Airport, taking up an area of more than 1,300 square kilometers, which is 47 times of that of the Shanghai free trade zone.

Lin warned that it would be a challenge for the Guangdong government to figure out a way to coordinate so many areas.

Part of the reason for Monday's news conference was to interpret the provincial Party committee's suggestions for Guangdong's implementation of the central government's comprehensive reforms.

The suggestions were approved by the Third Plenum of the 11th General Assembly of the Guangdong Provincial Party Committee, held last weekend in Guangzhou.

"To further open up the province, Guangdong will also strengthen its cooperation with the US and European developed countries by establishing overseas offices of economic trade in these countries," Xu said, adding that an office in Germany already has been set up.

"This is to get in touch directly with big multinational corporations to attract investments and technologies that will assist in upgrading and transforming Guangdong's economy," he said.

Guangdong, the largest Chinese trader for ASEAN countries, also will further promote its foreign trade with these countries and spearhead the central government's strategy of building the Maritime Silk Road of the 21st century.

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12/31/13

Permalink 09:06:39 am, by dacare, 379 words, 291 views   English (US)
Categories: Announcements, News of China

Shenzhen to Hike Minimum Wage Levels

Shenzhen human resource officials announced last week that the city will raise its monthly minimum wage level by 13 percent to RMB1,808 from February 1, 2014, while its hourly minimum wage will be adjusted from RMB14.5 to RMB16.5.
The new minimum wage standards are expected to benefit about 936,000 workers in Shenzhen, according to the city’s human resources and social security bureau.
In China, local governments are required to raise their minimum wage levels at least once every two years as a matter of State policy. Shenzhen last updated its minimum wage levels in March 2013, raising the monthly minimum pay by RMB100 to RMB1,600.
In 2013, twenty-seven regions in China have adjusted their minimum wage levels including: Shenzhen, Shanghai, Guangdong, Xinjiang, Tianjin, Jiangsu, Zhejiang, Beijing, Shandong, Fujian, Jilin, Liaoning, Hubei, Ningxia, Shanxi, Yunan, Anhui, Henan, Jiangxi, Guangxi, Gansu, Sichuan, Shaanxi and Guizhou. Detailed information can be found in the chart below.

After the latest round of adjustments come into effect, Shenzhen will have the highest minimum wage in the country at RMB1,808, followed by Shanghai at RMB1,620. Shenzhen will also have the nation’s highest hourly wage rate at RMB16.5, followed by Beijing and Xinjiang at RMB 15.2.
The country’s Employment Promotion Plan provides that the minimum wage levels in China should grow by at least 13 percent annually through 2015, and the minimum wage levels in most areas should not be lower than 40 percent of the average local salary. Under such policies, minimum wage levels across the country have registered an average 12.6 percent annual growth rate from 2008-2012.
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12/26/13

Permalink 09:07:51 am, by dacare, 903 words, 203 views   English (US)
Categories: Announcements

Retirement delayed as China confronts smaller workforce

China plans to raise the retirement age for the first time since the 1950s, as policymakers confront the prospect of a shrinking workforce that damps economic growth.

“The age will rise gradually,” Hu Xiaoyi, a vice minister of human resources and social security, said this month. China’s compulsory retirement ages, now 50 for most women and 60 for men, are likely in 2020 to be about five years higher than they are now, according to economists surveyed by Bloomberg News.

Delaying retirement may be a more effective tool in alleviating labour shortages and driving growth than the easing of the one-child policy announced last month as part of the broadest policy reforms since the 1990s. More than three decades of population control are thinning the ranks of available workers, adding to constraints on expansion as President Xi Jinping’s government seeks to rein in debt-fuelled investment.

“I would think that a lot of people would want to voluntarily work longer if the policies are right,” said Chang Jian, China economist at Barclays Plc in Hong Kong, who formerly worked at the World Bank. “The government would get a lot more mileage from raising the retirement age than a partial relaxation of the one-child policy,” she said.

“Twelve of 18 analysts saw 55 as closest to the 2020 retirement age for women, with five saying 60 and one 65,” according to the Bloomberg News survey, conducted from 22 November to 27 November.

Men’s retirement

The retirement age for men is likely to rise to about 65, according to 14 respondents, while two said it would be closer to 70 and two said it would stay near 60, the survey found.

For women in white-collar jobs, the retirement age is 55, and there are other exceptions such as for heavy labour.

The working-age labor force in China declined by 3.45 million people last year, according to the government. The United Nations has forecast a drop of about 24 million in the population age 15 to 59 from 2015 to 2025, while people age 65 and older will increase by about 66 million.

Scarcity is helping push up labour costs, driving companies such as Samsung Electronics Co. to relocate production to countries including Vietnam.

Raising the male retirement to 65 by 2020 may help keep in the labor force some of what statistics-bureau data show were 41.5 million men age 47 to 51 in 2011. There were 51.5 million women age 37 to 41.

Yu Yongding, a former adviser to the central bank, said a higher retirement age won’t change China’s demographic structure and trends. At the same time, it’s definitely helpful for China’s labour supply, and therefore good for economic growth in the long run, Yu, a senior researcher at the Chinese Academy of Social Sciences, said in an interview in Beijing.

Pension shortfall

Fourteen Chinese provinces faced a combined pension shortfall of 76.7 billion yuan ($12.6 billion) in 2011, according to a report by CASS, a state researcher, the official Xinhua News Agency reported in October.

“A delayed retirement age, despite its unpopularity, is helpful for China’s economic growth and development by allowing people to work longer and making more efficient use of labour,” said Li Xiaoping, a Beijing-based researcher with CASS’s Institute of Population and Labour Economics.

“Letting people have more children, while more popular, may carry fewer economic-growth benefits because boosting the population alone doesn’t necessarily help expansion,” Li said.

Wang Yuanlong, a 42-year-old taxicab driver in Beijing, said that if the retirement age is raised to 65, I don’t think it’s worthwhile to make my pension contributions.

“It’s bad to think that I have to work every day when I am 65,” Wang said.

Support growth

Avoiding deeper declines in the labour force may help support economic growth that analysts forecast will slow. Expansion will decelerate to 7.4% in 2014 and 7.2% in 2015, according to median estimates of economists in a separate Bloomberg News survey this month.

China is also trying to sustain growth by encouraging some of the 600 million-plus rural residents to relocate to cities and better integrating the 260 million migrant workers who live in urban areas without getting full access to schools and other municipal benefits.

The Communist Party said last month that couples will be allowed to have a second child if either parent is an only child, instead of both parents. The party said it would consider raising the retirement age.

“Delaying retirement will slow the process of China’s labour surplus becoming a deficit,” said Zhu Haibin, Hong Kong-based chief China economist at JPMorgan Chase and Co. The shift will have a much bigger impact on the economy than the change in the one-child policy, because that will only start to affect the labour force in 20 years’ time, Zhu said.

Life expectancy

China isn’t the only nation grappling with the issue. The UK plans to raise the pension age to 66 from 65 by 2020 and may raise it to 68 by the mid-2030s. Australia’s pension age is scheduled to rise to 67 from 65 by 2023, and the government may need to increase it later to 70, the nation’s Productivity Commission said in a research paper last month.

“National average life expectancy in China was 72 for men and 77 for women in 2010,” according to government data. The highest was 82 for women in Beijing and Shanghai.

“The age of 50 or 60 is no longer regarded as old,” Yang Yansui, director of Tsinghua University’s Research Center of Employment and Social Security, said in Beijing. “The pension system just can’t be sustained if the pension access age is not extended.”

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12/17/13

Permalink 12:16:33 pm, by dacare, 447 words, 205 views   English (US)
Categories: Announcements, News of China, Manufacturing & Industry

Production to slow down: HSBC

Workers assemble heavy equipment at a factory in Qingzhou, Shandong province. A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged down to 50.5 in December from 50.8 in November, the lowest level since October, HSBC Holdings Plc said in a report.

Preliminary manufacturing PMI shows weaker growth in December

China's manufacturing sector will likely see the slowest expansion in three months in December because of lower output growth, HSBC Holdings Plc said on Monday.

A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged down to 50.5 in December from 50.8 in November, the lowest level since October, the bank said in a report.

The production output sub-index slipped to 51.8 in December from 52.2 in November, pressuring the index.

Meanwhile, the new orders sub-index hit a nine-month high of 51.8 in December, compared with 51.7 in November, while the new export orders sub-index rose to 50.3 from 50.2 last month, suggesting stable market demand.

A reading above 50 indicates expansion, while one below that level signals contraction.

The official PMI data for December will be released on Jan 1 by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. HSBC will release its final PMI data on Jan 2.

Qu Hongbin, chief economist in China at HSBC, said that although December's preliminary manufacturing PMI reading slowed marginally from November's final reading, it still stands above the third quarter's average reading of 49.7.

The latest reading implies that the manufacturing sector's recovery, which started in July, is still holding up, Qu said.

He believes that China's GDP growth will stabilize at about 7.8 percent year-on-year in the fourth quarter.

Zhang Zhiwei, chief economist in China at Nomura Securities Co Ltd, said that the slowdown in the PMI data "suggests that growth momentum has started to weaken".

"This trend is likely to continue in the first half of 2014, as market interest rates keep rising and pushing up financing costs for enterprises," said Zhang.

Figures from the central bank showed that new loans came in at 625 billion yuan ($103 billion) in November due to stronger retail and short-term corporate loans, rebounding from 506 billion yuan in October. Off-balance sheet lending saw a broad-based recovery to 377.9 billion yuan in November from 184 billion yuan in October but was still below the August-September levels.

A report from Barclays Capital said that short-term bill issuance has increased, as rising funding costs have probably led companies to rely more on short-term financing.

According to the NBS, industrial output growth in November slowed to 10 percent year-on-year from 10.3 percent in October, which may indicate that the GDP growth rate in the last quarter may be at 7.6 to 7.8 percent, compared with 7.8 percent in the third quarter and 7.5 percent in the second, analysts said.

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