Recruiting in China

Firm expects to hire around 80 people

CONOVER, NC — Folks in these parts are used to jobs connected to the textile industry moving overseas but a Chinese company is locating here and creating nearly 80 jobs.

Catawba County Economic Development Corporation announced on Thursday that Wuxi Taiji Paper Industry Company Ltd. is putting its first US manufacturing location in Conover and will hire 78 workers over the next four years. The company is buying the former Prestige Pillow 50,000-square-foot building, located at 405 Wortha Herman Road SW in Conover. It plans to invest $3 million, say EDC officials.

The company makes spiral-wound cardboard tubes and cores used in multiple industries, including the textile industry, according to information from the county EDC.

Julie Pruett, director of business recruitment for Catawba County Economic Development Corporation, said the jobs will include administration, sales and production. The first phase of hiring will start soon, according to information from the county EDC.

While salaries will vary according to the job, the overall average annual salary is more than $31,000, not including the additional benefits package, according to information from Catawba EDC.

The company is not receiving any incentives from the county or state, Pruett said. But it will get tax credits for the jobs it creates, she said.

Pruett said the company wants to have its equipment moved into its new building by February and be up and running by March.

“We are determined to be a respected tube and core supplier in North America,” says Mr. Meizong Yin, the company president.

The company is following what appears to be a trend to localize manufacturing. In other words, if a company sells in the US, it makes its products in the US, say officials.

“We are honored that Mr. Meizong Yin selected Conover as their first manufacturing footprint in America,” said Conover Mayor Lee Moritz Jr. “Our citizens are appreciative for this opportunity to become a member of the TAIJA Group team. It is exciting to see visionary international companies like TAIJI Group recognize the value of American manufacturing.”

Conover was competing against areas throughout the state, as well as locations in Virginia, Pruett said. County EDC and the state Department of Commerce officials have been working with the company since September, she said.

“It makes good business sense to locate their US operation in Catawba County which is the most specialized area for manufacturing in North and South Carolina,” Pruett said. “We were fortunate to have an available building with adequate ceiling heights and square footage that would meet the client’s needs.”

The company also chose Conover because it is centrally located near its customers, Pruett said.

The Taiji Group was established in China in 1994. In addition to the Chinese market, the company also has customers who are leading multinational companies in South East Asia, Europe and North and South America, according to information from Catawba County EDC.

“We welcome TAIJI Group(USA) Inc. to Catawba County and applaud their commitment to grow their business in the United States by investing in the people of Catawba County,” said Kitty Barnes, chair of the Catawba County Board of Commissioners.

To apply for a job with Wuxi Taiji Paper Industry Company, contact the Catawba County office of the NC Department of Commerce Division of Employment Security at 466-5535. The employment office is located at 3301 US 70 SE, Newton.

China tops any other Asia-Pacific market in its number of companies that plan to hire more employees, a report says.

Nearly 56 percent of organizations interviewed for a report by the global human resources company Hudson, said they plan to increase the number of permanent staff in the first quarter of 2013.

The enthusiasm to hire comes amid the recovery in the growth of the Chinese economy and an increasing number of multinationals moving their regional headquarters to China, said Lily Bi, general manager of Hudson Shanghai.

The salaries offered to talented workers will also increase, Bi said.

"International giants and local companies are attaching more importance to research and development work. Therefore, talented professionals have plenty of opportunities, especially in the pharmaceutical and automotive industries," said Bi, stressing that higher salaries offered to sought-after workers is another trend taking shape in the Chinese job market.

Multinational companies moving their headquarters to China, Shanghai especially, have also helped to create more jobs.

According to statistics provided by the Shanghai Municipal Commission of Commerce, as of September 2012, around 60 multinational companies had Asia-Pacific or Asian headquarters in Shanghai.

The pharmaceutical and biologics company AstraZeneca moved its Asia-Pacific headquarters from Singapore to Shanghai in June. McDonald's and Ikea have also moved their Asia-Pacific headquarters to Shanghai.

Although its economic growth slowed in 2012, China is still the second-largest economy in the world. The central government forecast that the country's GDP will grow by 7.5 percent in 2013 and its unemployment rate will remain stable at around 4 percent.

China is now the world's fastest-growing automobile market and skilled professionals are needed to sustain expansion, particularly in smaller cities. Salary packages are becoming more streamlined and bonuses are down, but candidates are ambitious and looking for increments of up to 25 to 30 percent to switch roles, the report said.

Guo Yating, 32, with three years of experience as an automotive research and development engineer, moved to AVL, an Austrian-based automotive consulting firm, in December with a 50 percent salary increase and a 10-day extension of annual leave to 15 days.

"Frankly speaking, the chances were far scarcer in 2011 and 2012 when the economy, especially the manufacturing industry, was pretty lousy. It was quite difficult for fresh graduates to get a job. But on the contrary, R&D engineers with experience have been receiving more enquires from headhunters in the previous two years," Guo said.

Bi from Hudson said salary increases will also be offered to people working in newly opened positions, even though they are in older sectors such as the advertising industry.

"Employees with expertise in digital and new media, e-commerce and social media may receive increments of up to 20 percent," she said.

Li Daifei, 28, a project manager at a Shanghai-based advertisement agency, was offered her current job at the end of 2012, which saw her salary rise by 40 percent. Her experience with digital media helped her make the switch.

Morgan Stanley plans to slash 1,600 jobs in what may be just the beginning of a new round of layoffs at large investment banks, this time driven by a deeper reassessment of Wall Street businesses in the face of new regulations and capital standards.

Morgan Stanley, the sixth-largest US bank by assets, plans to begin letting go of the employees, many of whom work in its securities unit, starting this week, two people familiar with the matter said.

A third person who has been involved with plans to cut staff at Morgan Stanley and other large banks said that Morgan Stanley’s cuts had been in the works for months, and that more are expected in the future.

Large global investment banks have been cutting staff for the better part of five years, when the financial crisis pegged to the US housing market began to seize up markets.

Firms previously focused their job cuts on areas where activity had screeched to a halt, such as securitization of mortgages, or that were explicitly banned by new regulations, such as proprietary trading.

But banks are now making strategic decisions about businesses in grey areas where management teams do not see major profit potential, or realize that their individual banks are not competitive, the third source said.

“It’s hard to look at yourself in the mirror, and say: ’I’m not good at this,’” said the source. But now that management teams are coming to those realizations, he said, they are beginning to make strategic decisions to exit businesses and cut more staff.

So far, the most prominent example of a bank making that kind of a tough decision is Swiss bank UBS, which said in October that it would exit bond trading altogether and eliminate 10,000 jobs.

Morgan Stanley has said it will not give up on the fixed income, currency and commodities trading business, known as ”FICC” in Wall Street circles. The firm has said it wants to boost market share in FICC by two percentage points.

But Morgan Stanley is aiming to exit more complex realms of bond trading that require more capital under new regulations.

The latest staff reductions will affect 6 percent of the institutional securities unit’s workforce, which includes the bank’s FICC business. The cuts will target salespeople, traders and investment bankers, the sources said. Support staff who work in areas such as technology will also be affected, the sources said.

Although all staff levels will be affected, the likely targets will be more senior employees who take in the biggest paychecks, and about half of the cuts will come from the United States, one of the sources said.

The cuts are also notable because, unlike its chief rival Goldman Sachs, which culls the bottom 5 per cent of its workforce each year to improve performance, Morgan Stanley does not have such a staff reduction program.

Some analysts have questioned Morgan Stanley’s plans to gain market share in the bond trading business.

JPMorgan analyst Kian Abouhossein - who earlier said that Morgan Stanley should give up that goal - expects Wall Street banks to report a 10 per cent decline in revenue for the fourth quarter, compared with the previous period.

Bernstein Research analyst Brad Hintz, a former Morgan Stanley treasurer, said in a report on Wednesday that layoffs are expected in capital-intensive areas of Morgan Stanley’s fixed-income trading business, such as asset-backed securitization, synthetic products, structured credit and correlation trading.

“Investors continue to wonder how Morgan Stanley’s fixed income business will be able to generate steady returns and beat its cost of capital without massive changes to its business model,” Hintz said.

Morgan Stanley chief executive James Gorman has pledged to cut costs, and said in July that he planned to reduce overall staff 7 per cent in 2012. The new job cuts are in addition to that plan, the sources said, and come just a week after Colm Kelleher took over as the sole president of the securities unit on January 1.

The cuts represent less than 3 per cent of Morgan Stanley’s entire estimated workforce at year-end, following other staff reductions in 2012.

“This continues the steady drumbeat of negative news from banks,” said Greg Cresci, a Wall Street recruiter with New York-based Odyssey Search Partners. “It’s hard to tell where the bottom is, given how many banks have made similar announcements.”

Altogether, US financial firms announced plans to reduce payrolls by 38,135 jobs last year, in addition to 63,624 job cuts that were detailed in 2011, according to employment consulting firm Challenger, Gray & Christmas.

“We are seeing a redrawing and restructuring of the industry,” said John Challenger, chief executive of the firm. “The map continues to be redrawn in terms of regulation, who the competitors are, and the resources banks are willing to commit to the investment banking business.”

In addition to earlier job cuts at Morgan Stanley and UBS, Goldman Sachs cut 700 jobs during the first nine months of 2012 as part of a plan to reduce annual expenses by US$1.9 billion.

Citigroup announced plans last month to cut 11,000 jobs, including some in investment banking and trading, to save US$1.1 billion in annual expenses. Credit Suisse Group is also cutting securities jobs to reach an annual cost-savings target of 1 billion Swiss francs (US$1.1 billion), while Bank of America is in the process of cutting 30,000 jobs across the firm in a plan unveiled in 2011 to save $5 billion in annual expenses.

Morgan Stanley shares fell 0.2 per cent to close at US$19.62 on Wednesday. Its shares are up 15 per cent over the past 52 weeks, part of a broad rally in financial stocks.

Changes to Chinese employment law will limit the use of agency workers by companies, as well as guaranteeing those workers the same rights as those hired directly.08 Jan 2013

An amendment to the Labor Contract Law (Chinese) will limit the use of 'labor contracting agents' by companies to "temporary, supplementary or back-up jobs". The change, which has been adopted by the National People's Congress Standing Committee, is due to take effect on 1 July 2013 according to national press agency Xinhua.

The Labor Contract Law is one of China's main sources of employment legislation. It came into force in 2008 and is administered by the Ministry of Human Resources and Social Security. Among other provisions, the law requires employers to pay employees' health insurance and social security contributions, and includes protection for employees on probation and working overtime.

According to Xinhua, the amendment was proposed in June to prevent employers hiring long-term workers through agencies. According to Ministry figures, China had 37 million agency workers in 2011.In practice, companies can pay these workers much less than those recruited directly as they are categorised as 'dispatched employees'.

The amendment reiterates a right for agency workers, or "dispatched workers", to receive "equal pay for the same work" carried out by a company's "formal employees". Employers must "adopt the same remuneration distribution measures of its formal employees at the same position for such dispatched worker".

Employers will also be required to hire the majority of their workforce directly, rather than via contractors, and to strictly control the number of 'leased workers' they hire. The amendment also clarifies those roles that can be filled by agency workers. 'Temporary' jobs are those lasting no longer than six months, while 'back-up' jobs are those that can be taken over while permanent workers are on maternity, study or holiday leave.

The amendment also creates new administrative rules for labor contracting agencies. The minimum amount of registered capital that an agency must hold has been increased to 2 million yuan, while agencies will also be required to obtain administrative approval before they can begin arranging employment contracts.

At a press conference to introduce the changes Kan He, vice chair of the committee's legislative affairs commission, told Reuters that the changes were intended to "prevent abuse".

"The regulations control the total numbers and the proportion of workers that can be contracted through agencies and companies cannot expand either number or proportion at whim," he said. "The majority of workers at a company should be under regular labor contracts."

(Reuters) - In September, the largest factory in the northeastern Chinese coastal city of Yantai called on the local government with a problem - a shortage of 19,000 workers as the deadline on a big order approached.

Yantai officials came to the rescue, ordering vocational high schools to send students to the plant run by Foxconn Technology Group, a Taiwanese maker of smartphones, computers and gaming equipment.

As firms like Foxconn shift factories away from higher-cost centers in the Pearl River Delta in southern Guangdong province, they are discovering that workers in new locations across China are not as abundant as they had expected.

That has prompted multinationals and their suppliers to use millions of teenage students from vocational and technical schools on assembly lines. The schools teach a variety of trades and include mandatory work experience, which in practice means students must accept work assignments to graduate.

In any given year, at least 8 million vocational students man China's assembly lines and workshops, according to Ministry of Education estimates - or one in eight Chinese aged 16 to 18. In 2010, the ministry ordered vocational schools to fill any shortages in the workforce. The minimum legal working age is 16.

Foxconn, the trading name of Hon Hai Precision Industry, employs 1.2 million workers across China. Nearly 3 percent are student interns.

The company "has a huge appetite for workers", Wang Weihui, vice director of the Yantai Fushan Polytechnic School, told Reuters during a recent visit to the city.

"It tightens the labor market," said Wang, whose school sends its students to work at Foxconn and other firms.

Local governments eager to please new investors lean on schools to meet any worker shortfall. That's what Yantai, in Shandong province, did in September when Foxconn had trouble filling Christmas orders for Nintendo Co Ltd Wii game consoles.

"It has been easier to recruit workers in the Pearl River Delta than some inland locations," Foxconn told Reuters in written comments in late December.

Some companies cite rising wages in southern China for the shift elsewhere. Wages are a growing component of manufacturing costs in China, making up to 30 percent of the total depending on the industry, according to the Boston Consulting Group.

Wages began to rise around 2006 as the migration of rural workers to Guangdong ebbed. China's one-child policy, plus a jump in higher education enrollment, further depleted the number of new entrants to the workforce, forcing up wages.

That prompted American carmakers, Korean electronics manufacturers and private Chinese firms to look for new sites. Cheaper electricity, land and tax incentives as well as a growing consumer class in regions beyond the booming southern coastal provinces were other reasons to relocate.

Minimum wages in Yantai can be as low as 1,100 yuan ($180) a month compared to 1,500 yuan in Shenzhen, a city near Hong Kong.

What makes vocational students attractive is they can be paid less than full-time workers, although some firms - including Foxconn - pay the same base wages.

Even if they pay the same base salary, employers can save 10-40 percent per person because legally they do not have to pay health insurance or social security benefits for student interns.

Yantai was not the only local government to help Foxconn.

Two months earlier, Foxconn's 100,000-worker factory near the city of Zhengzhou in Henan Province was racing to meet a deadline for Apple Inc's iPhone 5.

Henan authorities told its cities to find 30,000 more workers for Foxconn, according to a Zhengzhou city government notice reprinted by the Hong Kong-based labor rights group, Students & Scholars Against Corporate Misbehaviour, or SACOM.

THE YANTAI MICROCOSM

Yantai shows how much China's labor market has changed.

Zhang Weifang, head of human resources at the Yantai factory of LG Innotek estimates the city's employable 16- to 18-year-olds has halved since her firm began production in 2004. LG Innotek is the components unit of South Korea's LG Electronics Inc.

"It's really hard to find people nowadays," she said.

About 2,400 young workers staff Zhang's factory, of which one-third are vocational students or workers contracted through agencies.

Students are sought after by plants which need extra workers during peak production periods, especially since China's 2008 Labor Law makes firing employees cumbersome.

And students are plentiful. Vocational school graduation has surged 26 percent in the last five years, to 6.6 million students in 2011. Parents whose children cannot compete in China's exam-driven high schools look to vocational schools.

Such students made up such a large percentage of a Honda Motor plant in southern China that when they went on strike for better pay in 2010, they crippled Honda's production chain. A Honda spokeswoman said the ratio of students to regular employees had significantly declined, but would not give a figure.

About 2.7 percent of Foxconn's workforce in China comprises vocational students, the company said in October. That works out to 32,400 teenagers.

"This program gives Foxconn an opportunity to identify participants who have the potential to be excellent full-time employees should they wish to join our company upon graduation," Foxconn said in a statement at the time.

That month, Chinese state media said 56 minors under the legal working age were among students sent to work at Foxconn in Yantai. Foxconn removed the underage students from the plant after the reports.

Chinese law limits students to eight hours of work a day, with no night shifts. Vocational students in Yantai told Reuters they had worked up to 12 hours a day, and routinely did night shifts at Chinese and foreign-invested factories.

Foxconn has a program with Apple, one of its main customers, to pay interns the same wages as other workers, limit their work to eight hours a day, five days a week and allow them to quit if they want.

More than a dozen students interviewed by Reuters in Yantai had a mixed view of their internships, ranging from relatively positive to outraged. Many said it taught them to look for something other than assembly line work after graduation.

Most three-year vocational programs require a two-month internship in the second year, while the third is spent entirely at work. Even though students know they need factory experience to graduate, the assembly line comes as a shock to some.

"At the beginning I was really excited. I thought I could get experience and help out my family with some money," said Yu, 17, an intern in Yantai. She asked that her full name not be used.

"To suddenly encounter 12-hour work shifts, standing, with only 40 minutes to rest and eat, our legs can't stand it."

Some students said they hoped the work would improve their prospects.

"Electronics is our major and so this will help in finding jobs," said vocational student Sun Chuangjiao, a former Foxconn intern.

Companies defend the internships as educational as well as a useful recruitment strategy.

"The vast majority of our interns and the schools that sponsor them find their experience with us relevant and meaningful, and an important first step in their career development," Emerson Electronic told Reuters.

It employs 40 interns for eight-month stints, out of a workforce of 1,063 at its air conditioner compressor plant in the Yangtze Delta city of Suzhou. All are over 18, it said.

LOOKING FARTHER AFIELD

The shortage of labor means companies often search far and wide for vocational schools to supply workers.

Zhang of LG Innotek said she had contacted schools across China to find interns while Mok Jangkyun, an auditor with Samsung Electronics, told Reuters he drove a full day after flying to Guizhou province in southwest China to vet a vocational school sending interns to its supplier factories.

Samsung did an audit of factories after activists found underage workers with fake IDs at one of the electronics giant's 250 supplier factories in China. The South Korean company said it did not find underage workers at any of its suppliers.

Supplying vocational students can be lucrative.

Some students in Yantai said their school took 500 yuan from their monthly wage. Their school declined an interview request.

Some companies pay teachers directly to keep students in line in dormitories and on the factory floor, SACOM has found. In other cases, companies pay management fees or set up extra facilities at schools.

Foxconn says while it pays teachers who supervise students, it usually does not compensate schools.

"However, in some cases, we do provide compensation to meet their overall administrative costs," it said. ($1 = 6.2335 Chinese yuan)

The Central Economic Working Conference (CEWC) proposes the government enhance people’s livelihood and improve the standard of living. The goal is to be addressed under the guidelines of “keeping the bottom line, highlighting the key points, improving the mechanism and positively guiding the public opinion”.

The CEWC highlighted guaranteeing the basic life of low-income people. The government pledges to finance students born in poor families. Attention will be paid to stabilizing and expanding employment. The government will also strive to create more job opportunities for college students.

The government plans to shore up the development of small businesses and push large enterprises to recommit to corporate social responsibilities. The social insurance systems in both rural and urban areas will be enhanced. China will continue to intensify the construction and management of affordable housing and accelerate the transformation of shantytowns.

The Chinese government vows to lead people to setting in mind that to improve the living standard or become well-off is through hard work.

“To guarantee people’s livelihood requires the government to not only make every effort, but also have a clear evaluation of its own capability. To ‘keep the bottom line and highlight key points’ is very important,” commented Zhang Li Qun, researcher of macro-economic department in Development Research Center of the State Council.

Zhang said that one of the key points of the government’s work is to provide basic public services, and the bottom line is to guarantee the basic livelihood of people. The low-income group is problematic in society, and they especially need the help from the government. Furthermore, with the slowdown of economic growth and the promotion of economic restructuring, some people’s employment and income is expected to be affected. Therefore, the corresponding guarantees should be prepared earlier.

Zhang came up with one conclusion: that to improve people’s livelihood, on one hand the government should expand economic input, and on the other hand people should create wealth through hard work. Neither of the two should be neglected.