Recruiting in China

Almost overnight, China has become the world's second largest online retail (e-tail) market; revenue estimates for 2012 run as high as $210 billion with a compound annual growth rate of 120 percent since 2003.

At the same time, the compound annual growth in Brazil was 34 percent, and in the United States, 17 percent. These statistics are among the key findings of "China's e-tail Revolution: Online Shopping as a Catalyst for Growth", a new report by the McKinsey Global Institute.

China's retail sector already is among the most wired anywhere. Online sales accounted for about 5 to 6 percent of the country's total retail sales in 2012, compared with 5 percent in the United States. In fact, by the year 2020, it "could potentially lift China's private consumption by an additional 4 to 7 percent. Here's why: at 129 million (in 2011), China has the world's largest online population, surpassing the US's 81 million by a remarkable 59.3 percent.

In point of fact, most (about 90 percent) of Chinese e-tailing happens on digital marketplaces, megasites similar to eBay or Amazon. "These megasites include PaiPai, Taobao, and Tmall, which in turn are owned by bigger e-commerce groups. "Moreover Chinese e-tailing is not just replacing traditional retail transactions, but it is also stimulating consumption that would not otherwise take place. That stimulus is "the lift" referred to in the previous paragraph.

Although still in the early stages of growth, China's e-tail ecosystem is already quite profitable, realizing margins of around 8 to 10 percent of earnings, before interest, taxes, and amortization---slightly higher than those of average physical retailers.

Contrasting what's happening in China is the online retail in the US, Europe, and Japan. There, the dominant model involves a more even combination of brick-and-mortar retailers (such as Best Buy, Carrefour, Darty, Dixons, and Wal-mart) and online merchants (such as Amazon and eBay), which run their own sites and handle the details of commerce.

With this kind of explosive growth, China's e-tail business is poised for continued exponential growth. The biggest challenge the megasites will face will be staffing. China is already having serious shortages of skilled personnel. US companies with the right products have an extraordinary marketing opportunity.

Microsoft is expected to establish an innovation center in south China's Hainan Province, the first of its kind on the Chinese mainland, according to an agreement signed between Microsoft and the Hainan provincial government on Sunday.

Based on Microsoft's leading technology platform, the Microsoft Innovation Center will attract software enterprises in the fields of tourism and agriculture to Hainan, said Li Guoliang, deputy governor of Hainan.

Li said the government hopes to nurture an ecology-related industrial software chain worth 5 billion yuan (798 million U.S. dollars).

Microsoft will also build a "Microsoft IT Academy" in Hainan to boost the training of IT experts.

Microsoft will carry out strategic cooperation with Hainan regarding technological development, software training and intellectual property rights protection, according to a memorandum of understanding inked by the Hainan provincial government and Microsoft (China) Co., Ltd. on the sidelines of the ongoing Boao Forum for Asia.

Microsoft Group Vice President Orlando Ayala said global tourism hot spots are moving to the Asia-Pacific region, adding that the company's cooperation with Hainan will prop up the province's efforts to become a major international tourist destination.

Microsoft Innovation Centers are state-of-the-art facilities designed to foster collaboration on innovative research, technology and software solutions, involving a combination of government, academic and industry participants.

China's has 48 million people working in the fields of science and technology, but the pool of personnel still lacks high-level scientists for strategic needs, a former human resources official has revealed.

Though the numbers of both sci-tech current workers and graduates outnumber those of the United States, China is not a great power of talents, Xu Songtao, former deputy head of the Ministry of Human Resources and Social Security, said at a seminar on Monday.

According to statistics from the Ministry of Science and Technology, China has just over 10,000 people classed as high-level innovative talents, said Xu, also an adviser to the China Talent Research body.

Despite China being a marine leader, the number of Chinese scientists registered in a database of oceanic talents is less than 100, one-twentieth of that of the United States, he added.

"The innovative capabilities and competitiveness of Chinese talents are also weak," Xu said, urging officials at all levels to pay great attention to the nurturing of talented people and to initiate a number of recruitment projects.

He also suggested creating a competitive environment to eliminate the incapable as well as to form a reserve of strategic talents.

China’s second largest smartphone seller Lenovo will reportedly foray into the chip design segment. The company is expected to design own chips for smartphones and tablets.
“Lenovo is looking to expand its IC design team from 10 to 100 by the mid of this year,” EE Times quoted an industry source with direct knowledge of Lenovo’s recruitment of chip designers. The PC maker will be hiring 40 engineers in Shenzhen and 60 in Beijing.

This initiative appears to be driven by the company’s desire to control its own destiny in smartphones and tablets--a la HiSilicon at Huawei. (HiSilicon is a chip division of Huawei.)

Unlike Samsung or Apple, Lenovo has a checkered history of adopting different apps processors from a variety of suppliers for its smartphones. The company adopted MediaTek’s MT6573 in the Lenovo A60 smartphone in 2011, while it became the first company--outside Samsung --in 2012 to design in Samsung Electronics’ quad-core apps processor Exynos 4 in its LePhone K860.

Lenovo, however, announced earlier this year a 5.5-inch smartphone, dubbed K900, by integrating Intel’s first dual-core Atom chip for phones. The Atom Z2580 is said to have roughly doubled the CPU performance of Intel’s single-core Medfield processor used in Lenovo’s K800 phone, which was introduced a year ago.

While Lenovo might have been enjoying its freedom in choosing the best apps processor available on the market, reality bit hard, sources said, when Samsung Electronics refused to supply its newest version of the Exynos apps processor to the Chinese company.

Indeed, on the growing Chinese smartphone market last year, Lenovo became Samsung’s biggest rival--with Samsung holding a 17.7 per cent share, with Lenovo at 13.2 per cent and Apple at 11 per cent.

Meanwhile, Lenovo has been beefing up its senior management team to prepare itself to become a leading consumer electronics vendor.

The world's second-largest supplier of personal computers last month (February) named Jerry Yang, the co-founder and former CEO of Yahoo, as a "board observer.” Further, Lenovo added Tudor Brown, one of the founders of ARM, as a non-executive director to Lenovo's roster of seasoned veterans.

It’s far from clear if an internal group of mere 100 IC engineers can make a dent in the already crowded apps processor market. And yet, as Shao Yang, CMO of Huawei Device, recently said in an interview with EE Times, having a chip division of its own could help [the handset company] “negotiate better with other semiconductor companies.”

ZTE has reduced some middle and senior management positions amid an ongoing organizational review which begun last year to streamline the organization.

A spokesperson told ZDNet there will also be changes in underperforming parts of the company. "ZTE's aim is to make our organization more streamlined and deliver improved business performance," the spokesperson said, adding the company has a "natural" employee attrition rate of between 5 percent to 10 percent annually.

The company was responding to queries about reports about massive job cuts to its workforce in the first quarter of 2013.

The Investment Bulletin reported on Monday it learned the Chinese telecoms equipment manufacturer will be laying off 20 percent of its workforce in the first quarter of the year. The layoffs will also be staggered, with a certain percentage of contracts not being extended as they come up for renewal each month, the article said.

Streamlining underway
In January, ZTE announced plans to streamline itself to form a simplified, three layer structure comprising of headquarters, operational division and representative office, and some regional and structural grouping will be eliminated.

"The reorganization will strengthen competitiveness and risk-management, ensuring all departments have access to key operational resources," ZTE said in the statement.

Rumors of large layoffs at ZTE have been circulating since ZTE's vice president Shen Li announced his resignation on February 17, 2013. However, the company's management has denied such claims that it laid off 10 percent of its workforce, explaining 5 percent left of their own will while 5 percent were those with the lowest performance and part of routine elimination, a separate report by Want China Times, noted.

In January, ZTE said it expected to book losses of up to US$439 million in its preliminary report for the year ending December 31, 2012, due to postponed contracts and decreases in revenue from terminals in the domestic market.

Gary Wang, who left his online video platform after its merger with rivals Youku in August, said he hopes to import foreign technical experts to staff his new enterprise, to be launched April 1.

HONG KONG – Having left the limelight more than six months ago when he sold his online-video brainchild, Tudou, to his erstwhile rivals Youku, Gary Wang is now gearing for a return with a bang – by unveiling a Beijing-based animated-film studio producing movies for domestic consumption.

But the enterprise may have an international twist on it: Wang is aiming to recruit animation-film experts from Hollywood so as to compete with imported U.S. blockbusters.

Speaking to the Wall Street Journal, Wang said he would build a team that includes U.S. members. He said he had met directors, storyboard artists and senior animators while on a two-week scouting trip in Los Angeles and San Francisco in January.

“I get the impression that everyone there is excited about the Chinese market,” said Wang, who was born in China but moved to New York in 1993 to study high school before graduating with a computer science degree at Baltimore’s John Hopkins University.

Wang said he has already secured hundreds of thousands of dollars from international investors for his latest project and that the output will be mainly aimed at domestic audiences.

Citing an improvement in his home country’s distribution, exhibition and copyright protection issues, and also the surge in opportunities and profit in what now stands as the second-biggest film market in the world, Wang said “the time is right” to launch an animation-film studio that could tap into this pool.

Wang’s studio will add a domestic competitor in a scene that has long been dominated by Hollywood blockbusters. While films like DreamWorks’ Kung Fu Panda franchise have proved to be massive hits in China, the local industry has failed to offer reputable alternatives beyond straightforward copies like Legend of a Rabbit, which flopped badly at home.

In fact, DreamWorks will be one of Wang’s major competitors on home turf as well, as the U.S. studio is now already proceeding with building a studio near Shanghai under the name Oriental DreamWorks, a joint venture owned alongside China Media Capital, Shanghai Media Group and Shanghai Alliance Investment. Upon the launch of the company last year, the company announced the making of Kung Fu Panda 3 as a co-production, with a release date in 2016.

Wang founded Tudou in 2005 and sold his company to Youku, his long-running rivals in the business of hosting online videos for Chinese audiences, in August in a stock deal worth about $1 billion. He said his investors, which he did not name, are with him in terms of looking at the new business from a “very long-term view."