Recruiting in China

It’s a well known fact that Chinese labor is somewhat cheaper than what is available in the West, however in recent years Chinese salaries have sky rocketed at a rapid pace for the average white collar worker. Entry level jobs for a recent graduate in Shanghai will net around 5000RMB (812USD) per month at the minimum, post grads can look forward to around 8000RMB per month (13,000USD), even more if they have previous work experience and international experience.

So how much does a CEO take in, specifically the CEO of major Chinese automotive companies? Those that are listed on the HK stock exchange have to reveal the director level payment packages so investors can clearly see where their money is going. Of course, some Western CEO’s take a token 1USD salary but have decent stock options instead and we’re sure the situation in China is largely the same in China as well. If they lead the company well their stock returns will be much higher than their salaries and of course have lower tax on them as well.

In 2012 BYD’s billionaire chairman netted a 2.77 million RMB salary (438,525USD), but that was down from his 4 million RMB salary in 2011, of course BYD’s total income was down by around 800 million over the same period so its nice to know that even CEO’s are taking austerity seriously. Wang Chuan Fu nets the highest salary in the Chinese auto business, but the gentlemen is also China’s richest man so his BYD salary is likely chump change to him.

Li Shu Fu, the Chairman of Geely and the brains behind the Volvo saw profit rise 32.2% at the Hangzhou based company, but his salary is just 327,000RMB per year ($53,122USD), probably on par with some of his own mid level white collar staff.

JMC’s GM Chen Yuan Qing hasn’t seen a payrise in three years on his 238,240RMB per year salary (37,500USD), his salary is reportedly paid in USD so he is losing money whilst the RMB appreciates against the USD.

Geely’s CEO Gui Xian Rui brings in just over 2 million RMB with his salary approaching 2.36 million RMB per year, a nice increase over 2011?s salary where he netted 1.96 million, a further 3.41 million RMB was given to him in stocks, bring a total of 5.77 million into Mr. Gui’s bank account. nice.

Great Wall’s Board Chairman Wei Jian Ping’s salary rocketed from 1.74 million RMB to 2.47 million RMB over the course of 2011 to 2012.

Four companies are offering salaries between one million and two million RMB per year: Foton, SAIC, Ningtong and GAC. Ningtong Coach didn’t see any major salary upgrades in 2011, with CEO salary staying at 1.2 million RMB. SAIC’s CEO Chen Hong’s salary jumped from 917,000RMB in 2011 to 1.36 million RMB in 2012.

Foton and GAC saw a salary drop in 2012, probably due to a poor financial show in 2011. Foton’s General Manager Wang Jin Yu saw a salary decrease of 3.1% with a net salary of 1.88 million, Foton’s total income dropped 20.7% in 2012 with profit increasing 17.4%.

Taiwan technology giant Foxconn has been increasing its assembly-line workforce in central China in preparation for the manufacture of a new iPhone, the company and media said Tuesday.

Foxconn has been hiring workers in its Zhengzhou plant and will continue to do so to “meet operational demands”, spokesman Simon Hsing said, without elaborating.

The Taiwanese company said Monday that it has added about 10,000 assembly-line workers a week in Zhengzhou, its major production facility for iPhones, since the last week of March.

A spokesman for Foxconn declined to elaborate about production plans, saying only that the company would continue to expand its workforce in Zhengzhou, where it currently employs some 300,000 people, to meet seasonal demand from clients.

The Wall Street Journal said the resumption of hiring in Zhengzhou, the company’s major production facility for iPhones, indicated that Apple is gearing up for production of a new device.

The newspaper quoted unnamed Foxconn executives as saying the company had increased workforce numbers at the plant to cater for a new iPhone launch.

Foxconn, the trade name for Taiwan-based Hon Hai Precision Industry Co., is the world’s largest contract electronics maker and assembles products for Apple, Sony and Nokia, among others, in huge plants in China where it employs more than one million workers.

In February, Foxconn said it had decided to temporarily slow down the recruitment process due to an unprecedented rate of returning employees following the Chinese New Year holiday compared to previous years.

The Financial Times newspaper reported at the time that Foxconn had frozen hiring in China due to reduced orders for Apple’s iPhone 5, although the company denied such decisions were made based on any one customer.

China’s migrant workers go home for the annual Lunar New Year holiday and immediately after the long break companies typically report labour shortages as employees delay their return or fail to go back to their previous jobs.

Recruitment for general laborers has become tight for factories in East China’s coastal areas, according to a report by Economic Information Daily.

Visits to industrial parks in Shanghai and recruitment sites in Baoshan, Jiading and Zhabei district found that the market demand for skilled workers can be satisfied after the Spring Festival, but it is very difficult to get general laborers.

“We need about 20 workers, and the salary we offer is quite competitive even for low-level workers. Not until the recruitment is half through, we have got all the technical workers we need, while over half of the general workers we need are still lacking,” said Jin Tao from the Human Resources Department of Shanghai Shuanggang Warehouse Co. “Low requirements in skills and harder work for assembly-line positions make it less attractive to the new generation of migrant workers.”

Demand for proficient workers at production lines is highest for enterprises, according to a survey by local labor and human resource departments.

“In order to get people, companies had to give intermediaries 500 yuan in fees every time they introduced a worker,” said Xu Jiangao, director of labor and social security center at Shanghai Xinzhuang Industrial Park.

New generations of migrant workers in pursuit of decent employment, the narrowing wage gap between east coast and the central and west regions, and the soaring commodity prices on the east coast all contribute to recruitment difficulties.
Compared with the first generation of migrant workers, employment expectations of the new generation have increased. In addition to remuneration, they pay more attention to the quality of employment, life experience and the realization of life values.

Wang Yong, of Guizhou, who came to Shanghai, wants to find a job that is technological, challenging and promising. “My first choice is administration work, and then technological work. General workers have no prospect for my career, I won’t be such a worker anymore.”

Due to the higher cost of living in economically developed areas, performance ratio of income and expenditure compared to the central and western regions seems lower, which makes it less attractive to low-skilled workers.

In addition, because of the higher level of social security in developed areas, labor cost is actually higher, which makes it difficult for some companies to give raises to general workers.

Zeng Xiangquan, dean of the School of Labor and Human Resources at Renmin University of China, said that the Lewis turning point has come to China’s labor market.

The Lewis turning point is a concept by economist William Arthur Lewis. After surplus rural labor transfer is completed, the employment population will not be able to keep up with labor demand.

According to estimates, 16- to 24-year-old youth labor in China will decrease from 120 million in 2006 to 60 million in 2020, and the “golden” working population of 25 to 55 would fall significantly starting in 2015, which determines the labor market, especially the low-end labor market.

Experts believe that, after the Lewis turning point, China's demographic dividend will gradually subside, and structural imbalance of the labor market will further be highlighted.

It will effectively increase the labor supply if the country can lower the household registration threshold and provide the same health care, pension and children’s education to migrant workers, said Cai Fang, director of the Institute of Population and Labor Economics, Chinese Academy of Social Sciences.

As for the demand for "decent employment" by migrant workers, the government should promote concepts and values for different professions and reduce unnecessary labor mismatches, said Zhao Dejian, who is in charge of the Joint Meeting Office of Shanghai Migrant Workers.

China's nonmanufacturing industries gained stronger growth momentum in March, supported by an accelerating economic recovery.

The nonmanufacturing purchasing managers' index, an indicator that reflects the business activities in the construction and service sectors, bounced back to 55.6 in March, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Wednesday. It was 54.5 in February and 56.2 in January.

A PMI above 50 means expansion, as opposed to contraction. The survey covers 1,200 enterprises.

Overall new orders increased 0.2 points to 52 percent month-on-month, and new export orders improved to 51.7 from 51.6, indicating stronger demand from both domestic and overseas markets, said Cai Jin, vice-chairman of the CFLP.

Input prices dropped to 55.3, 0.9 points less than in February, suggesting an easing of inflation pressure, the analyst said.

It is a signal of a strengthened growth impetus for the whole economy, along with the raised manufacturing PMI released on Monday, he said.

The March manufacturing PMI, which reflects factory production, rebounded to 50.9 from 50.1 in February.

The construction industry PMI rose to 62.5, up by 4.5 points from a month earlier and a 12-month high, as most migrant workers returned to cities to resume construction projects after the Spring Festival holiday in February.

"It suggests that construction enterprises have more positive expectations for the market situation this year," Cai said.
The service industry PMI slightly declined to 53.6 from February's 54.9. Business volumes for catering, retail, air transport and road transport industries shrank in March, said an NBS statement.

HSBC Holdings PLC reported a service industry PMI on Wednesday based on a separate survey. It registered a six-month high of 54.3 in March, up from 52.1 in February, because of the rebound of new business orders and employment.

At least one employee at Foxconn, the manufacturing giant best known for making Apple products, has reportedly jumped from a factory roof in Shenzhen, China due to concerns over job security.

According to AppleInsider, which cited reports from Chinese micro-blogging website Sina Weibo, a female worker jumped from the roof at Foxconn's Shenzhen factory this past Friday at 9 a.m. local time but survived. By noon, three other employees had also climbed to the roof of the building and were threatening to jump, the blog said.

According to other reports, a second person jumped off the roof, though there is no word about their condition.

In a statement to PCMag on Monday, Foxconn confirmed that a worker dispute occurred, but did not address whether anyone had jumped from the building.

"We can confirm that on March 29, three employees at our campus in Longhua, Shenzhen were involved in a workplace dispute over the company's decision to offer them an opportunity to relocate to another Foxconn China facility as part of a shift in production linked to their business group," the statement reads. "As a result of that dispute, the employees in question gathered at the top of a campus building and stayed there until local law enforcement authorities arrived at the scene. The dispute was resolved peacefully and no one was injured. Any reports to the contrary are totally inaccurate."

Unfortunately, suicide at Foxconn is not a new phenomenon. At least 14 Foxconn workers in Shenzen and Chengdu have taken their own lives in a string of worker suicides since early 2010. Foxconn has since forced employees to sign a pledge promising that they won't commit suicide and installed nets outside factory dormitories to deter potential jumpers.

The most recent wave of employee discontent reportedly stems from recent job cuts, lowered wages, and the end of some free amenities. Foxconn is said to have been encouraging some employees to leave the company as part of an effort to cut employee costs.

The electronics maker last month suspended recruitment of new hires, but denied that the hiring freeze was related to slowing iPhone 5 demand.

As of December, working conditions seemed to be improving at Foxconn's mainland China factories. A New York Times article detailed positive changes at Foxconn's China-based plants, which have been criticized by global labor rights groups and were audited last year by the Fair Labor Association (FLA), at Apple's behest.

Editor's Note: This story was updated on Monday at 4:00 p.m. Eastern with comment from Foxconn.

The manufacturing sector in China grew faster pace in March 2013, indicating that Asia’s largest economy and the second largest in the world, is recovering modestly. The Purchasing Managers’ Index (PMI) was 50.9 last month, according to data from the National Bureau of Statistics and China Federation of Logistics and Purchasing released on April 1. The March PMI is the highest in 11 months an improvement from its 50.1 level in February.

A separate PMI released independently by HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4.

After adjusting for seasonal factors, the HSBC Purchasing Managers’ IndexTM (PMITM) – a composite indicator designed to provide a single figure snapshot of operating conditions in the manufacturing economy posted 51.6 in March, up from 50.4 in February, signalling a modest improvement. Operating conditions in the Chinese manufacturing sector have now improved for five consecutive months.

Production levels increased for the fifth month in a row in March. The rate of expansion accelerated from February to a solid pace, the second-fastest in two years. Behind the rise in output, total new orders rose solidly, and for the sixth month in a row. A number of respondents attributed growth to strengthened client demand. Meanwhile, new export orders also increased, albeit marginally, according to an HSBC press release.

Volumes of outstanding business declined for the second successive month in March. The rate of backlog depletion was broadly unchanged from February, and remained slight overall. Staffing levels, however, were relatively unchanged from the previous month.

Suppliers’ delivery times lengthened in March, following a slight improvement in February. That said, the rate at which vendor performance deteriorated was slight, with just over 6% of panellists recording longer lead times. A number of respondents linked the deterioration to increased orders placed at vendors.

Average input costs faced by manufacturers decreased, following a five-month period of inflation. However, the rate of reduction was marginal, with a number of respondents citing lower raw material costs. Output charges set by manufacturers also declined in March, and for the first time in since last November. The rate of discounting was modest, with approximately 10% of panellists lowering tariffs. A number of respondents attributed the fall to a combination of passing on lower input costs to clients and competitive market pressures.

Purchasing activity in the manufacturing sector rose for the sixth successive month. Growth quickened from February to a solid pace that was the third-strongest in two years. Meanwhile, stocks of purchases fell modestly for the second month in a row. Increased input buying and the depletion of stocks were both associated with increased production at plants.

Finally, inventories of finished goods increased for the first time in six months, albeit marginally. A number of respondents attributed the rise to increased production on the back of stronger client demand.