Archives 2006

Shanghai aims to be China’s Detroit

By Brian Schwarz

SHANGHAI – In its quest to make this city China’s auto-manufacturing capital, the municipal government is increasing investment in the Shanghai International Automobile City, according to local media reports.

Analysts say Shanghai has a competitive edge over rival Chinese cities in automobile manufacturing. However, they also caution that Shanghai’s ambition to become China’s Detroit could be hampered by worsening overproduction at home and growing trade tensions with potential importers of Chinese-made cars.

The Shanghai Daily reported that the municipal government has set the goal of turning Auto City, in the Anting area of the city’s western district of Jiading, into a multi-functional regional hub with an additional investment of 38 billion yuan (US$4.75 billion) or more in the run-up to 2010 and bolstering its research and development capacity.

The additional investment in the manufacturing park could encourage car makers such as Shanghai Automotive Industrial Corp (SAIC) and Shanghai Volkswagen to increase production to 500,000 vehicles per year. Zhou Bin, manager of the planning department of Shanghai International Autocity Development Co Ltd, expects Auto City to generate 300 billion yuan worth of automobile trade revenue annually.

With the introduction of a new Formula One racetrack, Auto City has made significant progress. During the past five years, 184 industrial projects have commenced, with investment from 100 auto-part makers. A few weeks ago, for example, SAIC, China’s second-biggest auto maker, began construction on a new automobile research institute, which is intended to help the firm develop self-branded models and new-fuel vehicles. Tongji University, which helped develop China’s first fuel-cell sedan, has also moved its automobile research department to Anting.

And it’s not just domestic producers using the auto park to their advantage. Auto City also hosts foreign parts suppliers such as Delphi and Visteon, both of which work in close cooperation with DaimlerChrysler AG and General Motors Corp in China.

Shanghai’s competitive edge

With overcapacity looming in the domestic market and trade tensions simmering with Western trading partners, some may question Shanghai’s ambitions. While it enjoys a superior location, the metropolis has comparatively high labor costs and high real-estate prices.

And other Chinese cities are racing ahead in search of greater auto investment. How do Shanghai’s capabilities compare with those of other cities such as neighboring Nanjing and the southern manufacturing center of Guangzhou?

Jeff Lin, a principal at Booz Allen in Greater China, says Shanghai has many hidden factors that make it an attractive location. With its international outlook and competitive energy, there is an emphasis on quality among Shanghai residents. Compared with inland Chinese cities, it enjoys superior infrastructure, such as the new Yangshan deep-water port, and a location to serve export markets in the region.

Shanghai is also home to many key suppliers, such Baoshan Iron and Steel, and is close to the fast-growing Yangtze Delta region. Baosteel is considered one of the most competitive steel producers in the world and has expanded its cooperation with FAW-Volkswagen.

Lin says Shanghai also holds an advantage in developing new engineering and management talent. With many industries suffering from a lack of experienced auto professionals, Shanghai universities, on average, have a better pool of young talent than Nanjing and Guangzhou.

“We have attracted car manufacturers and auto-part makers to build plants here and have laid a solid foundation for the development of Shanghai’s auto industry,” Auto City’s Zhou Bin told the Shanghai Daily.

Overcapacity looms

China’s central government has identified the auto industry as a “pillar” of the nation’s economy and offers incentives and protections to domestic producers. And to encourage the growth of local brands, Beijing announced plans in late June to offer low-interest loans to domestic car makers and aims to lift the share of Chinese nameplates to 60% by 2008, from 20% today.

“Years of large investments in the market have made China a top global auto-manufacturing hub behind the United States, Europe and Japan. The manufacturing strength will be enhanced further,” said Wang Liangfeng, an analyst with Shanghai-based Autobeat Consulting firm.

By the end of this year, China is expected to become the world’s third-largest car maker, following the US and Japan, according to a report released by Polk Marketing Systems. Government policy will also play a role in the nation’s efforts to become a world-class auto exporter.

Sales of Chinese-made cars are climbing both at home and abroad. Despite higher consumption taxes on big-engine cars, rising gasoline prices and stricter bank lending policies, passenger-car sales soared 50% during the first six months of 2006 over the same period a year ago, with second-tier cities such as Chengdu and Chongqing in the southwest leading the way. At the same time, China’s exports of automobiles doubled in 2005 to $1.58 billion, according to government figures.

However, while China’s auto industry has made significant progress in recent years, serious production overcapacity and falling prices are bound to take their toll. The government warned this year that the country was on course to produce twice as many cars as it needs.

China’s annual auto-production capacity, now at 8 million units, has already exceeded anticipated sales of 5.5 million units this year. And the government estimates that motor-vehicle production will hit 20 million units in 2010, more than double the expected sales of 9 million units.

Booz Allen’s Lin predicts that this overproduction will lead to a shakeup in the industry, with many inefficient players either consolidating or going out of business.

Overproduction may not translate into a greater reliance on export markets, which could increase trade tensions, but it certainly will put downward pressure on global prices.

Growing trade tensions

In 2004, China’s vehicle exports exceeded imports for the first time, as 172,800 units went overseas. But in mid-September this year, China’s Chery Automobile was forced to delay its ambitious plan to export cars to the US. In cooperation with maverick entrepreneur Malcolm Bricklin, the firm now hopes to send cars to the very competitive US market beginning in 2009, two years behind its original target date.

According to a recent report in BusinessWeek, Detroit-based Chrysler has been in discussions with Chery about the possibility of jointly manufacturing a small car. Chery produces 400,000 vehicles a year and plans to increase production by 1 million vehicles per year.

With the top Chinese auto makers making plans to export more to the West, trade officials are starting to raise concerns. Although import duties have dropped significantly since China joined the World Trade Organization in 2001, foreign auto makers are limited to a 50% stake in Chinese producers for the domestic market, while there is no limit on ownership of export operations. Government support for local auto makers is raising the eyebrows of WTO officials and creating friction among trading partners.

Last month, trade officials from the US, the European Union and Canada formally petitioned the international trade body to prohibit Chinese duties on imported car parts, which they say are hampering foreign car makers in China. The complaint alleges that the government requires foreign car makers to buy at least 40% of their parts from local suppliers or pay almost double the import duty applied to assembled vehicles. Under Chinese rules, imported auto parts making up more than 60% of the value of a car are subject to a 28% tariff, which is the same duty imposed on complete new cars.

And while many other labor-intensive industries have done well by exploiting the country’s low labor costs to export at a rock-bottom prices, the auto industry does not lend itself to a so-called “China price”, at least not in the near future, according to Susan Helper, an economics professor at Case Western Reserve University’s Weatherhead School of Management in the US state of Ohio.

In a recent Warton University e-newsletter, Helper notes two differences between autos and many other labor-intensive industries, such as textiles, that China has come to dominate. Unlike clothing or electronics, shipping costs are significant when it comes to autos, which include more “dead airspace”. Hindering the Chinese auto industry’s efforts to become a low-cost producer are commodity prices and the costs of developing automotive technology and research capability.

All these pose big challenges to the Shanghai government’s ambition to turn the largest commercial metropolis of China into a new Detroit. The city in the US state of Michigan has ridden the auto industry’s boom-and-bust cycle for generations. Now, if local government planners get their way, Shanghai is poised to join the ride.

Brian Schwarz is an American freelance writer and corporate trainer based in Shanghai.

China facing employment crisis with 34.5 mln new job-seekers in next five years

The Chinese government is facing a “severe” employment crisis with 34.5 million people expected to come on to the labor market from 2006 to 2010, according to a senior member of the Chinese People’s Political Consultative Conference (CPPCC).

Chen Mingde, said at a meeting of the Standing Committee of the CPPCC National Committee, China’s top advisory body, that job creation would be crucial to the government’s aim of building a harmonious socialist society.

He said 25 million new job-seekers would enter the market this year, of whom 11 million might find jobs in urban areas, leaving 14 million unemployed.

Chen said employment opportunities could expand if local governments put job creation atop their agenda and vigorously develop the service sector, and small and medium enterprises.

Governments should launch special foundations to encourage private businesses, such as favorable loans, risk funds and investment guarantees for the self-employed.

He said local governments should encourage university graduates to work in rural areas in western China with favorable policies such as minimum salaries and medical care, and subsidies for those who go to undeveloped and remote rural areas.

Source: Xinhua

Recruiting in China

An “adventure” is what Dave McCann calls the quest to recruit and retain good workers in the rapidly changing economy and market in China.

“The opportunities are great, but they create HR challenges,” says McCann, who is based in Beijing and has responsibility for HR activities for PricewaterhouseCoopers throughout China. The country may have a population of 1.3 billion people, but there’s a war for talent as fierce as in many parts of the Western world, he explains.

Carrie Conlon, director of human resources for Nanjing Interbrew Breweries in Nanjing, says China is undergoing significant changes and wants a market economy. “But they don’t have the talent,” she explains. “They haven’t recognized the need to train people to go into that type of economy.

And managers are particularly hard to find. “The challenge is finding managerial talent,” she says. “You can’t find a marketing director to save your soul.”

The reason: While many Chinese professionals have good technical educations, few have managerial training because in the past managers were promoted based on their political party allegiance. “There never had been any selection criteria; it was not attached to skills,” she says.

While managers are in particularly short supply and attracting good ones can present a special challenge, the truth is that recruiting for any position in China can require a whole new outlook. In some cases you may need to rethink what you know about finding and hiring talented workers because, when it comes to recruiting, China has its own particular rules of the road.

Do’s and Don’ts

As in other countries, companies operating in China can use campus recruitment, job fairs, newspaper advertisements, search firms, internal referrals and the Internet to search for the right talent. But, “in terms of hiring, there are more than a hundred ‘do’s and don’ts,'” says P.O. Mak, president of the Hong Kong Institute of Human Resource Management.

“First of all, you have to know where you are and what kind of people you wish to hire. And then, a thorough knowledge of applicable law is important,” says Mak.

Given the complexity of the market, Annella Heytens of Watson Wyatt urges U.S. companies to develop a well-thought-out recruitment strategy that spells out screening and interviewing methodology.

“Do not look for the perfect candidate–he or she does not exist,” Heytens says. Other mistakes: being inflexible with the benefits package and taking too long to interview or make an offer, in which case, “You may lose a good candidate,” she warns.

In addition, she warns not to market the company too optimistically or negatively. “Be realistic when describing the working conditions,” she says, because new workers “may not stay too long if you misrepresent the company.”

When interviewing, don’t be fooled by “a perfect accent and Oxford English,” Mak warns. “You still need to probe into values and experience. In the older days, many firms hired people primarily because of language proficiency. Don’t do this anymore. I put values first because unfortunately–due to education systems, culture and norms–we tend to see a big gap between ‘our’ values and ‘their’ values, and this can make or break a working relationship.”

Conlon warns that Chinese interviewees “may not be polished. Be cautious not to make a judgment on that.”

Unlike Heytens, Conlon advises conducting several interviews because people in the Chinese culture tend to be less direct than in Western cultures, and they “take a long time to say what they want to say. Bring them back, so they feel comfortable and you get the information you need. Tap into their true potential. The system is not geared to helping people know their own potential.”

Michael Colozzi–general manager for Portola Packaging Inc. in Shanghai–agrees. “Everyone I hired on my immediate staff I interviewed five times,” he says. “In two cases, I gave people minor assignments to prepare presentations. I tested them. I let everybody know I was extremely serious.”

Camille Elliott, who returned from Beijing last year to work as a recruitment manager for PricewaterhouseCoopers in the San Francisco area, also made use of multiple interviews in China. In fact, Elliott would regularly ask a Chinese native and someone from the West to interview and assess a candidate’s ability to balance Western and Chinese styles of management. The Chinese management style tends to be very directed, she says, and Chinese managers “tend not to have the coaching skills that you as a Westerner would like to see.”

This lack of managerial skills can be overcome, says Colozzi. Chinese managers “don’t like to make decisions without having 100 percent of the facts,” he explains. “In the United States we’re not reluctant. If we make a mistake, we clean up the mess and start again,” he says. But he has found that Chinese managers can learn to make direct decisions “and you’ll be amazed at how creative they are at solving problems.”

Conlon adds that references are easy to obtain in China. “You can call up a previous manager and ask for a reference. People have been pretty open.”

Recruiting Recent Graduates

Competition for workers has heated up on campuses. Students are “looking for high-paid, challenging work,” says C.P. Lee, HR director for Motorola (China) Electronics Ltd. In the past, new graduates usually went to government jobs, but “recently the government has relaxed the rules, allowing them to join foreign-owned companies and joint ventures.”

Motorola and many other companies offer internships to lure recent graduates. During the campus recruitment season–from October until December–companies go to each university and meet with students.

The university controls much of the process, according to Lee, who has worked in China for six years. Foreign companies are required to pay a fee to the university’s education fund to cover part of the cost of the student/hiree’s education, he says. That usually costs about $1,500 to $2,000 in U.S. dollars for a bachelor’s degree.

“Most students come prepared with questions about benefits and the type of training the company can provide. They also ask about location. They want to go to the cities seen as the most open in China,” according to Lee, such as Beijing and Shanghai.

When McCann came to China from the United Kingdom in 1997, young graduates were naive, he says. But today he finds them better prepared. “They are more savvy about how they present themselves, in how they develop relationships” with companies, he says.

Colozzi also finds young workers quite savvy. “I’m amazed at the number of young people who come to see me who have taken it upon themselves to look up our web page and have done basic research on companies.” He finds workers younger than 30 “very hungry to learn things. If they feel the boss is going to be a good teacher, you’ve got the battle half won.”

Attracting Experienced Workers

Experienced workers in China also want to learn new tasks and to work for companies that provide opportunities for growth and travel, according to the HR professionals interviewed for this article.

First on their list is training, Lee says. “They want good exposure to modern management and new technology, the opportunity to go overseas and to have career advancement.”

According to McCann, Chinese professionals “are looking to build their resumes by working with a company that is well recognized. They like working alongside expatriates; they recognize that they can learn from them about the behavioral characteristics it takes to be a professional in the West.”

At the same time, state-run companies are becoming more efficient–and better able to compete for talent, McCann says. “They are becoming attractive places for some people who want to work for a Chinese company, not just be a steward of a multinational company.”

Salaries are getting more competitive in state-run companies as well, but there is still a gap. “People who leave us are predominately going to multinationals,” says McCann.

One possible source of talent for multinational companies is Chinese nationals who have been working in other nations. “Many Chinese who are working in other parts of the world are looking to come back where they can make a difference,” says McCann. “They feel they will be able to make a real mark” back in their homeland now that the environment is less restrictive.

But Mak warns: “Try not to hire people with ‘green cards.’ There are lots of returnees to China from the U.S., but unless you are prepared to help them resolve tax and other related issues, stay away.” He says many of these people “come in with a different mentality and don’t usually work well with pure locals.”

Pay and Benefits

Chinese workers are learning the intricacies of Western compensation packages, such as variable pay and stock options. For example, Western companies that have variable pay plans at home “will probably have them here,” says McCann.

“Differentiation for performance is not a new concept in the West, but it would have been here a few years ago,” he says. Today, he sees “no resistance to meritocracy. It works very well. People do see a correlation between performance and reward. It mirrors much of what has happened in the West.”

Benefits issues are complex, according to Mak. “First of all, that China is a low-cost country is a myth, though it is still true in the southwest regions and inland. Benefit cost as a percentage of compensation would range from 30 percent to 80 percent, depending on where you are. Some benefit contributions are required by the government as statutory.”

While salaries generally have been lower in state-owned companies, benefit packages are much better, according to Elliott. That makes it difficult to assess the cost of individual compensation because benefits may include housing, international travel and allowances for clothing and a car.

According to tradition, housing isn’t provided for locals hired locally, says Mak. But now, “Due to the generosity of foreign companies and a lack of understanding of the norm and culture, housing is expected, especially by senior locals.”

Workplace Metamorphosis

When China first opened to foreign investors, HR-related laws were geared to controlling their activities “as well as facilitating the transfer of training and technology to the local labor workforce,” according to Mak.

“We couldn’t hire directly from the market unless we were legally registered and conducting business, or in partnership with a local partner,” says Mak. “The Foreign Enterprise Services Company (FESCO) was formed to act as a ‘medium’ or government vendor to hire and refer ‘talents’ to foreign companies establishing themselves as ‘Representative Offices.’ FESCO set the rates.”

The other reason for establishing FESCO was to handle the files of local workers. According to rules at that time, foreign entities were not allowed access to these files, according to Mak.

As China eases “its rule on equity and ownership of companies, more foreign firms–having had the painful experience of partnering with JVs [joint ventures]–have resorted to forming ‘wholly owned foreign enterprises.’ As a result, they can hire directly,” he explains. But, FESCO still exists to work with new entrants, which can only set up as a Representative Office, he says.

Mak believes China remains “provincialized” despite its open-door policy and that rules, regulations and practices still vary greatly from one province to another. “This has created a big challenge in terms of hiring and moving people around. Although there is a tendency for flexibility, it will not be easy to hire a person from Shanghai to work in Beijing due to the existing ‘hukou’ (residence) policy.”

But other HR professionals working in China say workers are being allowed to move from one area to another and that use of the residency policy is being relaxed. “Cities realize they no longer want to restrict people,” says Lee. “In major cities, the governments are beginning to welcome highly talented people. They are becoming more flexible,” Lee says.

Another recent change in China may help companies retain workers, Colozzi notes: Locals are now able to own property, although mortgages have been available only for the past two years. As in the United States, tax incentives encourage ownership. “For the first time, people can develop equity in something,” says Colozzi. “They may be more reluctant to jump off the horse they’re on” in favor of a new job.

In fact, he says, attitudes about job hopping have shifted in the past two or three years. “When I first got here, by [age] 27 people often had had five jobs. Salaries were inflated.” Today, “Word has spread that job hopping is not good, that it doesn’t help your career chances.”

But other HR professionals working in China say workers are being allowed to move from one area to another and that use of the residency policy is being relaxed. “Cities realize they no longer want to restrict people,” says Lee. “In major cities, the governments are beginning to welcome highly talented people. They are becoming more flexible,” Lee says.

Another recent change in China may help companies retain workers, Colozzi notes: Locals are now able to own property, although mortgages have been available only for the past two years. As in the United States, tax incentives encourage ownership. “For the first time, people can develop equity in something,” says Colozzi. “They may be more reluctant to jump off the horse they’re on” in favor of a new job.

In fact, he says, attitudes about job hopping have shifted in the past two or three years. “When I first got here, by [age] 27 people often had had five jobs. Salaries were inflated.” Today, “Word has spread that job hopping is not good, that it doesn’t help your career chances.”

But other HR professionals working in China say workers are being allowed to move from one area to another and that use of the residency policy is being relaxed. “Cities realize they no longer want to restrict people,” says Lee. “In major cities, the governments are beginning to welcome highly talented people. They are becoming more flexible,” Lee says.

Another recent change in China may help companies retain workers, Colozzi notes: Locals are now able to own property, although mortgages have been available only for the past two years. As in the United States, tax incentives encourage ownership. “For the first time, people can develop equity in something,” says Colozzi. “They may be more reluctant to jump off the horse they’re on” in favor of a new job.

In fact, he says, attitudes about job hopping have shifted in the past two or three years. “When I first got here, by [age] 27 people often had had five jobs. Salaries were inflated.” Today, “Word has spread that job hopping is not good, that it doesn’t help your career chances.”

Salary rises for foreign firms continued in China

According to a new wage survey published in Shanghai recently, professionals and executives with foreign enterprises in China saw their salaries rise by nearly 7 per cent on average last year.

The survey published recently by the international Hewitt Associate Consulting Corp, included 800 foreign firms in major cities, such as Beijing, Shanghai and Guangzhou, and also many secondary cities in China.

According to Qi Xu, a senior consultant for Hewitt, only 7 per cent of the firms said salaries did not rise in 2003. Four percent said salaries would probably remain the same in 2004. According it Qi Xu, “Such a drastic increase rate is an epitome of foreign enterprises’ confidence in investing in China.¡± Throughout China, Shanghai toted up the highest wage hikes at 8.3 percent with both Beijing and Guangzhou following at about 7.5 percent. According to the survey, the annual per-capita income of a senior executive in a foreign enterprise in China is 645,000 RMB (approx. US$77,700). A mid-level executive makes by comparison 297,000 RMB (approx. US$35,780).

To give an example of the spread in salaries in a foreign firm in China, a professional employee could earn an annual salary of approximately 100,000 RMB (approx. US$12,000) while a factory worker or an ordinary employee could expect about 36,000 RMB (approx US$4,340).

Qi attributed the increase to ¡°the increasing pressure on foreign firms to draw talent, foreign enterprises in China had to keep the percentage of volatile salary and long-term encouragement rewards in their salary systems.” He also stated that “The growing salaries in foreign enterprises also reflect the soaring direct investment in China¡±.

In 2003, despite SARS and other concerns, more and more multinational firms and global research organizations entered China. Many foreign firms have moved their China headquarters from Hong Kong or elsewhere to Beijing and a larger number are choosing Shanghai according to most reports. By early 2004, the number of foreign firms in China had increased to 468,200 with a total investment of US$953.3 billion and actual investment of US$505.55 billion.

Chinese rich with $1.59 trln worth of wealth

Chinanews, Beijing, October 16 ¨C Recent statistics show that there are about 320 thousand rich people in the Chinese mainland, with a total wealth $1.59 trillion, making China second on the top-10 list of rich people in Asia, the first being Japan.

Although of the rich Chinese from Hong Kong have the highest personal wealth, the Chinese mainland still ranks second, with each of the rich there having an average wealth of $5 million.

Though China only contributes 13.5% of rich people to the Asian-Pacific Region, their impressive personal wealth gains them a high mark, thanks to the rapid economic growth of the country. The number of extremely rich people in China is growing very fast, too. As a matter of fact, 29.1% of Asian extremely rich people came from the country, especially the big cities in 2005, according to a probe that year.

Rich people in China gained their wealth through industrial and commercial investment, funds and stock right. However, only 14% of their investment is used to buy stock shares, the lowest in the eight world markets.

China: Investment curbs paying off

Updated: 2006-10-17 07:11

BEIJING — China’s efforts to curb runaway expansion in some industries are starting to pay off, but fixed-asset investment growth remains too rapid, the country’ top economic planning official said in remarks published on Monday.

Ma Kai, head of the National Development and Reform Commission, said curbing the launch of new investment projects remained the main focus of the broad array of macro-control measures that Beijing was deploying.

In a speech made on Friday and posted on the agency’s Web site, Ma said the economy was in good shape but the country faced some striking problems: fixed-asset investment and credit were still expanding too fast, while the trade surplus was too large.

“The government has taken a series of timely macro-economic measures and these measures have initially helped contain the momentum of blind expansion in some industries, but the problem of overcapacity has yet to be fundamentally resolved,” the top economic planner Ma said.

Excess capacity in sectors such as steel, alumina, coking and autos showed no let-up, while risks remained for overinvestment in other industries including coal, power and textiles, he said.

Fearful that overcapacity could wipe out profits and deluge banks with new bad loans, the government has taken a raft of measures to cool some fast-growing sectors.

Investment growth slowed in August, but Ma said the authorities needed to keep tight controls on bank credit and land supply while implementing tougher environmental and safety standards.

“The top priority of macro-economic policy is to strictly control the launch of new projects,” Ma said.

Toward that end, the central government has dispatched six inspection teams to the provinces to spearhead a drive launched in early August to scrutinize new projects, he said.

Half of all new coking industry investments flouted government rules, Ma said. The figure for coal was 42 percent, for cement 35 percent, for electricity and steel 26 percent and for textiles 22 percent, he added.

Echoing Ma’s comments, Cheng Siwei, a top legislator, was quoted by the official Xinhua news agency as saying that overly rapid investment and credit growth and the swelling trade surplus were the biggest concerns for China’s economy.

The underlying source of those imbalances was the country’s overly high savings rate, which pushed interest rates down and fueled capital spending, said Cheng, who is vice-chairman of the standing committee of the National People’s Congress.

That, in turn, was largely the result of the social security system being relatively underdeveloped, he was quoted as saying.

ICBC draws US$130bln for coming IPO

Oct. 15 – It seems certain for the Industrial and Commercial Bank of China to set a new initial public offering (IPO) record with US$130 billion of orders so far, the South China Morning Post reported Saturday.

ICBC, China’s largest bank, has drawn more than $130 billio worth of orders from international investors for the Hong Kong portion of its IPO marketing, the English newspaper reported, quoting market sources.

The retail tranche of H shares on Hong Kong Stocks will go on sale on Monday and is expected to meet with an overwhelming response from the public.

ICBC will raise as much as $22 billion through a dual listing in Hong Kong and Shanghai, the world’s largest IPO to date, according to the newspaper.

The previous IPO record on Hong Kong Stocks was set by Bank of China, which attracted $175.6 billion worth of institutional orders for its HK$67.7 billion IPO in May.

The current $130 billion in orders were 10 times the $13.23 billion worth of H shares available to all institutional investors, including the $3.9 billion worth already set aside for 13 corporate investors and wealthy individuals.

With most big institutional investors yet to place orders, the subscription level should reach a record high before the books close, the newspaper cited a fund manager as saying.

Despite the strong demand, the deal’s sponsors and bank management have no plans to raise the indicative price range for the sale, the newspaper cited an investment banker close to the IPO as saying.

China to see insurance premiums double in 2010

Oct.16 – China will see its insurance premiums double to one trillion yuan (125 billion U.S. dollars) by 2010, driven by people’s growing demand and constant product innovation, said the state insurance watchdog.

During the 2006-2010 period, as Chinese people spend more money on cars, houses, education and travel, insurance demand will grow, according to a document released by the China Insurance Regulatory Commission (CIRC).

With a 1.3 billion population and an ageing society, China will see insurance play greater role on the improvement of social services during this period, particularly on the medical service and pension, said document.

According to the commission, China vows to create a healthy environment for the development of the insurance industry before 2010, with improved legal system and people’s enhanced awareness towards insurance.

The commission urges insurance companies to explore markets, introduce more product varieties and improve risk-control system.

By 2010, China plans to build a modern insurance industry with a batch of large insurance companies with international competitiveness, said the plan.

China’s insurance premiums hit 493 billion yuan (62 billion U.S. dollars) in 2005, ranking the 11th in the world. The industry witnessed a 25 percent annual increase from 2000 to 2005, the CIRC statistics showed.

The life of China’s knowledge wealthy class

Chinanews, Beijing, Oct. 16 ¨C There has appeared in Chinese society a new group of people that are termed as the knowledge wealthy class. Most of these people are aged between 25 and 39. They have received a good education and work in IT sector, finance, or the arts. They drive Audi instead of BMW, and put their money for investment instead of buying gold. Most of them like adventures and have little interest in golf.

Such is the way of life for the knowledge wealthy in China. Recently, the Sinomonitor International, a Beijing-based consulting firm, carried out a survey about them. The survey covered more than 10,000 young rich people in 12 cities across China. Compared with 2005, the proportion of the knowledge wealthy has increased by 2 percentage points to account for 45% of the rich people in China. In other words, 45% of the young rich people in China work in industrial sectors that are characterized by new knowledge, new economy and new technologies or in new service sector. A large number of the knowledge wealthy are concentrated in Beijing.

Deputy manager of the Sinomonitor International Liu Rong said the young rich have the following characteristics: they become rich at a very young age; most of them have a good financial background, either because they make good money or because they are born in a wealthy family; and many of them have received a good education and have a strong consumption power.

These people have become the main driving force of consumption. Every year, their family expenditure exceed 100,000 yuan, mostly in buying durable goods or fashion gadgets, dining out, traveling, or maintaining cars. They are willing to search for new information, as 80% of them read newspaper or surf the Internet everyday. In addition, these people advocate new lifestyle. 70% of them think that if they have enough money, they should enjoy life. So most of them travel out of town, go in for physical exercise or visit beauty parlours regularly.

salary negotiation tips

Salary negotiation (asking for a salary increase, a pay rise, or simply more money) affects everyone from time to time. Salary negotiation can be difficult, and many people handle it poorly, causing frustration and ill-feeling. There are constructive ways to approach salary negotiation, and techniques to achieve good outcomes. If you are a manager, you will need to handle salary negotiation positively. If you encourage people to adopt a constructive approach to salary negotiation, you will help to minimise upset and to achieve a positive outcome. As a manager dealing with salary negotiation or a pay increase request, it’s important to encourage a grown-up, objective, emotionally mature approach. These ideas and techniques will help achieve this whether you are giving or receiving the salary increase request.

There is no ‘proper’ or standard way to ask for a raise or salary increase. It’s not something that people are trained to do, and little is written about it. People use various approaches: they can write; discuss informally; discuss with colleagues and hope the boss gets to hear; they drop hints to test the water; they ask the boss politely; demand firmly; go over the boss’s head, or maybe even threaten to resign, secure another job offer, or simply resign.

Largely people do not look before they leap; they are often under pressure, and they feel uncomfortable and stressed asking, so they fail to plan and control the situation, which makes achieving anything difficult. Simple planning and keeping control makes a big difference. The techniques here might not secure a salary increase immediately – there are usually very good reasons why this is not possible anyway – but these ideas will eventually bring a better reward and outcome than doing nothing, or doing something the wrong way. As a manager receiving a request for a salary increase, encourage people to follow this approach, and then respond fairly sensitively and openly. Only make promises you can be sure to deliver, and always try to understand the person’s needs and feelings before you explain the company’s position.

It is important always to recognise the difference between the value of the role that you perform (or any employee’s role if looking at this from a manager’s perspective), and your value as an individual (or the employee’s value). The two are not the same.

If you continually feel frustrated about your pay levels despite trying all of the techniques and ideas for achieving a pay rise, it could be that your boss or employer has simply reached the limit of the value that they can place on your role, which is different to your value as an individual. You could have a very high potential value, but if your role does not enable you to perform to your fullest extent then your reward level will be suppressed. For example does a professor who sweeps the street deserve a street sweeper’s salary or a professor’s salary?

Salary levels are largely dictated by market forces (notably the cost of replacing the employee), and the contribution that the employee makes to organisational performance (which is particularly relevant for roles which directly impact on profitability). When you acknowledge this principle you begin to take control of your earnings.

Aside from issues of exploitation and unfairness, if you find that the gap between your expectations and your employer’s salary limit is too great to bridge, then look to find or develop a role which commands a higher value, and therefore salary. You can do this either and both with your present employer by agreeing wider responsibilities and opportunities for you to contribute to organisational performance and profit, and/or perhaps with a new employer.

Focus on developing your value to the employer and the market-place, rather than simply trying to achieve higher reward for what you are already doing.

salary, pay and contract negotiation for a new job

If you are changing jobs, the best time to negotiate salary is after receiving a job offer, and before you accept it – at the point when the employer clearly wants you for the job, and is keen to have your acceptance of the job offer. Your bargaining power in real terms, and psychologically, is strongest at this point, and is stronger still if you have (or can say that you have) at least one other job offer or option (see the tips on negotiation). A strong stance at this stage is your best chance to provide the recruiting manager the justification to pay you something outside the employer’s normal scale. The chances of renegotiating salary after accepting, and certainly starting, the job are remote – once you accept the offer you’ve effectively made the contract, including salary, and thereafter you are subject to the organization’s policies, process and inertia.

A compromise in the event that the employer cannot initially take you on at the rate you need is to agree (in writing) a guaranteed raise, subject to completing a given period of service, say 3 or 6 months. In which case avoid the insertion of ‘satisfactory’ (describing the period of service) as this can never actually be measured and therefore fails to provide certainty that the raise will be given.

If you are recruiting a person who needs or demands more money or better terms than you can offer, then deal with the matter properly before the candidate accepts the job – changing pay or terms after this is very much more difficult. If you encourage a person to accept pay and terms that are genuinely lower than they deserve, by giving a vague assurance of a review sometime in the future, then you are raising expectations for something that will be very difficult to deliver, and therefore storing up a big problem for the future.