Archives March 2007

GE Will Focus On Water Quality In China

GE Water & Process Technologies, a unit of General Electric Company, has announced its upcoming World Water Tour, a series of seminars which will bring water industry experts and industrial water users together to discuss best practices and solutions capable of meeting industry’s growing need to minimize operational costs, create sustainable supplies of quality water, decrease energy consumption and meet increasingly stringent regulatory requirements.

The 14-city tour will arrive in Beijing and Shanghai in fall 2007 and will focus on best practices proven in balancing the competitive business and environmental demands that often face industrial water users, especially those located in regions confronting water quality and scarcity challenges.

“Some of industries costliest mandates are regulatory compliancy, as well as water and energy use,” said Jeff Garwood, president and CEO, GE Water & Process Technologies. “Experts will discuss ways industries can better meet business demands and improve productivity through solutions that can cut operational costs. And in competitive marketplaces, this can be an invaluable asset.”

Currently, industries consume as much as 22% of the world’s water. In developed countries, industrial water use is as high as 59%. For industrial water users in areas that lack access to adequate supplies of quality water, and often infrastructure too, creating a sustainable and dependable source of water can offer security, independence and increased opportunity for growth.

GE Water & Process Technologies’ World Water Tour will touch on challenges that can often arise during industrial processes, such as: washing, diluting, cooling, transporting, processing, fabricating products, sanitizing facilities, and producing commodities such as, refined petroleum, chemicals, food, paper and primary metals.

Chinese Job Seeker Sues Nokia

A Chinese job seeker, identified only by his surname Li, has filed a lawsuit against mobile phone giant Nokia Dongguan, a subsidiary of Nokia China, for not employing him because he is a Hepatitis B virus carrier.

The job seeker says that Nokia Dongguan cancelled plans to hire him after a physical examination. Li believes that as a big company, Nokia should have better understanding of the disease and should not refuse him employment because of his illness. Li is asking Nokia to employ him and pay him RMB500,000 for mental suffering.

Nokia’s global employment policy states that the company will not turn down job applicants because of chronic illnesses unless they can’t do the job or if they impose serious danger to others. A spokesman for Nokia has told local media that Nokia is investigating the case and they will take necessary measures to correct any wrongs if the Dongguan company has really made a mistake in refusing Li employment with the company because of his illness.

A vaguely written Chinese law in 2004 does forbid discrimination against Hepatitis B sufferers in most areas except in the food industry.

Knowledge Manager – A US leading consulting company ( big four )

A US leading consulting company ( big four )
Location: Shanghai

Department: Knowledge Management (KM)
Reporting to: National Director of Knowledge Management, National Knowledge Management Office
Description:
The National Knowledge Management office is initiating a recruiting process for a knowledge management program manager. Generally speaking, the position serves the China Knowledge Management office by developing and executing project plans in support of China Firm Knowledge Management goals. The position is responsible for working with the China Firm functions, industries, and Internal Client Service (ICS) support teams to manage KM-related projects. This position also liaises with global KM contacts in other practices to leverage global leading practices, promote the China KM program, and contribute to ¡¯s global KM capabilities.

Responsibilities:
1.Manage multiple project teams to identify KM needs throughout the China Firm and to explore process-based solutions to address those KM needs.
2.Work closely with designated project sponsors and other stakeholders to define approach and scope of desired capabilities.
3.Provide significant input to or create documented business requirements to capture requested capabilities.
4.Partner with business sponsors and industry and/or functional customers to identify and prioritize requirements.
5.Participate in discussions of capabilities, deployment timeframes and trade-off decisions.
6.Manage projects to identify and/or implement enhancements to existing KM processes.
7.Perform project management tasks for multiple projects simultaneously ¨C including managing resources, issues, communications, budgets and pilots for projects.
Qualifications:
1.Clear understanding of the issues surrounding internal document management, web content management and knowledge management in a global environment
2.Experience with electronic knowledge repository management, collaborative tools, intranets/portals, web site functionality and web authoring tools (familiarity with HTML or Microsoft SharePoint a plus)
3.Demonstrated ability to facilitate communications between technical and non-technical resources
4.Experience with change management initiatives in China including stakeholder management, organizational development, resistance issues, cultural issues, and communication issues
5.Exceptional ability to actively listen, understand, communicate (verbal & written) and build consensus in a diverse global environment with various levels of management
6.Demonstrated project management and process implementation experience
7.Ability to handle multiple projects at once
8.Excellent planning, organizational, analytical and interpersonal skills
9.Experience supervising and/or managing resources or teams in a virtual / global environment
10.5 years of related experience, preferably in a professional services environment in a knowledge management capacity
11.Bachelor¡¯s degree required; Master¡¯s degree in knowledge management, library/information science, business or related field preferred
12.Fluent in verbal and written English and Mandarin
13.Experience working with project management tools, including MS Project
14.Proficiency in Microsoft Word, Excel, PowerPoint and Outlook
15.Capacity to travel as needed

* Please send us your complete resume (both in Chinese and in English) to:
‘topjob_eo073sh#dacare.com'(Please replace “#” with “@”)

Hiring a CFO in China

ChinaForum

With the right credentials, the opportunities for chief financial officer candidates are wide open in China. But those credentials are very different than expectations in the United States or Western Europe. Success is linked to the ability to set up processes and systems, as well as the ability to thrive in the local environment.

Demand, supply

When foreign companies move their manufacturing operations to China from nearby Asian countries, moving regional headquarters follows. Then the banks come along. This migration has created a huge demand for qualified financial professionals and a special demand for a unique type of CFO.

Thomas Zhou, an executive recruiter with DaCare Executive Search in Shanghai, told ChinaForum, “On the corporate side, the hiring activities are quite busy because all companies need a CFO or controller. Financial management helps them grow the business. We do quite a lot at the controller and CFO positions.”

Other recruiters see the same. In a recent article “Hiring Days are Here Again,” consulting firm Wang & Li says, “The greatest need area that we are getting is for candidates with strong financial management backgrounds who are able to take on CFO and Controller positions…. In addition to being familiar with both international and China GAAP, such a person must also have very strong experience in setting up financial systems and processes.”

To underscore the importance of systems knowledge and process, a study last year by PriceWaterhouse Coopers and CFO Magazine said that one reason CFOs in China find financial reporting a struggle is incompatible IT systems and poorly trained staff. Ting Liu of PWC’s advisory group in Beijing was quoted as saying, “The key reason that the finance function in China is not up to world class standards is mainly due to a shortage of qualified professionals as well as the advanced techniques coupled with state of the art IT systems.”

At smaller companies, Wang & Li, which specializes in placing international caliber bilingual professionals, points to a disconnect between the international environment expected by many CFO candidates and the localized environment of the businesses that need them. “Typically, the direction and intent of both the board and executive management team is there, but the day-to-day operating realities are quite a different story. Therefore, it requires a person who really understands how to get results and bring about fundamental change in a highly local Chinese company environment.”

Some companies take the route of not hiring a CFO at all. Lehman Brown, for example, provides outsourced CFO services for companies that have good finance teams in place but which lack the resources to hire a full time CFO, or which have only sporadic oversight requirements.

Credentials

Most CFO candidates Zhou sees have their CPA credential, which they typically earn in China. Although an MBA is not always necessary, many have earned graduate degrees and certifications overseas in the U.S. or U.K. Some candidates are trained by their companies or they are promoted to the Asia-Pacific level (Hong Kong, Singapore, Kuala Lumpur) and are trained there, he says. Other recruiters say companies like to see candidates with both an MBA and CPA, although finding such a candidate is rare in China’s tight job market.

Special skills

At a multinational company operating in China, bi-lingual fluency is not only an advantage but a necessity. “The person has to be able to speak English and Mandarin very well,” Zhou says, and be able to read and write both languages. “English is a must because he will have to report to headquarters in Europe or the U.S.”

Fluency in changing accounting regulations and market knowledge is also important. Not only must candidates be very familiar with the U.S. GAAP and China GAAP, but they should understand the China market and the U.S. market.

Soft skills are also important, Zhou told ChinaForum. “They should be able to manage a team. And personality is always very important. You have to be able to communicate very well.”

David Yeoung, a partner in the CFO and professional services practice of Hendricks & Struggles in Beijing, says that IPO experience is also helpful, given the number of overseas IPOs, although it’s not absolutely necessary as most investors know that IPOs are driven by teams. It is more important for the CFO candidate to have run the full financial function.

Ambition, a recruiting firm with offices throughout Southeast Asia, reports a trend toward “exact fit” hiring of CFOs, leading to a more rigorous selection process, which can take six months. With CFOs in China now highly visible after recent accounting scandals, and with responsibility far beyond accounting, the risks of hiring the wrong candidate must be avoided. One of those risks is simply not fitting into the corporate culture, which is why “internal candidates” are often perceived to be the right choice for regional CFO positions.

Meanwhile, Ambition is also observing in China new “governance roles,” which support the CFO in compliance and financial reporting matters. New roles are leading to job creation and increased opportunities for senior level financial professionals beyond the CFO title, often at high rates of compensation. Ambition describes this as a new governance support profession.

Hiring

Zhou’s search group is typically used by foreign companies doing business in China, generally the Fortune 2000, and including such companies as Intel, Microsoft and EBay. When a company seeks a high level executive or CFO, his firm is able to attract candidates by presenting the company well and offering an attractive package, which can mean more than straight compensation. In China, he notes, the job title is important. “More and more candidates like to see their career progress while they are working in the company.” Rather than the title China CFO, many would like to see the title CFO- Asia-Pacific, according to Zhou.

And whereas China has a reputation for being a low-cost labor pool, hiring at the CFO level is an area where scrimping doesn’t work. One mistake that corporate executives typically make is thinking that they will be able to hire financial talent cheaper in China.

In a June interview with the Dallas Morning News, Martin Tang, Spencer Stewart’s chairman for Asia, said that some companies think they can hire a CFO in China for as little as $40,000, but learn it may cost five times that, or more. Not only that, but wise companies over-hire to sandbag against employee dropout.

Tang described five talent pools from which executives are chosen: (1) Western expatriates, (2) Asian expatriates, (3) Chinese natives who return after earning graduate degrees abroad, and (4) Chinese locals who have remained in China. Of these, the most valuable are the Chinese who return from abroad, according to Tang. That’s because they have education, knowledge of both cultures and the advantage of being Chinese themselves.

When multinationals can’t find these returnees, Hendrick & Struggles’ Yeung says they should consider foreign CFOs who have worked in China “for a meaningful period of time” rather than hiring expatriates. Ambition reports that it is “extremely rare for a full expatriate package to be offered to a CFO hired locally.”

In Zhou’s experience, half the candidates are coming from the Mainland, half are expatriates. Local candidates “can have a good degree, be well trained in the Big 4, also have some industry experience and work long enough in the local markets for a multinational company. Even if they don’t have overseas background, they can get small or medium size CFO positions.”

In terms of pay, the CFO title in China doesn’t guarantee a large salary, except in certain industries that require specialist knowledge. Increasingly, CFOs are expected to demonstrate a record of success. Ambition reports that corporate governance concerns have led to a general scrutiny of CFO pay packages, with compensation trending toward performance based incentives.

Retention

Churn at the CFO level remains relatively low. According to Zhou, “Turnover rate at the CFO level is not that high. I won’t say that’s a problem in China. I would say that’s a stable position.” The Ambition recruiters concur, especially for non-Chinese speaking CFOs who may be reluctant to move on because they see the “dwindling demand for non-Chinese speakers.

Google on a search for engineers in China

BEIJING: Google, owner of the world’s most-used Internet search site, is planning to more than double the number of engineers it has in China to help win users in the world’s second- biggest Internet market.

The company aims to have between 200 and 300 engineers in the cities of Beijing and Shanghai in a year’s time, Google China’s president, Lee Kai-fu, said after a press briefing Friday in Beijing. Google has more than 100 engineers in the nation, he said.

Google plans to hire “thousands of people” for its Beijing development center to create services for China’s more than 137 million Internet users, the company’s chief executive officer, Eric Schmidt, said last April. The Mountain View, California, company added online map and Internet spreadsheet services last month in a bid to catch Beijing’s Baidu.com, which has a China market share three times larger than Google’s.

“Google is already hiring people away from Baidu,” Florian Pihs, assistant vice-president at the Beijing-based researcher Analysys International, said Friday by telephone.

“Google is after people who are highly coveted not only by Baidu,” but by Microsoft other companies, Pihs said.

The search company is planning to open a development center in Shanghai this summer, Google’s Lee said, declining to provide further details. An announcement about the center will be made in a few weeks, he said.

In the fourth quarter, Google’s share of the Chinese search market rose to 17 percent from 16 percent in the previous three-month period, according to Analysys. Baidu’s share rose to 58 percent from 57 percent, while Yahoo!’s was unchanged at 13 percent.

Google on Friday began offering a service that allows users to search for information in Chinese-language books, Lee said. The company began offering search services for mobile phones in December last year in partnership with China Mobile, the nation’s biggest wireless carrier.

In January, Google bought a stake in Shenzhen Xunlei Network Technology, a Chinese company that helps users download movies, music and software from the Internet.

Baidu’s search revenue could grow 15 percent on a quarterly basis during 2007, slower than Google’s rate in China of between 20 percent and 25 percent, according to a Feb. 2 Credit Suisse report.

By Dune Lawrence and John Liu Bloomberg

China Impacts The World

By Frank Mulligan – Recruit China

By now I am sure you have seen the headlines. ’Chinese stock plunge sets off a worldwide sell-off’, and ominously, ‘It began in Shanghai’.

If you haven’t been paying attention to this story maybe it is time to take a look. It looks and sounds like the beginning of a Hollywood thriller except that this time it’s for real.

Putting aside the negative consequences of the world-wide stock sell-off, it is clear that China has come of age. Ten years ago, or even five, no one paid any attention to the stock markets in China. There was little incentive to do this as the exchanges in Shanghai and Shenzhen were inaccessible to foreigners. Additionally, the stocks themselves were not of sufficient quality to grab anyone’s interest, and the market was extremely opaque.

It was more akin to gambling than investing.

The situation has changed a lot since then but it is still hard to come to terms with the fact that the Chinese stock exchanges were the first to fall and that they triggered a world-wide panic. It’s a bit like growing up. Suddenly you have all these additional skills but don’t know how to use them.

The source of the sell off appears to be the idea that the former US Federal Reserve Chairman, Alan Greenspan suggested a recession in the United States, and soon. The good news is that if you look at his comments, he did not specifically say that he expected a recession in the US. What he said was ‘ While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 … with some slowdown’.

Not exactly the sky falling down, is it?

Here in China the upside of this is that the narrative of a recession and a falling stock market may cause companies in China, both foreign and local, to hold back investments in new factories and offices. Big companies are like that. Staffers don’t make strategic investment in uncertain times.

This should trickle down to a slowdown in hiring, albeit small, just at a time when it would normally increase rapidly. Candidates might also absorb the current headlines and become a little more conservative. The net effect might be an increased stability in retention patterns. So look out for a little fewer resignations than usual, which is a definite positive.

On the flip side you may have a harder time convincing candidates to join your company if you are new to the China market or the role is risky.

Headcount: Wrong Way Huawei

Here at Headcount HQ, we’re always interested in tales from the high-rolling, globetrotting executive recruitment market – especially when they involve mysterious companies like Huawei Technologies Co. Ltd.

A high-level network architect recently recounted a strange tale in which he was recruited by two corporate recruiters and a half-dozen Huawei managers, only to end up with an offer that was roughly half of what he earned in the States. To take the job, Huawei also wanted him to relocate his family to China and live in Huawei’s corporate housing – without a relocation package or an education budget for his kids.

Something got lost in translation.

“What a waste of time,” said our source, who described the Huawei recruitment process as some sort of “Keystone Cops” experience.

The failed seduction started when our source got a call from a Huawei recruiter in Beijing. Our source says that after he expressed interest, he was quickly bounced from recruiter to manager to manager, back to recruiter, and then eventually to a manager at Huawei’s FutureWei subsidiary in Texas.

Not only was nailing down the exact requirements for the job difficult, says our networking expert, but none of the Huawei executives could agree on where he should be based. The office proposals ranged from Beijing to Shenzhen. Sydney, Australia was mentioned, too, and that’s a long drive from Futurewei’s office in Plano.

Finally, our source asked for a formal letter with a formal offer. What he got was a letter asking him to take a laughable pay cut and pack his bags for a company dorm in Shenzhen.

Headcount hopes this yarn serves as a warning for execs everywhere: A bit of fragrance clings to the hand that gives flowers. Actually, that wasn’t the lesson at all. That just came up in my Chinese proverbs desk calendar. Oh, well…

China Career Builder Corp. Announces Plan to Acquire Asian Career Company Ltd. of Hong Kong

HONG KONG, March 14, 2007 (PRIME NEWSWIRE) (PRIMEZONE) — China Career Builder Corp., (Pink Sheets:CCBX) a Delaware Corporation, is focused on outsourcing human resource services and staffing in Hong Kong, China. The company is pleased to announce a plan to acquire Asian Career Company of Hong Kong. The company is expected to complete the transaction in the next Two (2) to Four (4) weeks. All additional information will be available upon finalization of the acquisition. The company will make further announcements in coming weeks.

About the Company

China Career Builder Corp. is a provider of outsourcing human resource services and staffing. The company provides recruitment services focusing on the professional, management, clerical, administrative, IT and industrial market in Hong Kong, China. Its services include screening, recruiting, training, workforce deployment, loss prevention and safety training. In addition it supplies pre-employment testing and assessment, background searches, compensation program design, customized personnel management reports, job profiling, description, application, turnover tracking and analysis, opinion surveys and follow-up analysis. It conducts exit interviews and follow-up analysis, and management development skills workshops. The company markets its recruitment services by way of a combination of direct sales, telemarketing, trade shows, and advertising.

Safe Harbor Statement

Certain of the statements set forth in this press release constitute “forward-looking statements.” Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words “estimate,” “project,” “intend,” “forecast,” “anticipate,” “plan,” “planning,” “expect,” “believe,” “will likely,” “should,” “could,” “would,” “may” or words or expressions of similar meaning. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the company’s actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company’s ability to grow its business. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company’s limited financial resources, domestic or global economic conditions — especially those relating to China, activities of competitors and the presence of new or additional competition, and changes in Federal or State laws, restrictions and regulations on doing business in a foreign country, in particular China, and conditions of equity markets. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

CONTACT: China Career Builder Corp.
Mona W. Y. Yim
852-3527-0661

Xara Group of Consultants Ltd.
Investor and Public Relations
Nixon Lau
302-261-2421

51job: Set to Capitalize on China’s Evolving HR Market

Ashish R. Thadhani (Gilford Securities) recently sent a note to clients raising his price target for 51job, Inc. (JOBS) based on the Company’s strong Q406 results. Key excerpts follow:

* Investment Conclusion. After incorporating stepped-up S&M – funded by lower G&A and near-term taxation — we are maintaining our estimates: 2007 GAAP EPADS at $0.60 on net revenue of $100 million (20% YoY growth and up from our prior $99 million projection); and 2008 GAAP EPADS at $0.80 on unchanged net revenue of $122 million (22% YoY growth). Due to the late Chinese New Year, our 1Q07 assumptions reflect a shorter peak recruiting period of five weeks vs. eight a year ago. We are raising our target from $26 to $28. In 12-months, this would correspond to 35x forward GAAP EPS of $0.80. Our recommendation is backed by an EV of $344 million or 20x forward earnings plus continued purchases by CEO Yan. We also point out 1) recent newspaper alliances in the U.S. should validate the 51job online/offline model to maximize local reach; and 2) 2007 is expected to be the last year in investment mode for rival ChinaHR.com, which remains much smaller and less profitable than 51job.
* 4Q06 Results. GAAP EPADS of $0.09 vs. $0.08 a year ago on net revenue of $20.8 million (23% YoY growth) matched our $0.09 estimate on net revenue of $20.1 million. Non-GAAP EPADS of $0.14 vs. $0.10 also met our $0.14 expectation. 51job posted positive variances in print advertising revenue and G&A expenses – offset by gross margin and S&M spend. Non-operating interest, subsidies, forex and tax variances offset each other. Revenue was driven by online recruitment services, which advanced 37% YoY to 34% of the total. Operating income of $2.6 million (12.6% margin) was right in line with our estimate of $2.5 million (12.5%). Other highlights included diminished seasonality (-4% QoQ) and clear market leadership based on online postings, traffic quality and pricing — despite competitor claims to the contrary. Metrics showed growth in print advertising page-count (+33% YoY from a depressed level) and lower revenue per page (-14% in dollar terms due to seasonal promotions and city-mix); and moderating growth in the number of employers using online services (+30%) with steady revenue per employer (+5%). Net cash climbed to $111.3 million (~$3.90 per ADS) from $104.5 million on September 30.

Noteworthy developments

December 2006. In an SEC filing, Recruit Co. disclosed an increase in its holdings to 5.1 million ADS equivalents (18% ownership stake).

November 2006. CEO Rick Yan reported additional market purchases totaling 317K ADSs at an average price of $16.04 between November 13-22. This activity took his ownership to 8.6 million ADS equivalents or 30% of the total. Separately, the class action lawsuit against 51job and its officers, which followed a 4Q04 EPADS shortfall, was dismissed.

September 2006. CEO Rick Yan reported market/private purchases totaling 818K ADS equivalents at an average price of $14.57 during the 30 days ended September 13. This activity took his ownership to 8.2 million ADS equivalents — well above what is covered under the agreement with Recruit.

August 2006. 51job announced an exclusive partnering agreement with CareerBuilder.com (owned by Gannett, Tribune and McClatchy), under which the two sites will have links that provide job posting and resume access.

June 2006. Mr. Charles E. Phillips, Jr. – President of Oracle (ORCL) – resigned from the board citing personal reasons. Mr. Phillips had served as a director for two years.

April 2006. In a private transaction, existing shareholders comprising management and Doll Capital Management [DCM] sold to Recruit Co. the equivalent of 4.2 million ADSs (or 15% of the total) at $26 each (47% market premium). Recruit holds a three-year option to purchase an additional 25% stake from these shareholders at the higher of two prices: 1) floor of $26 per ADS – as long as JOBS does not drop below $10 at the time; or 2) 15% market premium with a $51 cap. If exercised, management ownership would decline (from 50% before April 2005) to 35% and that of DCM (from 25%) to nil. Separately, 51job entered into a business alliance with Recruit that will explore new information service opportunities in China. Founded in 1963, privately held Recruit is the leading provider of HR services in Japan. It also provides information services across diverse businesses such as learning, real estate, automobiles and coupons. In fiscal (Mar.) 2005, Recruit operating income exceeded $1 billion on sales of $3.5 billion.

October 2005. 51job signed a letter of intent to purchase a $14 million service and headquarters complex in Shanghai, which it began occupying in late-2006… July 2005. The Chinese government changed its currency policy. Over time, anticipated Renminbi appreciation should translate into higher dollar-denominated operating income, offset by near-term currency translation losses.

May 2005. Shareholders approved a $25 million stock repurchase program over a 12-month period. In 2H05, 51job repurchased 686K ADSs at an average price of $13.65.

February 2005. Monster Worldwide acquired a 40% stake in rival ChinaHR.com for $50 million – or 9x 2005E revenue of $14 million (up 100% YoY and 70% online). At the time, ChinaHR.com had 3.2 million registered users and 480 employees in 10 major cities. In 1Q06, Monster increased its ownership to 44.4%. It acquired shares from existing holders for $20 million, implicitly valuing ChinaHR.com at $450 million. Monster expects to assume full control of this subsidiary in early-2008. Financial backing by Monster has not altered the competitive landscape materially. However, 51job does anticipate heated competition until such time that ChinaHR.com – which is likely to remain unprofitable through 2007 – becomes directly answerable to public shareholders.

January 2005. 51job pre-announced a 41% shortfall vs. 4Q04 EPADS guidance due to unprecedented revenue softness in late-December. The sudden (post-IPO) slowdown was attributed to a shift in budget allocations to earlier quarters of the year – borne out in 4Q05 – and moderation of overall demand from ~70% YoY growth.

September 2004. 51job raised net proceeds of $76.8 million from its IPO at $14 per ADS.

Investment Thesis

51job is enviably placed to capitalize on the rapidly evolving market for HR services in China – by applying a proven business model across its vast labor force (5x U.S.). Compared with traditional job search channels such as referrals and fairs, pioneers like 51job offer significant reach and speed advantages. Favorable demographic drivers include GDP growth (~10% in recent years), Internet usage (ranked #2 behind the U.S.), an aging workforce and increasing private, urban and service sector employment. iResearch forecasts that the total recruitment market in China will increase from $570 million to $1.26 billion in 2005-10, implying 17% compound annual growth. During this period, the online recruitment segment is expected to advance from $100 million (18% of the total) to $570 million (45%), or 42% compound annual growth. Superior positioning includes: premium brand/pricing; a comprehensive online/offline offering; wide geographic presence (25 cities); large direct sales force (over 1,200 representatives); and unmatched job seeker database (access to more than 11 million resumes for professional, clerical, industrial and hourly jobs). EPS visibility stands to benefit from top-line, profitability and taxation drivers. Specifically, ramp-up of online subscriptions (from single-digit penetration of client budgets at present); a scalable model offering 30%-plus operating margin (excluding share-based compensation); and initiatives to avail of tax incentives.

JOBS is suitable for aggressive investors. In our opinion, principal risks include the following:

* Deterioration of economic conditions in China, slowing of hiring activity or a “hard landing” scenario.
* Competition from ChinaHR.com and Internet portals could pressure future profitability by way of lower pricing and/or higher marketing expenses.
* Rapid online migration could result in cannibalization of offline revenue.
* Despite recent improvement, 51job has an inconsistent execution record.
* Uncertainties in the PRC regulatory and legal system, particularly laws governing foreign ownership and licensing/operation of HR and Internet business entities. Note that 51job is incorporated as a holding company in the Cayman Islands.
* Disruptions such as spread of the H5N1 virus or a recurrence of SARS, political unrest, breakdown in relationship with a major publishing/distribution contractor, etc.
* Influence of Recruit Co. and current management over all matters requiring a shareholder vote.
* Correction in the U.S. markets.

How to talk business in China

Reviewed by Michael Jen-Siu

Tim Cole, a magician from Las Vegas, Nevada, met me in a Beijing coffee shop about two years ago and said he had been cheated out of US$127,000 because his Chinese business partner canceled several performances in violation of their contract. The partner also stuck Cole with the trans-Pacific shipping bill for the show equipment, he told me.

His story followed a series of interviews I had done with the

owners of a Hong Kong engineering company that lost a large hotel to court receivership in Dandong, northeastern China, because the Dandong partner tried to pass off its own loans on the Hong Kong side.

I remember these two cases because they go against the overwhelming majority of China business news stories, which generally follow China’s fast-track investment deregulation and the natural flood of foreign businesses entering an anticipated record- sized consumer market. But the magician and the engineering firm showed paperwork to prove that they had been cheated despite the hype.

The Chinese Negotiator, a topically overdue book published this year, suggests that the magician or the engineering firms might have misunderstood their Chinese counterparts when they agreed to do business together. Maybe Cole or the engineering firm upset their local partners during contract negotiations, I started to imagine. Maybe they didn’t even have a solid enough deal before business began.

Authors Robert March, a negotiator and consultant since 1985, and Wu Su-hua, an entrepreneur for 25 years in Taiwan and Australia, provide 280 pages of tips on how to negotiate with teams of stoic chain-smokers who don’t say what they’re thinking. They tell foreign companies to negotiate according to a 12-step process and to pick a team with refined social graces and a taste for Chinese food. They explain why foreign teams must come to the table as a unified front but with a clear leader and every other member assigned non-conflicting responsibilities to avoid the appearance of uncertainty or risk spilling sensitive details too soon.

More important, The Chinese Negotiator shares scores of subtle, example-rich insights about Chinese versus non-Chinese psychology in language that brilliantly transcends stereotypes. These lessons could help almost anyone get along in any Sino-foreign environment, whether as a negotiator, a boss or a common employee. The authors point out that overlooking these subtleties during a contract negotiation can quietly offend the Chinese side, which in turn might sign with a competing foreign firm or plot revenge against the offending party.

March and Wu note, for example, that Western negotiators bristle too obviously when deals don’t come together soon enough and do not see how non-business chats over alcohol can improve later negotiations. Chinese, for their part, are as flexible as street-market vendors, take a shared-destiny view of joint ventures, and may look to an absentee boss far removed from the negotiations for serious contract decisions, even after deals are struck at the table. They also subconsciously use any of 36 classic Chinese war stratagems that promote deception, secrecy and elaborate mind games to get what they want.

The book’s top lessons, threads that bind one chapter to the next, are that interpersonal trust must precede business, that the Chinese value a harmonious negotiation atmosphere (despite their own poker faces), and that negotiations can last much longer than foreigners expect – though we’re never told exactly how long. Another piece of repeated advice: foreigners should avoid talking too much about business in opening negotiation rounds so the parties first get to know each other personally.

The Chinese Negotiator leaves one big red elephant in the negotiating room. That’s the profound influence of China’s government. Almost every day of my seven years in China, as a reporter or a colleague or a teacher or just someone in the street, I met with the nationalism of modern Chinese people. Much of their distrust, resentment or superiority toward foreigners stems directly from the government’s relentless teachings in school or through media that Chinese are historically superior people victimized by foreigners.

The government promotes especially strong anti-Japan sentiment and the questionable idea that ethnic Chinese inside and outside China are all the same except that outside they’re lucky to be rich. Before 2000, it was legal to overcharge foreigners at government tourist landmarks. These prejudices are not checked at the negotiation-room doors. Local courts normally back the Chinese side in any dispute, another sign of us-versus-them nationalism. And because of China’s non-consultative policymaking and lack of public participation in government, many laws touted as business-friendly via government-run English-language media are vague, redundant and even contradictory.

Cole or the Hong Kong engineering firm might have blundered in their negotiations, but they could easily have been cheated out of sheer resentment, or fallen into the red through a legal gray area. The Chinese Negotiator might have noted the state’s formative role in Chinese psychology and advised companies on how to reach sound, cheat-resistant business agreements that have the flexibility to withstand undulating local laws on key matters such as currency conversion and patent protection.

Key foreign countries are also missing from the book. Most of the advisory anecdotes feature firms from developed Western countries, but what about growing powerhouses such South Korea or Russia, where business cultures differ, likewise stereotypes held by the Chinese? And if I were a sole proprietor magician or hotelier, rather than a company with a big staff, I’d want to know how to negotiate against a complex Chinese organization without hiring a team. Is there a network of negotiators for hire?

Finally, The Chinese Negotiator could further explore China with a few more anecdotes from the book’s namesake. Experienced contract negotiators at the foreign-affairs offices of state companies or the poker-faced Chinese bargainers who quietly evaluate their foreign counterparts across a table might tell revealing stories about what it’s like on the home court.

Influential Chinese people do not always open up to foreign writers, but some will talk, especially if contacted through personal connections. Chinese sources also might offer details on how they arrange room, board and meeting venues for the negotiators – and who pays for it all. Maybe we would learn that some Chinese publisher is about to release “The Foreign Negotiator”.

The Chinese Negotiator: How to Succeed in the World’s Largest Market by Robert M March and Wu Su-hua. Kodansha International, February 2007. ISBN-10: 4770030282. Price US$24.95 hardback, 280 pages.

Michael Jen-Siu is a wire-service reporter living in Taipei.