Archives 2008

Executive hiring in Asia to remain firm in Q1 — Hudson

HONG KONG — Executive hiring by multinationals in Japan is set to reach a six-year high this quarter but a global credit squeeze will affect staffing plans at IT and finance firms in Hong Kong, according to a survey by recruitment firm Hudson.

The report was slightly less upbeat than a previous survey three months ago because hiring expectations in China and Singapore have dipped. Hudson said rising concern that the United States is heading for a recession would make banks and finance firms in the region more cautious about hiring.

Still, 66 percent of managers at multinationals in Japan expect to increase recruitment this quarter, according to the survey released on Thursday, up from 65 percent three months ago and the highest level since the Hudson report was launched in late 2001.

In China, 61 percent of managers at multinationals plan to increase headcount in the next three months, down just slightly from 64 percent in the previous quarter.

The survey by Chicago-based Hudson Highland Group Inc. covered responses from 2,500 managers at multinational companies across industry sectors in China, Hong Kong, Japan and Singapore.

“The market in Asia is still looking buoyant and it is quite separate from issues in the United States,” said Gina McLellan, Hong Kong manager for the US firm.

“But from February to April we’ll start to see the actual size of bonuses and whether recently announced global headcount cuts by some investment banks will come in Asia.”

Asia’s financial services sector is booming, helped by China’s and India’s rapid economic development, and international finance companies are expanding in the region.

JP Morgan says it could hire up to 1,900 people in Hong Kong in the next three years and Credit Suisse plans to hire at least 70 bankers in the Asia-Pacific this year.

However, there could be job losses too in financial centres Hong Kong, Singapore and Tokyo as investment banks including Citigroup, Lehman Brothers and UBS have announced plans to lay off thousands of staff worldwide in the wake of the credit squeeze, even though those cuts are likely to focus on the United States and Europe.

In Hong Kong, 58 percent of managers surveyed plan to add staff this quarter, up from 54 percent three months ago, but nearly a third of IT&T companies and 23 percent in finance and banking say the global credit squeeze triggered by problems in the US subprime mortgage sector would have an impact on hiring.

In Japan, 12 percent of managers across sectors say hiring plans will be affected by the credit squeeze compared with less than 10 percent in Singapore and China.

“Hiring expectations remain at a high level in all the markets surveyed and the outlook is positive,” McLellan said. “But employers are caught between sharply rising salaries and bonuses on one hand and high staff turnover rates on the other. This is most marked in China.”

The survey showed a third of managers in China expect to increase managers’ starting salaries by more than 20 percent to attract candidates and 47 percent reported turnover rates above 10 percent.

In Singapore and Hong Kong, 19 to 20 percent of managers said they had to offer pay increases of more than 20 percent but in Japan only 4.0 percent of managers saw such a need.

Boyden Global Executive Search Explodes Myths of Business and Management Recruitment in China

* Mainland executives lead the talent contest
* Talent wars tougher than Europe
* Multinationals only compete long-term by sharing know-how
* Chinese companies going global need leadership due diligence

SHANGHAI, China–(BUSINESS WIRE)–A growing pool of extremely talented Mainland Chinese executives are gaining internationally competitive compensation as the best in class among all nationalities, according to The Boyden Report – Exploding the Myths in China released today by Boyden Global Executive Search. The report is based on interviews with senior executives of Chinese and multinational subsidiary organisations.

“Mainland companies are beginning to pursue international ambitions and attracting Chinese executives back from Western companies, where global exposure has been gained in a local context,” says Charles Bien, Managing Director of Boyden China. “The combination of a Chinese culture, internationally competitive remuneration and the chance to learn best practices is very powerful.”

The report explores eight commonly held myths about business in China including:

The Chinese Economy as a Threat
China vs. India: Zero Sum Game?
One China, One Market
Human Resources Best Practices
Chinese Returnees
“War for Talent”
One Country, Two Systems
Proprietary Technology
Following are highlights of the report:

Learn How to Ride the Tiger

The opening myth of report examines the fear among Western Companies that the rapid development of the Chinese economy is a competitive threat. Respondents explain how this prevents multinationals benefiting from the significant advantages China has to offer. “The Chinese have an expression: ‘learn how to ride on the tiger’s back,’” says Mr. Francis Yuen, President of Trane Asia in the report. “Western companies need to realise that you should never try to fight the tiger—learn to leverage the tiger.”

HR: Organisational Landscape and Competitive Advantage

Interviews with Mainland and multinational executives found that China’s Organisational Landscape is far more heterogeneous than many Westerners appreciate. Most respondents agree that Chinese companies tend to lag behind multinationals in making human resources part of their strategic planning. Businesses that do focus on HR strategy gain a notable competitive advantage.

“We adopted many HR policies from the legacy of China business across our international operation including the legacy of the IBM PC division,” says Reid Walker, Lenovo’s Vice President of Global Communications. “Our new performance management system is based upon many of the ‘pay for performance’ practices of our original China operation. These practices helped Lenovo grow from a small start-up to a leading global multinational.”

Local Market Knowledge is King

The general consensus is that it is a mistake to focus on returnees for international perspective in China operations. Senior executives interviewed believe returnee managers are helpful in the short-term and for transitional periods, but they have often adopted a Western perspective that doesn’t always fully embrace or comprehend the Chinese perspective. Companies in China need managers with local market knowledge, including an ability to communicate well with key officials and understand regional business practices.

“Just as it is very difficult for companies to expand or market nationally in China, it is hard to move executives from one province to another,” explains Brian Renwick, Managing Director of Boyden China. “The logistics of moving people can be as challenging as the logistics of moving goods.”

Talent Wars Worse Than in Europe

Senior executives interviewed for the report concurred that there is as big of a war for talent in China as in other markets, and perhaps even more so in China. Opportunities and salaries are rising fast in China and labor costs are going up. Competition for managers changes in relation to the competitiveness of the sector or industry.

“The war for talent is very fierce in China,” said Bengt Hamsten, Former CEO of MAN Truck & Bus China; Professor, Mechanical Engineering, Chongqing University. “If anything, the talent wars are worse than in Europe.”

Change programs tend to include a comparison of the company’s values with an individual’s perception and preferences. Companies should view the recruitment of a key executive as a microcosm of change. The rapid pace of development in China means that companies need to hire with a view of how a role will evolve in the near future.

The Boyden View for Multinationals in China and Mainland Companies

For multinationals in China, the overriding challenge to overcome is fear of sharing their know-how and intellectual property with their subsidiaries. If they fail to do this, Chinese competitors will soon outperform multinational subsidiaries, and the advantages of having operations in China will be lost. Boyden’s Brian Renwick explains, “The potential shift in manufacturing jobs is having greater global benefits in quality of life and access to goods. Mature economies have a rare chance to transform themselves through the opportunities offered by China.”

The challenge for mainland Chinese companies with global ambitions means focusing on executive talent during the due diligence phase of an acquisition.

“For Chinese companies wanting to expand overseas, understanding the management culture and the executives they are buying is as important as financial due diligence,” says Boyden’s Charles Bien. “Assessing the senior executives in an acquisition target enables Chinese companies to gain a greater understanding of the real value of the deal.”

About Boyden World Corporation

Boyden is a global leader in the executive search industry with more than 70 offices in 40 countries. Founded in 1946, Boyden specialises in high level executive search, Interim Management and Human Capital consulting across a broad spectrum of industries. For further information, visit the firm’s website at www.boyden.com.

About The Boyden Report

Other reports in The Boyden Report series include The Boyden Report: India – the Sun Rises on the Indian Executive (3Q 2007) and upcoming The Boyden Report: South America (1Q 2008).

Mainland hiring momentum builds

Chinese mainland employers across all industries, and the service sector in particular, remain optimistic in their recruitment plans in the first quarter of 2008, according to a recent survey.

The employment outlook survey, conducted by Manpower, a world leader in the employment services industry, questioned nearly 52,000 employers around the world, including more than 16,000 in the Asia-Pacific region and 4,100 in the Chinese mainland.

The Chinese mainland net employment outlook improved by two-percentage points since last quarter, but dropped slightly compared to the same quarter of 2007, according to the survey.

In the first quarter of 2008, the net employment outlook for the Chinese mainland stands at 14 percent. That figure is the percentage of employers anticipating an increase in hiring activity, minus that of employers expecting to reduce their workforce, said the Manpower.

The survey also found the strongest recruitment plans in the service sector, for the second consecutive quarter, as services gear up for the 2008 Olympic Games.

“The Chinese mainland, faced with companies’ over-cautious recruitment activities, is drafting related detailed laws and regulations to clarify its labor contract law,” said Lucille Wu, managing director of Manpower Greater China. She added, “Once this is complete, we believe employment relationships in the Chinese mainland will achieve standardization.”

Among major cities of the Chinese mainland, employers in Chengdu, capital of Southwest China’s Sichuan Province and where the outlook index has reached 19 percent, report the strongest recruitment expectations. That figure is a 10-percentage point improvement over the previous quarter and the strongest quarter-over-quarter increase to date.

“The result of the survey reflects a growing demand for talent in Chengdu, one of the most important cities in southwestern China,” said Wu.

Last September, the Sichuan provincial government signed a strategic cooperation agreement on talent development with Manpower, in an effort to take advantage of Manpower’s network to improve the local talent pool while attracting foreign investment.

In the other 26 countries and regions covered by the survey, first-quarter hiring is also expected to be positive although degrees of optimism vary, according to the survey.

In the Asia-Pacific region, employers in Australia, Japan, New Zealand, Singapore and Taiwan Province indicate they will slow the pace of hiring compared to the same period of last year. The strongest recruitment plans were reported in Singapore and India.

Atkins to recruit from China

Atkins has started recruiting in Mandarin to attract Chinese engineering undergraduates studying in the UK

The country’s biggest consultant takes on nearly 400 graduates a year – a third of them civil engineers.

Now Atkins head of recruitment Karen Wallbridge said the company had hit on the idea of recruiting directly in Mandarin to make sure it was reaching the widest possible audience.

Atkins has decided to use native Mandarin-speaking recent graduates within the company to address students from China who are studying for engineering degrees in the UK.

Wallbridge told a skills conference organised by Construction News: “Many people in India and China view engineering as a blue riband qualification, the way it used to be viewed in the UK. There are a lot of good young people coming to this country that we would like to bring on board.”

She said the events had been extremely popular among Chinese students pleased to be addressed in their first language and that rooms had been filled with undergraduates keen to find a high-profile job.

She said: “It’s made us review our policy on communication altogether. We look at recruiting good communicators.

“But now we are re-thinking whether this is the same thing as being able to speak good English.”

The firm has already held a number of events at UCL in London and one in Manchester, the largest centre for Chinese students in the UK. It is planning more events at other universities.

Wallbridge said the Chinese recruits would be used not just in the UK but back in their native China where Atkins employs several hundred consultants.

She added the company had not ruled out expanding the plan to cover speakers of other languages.

Sourced from Construction News

Chinese students pulled by opposing tides

By Maureen Fan

CAOTANG, China – This week in Caotang village, members of the Huang family were preparing for the Chinese New Year by making traditional dishes, scrubbing their already spotless homes and paying their respects to the family patriarch.

They were also discussing the fortunes of one of their most promising members, Huang He, a film and television student. In 2006, after 10 years of study in Northern Virginia and Michigan, Huang returned to China. Now, at the dawn of the Year of the Rat — a symbol of prosperity — he is contemplating heading back to the United States for work.

“I’m caught in between. My friends think I should set my feet firmly in the U.S. because I have already spent so much time there,” said Huang, who wonders who will look after his parents if he leaves. “I’m not really lost. I’m not panicked. I’m just looking for my next opportunity and my next home.”

Huang, 36, is a “sea turtle,” one of the thousands of students who return to China each year after spending time abroad. For many of them, a visit to their family villages during the Lunar New Year, or Spring Festival, is near mandatory. But such visits also force them to confront changes in modern China — changes that may prompt them to swim away again.

A rising tide of sea turtles

More than 1 million Chinese have studied abroad since this country began opening up in 1978, with just over a quarter of them returning after their studies. As the number of Chinese studying in the United States has risen over the years, so, too, has the number of sea turtles, so named because “overseas returnee” in Mandarin sounds like the word for the animal. According to the official New China News Agency, 42,000 students came back to this country in 2006, up 21 percent from the previous year.

But the China those students return to is not always the China they left. The phenomenal economic growth here has led not only to the development of villages and towns, but to a shift in Chinese values and priorities. Meanwhile, the sea turtles have experienced changes of their own.

After a decade studying communications, broadcasting and cinematic arts at Shenandoah University in Northern Virginia and Central Michigan University, Huang is a faithful mimic of President Bush, a regular viewer of “The Daily Show With Jon Stewart,” a fan of the Green Bay Packers and a lover of steak. But he is also a citizen of China who misses his hometown dishes and his aging parents.

Caught in between

Fluent in two cultures, he is not quite at home in either.

“After living in the U.S. for so long, all sea turtles have to relearn their own culture,” said Huang, who has been working in Beijing for a company that makes historical television dramas. “China is not the same China I remember. People’s values have changed.”

The media business that he recalls focusing only on propaganda is now driven by ratings. Deals that depended only on relationships now also require creativity and money. “People think in a more complicated way. I’m more straightforward now, but they’re all zigzagging,” said Huang, who also goes by Derek.

Even the village here of his father and grandfather, just 20 miles outside the central Chinese city of Xian, where his parents now live, has been marked by change. Most of the old-style houses with gently sloping roofs and mud walls have been replaced by modern brick and tile boxes. The street named after his late grandfather, a village leader who helped build the local irrigation system, is now just a numbered road.

Caotang used to be blessed by three crops a year. But graffiti attest to the recent sale of village land to a developer who has cut off water pumps, reducing the harvest to two crops a year. Across the main road from the village, residents can glimpse brand-new townhouses that overlook a golf course. The houses start at $280,000 — to most villagers, an unthinkable sum.

“A cousin told me many of the young people in the village did not want to be farmers anymore, so they didn’t oppose the sale of the land,” Huang said. “Many who received money spent it on motorcycles.”

Annual culture clash

At Chinese New Year, the village’s population of 5,000 can grow to up to 10 times that number. Some traditions persevere: On Wednesday, a New Year’s address from village officials will be carried to homes by loudspeaker. Officials will make their rounds delivering liquor and pastries to dozens of village elders.

Next week, the village square will fill with people selling paper and silk lanterns, plastic toys, cold rice noodles and sweet desserts. A sign above an outdoor stage, erected during the 1966-76 Cultural Revolution, declares that art and literature should be for the common people, not the bourgeoisie. But traditional opera performances are now supplemented by amplified pop music. For the first time, there will be a village-wide basketball tournament, to make the traditional holiday more relevant for younger residents.

For Huang, going home means visiting his village relatives whenever he returns to his parent’s apartment in Xian. He has been trying to persuade a poor cousin to go out and find work.

“My plan this year is to add a few rooms to the house and then go out to look for a construction job,” said the cousin, Huang Gang, 35, from the bed where he spends most of his time. “Can you tell me where I should go look for work?” he asked his more successful cousin.

Huang He, meanwhile, has difficult career decisions of his own. He has walked away from his Beijing job and plans to return to the United States in order to make more use of his valuable green card.

Some parents lose faith in foreign studies

That’s a prospect that worries his father, Huang Ruike, a music professor who has changed jobs only twice in his life. He can’t quite understand how his amply educated son has switched jobs four times already.

“Many years ago, I was very proud of sending both my children out to the U.S. to study. Many of my friends were jealous. But now that feeling has faded,” Huang Ruike said over a lunch of fish and scallops.

Turning to his son, he added, “The American education you and your sister received is no doubt very positive. But many of your peers who did not study overseas, they all seem to be better off. Many of them were not as outstanding as you were in school. But those who didn’t leave got caught up in the fast-paced development of China. If you didn’t choose to go out, you’d probably have a car, a house, a wife.”

Those are crucial barometers of success to most Chinese families, as opposed to the abstract ideas that Huang has in mind: a dream career and job satisfaction. His father, after all, gave up conducting and composing for the stability of teaching.

Nevertheless, Huang’s parents are proud of him and his sister. And this being a new year, they tell him so.

“When your sister used to say, before the 1990s, that she wanted to study in the U.S., I always said, ‘Stop dreaming!’ ” Huang’s mother, Wang Lianyun, chimed in. “But now look at her. She didn’t stop dreaming, and it happened.”

China faces highest staff turnover rate

Source: CCTV.com

Employers in China are facing the highest staff turnover rate in Asia topping 20 percent last year. A survey by leading international recruitment and staff management company Hudson, reveals Chinese employees are seeking the highest salary increases in Asia this year.

Sara Lee, a Fortune 500 company, recently solicited advice from employees about what the company could do to make their jobs more enjoyable.

Ruan Weihua, Marketing Director of Sara Lee (China) Co. said “We quite often organize such events among our staff, and want them to know that the company regard them not only as employees, but also as a whole family. This is part of our efforts to reduce the staff turnover rate, however the figure doesn’t stay as low as we expect. ”

A growing number of companies recognize the importance of team-building and are offering more training opportunities to nurture loyalty. The efforts have had mixed success, however, as recent reports show salary is still the number on concern for Chinese employees, when choosing a job.

Angie Eagan, General Manager of Hudson Shanghai said “Many markets in the world give salary adjustments that are related to. And all this investment and all this economic activities is creating the demand of people. And that drives up people’s value in the economy. ”

A survey conducted by Hudson China suggests nearly one-third of all local employees plan to ask for pay rises of more than 20 percent this year. And two-thirds expect their annual bonus to rise by at least ten percent. Fitting into this picture is also a turnover rate, especially in the service sector, which has held firm between 10 and 20 percent over the last 12 months.

Asian workers demand more

Dissatisfied staff, increasing job mobility, rising wage demands – no, it’s not Europe or the U.S. but Asia, where the booming economies of the region are fuelling an increasingly fierce war for talent.

Asian workers are becoming happier to dump their old employers and chase the best jobs and money, in the process creating a talent and retention crisis for both local and Western employers in the region.

A study by recruitment firm StepStone has found companies looking to tap into Asia’s rapidly expanding economies are reporting growing difficulties when it comes to recruiting and retaining skilled employees.

What’s more, the wage bill – once one of the biggest attractions for Western companies moving operations to the region – has been rising sharply.

The company’s Talent Report 2008 has concluded that the notion as a “low-cost utopia with an abundance of labour” is now long gone.

Senior managers in Asia reported facing four major recruitment and retention obstacles.

These were: rising wage and pay demands among potential candidates, a lack of suitable candidates and skills, a perceived lack of career opportunities among workers and employee increasingly believing they could snap up better pay and benefits elsewhere.

The expectations of workers in the region were also rising, with workers no longer prepared to settle for second best and feeling they deserved more than they were getting.

Employees were now much more likely to jump ship if a better offer came along.

Job hopping was set to become one of the biggest talent headaches for organisations over the next three years, StepStone predicted.

Despite these difficulties, more than four out of 10 business leaders surveyed globally believed the Asia-Pacific region offered their business the best opportunities for revenue growth over the next three years.

The region has been much less affected than Europe or the U.S. by the sub-prime led credit crunch and in areas such as financial services is looking particularly strong at the moment.

Nearly nine out of 10 global business leaders expected either slight or significant improvement in their company’s growth prospects over the next three years, with fewer than three out of 10 saying the rising cost of credit had caused them to be less optimistic.

“While recent surveys and financial analyst predictions indicate a drop in business confidence in the next year, it’s clear that most business executives are still bullish on Asia as the growth machine in the longer term,” said StepStone chief executive Colin Tenwick.

“While the credit crunch might be dismissed in boardrooms as a short-term speed bump, it would be folly for Western businesses rushing to invest in high-growth Asian economies such as China and India to ignore the clear signs of longer-term talent shortages in Asia,” he added.

“This research shows that many companies will have to prepare themselves for a huge battle for talent, one that is even tougher than in Europe and North America,” he continued.

“Asia is seen as the engine for growth but without the right people, businesses will see their engine splutter and may not get out of first gear. Without a clear, formal talent management strategy in place, companies will find it difficult to get – and more importantly, keep – the people they need and may struggle to realise the growth they are promising their shareholders,” added Tenwick.

Globally, too, business leaders were unanimous in agreeing that recruiting and retaining talented employees was getting tougher.

Nearly half felt it was becoming slightly more difficult and four out of 10 believed it was becoming significantly more difficult.

Yet, despite this, only a quarter of organisations surveyed had a formal, company-wide talent management strategy in place and 16 per cent did not have a talent management strategy at all.

“To compete for the best people it is clear from this report that many organisations need to address how they are going to manage their talent in a far more structured way or they place their ability to grow under serious threat,” said Tenwick.

“Given the low number of businesses with a formal talent management strategy in place, it’ s unsurprising that a third of respondents said their organisation was poor at forecasting talent requirements and retaining talent in the organisation,” he added.

While it was in Asia where recruitment and retention difficulties were most acute, business leaders in Western Europe and North America also agreed that employee career switching would be a major issue in fuelling talent shortages there.

However, business leaders in the U.S. and Europe were in general more concerned at the effects of an ageing population and lack of education and development opportunities.

“The difficulty in finding talent coupled with an ageing workforce presents a serious challenge particularly to businesses in developed economies in Western Europe and North America,” Tenwick pointed out.

“With almost half of executives in those regions viewing an increased use of older workers in a positive light, it appears likely that we will see more older workers returning to the workforce or perhaps postponing retirement to fill skills gaps,” he added.

Migrants are China’s ‘factories without smoke’

By Alexandra Harney
For CNN

Editor’s note: Alexandra Harney is a Hong Kong-based writer and the author of the forthcoming book “The China Price: The True Cost of Chinese Competitive Advantage” (Penguin Press, 2008).

HONG KONG, China (CNN) — In the crowds still stranded by snow at train stations around China stand some of the country’s most valuable economic assets: migrant workers.

A migrant worker, right, joins a queue waiting to board trains this past week in Shanghai, China.

more photos » This group of 150 million to 200 million farmers — more than the population of the United Kingdom, France and Australia combined — account for the majority of employees in China’s world-beating manufacturing sector, the bulk of its coal miners and most of its construction workers.

During the past two decades, according to a conservative estimate from UNESCO and the Chinese Academy of Social Sciences, migrants have contributed 16 percent of gross domestic product growth.

Living for years at a time in coastal cities, China’s migrant workers have built the country’s skyscrapers and assembled its exports, sending tens of billions of dollars in earnings home to their families in poor inland provinces. For the workers known as “factories without smoke,” the Chinese New Year holiday is often their only annual vacation.

The forces that brought these smokeless factories to the cities took shape in the early 1980s, when Beijing, as part of an easing of central controls on the economy, loosened internal mobility regulations. Farmers have been pouring out of the countryside ever since, in what is believed to be the world’s largest internal migration.

They leave for mostly economic reasons: wages in the cities are higher than what workers could earn at home. And life there, many find, is more exciting than back on the farm.

Today, migrants dominate the Chinese labor force in dirty and dangerous trades: 70 percent of construction workers, 68 percent of manufacturing employees, and 80 percent of coal miners are migrant workers. But not all are on their hands and knees. More than 60 percent of staff in the service trade, according to state media, are migrants as well.

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On average, migrants tend to be among the best educated people in their villages. Still, many have little more than a junior high school diploma. Many migrate as teenagers, often with friends or neighbors, leaving behind their family in the countryside. More than half are men, but the toy and shoe factories of southern China prefer women — they are easier to control, managers say, and their fingers more nimble.

Wages vary by city and company, but many migrants in export factories in the south take home about Rmb1,000 a month ($139) — or even more. They sleep 12 to a room in bunkbed dormitories furnished by their employers, working six and sometimes seven days a week for months at a time. Wages are not always paid on time, occasionally not at all. Watch more about migrant workers’ living conditions in dormitories »

Victims of occupational disease, lacking of insurance

As little as a fifth of migrant workers in southern China’s Guangdong province, according to one Hong Kong non-governmental organization, have medical insurance. China’s household registration or hukou system links social benefits to the place where one is registered, and most migrants are still registered in their rural hometowns, hundreds of miles away from where they work. About 90 percent of the victims of occupational disease in China are migrants.

These migrants’ schedules are dictated by the fluctuations of demand from their foreign customers: winter is peak season for lawn furniture factories, for example. But most of the factories in southern China are busiest in summer, as they fill orders for the Christmas season.

Many of these plants close for the first months of the year and take the Chinese New Year holiday off, triggering an exodus of migrants as those who can afford the train and bus tickets travel home to see their families. Watch a migrant worker’s 1,000-mile journey home »

Much has changed since Chinese farmers began arriving in the cities two decades ago. Some of today’s migrant workers are “second generation” — the sons and daughters of the first generation of migrant workers. Most were born after China introduced a family planning policy in 1979, so they come from smaller families. Second generation migrants tend to be more demanding employees: they are pickier about where they work, preferring factories with better facilities and wages.

Their preferences, along with a rapid growth in factories in the Yangtze River Delta around Shanghai and a rise in rural incomes, have contributed to labor shortages in Guangdong province in the last several years. In response, the government is raising the minimum wage and strengthening labor laws. Forced to compete for workers for the first time in more than a decade, factory managers are building basketball courts and libraries, installing air conditioners and improving their cafeteria menus.

Beijing, too, is realizing the importance of migrant workers as a political constituency. The state-controlled labor union, the All-China Federation of Trade Unions, is targeting migrants in a recruitment drive. The government is expanding insurance coverage for migrant workers.

State media cover their hardships regularly. “Migrant Workers: We Need Them Just Like They Need Us,” read one headline in the China Daily last March. As the recent appearance of premier Wen Jiabao at the packed Guangzhou train station illustrated, migrants are crucial to keeping China’s economic development on track.

Nation top draw for FDI in 2007

China received $74.7 billion in foreign direct investment in non-financial sectors last year, ahead of all developing countries for the 15th successive year.

The figure reflects a year-on-year increase of 13.59 percent, the Ministry of Commerce said yesterday.
Total foreign direct investment, including capital flows to the financial sector, hit $82.7 billion in 2007, up 13.8 percent from a year earlier.

“The growth is higher than my expectation,” said Wang Zhile, director of the Multinational Enterprise Research Center affiliated to the Ministry of Commerce. “It shows China’s role as a crucial link for multinationals’ global manufacturing, purchases and research.”

There could be some adverse influences on foreign investment in China this year.

Income tax rates for domestic and foreign companies have been unified at 25 percent from the beginning of 2008. Before this, domestic companies paid a 33 percent income tax while foreign companies, which benefited from tax waivers and incentives, would pay an average of 15 percent.

But foreign enterprises registered before the date of implementation will benefit from the favorable tax rates for another five years.

Foreign investors also have to pay more for labor and material costs, such as oil, plastics and steel, as well as face tighter policies on polluting and resource-intensive industries.

But experts believe China will continue to be a magnet for FDI as Beijing’s policies on foreign investment and opening up will not falter.

FDI in non-financial sectors is expected to increase four to six percent year-on-year in 2008 to hit $69 to $72 billion, according to a report released by the center of forecasting science under the Chinese Academy of Sciences.

The report said FDI in the service sectors, including banking, insurance and retail, is expected to accelerate this year as China opens up these sectors to foreign investors further.

The ministry last year approved 37,888 foreign-invested enterprises in China, including in financial sectors, down 8.69 percent from a year ago.

Although the ministry did not give a breakdown of the countries from where the FDI originated, FDI from both the US and the 15 original members of the EU dropped in the first 11 months of last year.

Employment top of agenda in Jiangsu

Providing jobs for the unemployed and university graduates will be this year’s top priority for authorities in Jiangsu province, acting governor Luo Zhijun said in his report to the first session of the 11th provincial people’s congress yesterday.

Luo said the government will create more than 850,000 jobs and re-employ 250,000 laid-off workers to ensure all urban families have at least one person in work.

creating jobs has been high on the government’s agenda over the past five years, he said.

According to official figures, over the past five years, the provincial government has spent 5.16 billion yuan ($717 million) on employment and re-employment. Some 4.9 million new jobs have been created and 2.11 million laid-off workers have been reemployed.

But despite the government’s efforts, 600,000 to 800,000 people lose their jobs in Jiangsu every year, and some 600,000 join the labor force, official figures show.

“This puts great pressure on the government, but we will take an active approach and continue to carry out a positive employment policy to improve the situation,” Luo said.

As in the past, the government will provide free job training for laid-off workers to equip them with necessary skills for new positions, Chen Zhengning, director of the provincial labor and social security department, said.

“We will also take advantage of the rich vocational training resources in the province to organize skills training for high school graduates and unskilled workers,” he said.

The measures will be welcome news for Zhang Xin, a Japanese-language major who graduated in July from the Jiangsu Food Vocational School.

The 22-year-old has been out of work ever since.

“I have submitted job applications to dozens of companies and have gone for a few interviews, but they all said they had nothing for me,” Zhang said.

His mother, who earns 850 yuan ($118) a month, is the family’s sole breadwinner. His 49-year-old father was made redundant when the factory he worked for went through restructuring in 2001. He has held a number of part-time jobs but nothing since the end of last year.

Chen said the authorities are working hard to ease the financial burden on families like Zhang’s.

By the end of last year, 98 percent of retirees in cities and counties were covered by the pension system and 88 percent of people had medical insurance, according to the government’s work report.

Luo said the government will this year spend 200 million yuan ($27.8 million) on upgrading facilities at rural and community health clinics.