Archives 2009

No free lunch in China…

by Patrick O. Courtois, DaCare Consulting

I tend to receive a recurring misconception about the Chinese labor market from overseas-based clients. This misunderstanding primarily affects overseas-designed provisional staffing budgets as well as the perceived value of quality of China-based recruitment agencies. In short, agencies are perceived to attempt inflating candidate packages for higher fees. While some rogue agencies do, there is a distinctive trend that the cost of Chinese talent is catching up with international benchmarks.

China is an emerging Dragon, Shanghai, a crouching tiger… China is an emerging and developing economy. At least, it is its official status according to the International Monetary Fund’s World Economic Outlook Report, dated April 2008 (1). Taking into consideration the measurement criteria, based on statistical indexes of element like income per capita, GDP, literacy rate and such, are calculated against the sheer size of its population, it can only make sense.
Shanghai is, along with Beijing, Guangzhou and Shenzhen the economy’s locomotive. Having the status of “wealthiest” city in China, with a GDP per capita, above US $7,000 for 2007, it is however still far behind any Major European capital (2). To give you a clearer idea, Shanghai’s GDP per capita is below a city like Istanbul, Turkey (3). Once again, keep in mind the size of Shanghai’s population (over 15 million souls) and you can understand that GDP per capita does not necessary reflect the reality of local white collars, which are far from being the majority.

Another interesting piece of information is the Mercer’s 2008 Worldwide Cost of Living survey (4), which gives us an idea on the rising costs of living in Beijing and Shanghai, with both cities present in the Top 25. The results, however not entirely applicable to local nationals, as based on expatriate populations, still gives us an insight on a certain reality of the local economy. That is, the gap in cost of living observed between a modern city like Shanghai and other “emerging” one, in China.

Despite all these, Shanghai can still be considered as a “cheap” city, with low business operations related costs, minimal salaries requirements, and reasonable living costs below those of similar sized cities in US or Europe.

The “Made in China” picture of low wages is still relevant today. Compared to wages in the EU or US, employing local nationals is indeed an affordable option. Looking at the table 1 comparison of the median US, UK and Chinese total packages (salary + bonus and benefits) on some common positions, the point is made. At first glance, it quickly illustrates the cost-effectiveness of employing local nationals, considering we are talking about the “median” or average population, of course. It quickly demonstrates that employing the “average” local candidate can still be regarded as a cost-effective solution.

If you pay peanuts, you get monkeys… No offence to anyone in particular, as this applies to pretty much anywhere around the world… But, If you take a closer look at this “average” labor market, as it is the one providing input for most official statistics, surveys and other reports that one can easily find online and, incidentally, the segment on which a lot of people base a provisional recruitment budget upon, you get a rather interesting picture… Simply put, by a fellow recruitment specialist, “the average employee in China does not speak English, he does not work in a foreign firm, he does not think outside the box, understand western reporting structures, go to a top university, or have a chance of getting hired into your firm…”(5).

The average candidate has also the shortest retention potential, following a simple logic of job hopping for ever shinier titles and bigger financial packages, thus leaving a city like shanghai with a dramatic employee turnover at around 18 months and a managerial workforce with somewhat arguable overall managerial skills.

If you are the decision maker of one of these multinationals, which are slowly initiating a shift toward management localization by cutting off expatriates’ budget plans, would you really consider handing over the keys to your financial, commercial or product development operations to an average candidate whom, however nice of a person, would most likely fail to properly relate to, understand or even communicate on basic day to day issues?

No money, no honey… On the other hand, you have the candidates which are at the center of what is now known as the “Talent War” (6). These are candidates with bilingual English abilities, 5 to 10 years of solid people and projects management experience, strong overseas exposure, the ability to think in a systemic way, whom are fully acquainted with western reporting systems, can deal with foreign clients with the highest level of service quality, have graduated from top Western universities and can leverage on the added-value of their biculturalism. These are the candidates companies are fighting over for in Shanghai, Beijing or other tier 1 cities, with packages narrowing closer to those in the US or Europe, and sometimes going well beyond.

Figure 2 sheds some light on a more relevant picture of the Shanghai employment market (for top candidates), with key functions such as Finance, HR or Sales clearly aligning themselves on EU/US levels. This “headhunter’s” dream can quickly turn into an employer’s nightmare, if the latter does not properly understand the realities applying to the local market: An overall talented, self-motivated, creative, and experienced manager is a scarce resource in China, and a 28 years old sales manager making above RMB 1 million (EUR 100,000) is common.
Assignments, completed by Orion China, regularly cover positions for Financial Controllers around the RMB 500,000 (EUR 58,000) figure, HRDs in the vicinity of RMB 700,000 (EUR 80,000) and many others, with financial packages often giving a new meaning to the common image of China as the land of cheap labor. You need to face the facts, if you want to buy yourself the next superstar everyone else wants, you will most likely have to fork out a substantial amount for it, at least, more than your competitors.

Money can’t buy happiness…but you can definitely get yourself a top senior HR or Finance candidate, in China, for the right price… Sure, there are no comparisons possible between a Shanghai or Guangdong based factory worker and his counterpart in Europe, the US or Japan. China has and will continue to retain its image of “world’s factory” for years to come, with affordable labor costs and ever increasing quality standards. Nonetheless, good management, talented leaders and high potential profiles come with a high price tag, just like it would, in “Developed” economies.

Companies that will successfully implement localization strategies, in the upcoming years, and leverage on the amazing opportunities this rapidly growing market yields; are the ones currently understanding that quality, experience and skills come at a certain price, in particular in the Chinese economic capital Shanghai is. A solid and ethical executive search firm, with deep networks, up-to-date market knowledge, and experienced consultants, is therefore a partner of choice to prevent your next hiring from becoming a time bomb, in your company’s development plan, or a pricey mishap that may not look great during your next board meeting.

Nortel Cuts 200 Jobs in China

Nortel Networks Corporation (OTC: NRTLQ and TSE: NT) has reduced about 200 jobs in China, as part of its global 3,200-employee layoff plan announced in February 2009, according to Nortel Networks (China) Ltd.

The global job cut is expected to end in several months, but it is not clear whether more employees in the country would be dismissed. In part of Nortel’s earlier 1,800-employee layoff plan, a certain number of employees in China were fired. By far, the company’s China-based staff has had over 4,000 employees.

On January 14, the global telecoms equipment provider filed for bankruptcy protection, due to a credit squeeze and a sales decline. And it is set to shut most of its R&D centers over the world, only retaining those in Canada and China.

In addition, Nortel has established four subsidiaries in China for production and technological services, as well as two cutting-edge R&D centers in Beijing and Guangzhou.

Hong Kong’s jobless rate at near 3-year high

HONG Kong’s unemployment rate rose to a 32-month high because of staff cuts by firms reducing costs to weather the city’s deepening recession.

The seasonally-adjusted jobless rate for the three months through February climbed to 5 percent, the government said yesterday on its Website, from 4.6 percent at the end of January. That was more than the 4.9-percent median estimate of 13 economists surveyed by Bloomberg News.

Walt Disney Co, the second-largest United States media firm, said yesterday that it was shedding staff in the city. The government has pledged to create about 120,000 jobs by quickening infrastructure spending, subsidizing employers for new hires and setting up temporary government positions.

“Although the government has pledged a massive job creation program, the timing and the scale of the scheme is uncertain and much will depend upon the response of the private sector,” said Joanne Yim, chief economist at Hang Seng Bank Ltd in Hong Kong. “With more employers likely to shed jobs in the coming months, the unemployment rate may climb to as high as 7 percent this year.’

More Taiwanese lose jobs as rate hits 5.75%

TAIWAN’S jobless rate hit a record 5.75 percent in February despite a multibillion dollar plan to create jobs and cushion the economic downturn, regulators said yesterday.

Of the total 624,000 unemployed workers, 53 percent lost their jobs due to company closures or layoffs.

Taiwan’s electronics sector – the heart of its export-dependent economy – has been hit especially hard as demand has dropped sharply from the United States and other industrialized countries.

Labor Council Chairwoman Wang Ju-shiuan put part of the blame for the rising unemployment rate ?? up from 5.31 percent in January – on a failure to implement public works projects as scheduled.

Taiwan unveiled a NT$320-billion (US$9.5 billion) plan in early February to help create some 150,000 jobs in 2009.

Taiwan’s economy shrank 8.36 percent in the final quarter last year, following a minus 1-percent drop in the third quarter.

Fewer employers aiming to hire staff

JUST over a third of employers in China, or 34 percent, plan to increase staff numbers in the first quarter, 10 percent fewer than last quarter.

However, the figure remains the highest in Asia, according to a report released yesterday, and many respondents remain optimistic about their company’s performance in 2009, with 47 percent saying it would be “excellent” or “good.”

The Hudson Report surveyed the expectations of almost 3,000 key executives from multinational organization in all major industry sectors in Asia, with 858 of them based in China.

The steepest decline in hiring expectation was in the banking and financial services sector, from 50 percent last quarter to 29 percent this quarter.

The media, pubic relations and advertising sector also reported falling hiring expectations, from 33 percent last quarter to 18 percent.

Last year some 61 percent of respondents had expected to increase hiring in the first quarter.

The percentage who forecast a head count reduction rose from 1 percent in 2008 to 8 percent this quarter.

The consumer sector was the most optimistic about the future, with 62 percent forecasting excellent or good performance in 2009, while respondents in information technology and telecom were the least confident, with 15 percent believing their company’s prospects would be poor this year.

Despite the decline in hiring expectations, almost half of the respondents were willing to pay salary increases of more than 10 percent to attract new people at management level, of which 17 percent of respondents expected pay increases of more than 20 percent, a significantly higher figure than for any other market in Asia, including Japan and Singapore.

Across all sectors, bonuses of more than 10 percent of the employees’ yearly salary were forecast by 32 percent of respondents, of which 6 percent said they would pay bonuses of more than 20 percent. Some 12 percent of respondents were not planning to pay a bonus, 6 percent more than in 2008’s first quarter.

Angie Eagan, Hudson’s Shanghai general manager, said that employers could now pay lower salary increases to attract new managerial hires and were actively recruiting talented candidates displaced by the downturn.

System Operation Engineer ?eng096sh)

Job Title: System Operation Engineer
Report To: Group Leader
Location: Shanghai&Guangzhou
With operations in 50 countries and 68,000 employees, our client is a world leader in Mission-critical information systems for the Aerospace, Defense and Security markets with its global network of 20,000 high-level researchers.
Our client’s rich history goes back well over a century. Built slowly and with careful planning, the Group boasts remarkable cohesion and strength, and has often proven its ability to adapt its structures to prevailing conditions.
Leveraging a global presence and spanning the entire value chain, from prime contracting to equipment; our client plays a pivotal role in making the world a safer place. With the development in APAC, especially in China, they are looking for talents to join them.
Job Description:
1. Managing, maintaining and support of automatic control system for platform, data configuration and libraries developed across multiple geographical sites;
2. Performs technical/engineering tasks to define system configuration of system and subsystem according to customer requirements;
3. Presents configuration proposals and reports to customers and/or other engineering/management groups in clear, complete, concise and non-ambiguous terms;
4. Configure system databases;
5. Update, create, and maintain automated build scripts and processes;
6. Document Configuration Management procedures;
7. Defines or proposes configuration updates of processes and standards covering the work and its products based on knowledge of systems engineering and/or his technical specialty;
8. Handle some emergency to ensure the system configuration match customer requirements and safety operating principles / concepts for the product and smoothly operate on site.
Education Requirements:
1. Bachelor’s Degree (Software Engineering, Electrical and Computer Engineering, or Computer Science) or equivalent
2. 4+ years of Software Configuration and Operation Management experience
Required Skills:
1. Extensive experience with Configuration Management concepts and procedures including source code management, build and release management, administration and automation of builds, and generation of audits and metrics;
2. Has overview over the whole system VOBC, CBTC, ATS, Vehicle, Wayside, PMI, MAU;
3. Experience in the use of version control systems such as CVS;
4. Proven knowledge of best practices software development lifecycle;
5. Strong attention to detail;
6. Excellent verbal and written communication skills;
7. Experience working in a team environment;
8. Strong hands-on troubleshooting skills;
9. Fluent in English.
* Please send us your complete resume (in Chinese and in English) to: ‘topjob_eng096sh@dacare.com'(Please replace “#” with “@”)
* In the email subject please include the position name and job #

1.24m college students to graduate jobless this year

About 1.24 million Chinese college students will graduate without jobs that require their qualifications this year, Tian Chengping, head of the Ministry of Labor and Social Security, has warned.
A total of 4.13 million students graduated from higher education institutions this year, 750,000 more than last year, said Tian.

Tian said the government had set up a mechanism to provide guidance and training for unemployed graduates.

Only 22 percent of China’s new jobs last year were for college graduates, according to a ministry study of 114 urban labor markets.

Tian said the country should create more jobs in the process of economic development and urged college graduates to work in grassroots units and undeveloped areas where they were most wanted.

With an average 10 percent annual economic growth over the past two decades, China was no longer able to accommodate surplus labor, with the official unemployment rate standing at 4.1 percent in the first nine months.

The demand for college graduates was down by 22 percent in 24 provinces and 15 major cities from last year, said a report issued by the Ministry of Personnel in March.

A survey showed 52.14 percent of bachelors considered lack of social experience as the biggest obstacle in finding work.

Colleges and universities should organize internships to prepare students for employment, said Lin Zeyan, a researcher with the Development Research Center of the State Council, at a forum this month.

The country needed to develop the service sector and promote small and medium sized enterprises to create more jobs, said Mo Rong, deputy chief of the Labor Science Research Institute of the ministry.

Regional Sales Manager (mkt279sh)

Company introduction

As a U.S. leading provider of integrated systems for the genetic variation analysis and biological function, our client develops and manufactures technology that allows researchers to gather, process, and analyze genetic information that can be used to study the causes of disease. Their system helps scientists answer complex biological questions—at a revolutionary speed and cost. With their business expansion in China, they are looking for a Regional Sales Manager, based in Beijing or Shanghai.

Job Responsibilities:

1. Development, implementation and monitoring of the business plan to meet agreed budget and achieve the annual sales plan.
2. Recruit, train, motivate, support and manage Regional Account Managers and sales team to make sure them to achieve the sales target.
3. Monitor, assist, set standards and evaluate distributor performance
4. Supervise and co-ordinate activities in areas such as Market Research, Seminars, and workshops.
5. Responsible for ensuring an appropriate marketing information system and level of market knowledge.

Requirements:

1. Master’s degree or higher, with extensive industry experience
2. Must be able to build relationships at a very high level
3. Must be very fluent in English
4. Minimum of 10 years sales experience and better experienced with solutions sales approach.
5. Must be able to build relationships at a very high level
* Please send us your complete resume (in Chinese and in English) to: ‘topjob_mkt279sh@dacare.com'(Please replace “#” with “@”)
* In the email subject please include the position name and job #

Students flog CVs in flagging market

In an unfortunate reversal of fortune, more than 70 percent of upcoming graduates have yet to secure a job.

“Normally about 70 percent of graduates have job offers in March, but now the situation is completely upside down,” Wu Xiaohui, senior campus recruitment consultant with Shanghai Foreign Service Co Ltd (SFSC), told China Daily yesterday.

According to SFSC’s report, two-thirds of students have sent out more than 30 resumes since last autumn, with one frenzied student even sending out 600 copies to recruiters, Wu said. “The financial turmoil is forcing us to take advantage of every possibility to find a job because many companies have stopped recruiting,” said Xiao Qin, 22, a student from Shanghai International Studies University.

Jia Dong, a computer major graduate, said, “I have hardly missed a chance to hand out my resume since last year – job fairs, campus recruitment sessions or even by e-mail. With more than 120 copies of my resume out there I think I deserve better.”

The report, released Saturday by SFSC, the city’s largest employment agency, surveyed 519 undergraduate and graduate students from 12 local universities.

“The time after the Chinese Spring Festival, especially March, is usually the peak season for fresh graduates to sign job contracts with employers,” Wu Xiaohui, senior campus recruitment consultant with SFSC, said.

According to another survey by SFSC, about 55 percent of the city’s 104 multinational corporations didn’t intend to recruit new staff this year amid the deepening recession.

Among those who plan to hire, half will recruit fewer than 10 people, compared with an average of 50 to 100 people in previous years.

Earlier this month, the SFSC teamed up with 157 multinational corporations to offer 1,000 vocational training opportunities, 1,000 internship positions and 1,000 job openings for graduates in the city to help ease the shrinking job market.

The Outlook for Recruiting

The recession we’re in will have long-run consequences for employment and consequently recruiting. The world is about to see the biggest increase in unemployment in decades. The World Bank and the IMF predict that global trade will contract at the fastest rate since 1930 and global economic output will drop for the first time since the Second World War. Employment is a lagging indicator of problems in the wider economy, so unemployment will continue to rise even if economies start to recover today. The consensus estimate among economists is that in the developed world average unemployment will exceed 10% before the end of 2010.

There are glimmers of hope. Inventories have fallen to such low levels that production will have to be increased just to meet the current level of demand. The fall in consumption is beginning to level out. In the U.S., auto dealer and homebuilder surveys are heading up. Japanese automakers have announced production increases. A broader indicator of an upturn — JPMorgan’s global manufacturing index — posted a second consecutive gain in February, and its new-orders index is rising. A realtor friend just wrote that she has five closings this month. 5. F-i-v-e. 5. Way to go.

What Will Emerge?
Regardless of when we emerge from this situation, there are some major changes in the employment landscape that will change recruiting in terms of where it occurs and how it is done. Where recruiting occurs will depend on where there is growth — somewhat debatable but getting clearer. Where it will not occur is in finance and housing construction; they will not return to past levels for a very long time. Also, if you work in an industry that’s heavily dependent on exports, then don’t expect an upturn either. Domestic demand is also falling overseas, and countries will increasingly strive to protect their domestic industries, further reducing the need for imports.

Where?
A recovery will be weak: losses in asset values and the need to reduce debt will all but guarantee that. But there will still be pockets of growth. These will be largely in infrastructure, IT, education, healthcare, government, and energy.

Infrastructure will be an early winner because so much stimulus and other funds are being directed at it — not just in the U.S. but also overseas. In particular, India and China are channeling billions of dollars at infrastructure projects to both boost employment and enhance economic activity. That means industries that support infrastructure — heavy equipment, architecture, cement, safety equipment, etc. will see near-immediate upturn in demand.

IT and engineering are perennial job creators, and will remain a source of employment for recruiters. For the simple reason that supply cannot match demand, a problem that will be exacerbated by restrictions on companies receiving stimulus funds from hiring foreign workers. This gap is even wider overseas. In India and China, compensation in IT is estimated to increase this year by 11% and 8% respectively because of the extreme shortage of qualified professionals.

Education will see jobs growth because of three factors: 1) large cohorts of teachers reaching retirement age; 2) a massive expansion in funding for education and student aid in the current federal budget; and 3) large increases in enrollment in higher education by people unable to find work.

Healthcare is another engine of job growth. Enough has been written elsewhere on the shortage of nurses, doctors, etc. that it doesn’t need to be repeated here. The U.S. Bureau of Labor Statistics also predicts an increase in social services jobs as a swelling number of retirees check-in for medical care.

Government payrolls at the federal level will swell to accommodate the administrative needs created by the vast expansions of regulatory authority being proposed — over banking, transportation, education, labor, and healthcare. The situation is likely to be the opposite at the state level where most states find themselves facing huge budget shortfalls.

Energy in general and green energy in particular will see significant growth. Biofuels, wind energy, and solar all will benefit from new investments and tax incentives. Consequently jobs that are related — research, infrastructure, maintenance, and sales can expect to benefit. However, the number of jobs in these industries is small to begin with, so the overall impact may not be much.

Interestingly, much of the increase in employment is expected to occur in small businesses and startups. One impact of a recession is that more people start businesses because they can’t find work. With expansions in federal grants for some of the above industries, expect to see a lot of new companies emerge. Also expect to see geographical shifts in areas of employment growth. California and New York continue to shed jobs as employers move away because of high taxes and burdensome state mandates. The beneficiaries are many Midwestern and southern states that have low taxes and fewer restrictions.

Recruiting will become more difficult in this new landscape that emerges. Unemployment is not evenly distributed, and for many of the industries mentioned above there is not an abundance of unemployed talent. The employed are also less interested in changing jobs in an uncertain economic climate and will likely remain so for years. Finally, mobility for many is restricted by their inability to sell their houses. Many people will be forced to delay retirement, but that will not solve the supply problem. Many of the new jobs that will be created cannot be easily filled with skills available in the current labor pool.

How?
Changes in how recruiting is done are harder to predict, but some trends can be discerned. Given that a recovery will be weak, employers are more likely to turn to part-time and contract recruiters than have full-time staffs. This will be reinforced because much of the growth in jobs is expected to occur in small and medium-size businesses that have no need or cannot support full-time recruiters. An increase in needs for sourcing, as opposed to full-service recruiting, will occur as employers seek to minimize costs.

Technology will need to adapt. The major boards are not designed for use by the occasional recruiter. It’s likely that products and services targeting small-businesses will be where we see most changes in recruiting technology.

The Legend of the Phoenix
What we’re experiencing is known in economic theory as creative destruction. Jobs are destroyed and new ones emerge. In the past it has been a somewhat gradual transition, but not this time. In past downturns the mood has never been so sour. In 1990 and 2001 most saw the recession as a slow-down, a readjustment, perhaps even a necessary realignment of the business cycle — something to be concerned about not a lot. The future was bright. After all, this is America. But this time is different. It shows up in many little ways. Several people I know have asked that we use Skype to talk to lower their phone bills; that they’ve cancelled their magazine subscriptions and only read online; that they’ve changed their home page from CNN to the BBC because there’s less negative news. Larger numbers of friends than I’ve ever seen are online late at night and available to chat. Someone I know to be an eternal optimist wrote to me that the American dream was an illusion and they don’t believe it in any more. Much has gone wrong if it has come to this.

This time it’s like the legend of the Phoenix. It lives for a thousand years and once that time is over, it builds its own funeral pyre, and throws itself into the flames. As it dies, it is reborn and rises from the ashes to live another thousand years. We’re at the end of the thousand years.