Archives 2014

Labor laws need to be overhauled

You see them everywhere in Asia.

They push street carts selling food and drinks, sell newspapers and water on busy intersections, and collect garbage for recycling while breathing in thick black smoke from the exhausts of trucks, buses and cars.

In the countryside they tend to small plots, growing just enough food to survive.

Despite Asia’s massive economic gains over the last 30 years, very little of this new wealth has managed to trickle down to the grassroots, or what economists call the “informal economy”.

The millions who work in the informal economy are not covered by formal employment agreements, which are so common in developed economies.

The International Labour Organization estimates the informal economy accounts for 60 percent of Asia’s workforce.

The real challenge facing governments in emerging Asia is how to improve and protect those in the informal sector who have no protection from the non-payment of wages, and who can be retrenched at any time without notice or compensation.

They work in dangerous, low-skilled jobs with poor occupational health and safety conditions. None of them are protected by social security nets.

On the other hand, the formal sector – areas such as manufacturing, financial services and technology – is suffering from a growing skills shortage.

Asia reaped huge economic benefits when manufacturing migrated from many developed countries. Low-end manufacturing has even been migrating from China.

The World Bank has said the region’s policymakers need to enact “labor regulations and social protection policies to benefit all workers, including those in the large informal economy”.

Christophe Duchatellier, the Tokyo-based CEO of human resources firm Adecco Asia, says there has been a “significant deregulation of challenging labor laws” in many countries in Asia.

But he says that more deregulation still needs to be done if countries are to become “competitive from a labor perspective”. Duchatellier says that over the last 20 years there has been a steady shift of industrial manufacturing from the West to the East.

Much of that shift was prompted by low productivity, high taxes and high wages in the West. “Companies need to do things cheaper and faster,” he says, adding that the idea of a full-time job or ‘job for life’ is fast becoming a thing of the past in many global and regional markets.”Young people want more options and will have more employers than we did in the past.”

He believes Asian universities and schools need to better prepare young people entering the workforce with the right skills to help them get jobs.

“We need to remember that for the majority of the world, education is about preparing people to get a job. More ‘later-in-life’ retraining and re-skilling is needed for those in sunset industries and where new technologies are emerging. And companies need to encourage more apprenticeships,” Duchatellier says.

A report released earlier this year by the World Bank, East Asia Pacific at Work: Employment, Enterprise and Well-Being, said: “Asia has seen rising productivity amid a brisk structural transformation, with large movement of people into cities and higher output in agriculture, manufacturing and services.”

“Countries that were poor a generation ago successfully integrated into the global value chain, taking advantage of low labor costs,” the report said.

Commenting on the report, Axel van Trotsenburg, regional vice-president of World Bank East Asia and Pacific, said: “The unprecedented economic development in East Asia Pacific has provided jobs and lifted millions of people out of poverty and has been a triumph of working people.

“It’s time now to consolidate growth by adopting social policies that protect people, rather than any particular sector, location or profession.”

When well-designed, those policies should make sure social protection and labor regulations benefit the most vulnerable workers in society.”

The World Bank said that as economic growth is moderating and labor costs are rising, “constraints of the region’s current labor market and social protection policies are becoming a more pressing issue”.

China’s property climate index drops in May

China’s property development climate index dropped 0.77 points from April to 95.02 points in May, the National Bureau of Statistics (NBS) said on Friday.

The figure has declined month on month for four consecutive months.

In the first five months, the country’s investment in property development rose 14.7 percent year on year to 3.07 trillion yuan (about 500 billion U.S. dollars), slowing down by 1.7 percentage points from the Jan.-April period, the NBS said in a statement.

State Council makes logistics industry’s growth a priority

China is stepping up its efforts to develop its logistics industry, as the government announced its goal of building a modern national logistics service system by 2020.

The State Council’s executive meeting, chaired by Premier Li Keqiang, approved a plan on Wednesday to develop the logistics industry in the middle and long term.

The move aims to lower the operational costs of logistics enterprises and improve logistics infrastructure networks, as well as to develop large-scale companies to improve the industrial chain, according to a statement released after the meeting.

China’s economy has grown at a fast pace, but its logistics and transportation sector as a whole remains in comparatively early stages of development.

The fierce competition has created a market in which rivals offer similar and limited services.

A total of 12 logistics issues, including services for agriculture, manufacturing, industrial material supply chain and recycling materials, will become priorities because these businesses can create more new market growth points to the industry, the statement said.

The government will accelerate the reform pace to upgrade the management style of various couriers and crack down on illegal charges and regional protectionism to create a fair market environment.

It also promised to ensure land supplies and use for building logistics service facilities such as warehouses and package sorting centers, to improve the statistical system of logistics costs, and to introduce preferential financial policies for the sector.

Zhou Zhicheng, deputy director of the research department of the China Federation of Logistics and Purchasing in Beijing, said making medium- and long-term plans is a useful way to optimize industrial structure, as diversified distribution models and the fast development of e-commerce today have changed the operation method and network density of China’s logistics market.

“As more Chinese companies are inclined to expand and create new businesses nationwide, their demand for logistics will expand beyond coastal cities, with broader national network coverage, and consistent, upgraded and standard services will become a key differentiator in comparison with previous market condition,” Zhou said.

The meeting also arranged the work details of building an economic belt along the Yangtze River to underpin China’s sustainable economic development.

The statement stressed that the Yangtze River Delta is a key pole in China’s economic growth while the central and western regions along the belt boast the largest space for further economic growth.

China Mobile eyes 100b devices with 5G network

China Mobile Corp’s chairman Xi Guohua described his vision of the next-generation telecom network on Wednesday, saying the company is aiming to build a super-fast 5G network that could bring 100 billion mobile devices on the network.

The 5G technology, which remains on papers, will have a connection speed similar to the fiber Internet, the fastest fixed-line connection as of today, said Xi.

Xi, who heads the world’s largest carrier by subscriber number, did not disclose the possible launch date of 5G service. Analysts believe commercial use of 5G in China is years – if not a decade – away because the previous technology just kicked off in the country this year.

Local research of next-generation telecom technologies is most likely to get government support in the coming years however, meaning the development process could be greatly shortened.

Liu Lihua, vice-minister of the Ministry of Industry and Information Technology, told the Mobile Asia Expo on Wednesday that development of 5G technology will receive a “full government support” in the years ahead.

China Mobile launched its 4G networks in the country about half a year ago. Coverage of China Mobile 4G is mostly confined in city areas in developed coastal regions today. Xi pledged to add the amount of 4G stations to half a million by year end.

Will China’s housing market strike iceberg?


Will the bubble in China’s real estate burst in the near future, just like the titanic hitting the iceberg?

The answer may be no, some experts said.

After a round of soaring prices, the housing market is showing increasing signs of cooling down.

May was the fifth consecutive month in which the rate of price growth slowed.

Worries raised high that the decline may continue as banks become reluctant on mortgage lending.

According to official data, sales of residential property slumped 7.7 percent during the first quarter of 2014 to 1.1 trillion yuan (about 176.6 billion U.S. dollars). Month to month, home prices have been falling in more of the 70-strong pool of major cities surveyed by the National Bureau of Statistics.

When asked whether China’s housing market is experiencing a “turning point” as sales have plunged in recent months, Feng Jun, chief economic manager with the Ministry of Housing and Urban-rural Development, said recently changes in the housing market are normal and should be viewed in a broader context.

He reiterated that the aim of property control policies is to create a balanced and steady market.

“The policy is to protect reasonable buying demand and to restrain investment,” he said.

The fact is that the underlying demand-supply equation has changed, with ongoing construction exceeding the demand of a growing urban population and upgrading.

Meanwhile, investment demand is being eroded by stagnant property prices, the anti-corruption drive and investment alternatives such as wealth management products and overseas assets, according to investment bank UBS AG.

“We do not expect a sudden collapse of property prices or a financial or balance-of-payments crisis, as is often seen in emerging economies,” said Wang Tao, China economist with UBS.

A big drop in construction activity—even without a large price correction—would likely have a serious negative impact on the industrial complex and, through that, economic growth and banks’ balance sheets.

Hence, at present the real estate market is facing a serious adjustment, and the era of the secular property boom is forever behind us, he added.

More grads still opting to start own businesses


Graduates use posters to promote themselves at a job fair in Bozhou, Anhui province, on Sunday.

The percentage of Chinese college graduates choosing to start their own businesses has risen for three consecutive years, a survey shows.

It also found that the average monthly salary of self-employed graduates is higher than those who are not.

Of the college students who graduated in 2013, 2.3 percent started their own business, higher than the figure for 2012 (2 percent), 2011 (1.6 percent) and 2010 (1.5 percent).

This is according to the 2014 Chinese College Graduates’ Employment Annual Report, released on Monday by MyCOS, an education consulting and research institute in Beijing.

The survey polled 268,000 graduates from 28 provinces and regions.

Chen Yu, vice-president of the China Association for Employment Promotion, said the increase results from government efforts in recent years to support graduates in starting their own businesses, such as reduced intervention, the offer of micro loans and cuts in taxes and fees.

“These measures provide a good environment for college graduates who intend to start their own businesses,” Chen said.

The survey also found the education sector is graduates’ preferred choice when they decide to start a business, with 15 percent of them choosing to begin their careers in this area.

Other areas, including retail, wholesale, architecture, media, information and telecoms, are among the top choices.

Feng Lijuan, chief consultant at 51job.com, a major recruiting website in China, said starting a business in these fields is comparatively easier and college graduates have a bigger chance of keeping their businesses going.

“The education sector, especially test-oriented training, is expanding quickly in China and therefore college graduates, as a group of highly educated people, can easily find a place in it,” Feng said.

Research shows post-1990 generation picky about jobs

As for the retail and wholesale industries, Feng said a series of online trading websites such as taobao.com provide a simple and convenient platform for college graduates to establish their own online stores.

The report shows that only 8 percent of self-employed college graduates started their own businesses because of difficulty in landing jobs, while 48 percent did so because they wanted to become entrepreneurs.

Other reasons include having good entrepreneurial ideas, being invited by friends or peers to start a business together and believing in the income prospects of entrepreneurship.

The report said college students who started their own businesses after graduating in 2010 now earn an average of 8,424 yuan ($1,349) a month, 41 percent higher than the average for all college students who graduated that year.

Despite the good incomes earned by college graduate entrepreneurs, experts voiced concern for such businesses.

Feng believes that real entrepreneurship lies in innovative developments in areas such as the high-tech sector.

“But most Chinese college graduates can’t make it with their current knowledge structure and therefore most of the Chinese graduate entrepreneurs end up in the service industry.”

Chen said, “An ideal entrepreneurship program can solve the problem of college graduates’ employment and also create new industries and promote the development of the economy, science and technology, just like Steve Jobs and Apple did.”

More foreign students compete in China’s employment market

The competitive job market in Beijing has been hotter than the scorching summer this year, as it is not only proving to be tough for locals, but for foreign graduates seeking jobs as well. The market is further being heated up by new rules that allow foreign students to work part time while they study.

At a job fair held at the Beijing Friendship Hotel, foreign students are trying to land a job in China.

Last month, about 27 companies and institutions from China’ eastern Zhejiang Province offered 142 vacancies for positions including engineers, salespeople and foreign managers, which attracted some 200 foreigners, mostly students.

“I’ve come here to get experience and hopefully get a job in China,” 22-year-old Russian student Kristina Popova, from Beijing Foreign Studies University, told the Global Times.

It was Popova’s first time at a job fair. She has been studying Chinese for five years and has worked as a translator and part-time English teacher. Despite her existing experience in China, she said she was a bit worried.

“The interview officers seem very professional. I think they might be looking for someone with more experience,” she said.

There were over 320,000 international students studying at 690 universities across China in 2012, up 11 percent from 2011. That number is expected to reach 500,000 in 2016, according to the Department of International Cooperation and Exchange, under the Ministry of Education.

For many foreign students like Popova, China is seen as a land of possibilities. They might find jobs more easily than at home, with higher pay and a relatively more comfortable life. But not everything is easy. The path that leads to a job is often harder than they expect.

New policies

When it comes to working in China, one of the most important things that foreign students have to clarify with their Chinese employers is “will you get me a working visa?”

To get a working visa, foreigners must have at least two years of work experience in the relevant industry, which rules out most graduates. This means that foreign graduates have to go back home after graduation so they can apply for a job in China after getting the required experience.

Until last year, foreign students were not allowed to work part time or take on an internship while they were studying. Some believe these policies were the major reasons that stopped some foreign students from studying in China.

Employers face fines of up to 10,000 yuan ($1,600) for each foreigner illegally hired, and foreigners who work illegally may have their income confiscated and can face detention or deportation.

But there have been recent changes. Last year the government updated the current visa system and introduced some changes to the application process for a residence permit. For the first time, foreigners holding study residence permits were permitted to take part-time jobs or internships outside the campus as long as they obtain approval from their academic institutions and the entry and exit administrative authorities.

Lin Yaochen, a business assistant with Zhejiang-based King-Mazon Machinery Co. Ltd, who interviewed a dozen foreign students at the job fair in Beijing, told the Global Times that the company is willing to offer intern opportunities for inexperienced candidates.

“We are actually looking for the more experienced candidates, but the foreign students told us that their universities don’t offer them internship opportunities,” Lin said.

This is Lin’s third time hiring foreign talent in Beijing. “You can see these young people come prepared. They dress up in suits and greet us politely,” she said. “You can see they really take it seriously.”

At the end of a whole day of interviews, Lin said they had given out two official job offers and three internship opportunities.

During the summer hiring period this year, the career centers of many universities have been busy introducing this new rule to foreign students, who are about to compete with 7 million fresh Chinese graduates.

“I believe foreign students have a better chance than Chinese students,” Popova said.

However, education experts see it as an opportunity to promote culture. “I don’t think the increasing number of foreign students brings competition to Chinese graduates,” Zhu Dingjian, a representative of the standing committee of the All China Youth Federation, said while attending this year’s National People’s Congress in March.

“Friendship first, competition second,” Zhu continued. “Foreign students can promote diplomatic friendship no matter whether they work in China or at home.”

Ejaz Karim, 29, a Pakistani student studying at Tianjin Normal University, came all the way to Beijing for the job fair to gain experience.

Before coming to China, Karim had three years experiences working at a tour company at home. Now he wants to get into the hotel management industry.

“The economy in China is growing faster than in my country,” Karim told the Global Times. “I know the job market is becoming more and more competitive as the number of foreigners increase, but I think I can stand out with my international background.”

Foreigners with an international background, like Karim, are favored by many Chinese companies that are expanding their business networks overseas.

“We need more foreign professionals to push our products to go global,” Ge Wei, an HR manager at the Zhejiang-based Shanhai Machinery Company, told the Global Times. “We do not mind hiring talent from developing countries as they can develop new markets for us.”

The second thing that most foreign students are concerned about is payment. Generally foreign employees receive an income 2.5 times higher than Chinese employees in the same position.

But many inexperienced foreign students are satisfied with a lower starting salary. Popova said 5,000 yuan a month, with accommodation provided, would be acceptable.

“We can offer up to 40,000 yuan for a professional European engineer, plus an apartment,” said Lin. “For salespeople, 20,000 yuan a month is acceptable.”

New supervision and management

When China opened its doors to the world in 1980s, it was uncertain what kind of foreign talent it might attract. China’s foreign population has risen as the economy has grown.

Not all Chinese companies are permitted to hire foreigners. Companies that have been open for less than two years cannot, but some of these companies bypass these rules by asking foreign employees to get other types of visas such as business or tourist visas.

Over the years, the country has developed means of cracking down on foreigners working illegally. In May 2012, Beijing launched a 100-day crackdown on “illegal foreigners,” focusing on those working illegally in the city or who overstayed their visas. More than 60 models, mostly from Europe, were taken into custody for working without working visas last month in Shanghai and Guangzhou.

A year later, the authorities released new visa and residence permit regulations for foreigners, as well as new regulations about foreigners working in China.

The regulation strengthens supervision and management over foreigners, including allowing some institutions to verify their identities with exit-entry administration authorities when necessary, and making it necessary for foreign nationals to report to local entry and exit administrative authorities if they change jobs or house.

Some foreigners complain that the rules are changed too often. “Every year or 18 months, there are new rules. This can upset lots of foreigners because they don’t know where they stand. It’s inconsistent,” Carlos Ottery, 31, a teacher at the Communication University of China, told the Global Times.

Ottery has been living in China for five years with a working visa. Every time he leaves China, he has to report to the local police station within 24 hours when he comes back. He thinks this is an onerous task.

“As the regulations are getting stricter, I am afraid some small companies might think twice before getting a work visa for foreign employees,” an HR manager surnamed Zhu at a Beijing-based foreign company told the Global Times.

There have been some positive changes for foreign staff. In 2011, foreigners working in Chinese companies became eligible to participate in the national social insurance scheme, which covers pensions, medical, work-related injuries, unemployment and maternity insurance programs.

Now China is considering relaxing its “green card” policy. In the ten years since the system was launched in 2004, an average of just 248 foreigners obtained green cards annually, according to Xinhua.

But with or without a green card, staying in China is the priority for many foreign students. “I’ve been studying Chinese for five years, it would be a waste of time if I go home now,” Popova said.

When asked what if she couldn’t find a job, she considered the question for a moment. “Well, I would go for postgraduate study like Chinese students do,” she said.

Businesses more active in Beijing Fair

Bruno Masier, chairman of World Trade Point Federation, a not-for-profit organization helping trade, said he saw more companies, rather than institutions, appear at the China Beijing International Fair for Trade in Services.

Maiser, who had attended all the CIFTIS, also the Beijing Fair, since its launch in 2012, told chinadaily.com.cn on Wednesday this indicated that real players are taking opportunities in the sector of trade in services.

He said the federation has brought 60 businesses from more than 40 countries to the fair and deals worth 120 billion yuan will be signed by the closing ceremony on June 1, according to a Beijing Daily report.

In addition to companies attending with help from global institutions, some specializing in traditional Chinese medicine also took the chance to showcase products or services.

Fan Kui, chairman of Hunan Hongyao biological Polytron Technologies Inc, set up late last year, said his company needs this platform to let people know what they can do.

Fan said his company has developed a cream, containing Chinese herb extracts which, according to clinical experiments, can help control blood sugar when applied to the skin. Fan said the product can be used in elderly care but it may take a year for people to know of its existence.

The Beijing Fair was launched by the Ministry of Commerce of China and the Municipal Government of Beijing in 2012 and has been held annually.

Vanke president says property sector’s golden era over

The days of rapid growth in China’s real estate sector are over, but the government’s urbanization drive will continue to fuel demand for the next 15 years, the country’s biggest residential property developer China Vanke Co said.

After climbing at double-digit rates through most of last year, home prices in China started cooling in late 2013, with the annual growth in average new home prices slowing to an 11-month low in April as a sustained campaign to clamp down on speculative investment and easy credit gained traction.

Vanke president Yu Liang said the slowdown heralded the end of the golden era for Chinese real estate, but said the outlook remained healthy.

“The white silver era has just begun,” Yu told reporters at its research and development center in Dongguan in South China’s Guangdong Province this week.

“The industry is now after quality and service and back to real demand…The industry was worth 8.1 trillion yuan ($1.30 trillion) last year, even growing at a single-digit rate, it’s still large enough for us.”

His comments came nearly a week after ratings agency Moody’s lowered its outlook for China’s property sector and forecast flat to 5 percent yearly growth over the next 12 months, compared to 26.6 percent growth at the end of 2013.

Yu said he believed government measures to curb speculation in the property sector had worked and prices were now more sustainable.

“I don’t agree there’s a bubble. Since the tightening measures in 2008, financial leverage of developers and individual investors has dropped significantly,” Yu said.

Analysts said the latest land transaction prices have shown that the market is becoming more rational.

“Land sales in first-tier cities weakened in April as housing prices softened. It’s important for developers to time and source the land purchase better because land cost is a big factor to determine margins,” said Hong Kong-based analyst Karen Kwan.

Kwan said developers in April were bidding on average 40 percent higher than the asking price at land auctions, compared to 80-100 percent above opening bids last year. Transaction prices in April were also 1 percentage point lower than the previous month.

She said data also showed that developers had been delaying some new housing projects so she expected less oversupply in the fourth quarter.

New housing starts in the first quarter fell 25.2 percent compared to a year ago, sparking concerns that a sharp drop in construction activity and falling prices would weigh on economic growth in the world’s second-largest economy.

Yu’s comments came just days after the chairman of SOHO China sounded an alarm over the real estate sector.

“I am not upbeat about the residential market. I think China’s real estate is like the Titanic and it will soon hit an iceberg up front,” local media quoted Soho China chairman Pan Shiyi as telling a financial forum last week.

China Vanke also aims to get listed in the second half of June, Yu said.

Guangdong launches local stimulus plan

Authorities in Guangdong province, an economic powerhouse in South China, plan to allocate a large sum of money this year to boost its economy.

According to a financial budget report submitted to a provincial legislative meeting for approval on Wednesday, the province will arrange for up to 64.7 billion yuan ($10.47 billion) to support development of infrastructure, maintain stable trade growth, expand consumption and promote the transformation of industry.

The move comes after relatively slow economic growth in the first four months of 2014.

The province’s gross domestic product grew 7.2 percent year-on-year in the first quarter, or 1.3 percentage points lower than the same period last year, data from the Guangdong Provincial Statistics Bureau show.

“The economy faces pressures, and there are some uncertain factors ahead, following a tough trade situation, sluggish performance in the real estate sector and weakening demand in domestic consumption,” Zeng Zhiquan, director of Guangdong Provincial Finance Department, said. “That’s why we had to introduce financial measures to keep stable economic development for the whole year.”

Guangdong, a longtime leader in terms of economic development in China, has a GDP growth target of 8.5 percent for 2014.

“A prompt and efficient financial policy is of great importance to adjusting the economy, given the slower economic growth of the past few months,” Zeng said. There’s “an urgent need for the government to introduce measures to boost the economy.”

Of the budget, up to 14.8 billion yuan will come from local Treasury bonds, Zeng said.

“We expect that financial input will drive more social investment, which will help boost infrastructure development and expand domestic consumption,” Zeng said.

Guangdong’s fixed investment increased 17.3 percent year-on-year in the first three months, 2.2 percentage points lower than the same period last year.

Before the financial measures, the provincial government also decided to exempt 39 administrative fees for businesses from May 1.

“In such an economic situation, the exemption of administrative fees and increased financial support represented the government’s determination to cope with the economic slowdown,” Zeng said.