Archives January 2015

Hainan drug firm sues Tencent over derogatory posting

Internet giant Tencent Holdings Ltd may be facing a lawsuit from a pharmaceutical company based in Hainan province for allowing the spread of false information via its instant messaging platform WeChat.

In July, a WeChat post claimed that a medicine known as nimesulide granules, produced by Hainan Honz Pharmaceutical Co Ltd, had caused at least four deaths.

The drug is intended for the treatment of ear, nose and throat infections.

In early August, Honz reported the case to the local public security authorities, which determined that the rumor was false.

In December, Honz posted on its official WeChat account what it said was an apology from the source of the rumor as well as the case description from the local police to refute the rumor, but this move had little effect.

It then served notice on Tencent, urging the latter to delete, screen out and break the links of the false information, but it said it received little positive response from Tencent. The drug firm visited the headquarters of Tencent in mid-December to negotiate, it said, but was disappointed again.

As a result, Honz filed a lawsuit against Tencent. Haikou city’s Xiuying District People’s Court has put the case on record, the pharmaceutical company said on its official website on Tuesday.

Tencent told China Daily on Thursday that it had not received any legal claims.

Since the rumor spread on the Internet, sales of nimesulide have been heavily affected, as have sales of other medicines under the same brand, Honz told China Daily.

According to Guosen Securities Co Ltd, annual sales of nimesulide were about 100 million yuan ($16 million) between 2012 and 2014.

Honz is the largest nimesulide producer in China.

“With the rapid development of social media, which is represented by WeChat, rumors go viral due to the incomplete oversight system. It is quite difficult to monitor users’ behavior and words on social media, let alone take any regulatory or administrative steps.

“If there are no effective measures taken soon, there will be more individuals and companies that are harmed by rumors. The task of refuting rumors will also become even more difficult,” the company said in the response.

However, there appears to be a silver lining for the company. The Supreme People’s Court in October issued a judicial interpretation regarding Internet infringement, in which the plaintiff could order the Internet service provider to give the name, contact information and Internet address of an Internet user who is suspected of infringement.

“Technically speaking, all the requirements set by Honz can be met,” said Liu Haiyang, partner of the Guangzhou-based Guangda Law Firm, who is the attorney for Honz in this case.

“Tencent has the obligation to delete, screen out and break the links of the false information as an Internet service provider. As there is no precedent of a similar case, the case from Honz is very likely to set a precedent for later Internet infringement cases.”

Firms grappling with compliance talent shortage

Graduates seek prospects at a job fair in Hangzhou, Zhejiang province. They face tougher challenges in a slower economy.

Recruitment agencies find it difficult to satisfy demand as need for specialized regulatory professionals grows in several sectors

The Chinese job market will see rising demand for compliance professionals in 2015, a report suggests. The United Kingdom-based recruitment specialist Hays Plc said in its forecast that the huge growth in demand for compliance experts will be the most important trend in the next 12 months.

The government’s anti-graft campaign, as well as ongoing changes in the regulatory environment, will lead to the increased demand for compliance professionals, and the trend is expected to continue in the coming years.

According to Simon Lance, regional director of Hays in China, compliance staff usually see their salaries rise by 15 percent every year. But due to the huge shortage of candidates, experienced professionals are very likely to see their salaries increase by 30 percent or even 40 percent.

The closer cooperation between China and the United States after the 2014 APEC meeting, which was held in Beijing in November, will also result in higher demand for such talent, said Lance.

This is largely because the Chinese market will open further, and Chinese companies will need to learn more in terms of compliance.

Lance said that the demand for compliance talent will be even higher in the banking industry and elsewhere in the financial sector, including insurance, funds and securities firms, as well as in the pharmaceutical industry.

Global insurer Allianz SE got involved in compliance affairs in 2008 and set up its own compliance department one year later. The compliance staff increased from three to four people in 2014, of whom three have legal backgrounds.

Maria Zhang, head of the human resources department of Allianz China General Insurance Co Ltd, said: “Within Allianz, the compliance department is mainly responsible for working closely with the supervisory authorities and submitting reports or documents as required. It will also implement compliance projects within Allianz and manage contracts, internal controls and legal affairs.

“It is an independent department that also provides legal and compliance advice to other departments,” Zhang said.

Pete Chia, managing director of recruitment service provider BRecruit China, also said that the healthcare, vehicle, finance and high-tech sectors have a higher demand for compliance talent.

“We foresee cooperation between China and the US will be booming in the above industries. During this process, mergers and acquisitions are definitely the favored strategy for companies on both sides.

“Compliance people play the important role of making sure the acquisition and operations after the acquisition in one country obey the laws and policies of another country,” Chia said.

“Recently, we received many assignments from pharmaceutical clients, which urgently seek candidates who are well-versed in the laws of both China and the US.”

“Healthcare, vehicle, finance and high-tech companies are keen to find compliance staff. Generally, they have very specific requirements, but language skills, law certifications in both the US and China, and deep project experience are preferred by MNCs.

“Salary is not the only key factor in retaining these people. Based on feedback from our candidates, they care more about the job scope, authority and career development,” he said.

Zhou Tian, 30, received a law degree last summer and soon landed a compliance job in a local securities company in his hometown of Wuxi, in Jiangsu province.

To him, this is an ideal job, which is a little bit different from traditional legal work while also giving him a chance to enter an industry that provides opportunities to learn new things.

“The Chinese legal system is not yet mature. Neither is the Chinese finance industry,” said Zhou.

“There are only a few people working as compliance professionals at present. Therefore, if I can really obtain more financial knowledge, I can do the job really well in the long run. And the salary is also quite good, this is already quite attractive to me.”

Chia from BRecruit also added that the growing number of Chinese companies going public in overseas markets have helped boost the demand for compliance talent, with jobs in investor relations getting a lot of attention from Chinese companies.

“Many companies consider an IPO not as an end goal but as the starting point to enter the global market. This vision boosts the demand for compliance talent,” he said.

However, it is quite difficult to find the right compliance talent in China. Lance from Hays said that the pool of candidates is quite small in the country, but that is also the case globally.

Chia said that the major way to find such people is still the internal referral, as many compliance openings are not publicized.

SOE employees divided by pay gaps

Under pay reform measures which took effect Thursday, salaries and expense accounts have been slashed for senior executives at 72 centrally administrated State-owned enterprises (SOEs).

For many years, a widening gap between executive salaries and the wages of ordinary workers has been a major source of public discontent. Obviously, the new year’s salary reduction measures signify an important step toward social equality.

Nevertheless, some worry that mid-level managers could potentially outearn their bosses. Others believe ordinary staff may soon make more than their supervisors. In reality, those who contribute the most should be compensated more for their work, regardless of their standing within a company.

Of course, pay gaps exist throughout the State sector. Through their connections with Beijing, employees at central government-led SOEs typically enjoy higher pay and better working conditions than their peers in non-central SOEs.

To further promote fairness, relevant authorities should consider reducing salaries not only for senior executives at centrally administrated SOEs, but for rank-and-file workers at such enterprises as well.

Smartphones help boost e-commerce

People look at the new handset during a mobile phone trade fair on June 27, 2014.

Plans by Alibaba to boost its presence are a sign of vast opportunity

Looking for trustworthy suppliers of agricultural produce in India can be a tough job for Fan Chengliang, a Chinese businessman who exports Indian spices to China.

Fan, 40, launched his business in March last year in suburban Hyderabad, a city in southern India with a population of more than 6 million. During the harvest season, he had to travel hundreds of kilometers every day to purchase peppers from the local dealers.

“For newcomers like me, it’s difficult to appraise whether a supplier is credible or not,” Fan says. “It always takes a long period to establish trustworthy relationships with local businessmen.”

However, finding reliable suppliers using online business-to-business services is expected to become easier for businessmen like Fan, after Alibaba Group Holding Ltd, China’s largest e-commerce company, recently announced plans to boost its investment in India.

On Nov 25, Jack Ma, the founder and chairman of Alibaba, said while visiting India that the nation with the world’s second-largest population offered huge potential for e-commerce.

“We will invest more in India, and we will work with Indian entrepreneurs and technology companies,” 50-year-old Ma said at the India-China (Zhejiang) Business Cooperation Conference.

Alibaba currently has a small presence in the Indian e-commerce market. Ma, whose company is responsible for 80 percent of online retail sales in China, made the announcement two months after Alibaba’s record initial public offering in New York raised $25 billion.

“In the next three years, one of the key strategies for Alibaba is to globalize, to ensure that more small businesses around the world use our services,” he said.

According to Ma, Indian businesses have already become the second-largest presence on Alibaba after Chinese companies, and roughly 400,000 Chinese customers buy goods including spices, chocolates and tea from Indian sellers through the online platform.

Small business boost

There is huge scope for “mutual engagement” in technology between India and China, which could benefit many small businesses, Ma added.

The Economic Times, a Mumbai-based newspaper, said that during the visit, Ma was scheduled to meet with Kunal Bahl, the 31-year-old cofounder of Snapdeal.com, which styles itself as the Indian version of Alibaba.

Snapdeal, founded in 2010, has become the fastest-growing and largest online marketplace in India, with more than 25 million registered users and 50,000 business sellers.

In October, Japan’s Soft-Bank, the largest shareholder in Alibaba, pumped $627 million into Snapdeal to become the largest investor in the Indian online company as well.

Gu Jianbing, public relations director of Alibaba, did not confirm if a meeting took place between Ma and Bahl. It remains unclear how Alibaba will cooperate with its Indian partners.

The Indian government does not allow foreign direct investment in business-to-consumer e-commerce, but it does so in marketplaces where third-party sellers sell directly to shoppers through e-commerce platforms.

The online sales market in India is still at an early stage compared with China. According to Technopak Advisors, a New Delhi-based consulting company, the online trade volume in India was about $2 billion in 2013. The number was $300 billion in China at the same period.

However, the large population of young people in India has made the market more promising and attractive for investors like Alibaba.

Mobile shopping

The cheap smartphones that are popular in India are also expected to boost the country’s online trade volume. Bahl recently told Tencent Group, one of China’s biggest Internet firms, that about 65 percent of Snapdeal’s current sales were reached through mobile phones, far more than the 5 percent of only a year ago.

In India, smartphones are being sold in rural areas where “even the safety of purified water could not be guaranteed”, Bahl told Tencent.

Competition in the Indian e-commerce market has become fiercer with companies like Amazon, which entered India in 2013, stirring up the industry. Wal-Mart India has also taken its cash-and-carry wholesale stores into the virtual space, allowing customers to order online for home delivery.

India’s aggressive homegrown companies such as Flipkart, a leading e-commerce website launched in 2007, have also become powerful competitors. In June, Flipkart raised $1 billion in new capital to support its expansion, especially in mobile technology.

Flipkart says it has 22 million registered users and handles 5 million shipments per month. “The number of visitors on Flipkart.com is greater than the population of the top 10 Indian cities,” says the introduction on the company’s official website.

For Fan, the Chinese businessman, the rapid growth of the Indian e-commerce market means more choices when he selects business partners.

“If I can get more information about the suppliers through the Internet, I will not have to travel hundreds of kilometers every day during the harvest season, enduring the stimulant smell of peppers,” he said.