Fear of the axe
In China, working at a multinational company (MNC) used to be seen as an ideal choice, offering job stability as well as a high salary and decent benefits.
But in recent months many MNC workers have become victims of layoff plans by their well-known foreign employers.
US-based Motorola Mobility, a hardware unit acquired by Google Inc in May 2012, announced a cut of 1,200 jobs worldwide earlier this month, and the cuts will be mainly in China, the US and India, media reports said.
Motorola Mobility China said on March 8 that “the new job cuts are a continuation of the reductions announced last summer,” but did not reveal how many employees will be laid off in China.
A previous round of business restructuring at the company in August 2012 resulted in 4,000 layoffs globally, and an engineer at the Beijing office said that the company had closed all its other operations in China apart from the Beijing office, which currently has 700 employees. The firm has around 12,000 employees worldwide.
Media reports said that after the new round of job cuts, only 200 jobs will be saved in China, mainly in the areas of marketing and sales.
However, Motorola Mobility is not the only overseas firm downsizing its China workforce.
Who is firing?
Finnish mobile phone producer Nokia Corp cut about 100 staff at its Dongguan factory in South China’s Guangdong Province in October, following job cuts at its Beijing-based research center and consolidation of its Chinese distribution centers in July.
US chip producer AMD laid off 15 percent of the staff at its Shanghai branch in November.
Also in November, Japanese electronics firm Panasonic Corp merged its Shanghai plasma display panel television plant with its liquid crystal display television factory in East China’s Shandong Province, and shut down the Shanghai factory.
Some foreign supermarket chains such as Wal-Mart and CP Lotus have also reportedly cut jobs recently.
Past layoffs by large foreign firms have tended to focus on other countries, but the recent job cuts have been taking place in China too, and affecting higher-level positions such as in research and development (R&D) rather than sales and administrative jobs, Xing Zhiming, a business director of Beijing-based recruitment firm Career International Consulting Ltd, told the Global Times Friday.
“The mobile phone and chip firms decided to cut jobs because their industries have seen faster transformation cycles and more intense competition, resulting in losses at firms that are slower in adjusting to the market,” Xing said.
Supermarket chains cut jobs due to excessively rapid expansion in China, but job cuts are a normal phenomenon and a way to adjust strategy for the market, he noted.
Most of the laid-off employees at these MNCs have been reemployed either at their competitors or at domestic private firms, which are aiming to learn standardized management from the MNCs, Xing said. “For example, some employees laid off from a foreign chip producer’s server department now work at Chinese server providers or downstream producers.”
Motorola Mobility closed its Nanjing R&D center in August, and some of the laid-off employees from the center have relocated to Shanghai or to Motorola’s headquarters in the US, but most now still work in Nanjing at other software enterprises such as Lenovo and Samsung, a former employee at the center told the Global Times Saturday.
Who is hiring?
According to a survey of more than 1,000 firms in 12 key industries in China released by Career International on January 15, 2013, 58.8 percent of respondents said they would be hiring new staff in 2013, with only 26.1 percent planning for job cuts.
Owing to high costs and falling profits, just 46.5 percent of companies in the energy and chemical sectors said they would hire more staff in 2013, while 47.1 percent of machinery manufacturing firms planned for job increases in 2013 due to the sluggish global economy, the lowest two among the 12 industries, the survey found.
In contrast, 75.7 percent of the country’s auto firms have plans to hire more staff, thanks to expanded production capacity and the need for more production and R&D staff, the survey said.
Foreign auto producers have strong confidence in the Chinese market and are also expanding and recruiting. German auto firm Volkswagen announced in November it would invest 14 billion euros ($18.3 billion) in China by 2016.
Domestic auto brands are also expanding into overseas markets, which will offer opportunities for marketing and sales personnel in these areas in 2013, the report said.
The second most confident industry in the survey was real estate, with 70.4 percent of respondents planning to recruit more employees this year, thanks to a rebound in the property sector in the second half of 2012 and good expectations for the sector in 2013, especially for commercial property projects, the report said.
Although the survey found that companies in first-tier cities are more willing to recruit new staff than those in smaller cities, some manufacturing enterprises have relocated to or expanded their recruitment in smaller cities such as Wuhan in Central China’s Hubei Province, Chengdu in Southwest China’s Sichuan Province and Xi’an in Northwest China’s Shaanxi Province, Xing said, as a result of rising labor costs in coastal cities and production workers’ increasing desire to work near home.
As China’s State-owned enterprises and private firms have gained a more solid foundation in the market, their hiring is also increasing, Xing noted.
MNCs in China plan to recruit fewer employees than their Chinese peers, according to the Career International report, which found that 54.1 percent of MNCs have plans to increase jobs, compared with 61.7 percent of private Chinese firms and 62.4 percent of State-owned enterprises.
The hiring market in China is still strong, Jonathan Edwards, a partner at the Shanghai office of recruitment firm Antal International, told the Global Times Friday. Around 65 percent of Antal’s clients are planning to hire staff in 2013, Edwards said.
“Occasionally companies might have a hiring freeze, but this tends to be short-term and due to organizational restructuring rather than other reasons. Most MNCs have a long-term plan for their business in China and the hiring of key staff remains an important component of this plan,” Edwards said.
“We see strong pockets of demand in many industries, as diverse as healthcare and retail,” he noted, predicting that consumer-led industries such as autos would continue to grow.