China’s changing forces of labour

Since the economic reforms and opening-up policies, China’s role in the world economy has been steadily on the rise. Even before the global crisis of 2008-2009, the mainland’s contribution to global growth exceeded that of the United States or Europe.

In the coming years, China’s economic dominance will continue to increase, assuming there is sustained internal cohesion and a peaceful international environment. However, the nature of this growth is shifting, and the pace of change may be significantly faster than anticipated.

China is moving closer to the Lewisian turning point. In 1954, Sir Arthur Lewis published a highly influential analysis on economic development with unlimited supplies of labour, which contributed to his Nobel Prize a quarter of a century later. It can be read as a story of the rise and decline of rapid growth. In East and Southeast Asia, all successful industrialisers have experienced it, in one way or another.

In the Lewis story, a “capitalist” sector (read: manufacturing) evolves by taking labour from a backward non-capitalist “subsistence” sector (read: agriculture). Initially, there seems to be “unlimited” supplies of labour from the subsistence economy, which allows the capitalist sector to expand without rising wages. Things change dramatically when the supply of surplus labour from the countryside tapers off and industrial wages begin to rise rapidly.

In China, the debates over the Lewisian turning point began in the early 2000s. The coastal export regions were experiencing migrant labour shortages, while there was anecdotal evidence of soaring migrant wages. Consequently, some observers concluded that the huge reserves of supply labour had been exhausted. After all, the growth of the working-age population was also slowing on the mainland.

At the time, I argued that what these observers saw in China was an evolving reality in some coastal regions, but the generalisations did not apply at the national level. Industrialisation had taken off in the first- and second-tier megacities of the coastal export regions. But it had barely begun in the lower-tiered cities, inland and the west.

When the reforms were initiated at the turn of the 1980s, the level of urbanisation was barely 20 per cent. When the Lewis debate began in China, it was in the low-30s. In most developed economies, the comparable figure is over 75 per cent. In other words, China still had huge reserves of “unlimited supplies of labour”.

But things are changing. Today, more than half of China is considered urban. Since economic development is unbalanced on the mainland, however, different regions exhibit different realities.

If the focus is on the labour market developments at the aggregate level, the evidence is mixed. Wage developments do not signal the demise of surplus labour. On the other hand, employment, industrial relocation and policy shifts do reflect tightening labour-market conditions.

Most importantly, demographic realities are changing, driven by decades of modernisation policies, and the attendant declining fertility and ageing, which have been amplified by the one-child policy.

Until recently, the UN anticipated that the growth of the working-age (15-64) population would turn negative on the mainland around 2020, along with similar International Monetary Fund projections. However, the pace of change may be even faster. According to the National Bureau of Statistics, China’s working-age population (15-59) registered a decline in 2012, decreasing by 3.5 million to 937 million.

The different population bases of these projections explain some of the differences. This is even clearer, if the focus is more narrowly on the young, as most industry employees are relatively young.

In 2010, the growth rate of the core 20-39 population in China shrank to zero. Furthermore, it is expected to decline faster than the overall working-age population until the early 2030s.

While these demographic facts cannot be ignored, they are not destiny, as evidenced by the recent debate and policy developments in China. During the government reshuffle, the task of the population development strategy and population policy was transferred to the National Development and Reform Commission. That allows the central government to assess the population policy from the standpoint of the overall economy.

Over time, Beijing could also take advantage of “pro-natalist” policies – for example, a one-time baby bonus, child benefit payments or tax reductions, paid maternity and paternity leave. It could also promote pro-growth policies, raise the retirement age, increase the share of the workforce and accelerate retraining.

Some observers have argued that rising migrant wages are a result of labour market segmentation – the household registration system, limited portability of benefits, rising rural reservation wages and so on. In that case, overcoming the limitations of such segmentation could support demographic evolution as well.

The huge size of China’s population, coupled with a proactive central government, offer opportunities to revise the course of China’s demographic future – given a successful transition from extensive growth to innovation-driven intensive growth. But with demographics, change takes time. As a result, policy interventions must be proactive and have a long-term perspective.

In the coming years, several advanced economies, including Japan and Germany, will face demographic decline. Their current growth and prosperity is not sustainable in the long term. It is based on the demise of the ageing rather than the birth of new life. In China, another growth path is still conceivable in the long-term – with proactive intervention.

Chinese IT execs detained over alleged bribes

Summary: Two senior executives from China’s top futures exchanges have been detained after they allegedly received bribes from vendors supplying equipment for their companies’ transaction systems.

Senior IT executives from two large futures exchanges in China have been detained for allegedly taking bribes from suppliers for their companies’ transaction systems.

Yan Shaohui, who is in his 40s, and Zhang Guoyan, 38, were arrested and questioned by prosecutors, although it is not yet clear if they will be charged, Chinese financial news site Caixin Online reported Wednesday.

According to the report, Yan is the chief engineer of the electronic exchange system at Shanghai Futures Exchange (SHFE). Zhang, on the other hand, is the director of China Financial Futures Exchange’s (CFFEX) technology center, which he joined in 2006. The amount of bribes the two are accused of taking was not stated.

The report cited several sources familiar with the matter as saying investigations into the two men were likely connected, as the two companies often shared technology and talent.

The sources added the bribes Yan and Zhang took were likely from suppliers for the exchanges’ transaction systems. A large amount of capital is spent annually on updating the systems to meet demand of new products and trading techniques, so executives in charge of the systems’ design and operations hold significant sway over suppliers, they said.

Last year, an anonymous online message accused a former SHFE executive of illegally making billions of yuan by taking advantage of the loopholes he created in the exchange’s transaction system. But when SHFE examined the system, it found no such loopholes, the Caixin Online report noted.

Prosecutors said the investigations into Yan and Zhang are not related to the design of the transactions.

CFFEX and SFHE are the two largest futures exchanges in China in terms of transaction value. According to data from China Futures Association, CFFEX was placed first in 2012 with a turnover of 75.8 trillion yuan (US$12.1 trillion), followed by SHFE with 44.6 trillion yuan (US$7.1 trillion).

Increased salary expectations

Salary levels in China are likely to increase in 2013 as the nation expects stable growth in gross domestic product, recruitment consultancy Robert Walters Plc said.

Generally speaking, candidates moving jobs usually will get a 15 to 25 percent pay increase in the nation this year, said a survey released by the London-headquartered company.

Those who stay in their jobs are getting approximately 8 percent salary increases, which corresponds with the forecast for GDP. The World Bank estimated in January China’s 2013 GDP growth could hit 8.4 percent.

With the economic environment challenging, salary increments for professionals who moved jobs were generally lower than previous years, said the survey.

Candidates typically received increases of 15 to 20 percent when changing roles in 2012, while the amount was between 15 to 30 percent in 2011. Strong performers could receive as much as a 40 percent increase in some cases, it added.

Financial sector

The banking and financial services industry was the most affected by the global economic recession. As these employers were keen to increase profitability and hire sales professionals, they were also required to minimize costs and, in some cases, were subject to headcount freezes, according to the survey.

“In the second half of last year, international financial institutions bolstered their control functions in response to several overseas banking scandals. Senior professionals with risk, compliance, credit risk approval and anti-money laundering expertise were highly sought after,” said Robert Walters.

A number of overseas financial firms delayed their expansion plans last year because of economic uncertainty. The demand for talent is set to bounce back this year as China’s economy stabilizes, said Arthur Wang, managing director of Robert Walters China.

Multinational companies will be eager to recruit candidates with better knowledge of the Chinese market as banks start to explore markets beyond major financial centers such as Shanghai and Beijing.

“Candidates who could develop strong relationships with local clientele and possessed both overseas and local experience were particularly sought after and generally received average salary increases of 10 to 20 percent when moving jobs,” Wang said.

“Meanwhile, as Chinese financial institutions continue to increase their presence within the local market, we expect to see continued demand for local candidates with Mandarin skills.”

Speaking fluent Chinese will also help the candidates to seek jobs in other industries such as information technology.

The survey found that candidates were not only required to master IT systems made by industry giants such as SAP or Oracle: Bilingual proficiency in English and Mandarin will also be expected.

Retail and luxury

In cities such as Hong Kong where IT infrastructure and construction projects were implemented, demand for IT talent also jumped, said Robert Walters.

The industry with strongest talent demand was retail and luxury, boosted by the increasing purchasing power of Chinese citizens. It may grow by up to 20 percent year-on-year until 2015. Salaries in these sectors may jump 15 to 25 percent on a yearly basis, said Wang.

According to the Beijing-based World Luxury Association, Chinese people spent $830 million on luxury goods from Jan 20 to Feb 20 this year during the traditional festival shopping spree.

Although the growth of the Chinese luxury market slowed last year, the association expects that by the end of 2015 China will dominate the global luxury market with 60 percent of market share.

“The expansion of international luxury brands into second- and third-tier cities will boost demand in sales, human resources, training and in business development departments,” said Wang.

Luxury brands such as Gucci and Louis Vuitton have entered most capital cities at a provincial level.

Manufacturing

Companies in the manufacturing sector are also likely to recruit more staff in China to cement their presence in the world’s second largest economy, the report showed.

“As the economy showed signs of recovery at the end of 2012 with improving manufacturing activity, multinational conglomerates are likely to continue to invest in China moving into 2013.”

Robert Walters expects this new trend will lead to new jobs becoming available, although organizations will remain cost-conscious and, as a result, will seek local candidates to fill positions vacated by expatriates.

Despite an uncertain economy and a challenging business climate, companies specializing in foreign-made consumer goods, auto parts, machinery and pharmaceuticals performed well throughout the year, Walters said.

Most recruitment activities throughout 2012 were largely replacement-focused as employers concentrated on reducing costs. Although most job seekers were primarily motivated by a better salary, career development is playing an increasingly important role among Chinese candidates, according to the survey.

Inside China’s Economy: Shanghai Leads Office Worker Salary Rankings; Power Usage Up 5.5% January-February

Shanghai Leads Office Worker Salary Rankings
Shanghai has topped a white-collar worker salary list of China’s 24 largest cities, according to a report released by Zhaopin.com, a leading Chinese online job advertising site. The city’s ¥7,112 monthly salary for white-collar workers is followed by Shenzhen’s ¥6,787/month and Beijing’s ¥5,453/month. The three highest paid industries in Shanghai are energy/mining (¥9,711), automobile (¥9,644) and petrochemicals (¥9,218). The three highest paid industries in Shenzhen are telecom (¥8,488), finance (¥8,240) and energy/mining (¥8,220). The three highest paid industries in Beijing are telecom (¥7,633), real estate (¥7,095) and finance (¥6,950).

PBOC’s Zhou Says 20% of Local Govt Debts Are Risky
About 20% of China’s local government financing vehicles are not profitable and are vulnerable to risks, Xinhua reported, citing central bank governor Zhou Xiaochuan. Different from those funding major infrastructure and mortgages, 20% of local government financing vehicles are funding projects which are largely not profitable and the debts have to be paid with other incomes of local governments, according to Zhou. He called for further reforms to introduce new financing tools to ensure financial support for the country’s urbanization.

Money Rate Rises Amid Inflation Concern
China’s money-market rate rose to a one-week high after central bank governor Zhou Xiaochuan said the nation should be on high alert over inflation, Bloomberg reported. The CPI climbed to a 10-month high of 3.2% in February. The People’s Bank of China will sell ¥18 billion of 28-day repurchase contracts Thursday, which will reduce the amount of cash in the system and stem the rapid monetary growth. The seven-day repurchase rate, which measures interbank funding availability, rose 0.06 percentage points to 3.08% as of 10:45am in Shanghai Thursday.

Power Usage Up 5.5% January-February
China’s electricity consumption fell 12.5% year on year to 337.4 billion kW hours in February 2013 due to the Chinese New Year holiday, the National Energy Administration said. Between January and February, electricity consumption was up 5.5% to 789.2 billion kW hours, including 12.8 billion kW hours by the primary sector (up 4.3%), 552.8 billion kW hours by the secondary sector (up 4.2%), 106.8 billion kW hours by the tertiary sector (up 13.8%) and 116.9 billion kW hours by civilians (up 4.7%). A total of 6.48 million kW of new power generation capacity were installed during the two months, including 3.4 million kW of coal-fired capacity and 1.56 million kW of hydropower capacity.

Railroad Investment Jumps 26% January-February
Fixed-asset investment in China’s railways totaled ¥37.63 billion in the first two months of 2013, including ¥25.14 billion in rail infrastructure, up 25.7% and 20.9% respectively from the same period of last year, said the Ministry of Railways, which is soon to break up and merge with the Ministry of Transport. The strong growth came after the investment in the sector remained sluggish throughout 2012 following a deadly high speed train crash in 2011. Chinese railways are expected to receive ¥650 billion in total fixed-asset investment this year, including ¥520 billion in rail infrastructure.

Deal-of-the-Day Turnover Exceeds ¥2.3b in January
Turnover at Chinese deal-of-the-day websites added up to ¥2.32 billion in January 2013, up 7.5% from a month earlier and up 72% from a year earlier, according to Tuan800.com, a site that collects information about such deals. 46.6 million people purchased deal-of-the-day coupons in January, up 4.4% from a month earlier and up 33.9% from a year earlier.

Hong Kong losing its lustre as mainland Chinese firms raise pay

Big mainland cities like Shanghai are ratcheting up the pressure on Hong Kong on a new front – enticing professionals and specialists with higher pay and perks as the salary gap between the two narrows.

According to British recruitment agency Hays, 47 per cent of mainland-based businesses increased salaries by more than 10 per cent last year, compared with only 4 per cent in Hong Kong.

A Hays survey of 1,200 employers in Asia, including those in Hong Kong, the mainland, Japan and Singapore, showed that a chief financial officer on the mainland could earn up to 2.5 million yuan (HK$3.1 million) a year, beating a Hong Kong counterpart whose annual income tops out at HK$3 million.

“China led Asian countries in terms of salary growth despite uncertain economic conditions in other parts of the world,” said Simon Lance, regional director for Hays in China. “Competition in the job market is fierce and it is a salary-driven market.”

The British company said talented executives worldwide, including expats and overseas Chinese, were increasingly looking to relocate to the mainland.

Skill shortages remain a stumbling block to foreign companies’ aggressive expansions in the mammoth market, with 30 per cent of employers saying they planned to further raise salaries by more than 10 per cent this year.

The Hays survey showed that 93 per cent of employers were worried about a shortage of skilled workers, which would hamper their business growth.

But Lance said the trend of more professionals being drawn to China by increasing pay packages could be reversed. China’s higher personal income tax, difficult business environment and poor food-safety record could emerge as primary concerns, he said.

The performance of foreign businesses in China has declined as they fall victim to rising labour costs. A survey by the American Chamber of Commerce in Shanghai revealed recently that US companies reported profit drops for a second consecutive year last year due to rising costs, tougher competition and a slowing economy.

ZTE cuts senior, middle management roles in restructure

ZTE has reduced some middle and senior management positions amid an ongoing organizational review which begun last year to streamline the organization.

A spokesperson told ZDNet there will also be changes in underperforming parts of the company. “ZTE’s aim is to make our organization more streamlined and deliver improved business performance,” the spokesperson said, adding the company has a “natural” employee attrition rate of between 5 percent to 10 percent annually.

The company was responding to queries about reports about massive job cuts to its workforce in the first quarter of 2013.

The Investment Bulletin reported on Monday it learned the Chinese telecoms equipment manufacturer will be laying off 20 percent of its workforce in the first quarter of the year. The layoffs will also be staggered, with a certain percentage of contracts not being extended as they come up for renewal each month, the article said.

Streamlining underway
In January, ZTE announced plans to streamline itself to form a simplified, three layer structure comprising of headquarters, operational division and representative office, and some regional and structural grouping will be eliminated.

“The reorganization will strengthen competitiveness and risk-management, ensuring all departments have access to key operational resources,” ZTE said in the statement.

Rumors of large layoffs at ZTE have been circulating since ZTE’s vice president Shen Li announced his resignation on February 17, 2013. However, the company’s management has denied such claims that it laid off 10 percent of its workforce, explaining 5 percent left of their own will while 5 percent were those with the lowest performance and part of routine elimination, a separate report by Want China Times, noted.

In January, ZTE said it expected to book losses of up to US$439 million in its preliminary report for the year ending December 31, 2012, due to postponed contracts and decreases in revenue from terminals in the domestic market.

Hangzhou to Recruit Tourism Ambassador with High Salary

China’s coastal city Hangzhou plans to recruit a tourism image ambassador worldwide by paying 40,000 euros for one year work. The recruitment has been posted on well-known social networking services, including Twitter, Facebook, Pinterest and YouTube, reported the official website of the Hangzhou municipal government.

The “Modern Marco Polo — Dr. Hangzhou” global recruitment campaign is looking for a tourism ambassador by providing Chinese culture lovers around the world with a chance to experience the best of Chinese tea, silk, sigillography (the art of Chinese chop and seal making), kung fu and traditional Chinese medicine while being remunerated to the tune of 40,000 euros plus a 15-day free trip to Hangzhou. The only work for “Dr. Hangzhou” is to share his or her experience in Hangzhou through the internet

Participants must complete an online training program and games about Hangzhou culture first and the top 20 will enter the next round. The government will select the winner from the 20 candidates.
The unique competition procedures and the high payment are attractive for young people, and recruitment through modern media will help raise Hangzhou’s image and competitiveness, said Li Hong, head of the Hangzhou Tourism Commission.

In 2009, Australia’s Queensland tourism authority started a recruitment campaign of caretaker of the Islands of the Great Barrier Reef. The “dream job” attracted 35,000 applicants and adventurer Ben Southall from Britain finally won the job. He worked only three hours a week and enjoyed a salary package of 150,000 US dollars for the six-month contract.

The recruitment triggered hot debate among netizens. Some think the competition is interesting and the work is attractive. Some criticized the extremely high salary as a waste of money and said the government should spend money in more urgent issues.

Tudou Founder to Poach U.S. Talent for New Chinese Animated-Film Studio

Gary Wang, who left his online video platform after its merger with rivals Youku in August, said he hopes to import foreign technical experts to staff his new enterprise, to be launched April 1.

HONG KONG – Having left the limelight more than six months ago when he sold his online-video brainchild, Tudou, to his erstwhile rivals Youku, Gary Wang is now gearing for a return with a bang – by unveiling a Beijing-based animated-film studio producing movies for domestic consumption.

But the enterprise may have an international twist on it: Wang is aiming to recruit animation-film experts from Hollywood so as to compete with imported U.S. blockbusters.

Speaking to the Wall Street Journal, Wang said he would build a team that includes U.S. members. He said he had met directors, storyboard artists and senior animators while on a two-week scouting trip in Los Angeles and San Francisco in January.

“I get the impression that everyone there is excited about the Chinese market,” said Wang, who was born in China but moved to New York in 1993 to study high school before graduating with a computer science degree at Baltimore’s John Hopkins University.

Wang said he has already secured hundreds of thousands of dollars from international investors for his latest project and that the output will be mainly aimed at domestic audiences.

Citing an improvement in his home country’s distribution, exhibition and copyright protection issues, and also the surge in opportunities and profit in what now stands as the second-biggest film market in the world, Wang said “the time is right” to launch an animation-film studio that could tap into this pool.

Wang’s studio will add a domestic competitor in a scene that has long been dominated by Hollywood blockbusters. While films like DreamWorks’ Kung Fu Panda franchise have proved to be massive hits in China, the local industry has failed to offer reputable alternatives beyond straightforward copies like Legend of a Rabbit, which flopped badly at home.

In fact, DreamWorks will be one of Wang’s major competitors on home turf as well, as the U.S. studio is now already proceeding with building a studio near Shanghai under the name Oriental DreamWorks, a joint venture owned alongside China Media Capital, Shanghai Media Group and Shanghai Alliance Investment. Upon the launch of the company last year, the company announced the making of Kung Fu Panda 3 as a co-production, with a release date in 2016.

Wang founded Tudou in 2005 and sold his company to Youku, his long-running rivals in the business of hosting online videos for Chinese audiences, in August in a stock deal worth about $1 billion. He said his investors, which he did not name, are with him in terms of looking at the new business from a “very long-term view.”

Outlook bright for services job seekers

Survey reports big rise in number of companies planning to take on staff

Service sector employers have reported one of their most optimistic hiring periods in years, with nearly 25 percent planning to hire more staff over the next quarter, according to a survey from global recruitment company, the ManpowerGroup.

Its Employment Outlook Survey, covering the second quarter of the year, said its net employment outlook – which compared hiring and layoff figures – for the Chinese sector was +22 percent, meaning more employers planned to increase than cut staff, a quarterly increase of 4 percent compared to the first quarter.

The company produces localized surveys for many countries, and the exercise is considered one of the widest-recognized of its type.

Zhang Jinrong, managing director of ManpowerGroup China, said: “Vacancies are increasing in the nation’s service sector as the central government aims to further boost its development in a bid to make its economy driven more by domestic consumption than by industrial investment and exports.”

Within China’s 12th Five-Year Plan (2011-15), the central government has prioritized improving the service sector to raise service levels and attract more talented staff to work in the sector.

The plan is to increase the added value of the sector by 4 percent, and add 4 percent more job opportunities by 2015.

In 2012, the added value of the service sector increased by 1.2 percent, 0.2 percent higher than expected.

“It is essential to boost the service industries and offer essential services for consumers to support the economic development of China gradually,” Shi Zihai, head of the policy research office under the National Development and Reform Commission, said in an online interview on gov.cn and xinhuanet.com on Friday.

Service sector companies said government policies have started to have a positive effect on business.

Zhuang Qingman, general manager of Happy Lemon Shanghai Ltd, a teahouse chain with 300 outlets in China, said: “The recovering global economy and the enhanced daily living standards of consumers in China are boosting the demands of the service sector, and helping offer more opportunities for job seekers.”

Happy Lemon is hoping to double its outlets across the country and recruit 80 percent more employees by the end of 2013.

Zhuang added that further development of the sector is essential, as Chinese residents spend more and their incomes rise.

The Manpower survey said Chinese employers expect to grow staffing levels in all the six main service industry sectors.

Opportunities for job seekers are expected to improve marginally for the second consecutive quarter.

China’s net employment outlook of +18 percent (seasonally adjusted) is 3 percent stronger quarter-to-quarter and remains relatively stable year-on-year.

During the second quarter, 21 percent of Chinese employers said they expected to increase staffing levels, while only 3 percent planned to cut staff.

Some 41 percent of employers reported that they have no plans to grow or cut staff levels in the quarter ahead.

Manpower’s Zhang added: “We are seeing sustainable growth being aggressively pursued.

“For instance, many enterprises in the coastal regions continue to search for the skills they need, and many are moving their search inland for management-level talent and technicians.”

He said that the moderate economic recovery had provided solid opportunities for many companies to develop new business, meaning a renewed search for talent.

During this time, companies should consider implementing improved training systems, and explore ways to increase productivity to prolong the recovery effects and drive long-term, stable development, Zhang said.

The survey showed that positive hiring activity is anticipated in the wholesale and retail sectors, with an outlook of +20 percent, and the finance, insurance and real estate sector, with a +19 percent outlook.

Strong levels of hiring are also expected by employers in both the manufacturing and the transportation and utilities sectors, where outlooks stand at +17 percent, and in the mining and construction sector, with an outlook of +15 percent.

“Chengdu in Sichuan province has seized development opportunities in recent years and benefited from industrial transfers from the eastern coastal provinces to the west,” said Zhang.

He added that to reinforce its position as the economic driver and largest market in western China, Chengdu is establishing a modern manufacturing base and creating conditions for its high-end service industry to flourish.

A total of 4,203 employers in the Chinese mainland were interviewed by Manpower to measure their staffing intentions between April and June 2013.

Globally, the survey said that employers in 32 of the 42 countries and regions surveyed expect to add to their workforces in varying degrees during the second quarter of 2013, compared to employers in 29 of 42 countries and regions in the first quarter of 2013.

Hiring optimism strengthened quarter-on-quarter in 21 countries and regions and softened in 15.

Saon joins the ‘big three’ with ChinaHR deal

Global recruitment company Saongroup is taking aim at the number one slot in the Chinese online recruitment market with the purchase last month of the market number three, China HR.com.

Ciaran Lally, chief executive of the Irish recruiter’s China business, said the company now has 3,100 employees in 179 cities in China, after buying ChinaHR from the US company Monster for an undisclosed sum. Some sites have reported this as about $30 million (¤22.86 million).

Lally says the purchase is timely given the Irish group’s expansion plans, and also a very good fit when the regional spread of myjob.com’s business is taken into account.

With the myjob.com brand, Saongroup had built up a strong position in the second-, third- and fourth-tier cities, he said, and was number four in the market.

The tier one cities, such as Beijing and Shanghai, were dominated by the “Big Three” – 5onejob, which is US-listed, Zhaopin, which is Australian-listed, and ChinaHR.

“Our most profitable businesses, with scale, are tier two or three. A city like Zhongshan has a population of two or three million people, which is small by Chinese standards but still a significant market, with strong GDP growth,” says Lally in an interview in the group’s headquarters in Beijing, in the old ChinaHR building.

“If you take a snapshot at the end of last year we had 2,500 people, avoiding the tier ones. That project had ran its course. We pumped up the country ; we were very strong in telesales and job fairs,” says Lally.

Denis O’Brien holds a 75 per cent shareholding in Saongroup, while its chairman, Leslie Buckley, holds the remaining 25 per cent. Both O’Brien and Buckley insisted that the company expand its presence across the country, including breaking into the tier one cities.

This was easier said than done. The first-tier cities are seen as too expensive and difficult to break into, as the big three firms already had such a strong presence there.

Then, fortuitously, Monster took a strategic decision to sell ChinaHR. In contrast to myjob.com, ChinaHR did not have a presence in the second-, third- and fourth-tier cities. It seemed a good fit.

The two firms entered discussions and the deal closed on February 6th. If you add the two pieces together, you ha ve
myjob.com in the tiers four, three and two, and then you’ve ChinaHR with its great brand and presence in tier one. Aggregating the two makes perfect sense, says Lally.

“It’s really positioned us in terms of the company . The old staff at myjob.com have gone from telesales operation to SMEs and now, all of a sudden, we can use this network we’ve built over the last years to talk to Fortune 500 companies.

“And ChinaHR’s clients really are a ‘who’s who’ of China – VW, China Mobile, Baidu and others,” says Lally.

“I’ve no excuse if we don’t achieve number one at this stage. We have the products that the number one and number two have, we have the footprint across the country in 179 cities and we have the depth within the team,” he says.

“We have funding available to market and rebuild the brand so we are positioned to keep taking market share.”

“We now have 3,100 people. We were well-placed and the timing was quite fortunate for us. The deal makes sense. All of the changes will happen in Q2 [the second quarter ]. We hope to have a very significant relaunch of the brand,” says Lally.

The group is on track to achieve 41 per cent growth in the first quarter, while the overall market is seeing low, single-digit growth.

“China must succeed for Saongroup. There is a good 10 -15 years of solid growth here.”

Saongroup.com has operations across four continents – Europe, Africa, Asia and the Americas – and websites in 30 countries.