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Over 12 million jobs created in China this year: Report

BEIJING: The Chinese government today said it has created 12.02 million new jobs in the first 11 months of this year surpassing the goal of 9 million.

The urban registered unemployment rate stood at 4.1 per cent at the end of September, below the annual target of 4.6 per cent, the Ministry of Human Resources and Social Security (MHRSS) said.

The employment situation has been better than expected this year amid the backdrop of slowing global economic recovery and downward pressures weighing on the domestic economy, state-run Xinhua news agency quoted Human Resources Minister Yin Weimin as saying.

Meanwhile, massive layoffs have also been rare this year, as a continuous labour shortage left employers more prudent about staff cuts, Zhou added.

Yin said the focus of next year’s work will still be employment for college graduates, an expanding population that has hit 6.8 million this year.

China will carry out and improve policies in support of the employment and entrepreneurship of college graduates, expand their employment areas and introduce public recruitment services to campuses, Yin said.

To boost employment, the government also vowed to support the development of small and micro enterprises and strengthen social responsibility among large enterprises at the conference held on December 15 and 16.

China’s total urban population in search of employment reached 25 million in 2012, far exceeding the 12 million new jobs created annually in recent years, data show.

Analysts have pointed out that in addition to the pressure to create more jobs, there is a notable gap between the skills of the unemployed and the skills required for certain positions.

Most industries in China are currently facing a serious shortage of skilled workers. The manufacturing sector alone, according to the MHRSS, is in need of about 4 million senior technicians.

Expat executives in China

Interviewees are in general management roles including CEOs and COOs:

79% of the respondents see a shrinking gap of compensation package between expat and local executives.

70% noticed a change in the type of expatriate workers that China is attracting – expatriates are now younger and from more diverse nations.

71% now believe it is harder for foreign-born executives working in China to gain access to local executive positions.

42% cited “employers favor local talent” as the most inhibiting factor to finding an executive job in China.

60% of the surveyed expatriates think employers would prefer to use less skilled local people to avoid paying an expatriate compensation package.

51% are actively looking for a new opportunity.

The survey was conducted by the Association of Executive Search Consultants.

French journalists expose Foxconn again

iPhone 5 factory in a bad way

Claims by Apple and Foxconn that they had fixed the labour problems have turned out to be spin, according to a French expose by Envoyé Spécial.

Journalists from the public TV station France 2 went undercover at the Zhengzhou iPhone 5 Foxconn factory.

The programme, which is sort of a French Panorama, found many of the same problems the Chinese manufacturer and Apple promised to fix earlier this year.

According to Engadget, the report uncovers a nightmare of working conditions. Workers were forced to stay in partly built dorm rooms that had no elevators, electricity or running water.

A Foxconn manager was filmed warning workers not to plug devices into dorms that did have electricity, saying that eight workers were killed in a fire after overloading circuits.

Hacks interviewed lower-paid student employees who were of legal age to work there but were essentially slave labour. Corrupt school administrators told them they’d lose their diplomas if they didn’t take a job at the plant.

Regular workers also claimed that much of their upgraded $290 monthly salary was still being absorbed by the company through housing, insurance and food charges.

Envoyé Spécial found that Foxconn had methods of clawing back wages from employees. These included a $7 for a psychological test supposed to weed out suicidal candidates. Foxconn does not pay, but workers did.

Foxconn is under pressure from Apple to turn out shedloads of the shiny toys to keep the wealthy and clueless of the world happy.

One employee said it is so difficult to meet the quota, the company has to recruit all the time to stem the turnover of frustrated workers.

Foxconn didn’t discuss the above findings with French reporters on camera but has since admitted that it was not perfect.

It said that the company was making progress and was a market leader in meeting the needs of the new generation of workers in China.

Apple told Envoyé Spécial that its subcontractors were required to provide safe working conditions, dignity and respect to employees.

Apple said that it insisted all of its suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever its products are made.

However, neither Apple nor Foxconn seemed keen to have another round of investigations at the new plant.

China Labor Market Report 2012

China’s Labor Market Report 2012 just released in Beijing shows a large number of university students left campus without finding a job in the past decade. Experts believe that unversity recruitment expansion is not the cause of high unemployment among graduates. Boosting education reform and adjusting demand and supply in the labor market is the key to the solution.

The expansion of college recruitment started in 1999 when 1.6 million students were admitted to universities and colleges in China that year. The figure was 50 percent higher than the previous year.

After that, the student recruitment scale kept growing at a fast pace; in 2012, more than 68 million students entered universities and colleges.

Since 2002, the year when the first batch of students in the recruitment expansion period graduated, to 2012, more than 47 million college students graduated and entered the labor market. Their skill and knowledge effectively enhanced the general level of the labor force. Statistics show that less than 5 percent of the labor force in the year 2000 had received a higher education, this figure reached more than 10 percent in 2010.

However, the Dean of Chinese Academy of Personnel Science Wu Jiang says the rate of employees with a higher education in the Chinese labor market still lags behind other countries.

“This rate is far from sufficient. The figure in some countries already reached about 20 percent in 2005. We hope to achieve this goal in 2020.”

Analysis indicates that if there were no college recruitment expansion, the pressure in the labor market may come more from the low-end market. It’s hard to imagine what influence a large scale low-end labor market would have on the country in terms of the economy and family life.

In spite of the improvements, the first time employment rate among college graduates remain low. Figures show that from 2002 to 2012, more than 30 percent of the college graduates failed to find jobs before they graduate. That is to say, more than 1 million college graduates are unemployed every year.

The Labor Market Report 2012 also points out that among those unemployed, 40 percent are students of law, economic management, accounting, business and foreign trade. But 90 percent of the students majoring in science and technology, medical science, agriculture, education are employed following graduation.

Tang Min, counselor at China State Council says education reform is one of the key causes.

“The biggest problem is our education reform didn’t follow up. A significant amount of students have a hard time in catching up the changes in the society and our universities failed to give them sufficient base knowledge to tackle the changes.”

Dean of Economic Management Institute of Beijing Normal University Lai Desheng believes that the recruitment expansion should not be blamed for the college graduates’ high unemployment rate.

The report also points out that there is a regional imbalance in the labor market because students prefer larger cities.

Xie Ying, is the director of medical reform team at a medical bureau in Bijie, a low income city in Guizhou Province.

“Most college graduates choose to work in bigger cities like Guiyang or Zunyi, rather than Bijie. Some students whose hukou, or residency permit, is here choose to come back to Bijie but there are very few who would like to work here.”

The China Labor Market Report 2012 figures show that in the past 10 years, only 12 percent of the new graduates are willing to work in rural areas, and no big change has been seen in the rate since 2002.

Despite the fact that economic development in China’s less developed mid- and western areas has improved in recent years, more than 50 percent of the graduates still choose to work in the east where the economy is better developed. Students who possessed master’s and doctor’s degree will spare no effort to find employment in cities like Beijing and Shanghai. This phenomenon remains prevalent.

Popular employment choices for graduates are education, public management, social organization and manufacturing. Information industry, media, real estate and commercial services are also popular.

CHINA-Shanghai Comp : 2013 could be a promising investment year

The Shanghai Stock Exchange rose nearly 10% in the last sessions while signs of improvement started to be seen as the economy is accelerating under the monetary control of Beijing. And this could be the beginning of a strong catch-up which could take place in 2013. The Chinese stock market is still at a three year low, and it is one of the few remaining stock markets to be negative this year. In fact, more good news reassured investors and suggested that the second largest economy hit a bottom and could see a new economic upturn next year.

The Chinese economy has shown more and more reassuring signs of upturn since the end of September. The Chinese manufacturing activity in December grew at its fastest pace in 14 months, thanks to an increase in new orders and the resilience of employment according to the first result of a survey of purchasing managers. The HSBC PMI “flash” was released at 50.9, its highest since October 2011. This indicator had increased for the fifth consecutive month, a development that strengthens the hypothesis of a stronger recovery than expected in China.

The improvement reflects the government investment projects announced in the second quarter and which begin to produce their effects on the economy. This important upturn in the activity can be explained by good numbers in construction and distribution industries. The strength of China’s services sector shows that the Chinese economy quickly came out of its slump…Investors could take interest in the Chinese stock market again.

Technically, the dynamics of the index is now bullish in weekly data above 2100 points which also refers to the 20-week moving average. One month ago we had reported that it was the time to take long positions. We reiterate our advice to target 2450 points in the first half of 2013. Any pullback on 2100/2130 points will be the opportunity to obtain long exposure to the Chinese market. We can play this bullish trend thanks to a tracker on CSI 300 (IE00B5VG7J94).

Enterprises’ salaries ‘to rise 9.3%

Chinese enterprises expect an average salary increase of 9.3 percent next year, consulting firm Towers Watson said in a report.

The growth rate is a bit lower than the 9.6 percent for 2012, the report said.

“As retaining talented staff is becoming increasingly difficult these days, most enterprises have been striving to offer staff a competitive salary, but the inflationary pressure should not be under estimated,” said Xu Wenzong, general manager of Towers Watson China.

Geographically, in high-tech areas such as Shenzhen and Dongguan, salary expectations hit 10 percent, higher than the national average.

Measures boosting workforce expertise

A raft of favorable measures, including expanding recruitment programs, are leading to more foreign experts and expertise, a senior official said at a forum on Monday.

State-owned enterprises directly under the central government have hired more than 1,600 overseas employees, said Huang Shuhe, deputy director of the State Council’s State-owned Assets Supervision and Administration Commission.

“International experts have helped these enterprises produce many of the world’s leading technologies and products with their own intellectual property rights, and that has laid a foundation that will carry the enterprises forward,” he said.

A number of recruitment programs are in operation.

The Recruitment Program of Global Experts is one and through it a research and development group, involved with 15 State-owned enterprises in Beijing, hired 136 high-level experts.

China started the program in 2008, in a bid to attract 2,000 overseas professionals to key projects across a range of sectors from engineering to finance.

Another recruitment program, which started last year, aims to introduce up to 1,000 foreign professionals over 10 years to help spur innovation, promote scientific research and corporate management.

The project has just brought in 94 recruits, according to Zhang Jianguo, director of the State Administration of Foreign Experts Affairs.

Professionals recruited by both programs will be entitled to subsidies, research allowances, favorable salaries, residency permits, medical care and insurance policies.

Professor Robert Gilbert, 66, was one of the new recruits.

Gilbert, an Australian who studies nutrition and food science, started work in China in October. He plans to build his own laboratory at Huazhong University of Science and Technology and Wuhan University.

China’s emergence as a major global economy has made many foreign professionals shift their focus from traditional talent absorbers, such as the United States, he said.

“I enjoy being in China. It’s very comfortable working and living here and I will probably prolong my stay in China when my contract ends in four years,” he said.

Although China has been trying hard to attract international professionals, the country is still at the preliminary stage of attracting global talent, according to Wang Huiyao, director of the Center for China and Globalization in Beijing.

Only about 600,000 foreign professionals have work permits in China, while the US annually grants more than 100,000 green cards for foreign talent and nearly 90,000 talent visas, he said.

“We should do more to get global talent, for example by introducing more favorable and convenient visa and residence policies,” he said.

Wu Jiang, director of the Chinese Academy of Personnel Science, said the country should optimize its structure of recruitment.

“For example, China only has 10 percent of its foreign experts working in the economic field. It’s too low,” he said. “We know what kind of talent we need most only after we get a better understanding of the country’s talent and industrial structure.”

The government should also provide better public services and make its legal environment for talent introduction better, Wu suggested.

Guangzhou’s salary ranks first in 26 cities

Non-private sector workers in Guangzhou enjoy the highest salaries among 26 provincial capitals and municipalities across China, according to data released by the local statistics bureau.

Guangzhou leads the list with a 57,473 yuan ($9,052) annual salary, while Beijing ranked second with an annual salary of 56,061 yuan. Nanjing ranked third with an annual salary of 54,713 yuan.

In 2011, the national average salary for non-private sector workers was 42,452 yuan.

Eyeing up jobs with Chinese companies

More foreigners are employed by or showed a stronger interest in working for China-based companies against a backdrop of the rise of the country’s economy and the global expansion of many Chinese firms.

Huawei Technologies Co, the world’s second largest telecoms equipment maker by revenue, surprised people last year by inviting John Suffolk, former UK government chief information officer, to act as its global cyber security officer.

Suffolk is one of the most influential foreigners to work with a Chinese company. He works at Huawei’s headquarters in Shenzhen, a coastal city in South China’s Guangdong province, and reports directly to Huawei’s chief executive officer, Ren Zhengfei.

After Suffolk joined Huawei, Omar Khan, former chief product and technology officer of Samsung Mobile, was appointed co-chief executive officer of Beijing-based NetQin Mobile Inc, a mobile security software provider.

Khan was dubbed “the Godfather of Galaxy” after launching perhaps one of the best series of smartphones the Android mobile system has seen yet – the Samsung Galaxy S line.

The trend of more talented foreigners joining Chinese companies is just beginning, analysts said. Yang Haifeng, a telecoms expert who is also chief editor of Communications World Weekly, said the vigorous Chinese economy, coupled with overseas expansion of many Chinese businesses, would create many opportunities for skilled people worldwide.

“Chinese companies can provide them (expatriates) with promising prospects, good experience and, of course, generous salaries,” said Yang.

Duncan Clark, chairman of BDA China, a consultancy company that follows China’s IT industry, said some companies in China are beginning to “transcend their Chinese-ness”.

“In companies, I think we are almost beyond the ‘them and us’ of foreigners and Chinese. Once a company is founded by entrepreneurs, it doesn’t really matter where the founders are from. We are entering the age of the ‘multinational startup’,” Clark said in an email sent to China Daily.

This new breed of company is far more attractive to expatriates to work for than the traditional Chinese company, he added.

ZTE Corp, the world’s fifth telecoms equipment vendor, earns more than half of its revenue from overseas markets. In some developed countries, such as in the United States, about half of ZTE’s management team are expatriates, according to Dai Shu, director of corporate branding and communications at ZTE.

Dai said ZTE provides an equal playing field when it comes to promoting talented people. “Sometimes, foreigners have more advantages than Chinese staff because we measure performance largely by the results they deliver,” Dai said, pointing out that foreigners usually produce good results because they are culturally more close to clients.

In addition to talented foreigners, Chinese companies are also very interested in taking people who have experience in foreign companies. Lenovo Group, China’s largest PC maker, hired more than 40 laid-off employees from its mobile product rival Motorola Mobility Holdings Inc in October.
Chen Wenhui vice-president of Lenovo and general manager of phone research and development, said once Lenovo heard the news, it went to Nanjing Motorola’s R&D center immediately.

Former Motorola talent would improve Lenovo’s overseas market research ability because Motorola had many long-serving staff with good overseas experience, Chen said.

When the search giant Google Inc said it was shutting down its search service Google.cn on the Chinese mainland in 2010, its Chinese competitors also seized the opportunity to hire the US company’s best staff.

A number of Google’s senior executives left the company amid rising speculation that Google may further withdraw from the Chinese mainland with its decision to redirect its mainland traffic to Hong Kong.

These included Zhu Huican, the inventor of Google’s image search service, who went to Tencent Holdings Ltd as the chief architect of the company’s search service, but later he left again, and Wang Jin, who has been working at Baidu Inc as vice-president of technology after he left Google as former deputy director of its engineering and research institute.

For Tencent Holdings Ltd, the biggest Internet company in China by sales, talent is talent, whether it is Chinese or foreign.

“Bringing in foreign talent is quite normal here,” said Chen Shuanghua, assistant general manager of Tencent’s human resources department, adding that it is not the nationality but ability that matters.

Quite a few of Tencent’s employees used to work at major IT companies, including Microsoft Corp, Google Inc and Oracle Corp, he said.

Tencent hired Steve Gray, former executive producer at Electronic Arts Inc. Gray, who led the project for the Lord of the Rings franchise, used to be invited to give lectures at Tencent. After Gray and Tencent knew each other better, he was offered a job at Tencent in 2009 as an executive in charge of game production. Tencent is the biggest online game operator in China.

It’s not just research and development that benefits from foreign talent. So does global business expansion. Chen said Tencent’s WeChat, a hit messaging application on mobile devices, owes part of its success to the overseas marketing teams that hire local foreigners.

As part of its recruitment efforts, Tencent has taken a team to the top US universities, such as Harvard and Massachusetts Institute of Technology, every year since 2008 to recruit those with a masters in business administration. Chen said each time Tencent recruits about 10 people, most of whom will be deployed in the strategy and investment divisions.

By the end of this year, the company will have added 5,000 more people, boosting its total payroll to more than 20,000 employees, Chen said. About half of them are fresh graduates from Chinese universities, while the rest are experienced professionals.

Looking forward

Chinese companies are going to seek more international talented people as they embrace the global market. An increasing number of foreigners are considering working for Chinese companies because they believe the experience will add depth to their resumes, analysts said.

About 80 percent of the international talent in Chinese companies work in sales and marketing departments and are not based in China, according to Steve Shen, manager of information technology at Shanghai-based head-hunting company Robert Walters Talent Consulting Ltd.

Chinese companies need local talent to run their businesses in Europe and the United States because Chinese employees are not familiar with marketing procedures in the West and find it hard to explore the local markets.

Slowing economic growth in the West is also providing an opportunity for Chinese companies to lure talented foreigners and more candidates are expressing an interest in job offers from China, a country with three decades of constant economic growth, said Shen from Robert Walters.

The steady economic growth has also put Chinese enterprises in a good position to attract experienced people in the research and development sector.

Although only one in five of foreigners working for Chinese enterprises are R&D specialists, the amount is set to surge in the coming years because Chinese companies are planning to localize product designing and manufacturing in target markets, said Shen.

“China has a lack of experienced and skilled researchers and developers. International candidates with work experience are highly competitive in this area,” added Shen.

In addition, as an increasing number of Chinese companies transform from outsourcing manufacturers into retailers directly targeting local customers, they need to build a local team strong enough to power the strategic shift. Locals are often the most suitable candidates.

However, ambitious overseas expansion plans pose a series of challenges to the Chinese headquarters. One of the most stubborn ones is how to manage enlarged overseas branches.

“The cultural difference is a big problem for most of the expatriates working in China and for Chinese companies and it may affect foreigners’ careers in China,” said Shen.

Chinese enterprises will also need to figure out how much administrative powers should be delegated to overseas directors and how to effectively manage the overseas offices.

Another reason that Chinese offers have become popular among overseas job seekers is because the experience will make their future job hunting easier. Foreign companies are more willing to give jobs to those who have worked in China or for Chinese companies because the second largest economy is appealing to many foreign enterprises as a place to do business.

More overseas workers value the experience of working in China more than their pay, according to Shen.

“A China element in a candidate’s resume will award them extra points when looking for jobs with international corporations,” said Shen. “We are definitely going to see more foreigners working for Chinese employers as the nation’s economy continues to grow.”

Salary growth slows in China

Consumption growth is expected to slow as salaries rise less than before. This could affect Beijing’s efforts to be less dependent on exports

Mainland wage gains have moderated on weaker corporate profits, capping consumer demand as the government seeks to sustain a rebound after a seven-quarter economic slowdown.

Average urban salaries rose 12 per cent in the first nine months from a year earlier without adjusting for inflation, slowing from 14.4 per cent for all of last year and 13.3 per cent in 2010, government data shows. Restaurant operator Yum Brands reports smaller pay increases, and labour ministry data shows the same for minimum wages.

Deeper declines in wage growth would undermine efforts by the new leadership under Xi Jinping to boost consumer spending and shift the world’s second-biggest economy away from dependence on investment and exports.

Overcapacity in manufacturing is weighing on profits, with the latest reading due today when the statistics bureau releases industrial companies’ net income for the year to October.

“Given the poor profit picture, wage growth is bound to slow down in the coming quarters and this is set to reduce the robustness of consumption,” said Louis Kuijs, chief China economist at Royal Bank of Scotland in Hong Kong, who formerly worked at the World Bank in Beijing.

“The expected slowdown will impact the rebalancing in the sense that it will reduce the relative role of consumption in the short term.”

Li Keqiang, the second-highest ranked official in the new Communist Party leadership and set to take over from Wen Jiabao as premier in March, said last week that household spending is key to boosting local demand. Minimum wages rose an average 19.4 per cent in 18 provinces this year up to September 30, government data shows.

That follows nine-month gains of 21.7 per cent in 21 provinces last year and 24 per cent in 30 provinces in 2010. China has targeted an annual average increase of 13 per cent for 2011-15.

Consumption, which includes government and household spending, fell to 49.1 per cent of gross domestic product in 2011 from 59.6 per cent in 2002, when Hu Jintao began his decade as Communist Party chief.

Last year’s figure was close to the lowest contribution since China’s reform and opening up policy started in 1978, government data shows.

“Changing this model has become of paramount importance if China is to avoid a disruptive bust in investment in the next one to two years and lapse into a middle-income trap in the medium term,” George Magnus, senior economic adviser at UBS wrote last week, referring to growth slowdowns in developing nations after incomes rise.

In his last major speech as Communist Party chief this month, Hu vowed to double per capita income by 2020 from 2010, a target that HSBC estimates would signal real growth of about 7 per cent a year.

China’s economy expanded 7.4 per cent in the third quarter from a year earlier, the slowest pace in three years. Analysts forecast a rebound in the October-December period to 7.7 per cent, based on the median estimate in a survey this month.

Growth in investment growth has outpaced consumption for years, posing dangers including higher bad debts, overcapacity, lower profitability, environmental degradation, social instability and external imbalances, according to the World Bank and International Monetary Fund.

The global financial crisis exposed the risks to China’s economy from its dependence on exports as shipments fell for 13 months and about 20 million migrant workers lost their jobs.

Yum Brands, the US-based operator of KFC and Pizza Hut restaurants which has about 5,000 outlets in China, had a smaller increase in labour cost of 8 per cent in the last quarter for the third quarter running.

“Food inflation is falling, so there is less need to help minimum-wage workers,” said Alaistair Chan, a Sydney-based economist for Moody’s Analytics. “Median wage growth will naturally slow as it gets higher, because productivity gains slow” and diminishing returns to capital and labour set in, Chan said.

Consumer prices increased 1.7 per cent in October from a year earlier, down from a three-year high of 6.5 per cent in July 2011. Food costs rose 1.8 per cent last month, down from an 11.9 per cent gain a year earlier.