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Expats in top demand for Chinese state-owned enterprises

There has been a significant increase in the demand for foreign professionals to represent Chinese state-owned enterprises abroad as the nation gears up its global commercial activities and plans listings of its domestic companies on international bourses.

Robert Parkinson, founder and CEO of RMG Selection, an international recruitment firm with offices in the China, says that the job market started picking up in the second half of 2013, and ended the year with strong indications of good hiring activity continuing into 2014 on the back of growing optimism and confidence. One the areas that is seen robust recruiting is for foreigners who can represent Chinese interests abroad, and have specific knowledge of capital markets and listings regimes.

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RMG recently published the results of a survey of the China job market, done in conjunction with academics from the University of Nottingham. The research report, 2013 China Talent-flow Survey Report 2, tracked several trends such as the rate of ‘job-hopping’ in various industries, including financial services and professional services.

Of the 4,000 participants in the survey, more than a quarter had changed jobs in the previous 12 months compared to about a fifth in the previous survey period (end 2012/early 2013). Parkinson says candidates demand – and get – increases varying from 20% to 50% each time they move.

Most of the ‘job-hopping’ activity was concentrated among candidates who earned 50,000 RMB (over US$8,000 per month), while the age demographic most likely to change jobs was the so-called “millennials” – candidates born in the early 1990s – with 43% reporting they had changed employer in 2013.

“Many Chinese graduates will take pretty much any job they can find because the job market is so competitive. But once they have settled, and a better offer comes along, they will move quickly.”

RMG is seeing a flood of ethnic Chinese to China – either nationals who have worked abroad moving home, or people with Chinese ancestry and family connections wanting to seek opportunities in what Parkinson described as a very ‘hot’ market.

But Chinese companies were also seeking out foreigners who could represent their interests abroad – especially people with a strong understanding of and experience in international capital markets – skills that many Chinese nationals currently lack due to the country’s historically closed economy.

But for expats, finding a job in China and even looking for another role when already working in the country is challenging. Many channels available to finance professionals in other parts of the world, such as company recruitment portals, job boards, newspaper listings, and internet sites are practically non-existent.

One of the reasons, says Parkinson, is cultural. “Candidates, especially senior people, regard it as beneath them to look for jobs – they expect employers and headhunters to come to them.”

This supports one of the key findings for the research: that using headhunters is still the preferred channel for Chinese companies to find candidates. In the recent survey, the researchers found that the percentage of Chinese companies using headhunters had increased from 35% to 57% in the past year.

Lenovo challenges Apple, Samsung

Yang Yuanqing was never afraid of declaring war on the strongest enemies.

After beating Hewlett-Packard Co to take the No 1 position in the global personal computer industry, Yang, the chairman and CEO of Lenovo Group Ltd, can’t wait to challenge Apple Inc and Samsung Electronics Co Ltd.

“Traditional PC vendors are no longer our top rivals nowadays,” said the engineer-turned-executive. “Our next step is to challenge Apple and Samsung in the portable consumer electronics sector.”

Over the past five years, Lenovo eroded other PC manufacturers’ market share bit by bit, reaching the top position in China first and then in the rest of the world. Yang is determined to copy this strategy on a new battleground.

The biggest campaigns Lenovo launched in 2013 were for its smartphone and tablet series.

The Beijing-based company invited basketball sensation Kobe Bryant and Hollywood star Ashton Kutcher to endorse its high-end smartphone and tablet products in a bid to lure young Chinese buyers.

The company came out with most of its flagship gadgets just before Apple unveiled its iPhone 5S and iPad Air devices.

Lenovo has sold 1 million Yoga-branded tablets since the product’s launch in October, according to Yang, who also plans to bring Lenovo’s consumer electronics to developed markets such as the United Kingdom and the United States.

The company sees the smartphone market as a stepping stone to enter other mobile consumer electronics markets because of its popularity in both emerging and developed markets.

According to a Gartner report, Lenovo was the world’s third-largest smartphone manufacturer in terms of market share as of the third quarter of 2013.

The company sold nearly 13 million smartphones around the world, taking more than 5 percent of global market share.

Yet the Chinese company still lags far behind Apple and Samsung in terms of shipments.

Asia-Pacific markets are poised to post huge increases in smartphone sales as more buyers abandon feature phones for lower-end smartphones.

“Consumers in China and Latin America are rushing to replace their old models with smartphones,” said Anshul Gupta, principal research analyst at Gartner.

About 48 percent of Chinese mobile phone owners will use a smartphone by the end of 2014, Forrester Research Inc estimated. The figure is expected to increase to 64 percent by 2017.

In China, Lenovo is the second-largest vendor after Samsung, according to local research firm Analysys International.

Among the 93 million smartphones sold in the third quarter, Lenovo controlled 11.4 percent of market share, while Samsung had 18.1 percent.

Liu Jun, vice-president of Lenovo, said the company is eyeing an even bigger market share outside China.

Lenovo sees the rise of emerging markets as a golden opportunity for its business in the post-PC era. It’s quickly expanding operations in Southeast Asian nations including Malaysia, Indonesia and Singapore.

Antonio Wang, associate director at industry consultancy IDC China, said that Lenovo’s advances were mostly made via overseas M&A deals at the beginning of 2013.

“The company was able to use its own research and successful marketing strategy in the mobile devices sector to create huge profits later on,” Wang said.

Yang, Lenovo’s CEO, recently announced the opening of a brand-new assembly plant in Wuhan, Hubei province.

Located in the southeast part of the city, the factory is the world’s largest manufacturing facility for Lenovo and a hub for the company’s mobile product line, Yang said.

It will build more than 30 million smartphones and tablets in 2014, representing 40 percent of the company’s total output in the mobile sector.

The plant will also recruit another 4,000 employees this year and will ship out more than 100 million mobile devices once put into full operation.

“We will largely rely on our own plants to feed global demand for mobile devices,” said Liu, Lenovo’s vice-president.

Unlike Apple, which outsources its production, Lenovo makes nearly 70 percent of its mobile devices itself.

“The company plans to turn the Wuhan plant into the world’s largest facility for developing, testing and manufacturing mobile devices,” Liu said.

Johnson & Johnson trademark revoked in China

China’s top industry and commerce watchdog recently ruled that the trademark “OneTouch” for a line of blood glucose meters and test strips produced by LifeScan, a Johnson & Johnson company, violates Chinese trademark laws, and should be revoked.

According to Chinese laws, if Johnson & Johnson doesn’t file a lawsuit against the ruling in 30 days, or if a verdict isn’t reached within 60 days after the ruling was made, the Trademark Appeal Board of China’s State Administration for Industry and Commerce has the right to remove all of the company’s OneTouch products from the market.

Public security authorities can also confiscate the company’s illegal income from the product line in the past years, said Huang Yunzhong, an attorney from Beijing Peiwen Law Firm.

Huang is also the legal counsel of Guilin Zhonghui Biotechnology Co in the Guangxi Zhuang autonomous region, which has been under criminal investigation since 2007 for allegedly producing counterfeits of Johnson & Johnson’s OneTouch blood glucose test strips used by patients with diabetes.

In 2005, Johnson & Johnson recalled its OneTouch glucose meters, because instead of providing a warning, the meter turned itself off when it read a dangerous blood glucose level of 1024 mg/dL or above.

But later in 2006, Johnson & Johnson announced that it found a large amount of counterfeit blood glucose test strips from Zhonghui in China, which caused previous machine failures in its blood glucose meters.

Huang Yunzhong, the attorney, filed the dispute on the “OneTouch” trademark to the Trademark Appeal Board in late 2011, and the board reached the decision to revoke the trademark on Dec 27, 2013.

The recent ruling said “one touch” falls into a category of medical subject headings, so “OneTouch” cannot be trademarked.

Huang believes the ruling would bring about a favorable investigation result for Zhonghui on the accusations the company was making counterfeits.

Johnson & Johnson told China Daily it would comment on the ruling when the company had prepared a response.

Apple opens new online store on tmall.com site

Apple, the maker of iPhones and iPads, opened an online store Tuesday on tmall.com, China’s largest business-to-consumer online marketplace.

The store on Tmall was launched by Apple on Tuesday, providing an online selling platform in addition to the company’s online store, a customer service staffer with the online store said Tuesday.

The layout looks similar to Apple’s official online store for China, except for the logos and additional information of Tmall.

The price tags for Apple products on the Tmall store are exactly the same as those on Apple’s online store. It remains unknown whether special discounts will be offered on days such as November 11, known as Singles’ Day in China – similar to the Black Friday shopping bonanza in the US, according to the customer service staff member.

There has been no official announcement from Apple, and the Global Times could not reach Apple for comment by press time on Tuesday.

Yan Qiao, Tmall’s PR director, confirmed to the Global Times on Tuesday about the launch of the Tmall store by Apple.

The move came a few days after Apple unveiled its long-rumored deal with China Mobile, the world’s largest telecom operator by subscribers, which analysts believe will serve to prop up Apple’s market share in the country, where the US mobile gadget maker was losing ground to not only its nearest rival Samsung, but also an array of cheaper Chinese brands.

“With the Tmall store, Apple is set to embrace a broader customer base, as top online marketplaces have picked up steam in the country as an alternative to brick-and-mortar outlets,” Wang Jun, an industry analyst with Beijing-based Analysys International, told the Global Times Tuesday.

Handsets sold online in the market are estimated to represent 11 percent of the total in 2013, according to sales monitoring data from market research firm GfK China.

But Wang noted “the new store is unlikely to give a big impetus to Apple’s sales in the market.”

Only revolutionary new products from the company are likely to ignite the flame of consumers’ buying passion, he commented.

Mengniu agrees nutrition products tie-up with US firm

China Mengniu Dairy Co Monday announced that it has signed an agreement with leading US consumer food and beverage company WhiteWave Foods Co to jointly expand into the Chinese nutrition market.

In order to produce and sell nutrition products in China, a joint venture will be set up with the Chinese dairy producer holding a 51 percent stake and 49 percent to be held by WhiteWave, according to a statement filed by Mengniu on Hong Kong Stock Exchange on Monday. The venture formation is expected to obtain approval from Chinese authorities in the first half of this year.

Meanwhile, the venture has agreed to offer 376.7 million yuan ($62.2 million) to purchase Chinese infant formula maker Yashili’s nutrition plant, which is still under construction currently in Zhengzhou, Central China’s Henan Province, said the statement.

Mengniu is Yashili’s majority owner.

Mengniu has to diversify its product range, as the company’s core business – liquid milk – does not have much room for growth amid fierce competition from imported brands, Chen Lianfang, an analyst from Beijing Orient Agribusiness Consultant Ltd, told the Global Times Monday.

“China has seen a fast annual growth rate of more than 100 percent in imported liquid milk amounts in the past two years, as domestic consumers tend to prefer foreign dairy brands in the wake of the powdered milk scandal in 2008,” Chen said.

The latest financial information about Mengniu’s operation is not available to the public on the company website, but its mid-term financial results ending June 30, 2013 showed that the company gained 20.7 billion yuan, while its major rival Yili raked in more money over the same period, totaling 24 billion yuan.

According to the two companies’ mid-term financial reports, the sales of liquid milk products contributed to 88.3 percent of Mengniu’s overall revenues, with the rest mainly coming from ice cream.

Yili got about 75 percent of its revenue from liquid milk, but also makes money from products such as ice cream, milk powder and mixed animal feeds.

Mengniu also has been in the domestic milk powder market since 2006, but the company does not have a fairly satisfactory performance in this segment, resulting in its embrace of the country’s nutrition market this time, Yan Qiang, a researcher from Beijing-based Hejun Consulting, told the Global Times Monday.

An April report by Shenzhen-based market research firm China Competition Information stated that sales in the domestic nutrition industry reached 113 billion yuan in 2012, 32 percent growth year-on-year, forecasting the amount will surpass 430 billion yuan in 2018.

As China’s aging population is getting larger and the central government will implement the new second-child policy announced last November around the country in the near future, the demands for high-quality, especially foreign-branded or -invested, nutrition products will spike, said Yan.

Gregg Engles, CEO of WhiteWave, also sensed the potential boom in China’s nutrition market, as he expects that the tie-up with Mengniu could help his company access China, a promising market “with a rapidly growing, multi-billion dollar nutritious products segment,” according to a press release issued Sunday.

Mengniu could benefit a lot from the cooperation with WhiteWave in terms of technology as well as establishing its brand in the nutrition sector, Yan noted.

WhiteWave sells various goods such as plant-based foods and beverage as well as dairy products throughout North America and Europe.

However, Chen held a wait-and-see attitude toward the prospect of Mengniu’s nutrition operation, as the sector in China is faced with loose regulations and fairly chaotic competition.

“Mengniu, widely known as a liquid milk giant, will have to spend a fairly long time and lots of vigor in gaining consumers’ trust in the nutrition market,” Chen said.

Time for Xiaomi to end hunger game

Last week, Xiaomi Inc revealed its major achievements for the past year. In 2013, the tech up-and-comer sold 18.7 million handsets, up 160 percent year-on-year and well above the 15 million unit production target it set at the beginning of last year.

Based on its recent successes, Xiaomi founder Lei Jun promised to turn out 40 million handsets in 2014.

Enhancing productivity is now a top priority for Xiaomi, according to internal e-mails which also state that the company can’t keep up with demand.

Xiaomi appears to be breaking away from the starvation marketing strategy it has employed so skillfully to build a name for itself over the past three years. At this juncture, this is a wise move for the company.

In the beginning, Xiaomi could have made a convincing case that its limited output was the natural result of its limited production capacity. But now that Xiaomi has earned billions and is one of China’s largest tech brands, such a lame argument would only hurt the company’s reputation.

Moreover, scarcity is no longer a useful tool now that the market is overflowing with inexpensive, feature-packed smartphones.

Pudong Development Bank earns $6.7b in 2013

Shanghai Pudong Development Bank’s net profit jumped 19.8 percent year on year to nearly 41 billion yuan ($6.7 billion) in 2013, according to a filing to the Shanghai Stock Exchange late Friday.

The financial institution is the first listed commercial bank in China to disclose its 2013 results, Shanghai Securities News reported on Saturday.

Earnings per share stood at 2.195 yuan, up 19.8 percent from a year ago, according to the statement. Operating revenue stood at just over 100 billion yuan, up 20.61 percent year on year.

The lender’s total assets reached 3.68 trillion yuan, up 17 percent from a year earlier. Its total liabilities stood at 3.47 trillion yuan, up 17.1 percent from a year ago.

The lender’s non-performing loans ratio was at 0.74 percent, 0.16 percentage points higher than that at the end of 2012.

Its outstanding deposits totaled 2.42 trillion yuan by the end of 2013, up 13.41 percent from a year earlier. Outstanding loans reached 1.77 trillion yuan, up 14.37 percent from the end of 2012.

Tsingtao Brewery accelerates expansion

Tsingtao Brewery acquired a local beer producer in North China’s Hebei province, and launched a joint venture with another in Shijiazhuang, wrapping up a storm of expansion in 2013.

In a press release, Tsingtao said it would acquire Xinzhonglou, a 64-year-old brewery in Zhangjiakou on Dec 29.

Huang Kexing, president of Tsingtao, said the company will integrate and reengineer Xinzhonglou’s branding and distribution network. In addition Tsingtao will work with Xinzhonglou to invest 400 million yuan ($65.57 million) in a new brewery with an annual production capacity of 600,000 kiloliters.

Earlier, on Dec 16, Tsingtao entered a joint venture with Jiahe Brewery in Shijiazhuang to integrate Jiahe’s marketing network and seek mutual success. Tsingtao and Jiahe will each have a 50 percent interest in the joint venture.

The two projects will enable Tsingtao to enhance its competitiveness in North China by connecting its network across the northern and southern parts of Hebei province and increasing its exposure in neighboring Shanxi province and the Inner Mongolia autonomous region.

Huang said the company now puts more focus on the market network and is striving to ensure continued quality growth and innovation.

“Only with market expansion can we build more factories to expand production capacity,” he said. “As we uphold the principle of rational investment and value investment, the company’s strategic expansion has been yielding delightful market performance.”

In March, Tsingtao broke ground for a new brewery with a capacity of 600,000 kiloliters in Luoyang, in Central China’s Henan province. It began operations in December.

A 400,000 kiloliter brewery started in August in Jiujiang, Jiangxi province. Three relocation projects in Suqian, Wuwei, and Harbin were also completed before the end of 2013. Its breweries in Qingdao and Jinan have increased production capacity to meet strong market growth.

China’s beer industry slowed in the past two years. According to the National Bureau of Statistics, China produced 24.98 million kiloliters of beer in the first half of 2013, a 5.85 percent increase from the same period last year. The growth from January to June 2012 was 4.85 percent while the same period in 2011 saw growth in beer production of 11.4 percent.

Despite the countrywide slowdown, Tsingtao’s yield hit 7.53 million kiloliters from January to September 2013, up 11 percent from the same period in 2012. Net profits jumped 28.7 percent in the first three quarters from last year.

Tsingtao’s stock price at A shares and H shares also hit record highs, according to the company’s Q3 financial report for 2013.

Alibaba’s ‘Leftover Treasure’ hits 43 mln users

Yu’ebao (Leftover Treasure). an Alibaba personal finance product, had 43.03 million users with aggregate deposits of 185.3 billion yuan (30.4 billion U.S. dollars) at the end of 2013.

Yu’ebao is an online fund established by Alipay, China’s largest third-party payment platform and subsidiary of Alibaba, part of China’s biggest online shopping mall, togetheer with the private Tianhong Fund.

“Investments” in the fund have brought 1.79 billion yuan in profits to users since its launch in June 13 this year, according Alipay on Wednesday.

Yu’erbao allows Alipay customers to invest any balance in thier accounts with the Tianhong Fund and has already become the largest fund of its kind in China.

Its users come from all over China: more than 2,000 counties and cities in 31 provincial-level administrative regions with an average deposit of 4,307 yuan per user.