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Scant jobs for record number of Chinese graduates

A record number of graduates will come out of China’s colleges and universities this year, but many will rue the timing of their entry onto the job market as recruitment is slowing nationally, reports news agency UPI Asia.

At 6.99m, the number of grads is up 2.8% from 2012, but UPI says that the number of jobs for new hires has decreased around 15% year-on-year. However, China continues to recruit strongly at managerial and professional level.

One problem noted is that many new graduates prefer to work in the civil services, public institutions or state-run companies, rather than in smaller and medium-sized companies, with such firms reporting difficulties attracting these grads.

There is a parallel between this and the UK, where a recent survey of British university graduates selected the NHS as graduate employer of choice, with the BBC, the Civil Service and the United Nations also featuring in the top 10.

Click for more on logistics talent shortfalls in China. – See more at: http://www.recruiter.co.uk/news/2013/06/scant-jobs-for-record-number-of-chinese-graduates/#sthash.hXoHxk1U.dpuf

Tough job market for Chinese college graduates

Having sent out more than 110 job applications but getting no more than 10 interviews, chemistry graduate Yi Feng gave up on the idea of landing a decent job. He had traveled around a number of major Chinese cities trying his luck for four months.

Yi, who graduates from Jiangxi Normal University in east China’s Jiangxi province this month, decided to join the army to avoid what seems to be the country’s most toughest job market in a decade. He will wait for more opportunities to become available in two or three years time.

The 22-year-old said serving in the army is very appealing, adding he will get a fair allowance and enjoy favorable policies when pursuing a graduate degree or a post in the civil service later on.

“Joining the army is not a bad option for me. It has relieved my stress to find a job and will probably make me more competitive,” he said.

Although the job market in China is still much better than many other parts of the world, it is a tough market for graduates. Many job seekers have decided to shy away from the rat race and try other options.

A record-high 6.99 million Chinese students are leaving universities in 2013, a 2.8 percent increase year on year, to hunt for jobs at a time when employers are cutting down on recruitment, according to government figures.

The number of jobs for new hires this year has dropped about 15 percent year on year amid slowing economic growth in China, according to a Ministry of Education survey carried out among nearly 500 firms in February.

“The shrinking job market is the result of the sluggish world economy and tempered domestic growth,” said Yang Lin, director of the career guidance center of Beijing Technology and Business University.

New posts in many large state-owned enterprises have declined dramatically this year after economic reform or restructuring was performed in order to achieve efficiency, Yang added.

Out of 178,000 college graduates in Shanghai, 44.5 percent had signed up for employment as of May 10, while the figure for Beijing was only 33.6 percent at the beginning of May, according to government figures.

The grave employment situation has concerned China’s leadership. Chinese President Xi Jinping talked with college graduate representatives during his visit to a vocational training center in Tianjin in May, urging efforts to help graduates find employment.

China’s central government outlined measures to help college graduates in their job search, including the implementation of existing policies favorable to graduates’ employment, providing training subsidies, petty loans and tax breaks for self-employment.

Despite of the great pressure in the job market, many small- and medium-sized businesses are facing difficulties in finding employees due to a preference to seek work in the civil service, public institutions or state-run companies among young job seekers.

“We’re keen to hire college students with an education background in marketing, advertising or human resources, but it’s really difficult to attract them,” said Wang Zhong, manager of a small private company based in eastern China’s Shandong Province.

“It’s my first choice to seek employment in a large state-owned enterprise or foreign company, because they usually have a better promotion system and motivation mechanism,” said college graduate Gao Xinwei, adding it might be better to work at small firms after gaining enough experience at larger companies.

It is common for many young graduates to want to get their dream job straight away, but career planning is a long-term process and needs constant adjustment and improvement, said Yang Lin, adding that young people should not shy away from working at grassroots level.

“College students should have appropriate self-examination and be ambitious as well as down-to-earth in their job search,” said Zhang Libin, with the Ministry of Human Resources and Social Security.

Chinese workers holding American boss hostage over back pay

Chinese workers keeping an American executive confined to his Beijing medical supply factory said Tuesday that they had not been paid in two months in a compensation dispute that highlights tensions in China’s labour market.

The executive, Chip Starnes of Specialty Medical Supplies, denied the workers’ allegations of two months of unpaid wages, as he endured a fifth day of captivity at the plant in the capital’s northeastern suburbs, peering out from behind the bars of his office window.

About 100 workers are demanding back pay and severance packages identical to those offered 30 workers being laid off from the Coral Springs, Fla.-based company’s plastics division. The demands followed rumours that the entire plant was being closed, despite Starnes’ assertion that the company doesn’t plan to fire the others.

The dispute highlights general tensions in China’s labour market as bosses worry about rising wages and workers are on edge about the impact of slowing growth on the future of their jobs.

Inside one of the plant’s buildings, about 30 mostly women hung around, their arms crossed. One worker, Gao Ping, told reporters inside an administrative office in the plant that she wanted to quit because she hadn’t been paid for two months.

Dressed in blue overalls and sitting down at a desk, Gao said her division – which makes alcohol prep pads, used for cleaning skin before injections – had not been doing well and that she wanted her salary and compensation.

Workers in other divisions who saw how badly her division was doing thought the whole company was faring poorly and also wanted to quit and get compensation, said Gao, who had been working for the company for six years.

Starnes, 42, denied that they were owed unpaid salary.

“They are demanding full severance pay, but they still have a job. That’s the problem,” he said, still in the clothes he wore when he went to work Friday morning.

Chu Lixiang, a local union official representing the workers in talks with Starnes, said the workers were demanding the portion of their salaries yet to be paid and a “reasonable” level of compensation before leaving their jobs. Neither gave details on the amounts demanded.

Chu said workers believed the plant was closing and that Starnes would run away without paying severance. Starnes’ attorney arrived Tuesday afternoon. Chu later told reporters that there would be no negotiations for the rest of the day.

Starnes said that since Saturday morning, about 80 workers had been blocking every exit around the clock and depriving him of sleep by shining bright lights and banging on windows of his office.

The standoff points to long-ingrained habits among Chinese workers who are sometimes left unprotected when factories close without severance or wages owed. Such incidents have been rarer as labour protections improve, although disputes still occur and local governments have at times barred foreign executives from leaving until they are resolved.

Starnes said the company had gradually been winding down its plastics division, planning to move it to Mumbai, India. He arrived in Beijing a week ago to lay off the last 30 people. Some had been working there for up to nine years, so their compensation packages were “pretty nice,” he said. Then workers in other divisions started demanding similar severance packages on Friday, he said.

Kevin Jones, who advises U.S. companies on Chinese labour and employment law, said it is better if American executives stay at home and let their local managers lay off workers.

In a case last week, Jones said the chief financial officer of a U.S. telecommunications equipment maker wanted to come to Beijing to explain the situation and give 41 white-collar workers their termination notices.

“We told him to stay in America,” said Jones, who chairs the Shanghai-based Faegre Baker Daniels labour and employment practice. The company’s lawyers met with six employee representatives in a hotel. “We had two bodyguards but that was just in case things got out of control,” Jones said.

Christian Murck, president of the American Chamber of Commerce in China, said Chinese labour law specified a minimum severance pay in the event of a layoff due to economic necessity or if someone is dismissed due to cause, but not a maximum one.

“There is a kind of structural weakness in the way the labour law is set up that leads to negotiations and disputes when departures occur,” Murck said.

White Collars Overworked

Salaried professionals are facing greater pressure and growing anxieties

Updated criteria for identifying workers labeled “white collar” have been widely discussed among netizens in China in the past few months.

Drafted as of early 2012, the new criteria set the financial requirements for a white collar: a monthly salary exceeding 20,000 yuan ($3,260), owning an apartment with at least two bedrooms and a car worth around 150,000 yuan ($24,450).

The new standard put entry to the club out of reach for most earners.

“Four years ago, people with an annual salary of 100,000 yuan were regarded as white collar. As I finally managed to earn that money, the standard has more than doubled,” said an online post by Tangbo Xiaohu.

An online survey conducted by the Beijing-based Legal Evening News and Chinese recruitment website 51job.com in May showed that only three of 562 participating office workers reported to have met all the new requirements.

“The criteria show there is a big gap between Chinese white-collar workers’ expected salaries and reality, which put them in a constant state of insecurity and anxiety,” said Xia Xueluan, a professor of social psychology at Peking University.

Uneasy life

The definition of white collar in China has evolved a lot since the term was first introduced to China in the 1990s. Decent pay, well-fitted suits and fashionable lifestyles have been the typical impressions of white collars among the Chinese public. But in recent years, the phrase has carried more burdens than benefits.

“If you asked a college graduate in the late 1990s and early 2000s about his or her ideal job, more than 50 percent would list white collar as the first,” said Xia. “But now, less than 10 percent would make that choice.”

Kong Ranran, a college student majoring in accounting at Peking University’s Guanghua School of Management, said that her first job choice is definitely not accounting powerhouses including PriceWaterhouseCoopers (PwC), Deloitte & Touche, KPMG and Ernst & Young.

“Those accounting firms used to be my ideal work destinations and I had dreamed of working there since I was a fresh student in university,” said Kong. But she completely changed her idea after a three-month internship at PwC in the summer of 2012.

About a year earlier, Pan Jie, an auditor working for PwC in Shanghai, died of fever-induced illness due to overwork at the age of 25.

“I saw the tough situation behind the halo and it was definitely not appealing,” said Kong. “The work hours are endless and it is impossible to squeeze any time for leisure or anything else.”

Kong’s first choice now switched to civil service, which is the ideal choice among many of her classmates, especially the females. “We need to get married and have babies but we see no hope if we just work, work and work every day,” she said.

Ning Xin, working in a law firm in Beijing, recently quit her job and decided to go to the United States for further study. “With so many graduates coming back from abroad every year, it is not the best choice as I might have a hard time looking for jobs after my graduation in the United States, but I can’t think about that much as my present work is driving me mad,” said Ning.

Ning, for her two years of work in the law firm, enjoyed no vacation at all. On most weekends, she is either working in the office or flying to another city on business.

“Business trips are not as fancy as they sound; we just stayed in hotel rooms and worked on projects day and night,” said Ning, who has been to Hangzhou, a famous tourist destination in east China’s Zhejiang Province, at least 10 times, but hasn’t gotten a chance to walk around West Lake, the most-visited site in the city, for more than one hour.

Even on her last day at work, Ning worked till 11 p.m. to hand over all her projects to workmates. “I don’t even have time to enjoy the relaxation,” said Ning.

Guomao, a bustling area in Beijing’s Central Business District where Ning worked, is the gathering place of taxi drivers after 10 p.m. as they all know people working in companies there often stay late, so it is easy to get passengers.

“We get trapped at work,” said 30-year-old Jin Jian working in an advertisement company at Jianwai Soho community in Guomao. “The whole advertisement industry means endless working anyway and we cannot live in this city without salaries since the living cost in Beijing is rocketing.”

Jin used to be satisfied with his salary, which is more than 10,000 yuan a month, but it is not enough at all for him. “The mortgage is about 6,000 yuan ($978) a month and the basic living cost is about 3,000 ($489),” said Jin. “If I get married and have a baby, this salary is far from enough.”

It is not only the youngsters who feel under pressure. The first generation of white-collar workers in China, mostly in their 40s or 50s, are also in an awkward situation.

David, who declined to reveal his Chinese name, has been working in foreign-funded companies for 20 years and lives a stable middle-class life with the title of marketing director of the Asian-Pacific region.

Since January 2013, the financial report of the company said that some employees would need to be cut due to the slowing economy.

“Foreign companies are no longer glorified places to work, as state-owned and private companies in China are improving very fast with the development of the economy,” said David. Some of his contemporaries have started their own businesses with some success, but his time for such entrepreneurship has passed.

“My wife is a housewife and I have two kids studying at an international school,” said David. As the only bread winner in the family, he doesn’t want to take risks.

Money vs. health

On May 13, 24-year-old Li Yuan died of a sudden heart attack at the office of Ogilvy & Mather Beijing after working overtime for a month prior to his death.

The final message Yuan posted on Chinese social media site Weibo.com shows a photo of the young ad man saluting the camera, presumably as he left the office for the day.

Two days later, a young IT employee working at 17173.com, a Web game operator in Fuzhou City, capital of Fujian Province, died of viral myocarditis due to overwork.

Karoshi—the Japanese term for death by overwork—used to happen mostly in manufacturing factories or construction sites, but is more frequently claiming the lives of people in white collar professions in China. According to a report on China Youth Daily, almost 600,000 people die of work exhaustion in China each year.

According to a survey conducted by the China Moderate Labor Study Center, founded in September 2012, about 70 percent of the white collars working in the Central Business District of Beijing show signs of overwork and 38.4 percent are under serious pressure.

“It is highly competitive nowadays and some workers have to work overtime to compete with their counterparts,” said Yang Heqing, director of the center.

Since 1995, China has adopted a standard work week of 40 hours. “But sometimes it is the employees who want to work extra hours, so it is hard to control,” said Yang. “It has become a common phenomenon that working long hours turns out to be proof of working hard, while it is not the length of work that matters, but the quality.”

“We have the belief that work always comes before life, which also contributes to the stress of working,” said Peng Guanghua, a professor at Beijing-based Renmin University of China. “It is a topic for both employers and employees, and the research also shows that working overtime can sometimes lower productivity instead of improving it,” he said.

Looking for work becoming a career in itself

New graduates forced to adjust dreams to tough realities of nation’s weak employment market

Xie Dong, who will graduate from Xi’an University of Architecture and Technology this month, had to give up his career ambitions and accept a job his aunt arranged for him.

“I did not get any reply after sending over 20 resumes to the enterprises I am interested in,” said the 24-year-old. “I did not even have the opportunity to show myself to the enterprises.”

With his family’s help, Xie will go to work in a small State-owned company as soon as he graduates at the end of June.
Not every fresh graduate is as lucky as Xie. Most of them have struggled amid what is being called the most difficult year for fresh graduates’ employment ever.

By April 10, only 35 percent of this year’s graduates had signed job contracts with their future employers, which was 12 percentage points lower than the previous year, according to a survey from MyCOS HR Digital Information Co Ltd, a consulting company dealing with higher education.

The employment rate of postgraduates was even lower, at 26 percent, the report said.

Many companies have cut their recruitment plans for fresh graduates, amid slowing economic growth.

“Our company cut more than 30 percent of graduate recruitment,” said a human resource manager from a State-owned bank.
The increasing number of college graduates is a primary reason for the most difficult employment year. There will be 6.99 million fresh college graduates in 2013, the most since 1949, according to the Ministry of Education.

“It is the worst year ever,” said Gao Hua, an assistant professor from the finance school of a key university in Beijing.
Only two graduates in his postgraduate class of 32 students had received job offers as of the middle of June, one month away from graduation, said Gao. In the past, most of his students got jobs before they graduated.

Graduates’ employment pressure will continue, since the number of fresh graduates will remain at about 7 million annually in the next five years, said Minister of Human Resources and Social Security Yin Weimin, the Beijing Times reported on Tuesday.

Economic growth is the way to resolve the employment problem, Yin said, and China’s service industry has great potential, as the industry contributes only 36 percent of employment, which is much lower than the developing countries’ average level.

Many Chinese firms encounter recruitment problems because of the mismatch of human resource supply and demand, experts said.

Large State-owned companies and public institutions are the fresh graduates’ favorites, while small private ones are often ignored.

Li Fengyun, a postgraduate student at Beijing Foreign Studies University, is still waiting for a job offer from a primary school in Haidian district, although she already went through orientation at a listed educational service provider in Beijing.

The 26-year-old sent out more than 100 resumes in the past five months, targeting public schools and institutions.
“I want an easy life with more time to study,” she said, because she still plans to apply for a doctoral program in the future.

Salary is not too important to Li. Her only requirement is housing. “It will cost too much to rent an apartment in Beijing and I prefer jobs providing dorm space,” she added.

A report by Zhaopin.com, one of China’s largest providers of human resource services, found that college graduates prefer big cities such as Beijing, Shanghai and Guangzhou.

But staying in the big cities is an involuntary choice, some graduates said.

“Both my family and I want me to go back to my hometown, but I would have to work in a totally different industry from my major,” said Wang Ting, a fresh graduate majoring in advertisement design at a college in Beijing.

Wang said there is no real advertisement company in her hometown, a small city in Henan province, but such companies are everywhere in Beijing.

Actually, the structural contradiction is a real problem for China’s human resource market, Zhaopin.com said in its report.

China’s professional job market is still booming, and 75 percent of Chinese employers are recruiting or replacing staff at senior levels, Antal International, a United Kingdom-based recruitment and headhunting company, said in its latest global snapshot survey.

Antal International said automotive industry, retail and luxury goods and healthcare specialists are highly sought after in China.

Sales and marketing as well as research and development specialists are also in demand, according to its survey.
“Sales and marketing remains strongly in demand within companies as they focus on acquiring market share in tier-two, three and four cities in China,” said James Darlington, Antal’s head of Asia.

Yang Ziman contributed to this story.

Millennium BCP opens new branch to enhance business opportunities

The Portuguese bank Millennium BCP (Banco Comercial Português S.A.) yesterday celebrated its new branch in the territory, located at the Finance and IT Center of Macau building, in Avenida Comercial de Macau. In a launching ceremony held yesterday at MGM Macau, the CEO of BCP, Nuno Amado, emphasized the new branch “has more space and provides an excellent environment to further develop businesses.”

With branches in Macau, China, Angola, Mozambique and Poland, the Millennium BCP is hoping to enhance business opportunities within Portuguese-speaking countries. “This new branch allows the further development of BCP not only in Macau, but also in other countries we are represented in,” Amado explained. Nuno Amado revealed there are two main goals and areas of business behind the new branch launch: “We wish to develop our operations within the triangle China-Africa-Portugal, as we have a language and history in common. We also intend to see the Renminbi market evolve, since it is a business which is not that developed yet, so I believe we should focus on this area.” Moreover, he added that “there are more and more Chinese companies investing in Macau, so this is definitely an area where BCP could evolve.”

The CEO of Banco Comercial Português S.A. emphasized that the Macau branch recorded “a significant growth” in 2012, almost tripling the results of the previous year. Following such results, the bank plans to increase its workforce.

“We need to recruit more staff and we are able to expand by having these new facilities,” he added.

Furthermore, Nuno Amado highlighted the role of the Macau branch as a platform “to promote business opportunities between Chinese enterprises and companies in Portugal, Brazil, Angola and Mozambique.” Building a bridge between the East and the West seems to be one of the challenges the Macau branch is ready and willing to face.

The new branch launch ceremony included a ribbon cutting formality with the presence of several personalities, such as Wan Sin Long, a board member of the Monetary Authority of Macau, Vítor Sereno, the Consul General of Portugal in Macau and Hong Kong, the director of Banco Comercial Português S.A., José João Pãozinho, the Senior Assistant Director-General of Economic Affairs Department of Liaison Office of the Central People’s Government in the Macau and Conceição Lucas, the Executive Director of BCP, among others.

Results of Millennium BCP in Macau tripled in 2012

The results of the Portuguese bank Millennium BCP in Macau have tripled in 2012, the director of Banco Comercial Português S.A., José João Pãozinho, revealed yesterday. During the new branch launching ceremony, held yesterday at MGM Macau, the director of BCP announced the bank made MOP 177.7 million in profit, more than MOP 11 billion in deposits and MOP 10 billion in loans. According to José João Pãozinho, “the results have tripled” compared to numbers from the previous year. In his opinion, the great results are mainly the outcome of “a significant growth in the credit portfolio and good results in terms of clients’ deposits.” He concluded saying that “the branch registered extraordinary results following the development of a business platform that Portuguese companies have put in place in Macau and China”.

51Job: An Attractive Chinese Small-Cap Pick

As the global economy takes a route to recovery, a bullish momentum prevails in the markets worldwide. However, in China things are a little different as analysts fear that the authorities can no longer sustain the high growth rates. The Shanghai Composite Index fell by more than 2% in the past year. The security regulators in the Chinese economy have taken measures to keep up with the global trend as it gears the economy towards a wave of IPOs. This provides investors with an opportunity to take advantage of the low stock prices to add value to their investment portfolio.

The services sector of the economy has been one of the fastest growing fields; however, the growth has somewhat stagnated in the recent past. In May, there were signs of weak growth again raising concerns about sustainability. According to Shen Lan, an economist at Standard Chartered, the economy is facing a stimulus lag that will soon payoff in the coming quarter. The employment index improved to 50 prior to an index of 49.6. With more firms willing to expand especially in the green technology sector, the employment index is expected to improve sharply. 51Job Inc. (JOBS) is one of the companies that will benefit greatly from the recovery in the aforementioned index.

This article will discuss the upside potential in 51Job by analyzing in detail the internal as well as external factors that makes this small cap stock an attractive pick.

What Does 51Job DO?

51job is a leading provider of integrated human resource services in China aiming to capitalize on recruitment related services. Through online recruitment services at 51job.com and print advertisements in 51job Weekly, it enables enterprises to attract, identify and recruit employees and connects millions of job seekers with employment opportunities. 51job also provides a number of other value-added human resource services, catering to business process outsourcing, training, executive search and compensation and benefits analysis. 51job has a call center in Wuhan and a nationwide sales office network spanning 25 cities across China.

The company has collaborated with six material group entities namely 51net, Tech JV, Qian Cheng, AdCo and Adco Subsidiaries and WFOE. The joint venture provides advertising, consulting services and online recruitment and value-added telecommunication services.

Revenue Generation

The enterprise reports its earnings based on three core segments i.e. online recruitment services, print advertising and other human resources related revenues. The majority of the revenues are derived from recruitment and advertising services.

Online recruitment services share in the total revenue increased significantly in the last two years from 50% to 62.4%. Revenues through this segment are obtained by charging companies with advertisement and recruitment fees at the website. The website also provides companies with a facility to download resumes and management tools services. Print advertising share in revenues declined significantly in the past two years from 25% to a mere 7% as the management adjusts to the boom in the IT sector.

Again, employer companies are charged with a recruitment and advertising fee placed at 51Jobs Weekly across China. Contracts in this segment vary from single to multiple advertisements and are generally more short-term. The last segment, like the online recruitment services, experienced an increase in revenue share from 25% to 31%. The human resource related revenues as the name suggests generate revenues via catering to the employees of the company’s corporate clients.

Financials

The company reported an increase in its consolidated revenue of 11.3% in 2012 consistent with the average 3-year growth in revenue of 23.2%. However, the recent quarter revenue of 2013 amounted to $61.2 million, showing a decline of 0.1%. Analysts expect the decline to quickly reverse given the forward market expectation. Net income of the company also showed an increase of 21.4% in 2012 keeping up with the 3 year growth 61.1%. The company has managed to beat the industry trend as the industry ratios lingered in single digits. Given the competitive nature of the industry, 51Jobs upholds its competitive edge by relying on operational synergies to cut down costs. The EPS% for the 5 years touched 34% as per Reuters estimates.

The capital structure of the company is more geared towards financing from within. The company has not resorted to debt financing in its operations and has no plans to do so. Thus the company’s operations are well-cushioned against market risks. The liquid assets at the end of 2012 consisted of $408.6 million in cash and short-term investments. The recent quarter announcement marks an improvement in the liquidity position of the company. Thus 27% growth in asset base of the company is financed through growth from within.

Growth Strategy

Rick Yan, CEO of 51Job, announced that based on current market conditions and the declining share of print advertising revenues, the Company’s revenue target for the second quarter of 2013 is in the estimated range of $63.6 million to $66.0 million, an expected increase of roughly 6%. The stated increase in its revenues will be brought about by pursuing a multi-dimensional growth strategy.

Firstly, the management seeks to capitalize on the anticipated growth in the Chinese economy. As the employment index touch 50 and the expansive path undertaken by the firms, increase in revenues is inevitable. On the supply side, skilled and educated workers now comprise a major portion of the labor force. Secondly, the Chinese economy is still undergoing a development transition with more workers willing to accept new recruitment channels and human resource services. Growth in the IT sector will translate into an increase in customer base for the company.

According to CNNIC estimates, the number for internet users has showed an increase of 662% in the last 9 years making China the largest Internet user of the world. It is for this reason that the management has decided to increase its provision of online recruitment services. The claims can be authenticated by an increase in capital expenditure from $60 million to $138 million in the last year. It should be noticed that the free cash flows remained constant despite this increase. Lastly, mobile Internet website has been developed to increase access through mobile devices and utilize most functions available on the website. The construction of a call centre in Wuhan is anticipated to triple its catering capacity. Expenditure on sales and marketing also remained roughly constant for the recent quarter despite a decline in earnings. The company relies on the former to build a strong customer base and repute for itself. Thus, 51Jobs is all set to cater to the growing demand in the economy.

Competitive Advantage

As stated earlier, the enterprise operates in an extremely competitive environment facing competition from Adecco, Randstad ADR and Paychex Inc. It has been able to maintain its competitive edge by relying on operational synergies to maintain an operating margin of 32.5% as compared to an industry average of 2.5%. In the online recruitment service segment, a wide array of audience is catered to. The websites are updated on hourly basis which helps attain a high turnover. The idea to open up the websites to mobile users is expected to generate higher earnings in the near future. Also, the company is able to charge multiple prices based on the diverse customer base. The company mostly caters to large multinational corporations as well as local Chinese enterprises of all sizes. In the print advertising segment, publications are more city specific and short-term. Thus, the management is able to maintain relatively stable stream of revenues using the aforementioned techniques.

Risks

The risks associated with this small-cap stock are centered more towards economic factors. One of the potent risks that the company is exposed to is seasonality in its operations. The recent transition towards the provision of IT services makes the earnings of the company more volatile. Seasonal fluctuations in the demand for human resources add to the fluctuations in its operations. Inflation (although not currently) poses a threat to the earnings of the company. Inflation rates of 5.4%, 3.6% and 2.1% put an upward pressure on the costs of the company and if continued, can lead to a substantial decline in earnings. Lastly, the exchange rate risk associated with the stock cannot be ignored. Investment in derivative securities by the management does mitigate the associated risks nonetheless it cannot be disregarded.

Conclusion

The stock currently trades at $64.89 with the total market capitalization of $1.9 billion. The current P/E ratio for the stock is 25.8; however, the ratio is projected to decline to 17.7. The enterprise multiple ratio for the 12 months is expected to reach 31.41 while the current ratio stands at 33.72. The P/B and P/CF ratio equals 4.1 and 20.6, above the industry trend. The stock is up 39% year to date, and keeping in mind the growth potential, the upward trend is expected to continue.

After the careful evaluation of the company, I believe JOBS is an attractive investment and the stock will return handsomely over the short term as well as long term. The company is expected to benefit from the recovering economy offsetting the minor weaknesses. The management has been able to maintain its strategic position by adjusting to the changing market trends and is expected to do so in the future.

Money talks in sluggish economy

During an economic downturn, job seekers tend to attach greater importance to the overall compensation and cash incentives they can earn, according to a report by the Hong Kong-founded executive recruitment firm MRIC.

Of the 3,820 professionals interviewed on the Chinese mainland, 35.9 percent requested an increase in overall compensation or commissions, which outweighed other relevant concerns, such as finding a clearer career track or having the opportunity to face more challenges, the report found.

Meanwhile, the number of Chinese mainland respondents dissatisfied with their current level of compensation rose from 54.2 percent last year to 57.8 percent in 2013. Only respondents from Taiwan reported a greater level of dissatisfaction with their current earnings.

A lack of satisfaction with compensation may be tied to mounting living costs and lower bonuses this year. Many people aim to earn higher salaries in order to improve their housing conditions and achieve a higher quality of life.

With a score of 99, Shanghai ranked 30th of 131 surveyed cities in terms of living cost in 2012, up 11 places from a year earlier, according to a survey by the Economist Intelligence Unit. It fell just short of matching New York, which scored 100. Just five years ago, Shanghai ranked 53rd on the list.

“Respondent sentiment is generally more conservative, with a lowering of job-change intentions from the previous year, while stress has taken its toll on professional talent, who are increasingly aware of their quality of life,” said Christine Raynaud, chief executive officer of MRIC.

Workers will change jobs if it makes financial sense, but many of them have become more averse to risk and require a major salary hike to make a move, according to the report.