Category Manufacturing & Industry

Higher pay and stronger yuan slow hiring

The manufacturing industry’s demand for new employees shrunk by more than 20 percent year-on-year in the first three quarters of this year, according to a recent survey released by the Seebon Human Resources Research Institute.

Among industries, shipping showed the greatest hiring demand, as the need for more employees in transportation, warehousing and postal services increased steadily in the first nine months of 2012, the report said.

Contributing to that result has been the success of e-commerce and the ever-tenser competition among online shopping malls. Industrial restructuring has also led to the disparities in hiring demand, said analysts at the Seebon Human Resources Research Institute.

The survey also said the reduction in job opportunities has resulted in part from the international market’s declining interest in products manufactured in China, and the greater number of robots now performing jobs formerly done by people.

It predicted that rising labor costs, the incessant appreciation of the yuan and shrinking overseas demand will force small and medium-sized manufacturers, which once were the source of many job opportunities, to exit the market.

The survey also found that the number of people hired in the first three quarters of the year was up by 5 percent year-on-year. The demand for employees was the strongest in Beijing, Changsha, Kunming, Shenyang and Tianjin during that period.

Most workers saw their incomes rise by 15.1 percent year-on-year in the first three quarters of this year, the report said.

“The average monthly salary for a worker at our factory has increased by at least 15 percent to more than 3,000 yuan ($481) from the beginning of the year,” said Gu Zhongwei, general manager of the Wuxi-based Handa Enterprise Fabric Department.

“In the entire textile industry, nobody is talking about profits now. We are only thinking of making it through our current difficulties.

“There is literally no order. Our former partners are now turning to manufacturers in Vietnam and Cambodia, where they offer salaries of only $60 a month.”

Shen Xiangjun, manager of Ningbo Jinfan Toy Co Ltd, agreed that labor costs are much higher in China than in other countries.

“I have investigated the Indian market recently,” he said. “It turns out that labor costs there are 70 percent cheaper than in China.”

He said the average monthly salary at his company exceeds 3,000 yuan.

“Soaring labor cost and rapidly increasing salaries are partly the results of government policies,” said Pu Yonghao, Hong Kong-based regional chief investment officer for Asia Pacific at UBS Wealth Management.

“On the other hand, the profit margins of companies have been greatly impaired, especially in labor-intensive industries such as manufacturing. It is very likely that Chinese companies of this kind will lose their edge.”

L’Oreal opens local training facility

L’Oreal China on Thursday opened an academy in Shanghai for training and developing talent in the cosmetics industry in order to promote sustained business growth in the world’s most populous country.

Occupying a total area of 3,300 square meters of a seven-story building in the city center, the training center has 20 classrooms that can accommodate a total of 600 students taking classes at the same time.

The center integrates training with education, and it is devoted to the development of talent in all cosmetics-related jobs, including beauty advisors, hair stylists, skin care advisors, salespersons and managers.

The center will serve all four business divisions and 20 of L’Oreal China’s best-known brands. The center plans to train 17,000 hairdressers in the coming year, according to an initial company estimate.

L’Oreal has a history of commitment to talent development. The company’s leadership said it hopes to maintain high-quality human resources via various types of training, which will lay a solid foundation for the company’s future growth.

Alexis Perakis-Valat, CEO of L’Oreal China, said it is important to not only focus on market share and other metrics of business success but to also pay close attention to talent development.

“Talent is a valuable asset to us. The establishment of this training center is one of the most important steps we have taken in China. It caters to the need of business development and is evidence of our confidence and promise of sustainable development in the Chinese market,” he said.

The establishment of the center is one more piece of the puzzle for L’Oreal as it continues to grow its China business.

Since it entered the Chinese market in 1997, L’Oreal has managed to achieve steady double-digit growth for 11 consecutive years. It generated more than 10 billion yuan ($1.6 billion) in total sales in China last year, further consolidating the country’s role as one of the three most important markets for the entire group.

L’Oreal has about 3,000 employees in China. With two plants, one management development center, an Asia-Pacific operation center and a state-of-the-art research and innovation center dedicated to Chinese and other Asian consumers, it is one of the few multinational companies possessing R&D, production, logistics and human resources development facilities in the country.

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.

Ford Motor to Double China Workforce by 2015 in Expansion Drive

Ford Motor Co. (F) will hire 1,200 new employees in China by 2015, doubling its workforce as it seeks market share in the world?s largest auto market.

?In China we?re going to significantly increase our resources here,? Joe Hinrichs, chief of the automaker?s Asia- Pacific and African operations, said today in Shanghai. ?We?re committed to it, we have the capital, we have the products.?

Ford is banking on emerging markets to help it maintain profits after posting $6.56 billion in net income last year, the most since 1999. The Dearborn, Michigan-based company expects 70 percent of its growth in the next 10 years to come from the Asia-Pacific region and Africa, it said in September.

The automaker introduced its Mondeo sedan in China last month and also sells Focus compact cars and Fiesta subcompacts in the world?s second-largest economy. Its deliveries in China surged 40 percent to a record 582,467 vehicles last year as rising incomes and economic growth spurred auto demand. Sales rose 20 percent last month, the company said April 7.

The hiring in China — in departments including engineering, manufacturing and marketing sales — adds to the more than 7,000 workers Ford plans to employ in the next two years in North America.

Ford is building a new vehicle plant with its China joint venture Changan Ford Mazda Automobile Co. in Chongqing and has plans for a new engine plant in the southwestern city.

Geely’s Volvo says to hire 1,200 new staff

STOCKHOLM: Volvo Cars, owned by China’s Geely, said on Tuesday it planned to hire 1,200 new employees in Sweden and Belgium as it invests to meet new global demand.

Volvo Chief Executive Stefan Jacoby said the carmaker expected to sell “significantly more cars in 2011” compared with the previous year and that it had seen good demand in the past month in the United States, Europe and also China.

Demand in Japan also remained surprisingly strong, he said. “We are investing in our future. There is no free ticket for a bright future,” Jacoby said, adding that the firm was also investing in capacity at its plants.

The carmaker has said it plans to invest up to $11 billion in new product development and facilities over the next 5 years.

Geely, parent of Geely Automobile Holdings, took over Ford Motor’s Volvo car unit in August 2010, in China’s largest acquisition of a foreign car maker.

GM says China sales overtake US for first time

SHANGHAI — General Motors Co. says its first-half sales of vehicles in China overtook the U.S. for the first time amid a fitful recovery in American demand.

The 1.21 million GM-brand vehicles sold in China in January to June — a near 50 percent gain over a year earlier — compared with 1.07 million sold in the U.S. market, according to figures released separately by GM’s U.S. and international headquarters.

The shift reflects GM’s growing reliance on stronger growth in emerging markets, especially China, to offset sluggish sales back home.

The recovery in U.S. auto sales this year has been fitful, with month-to-month sales falling as many times as they rose. Sales of GM’s four core brands rose 36 percent in the first half of the year over a year earlier in the U.S., but were down 12 percent in June from the month before, at 195,000, the company said.

In China, where first half auto sales figures for the entire industry are not due until next week, demand has begun to moderate but remains strong. Passenger car sales rose 55 percent in January-May to 5.7 million vehicles, while total vehicle sales rose 53 percent to 7.6 million.

Last year, China sped past the U.S. to become the world’s largest auto market, with 13.6 million vehicles sold, as consumers with rising incomes responded to government tax cuts and subsidies aimed at encouraging purchases of small, energy efficient vehicles.

By contrast, U.S. sales of cars and light trucks plunged 21 percent in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms.

Last year, GM’s global sales overtook the home market as U.S. demand languished. Sales in China by GM and its partners surged 67 percent over a year earlier to a record 1.8 million vehicles. But while GM’s U.S. sales fell 30 percent from a year earlier, they still exceeded its China sales at 2.08 million units.

China Overtakes Germany as World’s Biggest Exporter

Chinese officials say the country’s exports surged in December to edge out Germany as the world’s biggest exporter.

The official Xinhua news agency reported Sunday that figures from the General Administration for Customs showed that exports jumped 17.7 percent in December from a year earlier.

Huang Guohua, a statistics official with the customs administration, said the December exports rebound was an important turning point for China’s export sector.

Huang added that the jump was an indication that exporters have emerged from their downslide.

However, although China overtook Germany in exports, China’s total foreign trade — both exports and imports — fell 13.9 percent in 2009.

Toyota’s China car sales up 21 pct in 2009

SHANGHAI, Jan 6 (Reuters) – Toyota Motor Corp (7203.T) said on Wednesday it sold 21 percent more cars in China in 2009 compared with a year earlier, lagging rival General Motors’ [GM.UL] 67 percent gain.

Toyota, which competes with Honda Motor (7267.T) and others, sold 709,000 cars in China in 2009, up from 585,000 units a year earlier, it said in a statement.

That compared with 1.83 million vehicles GM sold in China last year, which also includes 1.06 million mostly mini vans, pick-up trucks made at SAIC-GM-Wuling, its three-way venture with SAIC Motor Corp (600104.SS) and Liuzhou Wuling Automobile.

Volkswagen AG (VOWG.DE) has yet to release its annual sales in China, but Winfried Vahland, president and CEO for its China operations said in November he expected the automaker to sell about 1.4 million vehicles in mainland China and Hong Kong last year, up more than 35 percent from 2008. [ID:nHKG261968]

Analysts attributed Toyota’s slower growth to its lack of small cars whose sales have soared this year thanks to government tax incentives.

“GM and Volkswagen are a major beneficiary of the policy incentives favouring small cars, while Toyota’s portfolio in China is not as broad,” said Zhang Xin, an analyst with Guotai Junan Securities.

Still, Toyota’s full-year sales marked an acceleration from 13 percent annual growth in the first nine months of 2009 and 17 percent growth in 2008.

The company originally said in a statement that sales were up 121 percent in 2009, but a company official later clarified that the rise was actually 21 percent.

Masahiro Kato, president of Toyota’s China operations, said in November that the Japanese automaker was expected to sell about 800,000 cars in China next year. [ID:nHKG295551]

Earlier last year, Toyota rolled out revamped version of Vios and Yaris compact cars — both eligible for Beijing’s tax incentives.

It also launched RAV4, a sport utility vehicle produced by its venture with FAW Group in April 2009, followed by Highlander SUV, made at its tie-up with Guangzhou Automobile, the next month.

It did not say how many new models it will roll out in China this year.

Auto sales in China, the world’s largest market, surged last year, boosted by government incentives aimed at bolstering domestic demand. (Reporting by Fang Yan and Jason Subler; Editing by Jacqueline Wong)

China’s SAIC Motor tips 900% jump in 2009 profit

HONG KONG (MarketWatch) — China’s largest automobile manufacturer by sales, SAIC Motor Corp., said Wednesday it expects to post 10 times as much net profit in 2009 as it did in the previous year on the back of a robust jump in sales.

The passenger car and commercial vehicle maker said it expected an increase of more than 900% in 2009 net profit after a 57% jump in vehicle sales to 2.72 million units during the year, according to a filing with the Shanghai Stock Exchange.

SAIC, which operates joint ventures with General Motors Co. and Volkswagen AG (VLKA.Y 21.70, +0.05, +0.23%) , said earnings per share was expected above 1 yuan in 2009, up from about 0.1 yuan in 2008. That compares with analysts’ median estimate of 0.93 yuan a share, according to FactSet Research.

The company’s strong sales growth in 2009 was aided by government incentives to new car buyers aimed at boosting domestic consumption in the face of the global economic downturn.

However, SAIC (CN:600104 25.24, -0.41, -1.60%) shares were down 2% by mid-morning in a choppy trading session in Shanghai Wednesday, giving up early gains in spite of the performance.

China’s manufacturing hits 20-month high

Simon Rabinovitch and Aileen Wang

China’s manufacturing sector steamed ahead in December as strong rises in new orders and output drove a key economic survey to a 20-month high.

The official purchasing managers’ index (PMI) jumped to 56.6 in December from 55.2 in the previous month, the China Federation of Logistics and Purchasing (CFLP) said on Friday.

It was the tenth straight month that the index has stood above the watershed mark of 50, indicating an expansion of activity.

As the biggest month-on-month rise since March, it also suggested that the Chinese manufacturing sector, far from plateauing after its recovery, has actually gathered momentum.

“December’s PMI reading suggests sustained expansion in industrial activity,” Jing Ulrich, chairman of China equities at J.P. Morgan, said in a research note. “The forward-looking components of PMI indicate continued expansion in both domestic and external demand.”

But a slower expansion of new export orders for the second straight month may offer pause to officials who have been extremely cautious in winding down loose, pro-growth policies, believing that domestic stimulus is still needed to counteract sluggish external demand.

“The fall in the indicator for new export orders warrants attention, as it shows we must avoid undue optimism about the improvement in the international marketplace,” said Zhang Liqun, a researcher at the State Council’s Development Research Centre who comments on the PMI for the logistics federation.

Another mildly discordant note among the otherwise rosy survey was the reading for input prices, which climbed to a 17-month high of 66.7 in December, up from 63.4 in November.

“The input price rise shows that the production cost of enterprises are climbing. Enterprises should work to increase their capability to withstand rising costs,” Zhang said.

Worries about price rises have emerged again in China after deflation for much of 2009, with top leaders saying that controlling inflationary expectations will be one of their priorities this year.

The dominant theme of the PMI, though, was the broadening strength of China’s recovery. Seventeen of 20 industries surveyed reported an expansion in activity, with metal products the strongest and tobacco at the low end.

China’s economy shot back to nearly double-digit growth in 2009 after nearly standing still at the end of 2008, giving a lift to Asia and countries that have been able to feed its voracious appetite for commodities.

An unexpected surge in South Korean exports in December was the latest evidence of how economies that are intertwined with China have benefited.

China’s PMI also showed that the country’s job market has continued to improve. The employment sub-index hit 52.2 in December, up from 51.1 in the previous month, as 12 of 20 industries reported increases in hiring.

Many analysts believe that two crucial preconditions for China to begin tightening policy more aggressively are a recovery in employment and a sustained increase in exports.

At the height of the global financial crisis, China’s central planners worried the country would be unable to reach the 8 per cent growth deemed necessary to maintain employment and avert social instability.

The country’s 4 trillion yuan stimulus package, complemented by a record surge in bank lending, propelled the economy to 8.9 per cent year-on-year growth in the third quarter of 2009 and put it on track for even faster expansion this year.

“We expect China’s strong economic growth momentum to continue in 2010, with the major source of growth coming from a broad-based improvement in private consumption, and further strengthening in private housing investment, and a solid recovery in exports,” Ulrich said.