Category News of China

Recruitment agencies tap new markets to hire staff

Recruitment agencies in the GCC are tapping into new labour markets, including Bangladesh, Nepal and Vietnam, in an effort to solve the acute labour shortages in the construction industry.

Recruitment of workers from Bangladesh, in particular, has increased by more than 100 per cent compared to previous years, with more workers from the country coming to the UAE during the first two months of 2008 than the whole of 2007.

With the construction industry witnessing a boom in several Asian countries, especially India, the shortage of workers in the GCC has driven labour sourcing companies to look towards untapped markets.

As a result, expat workers’ contribution to the Bangladesh economy rose by more than 25 per cent in the first eight months of the current fiscal year, compared to the same period the previous year, according to reports quoting statistics released by Bangladesh Bank.

And the staffing problem is unlikely to be resolved soon. According to a new study by the Project Management Institute (PMI), the construction sector in the GCC will experience an alarming shortage of workers during the next five years.

Majeed Al Gassab, President of the Bahrain Society of Engineers and the Vice-President of the Bahrain’s PMI chapter, told Emirates Business the movement of workers away from the GCC has already started and immediate measures have to be put in place to retain remaining staff and find new sources for recruitment.

A recent PMI study, Resource Challenges, said construction projects in the GCC planned for the next two years would require five million workers.

“Our findings were based on a market study conducted by the Middle East Economic Digest (MEED). Based on the expected project workload, it was estimated construction activities in the Gulf may reach the peak at about 12 billion man hours in 2010. This is equivalent to about five million labourers,” said Al Gassab.

“It is evident skilled workers are already moving out of the Gulf for better opportunities and it will be a great risk to carry on with inexperienced labourers,” he added.

While the shortage is more intense in the semi and unskilled labour sectors, agencies are also finding it difficult to recruit experienced engineers, project managers and architects.

Phil Edmondson, general manager for EDARA, a Union Properties-owned project management company, yesterday said he has been short of 20 employees for almost two years.

“Ever since I joined the company 22 months ago, I have been looking for at least 20 staff, mostly project managers for different fields. The only problem in going for young guys is that they lack experience,” said Edmondson.

Meanwhile, as a result of the crunch, the average salary of a project manager in the UAE has increased from Dh35,000 to Dh45,000, while it has become difficult to find commercial and development managers for even Dh50,000.

“Amid all this confusion is the poaching menace. Companies are willing to simply buy employees by offering a 100 per cent salary increase,” said Edmondson.

“One of my staff, whose salary was Dh27,000, was brought over by another company for Dh43,000. The government should introduce a new three-year fixed visa where the employees should not be allowed to move jobs.”

The shortage is so severe that several companies are settling for candidates who do not meet the required criteria and, in some cases, have only half the required years of experience.

Phil Starr, recruitment director at Real HR, said companies no longer have the time to wait for ideal candidates.

“Several projects are already delayed and companies cannot afford to wait further for their ideal candidates,” said Starr.

The GCC’s construction industry is valued at more than Dh1.9 trillion and according to news reports more than 160 construction projects in the UAE alone are delayed because of labour shortages.

While in previous years, the majority of the semi and unskilled construction workers were from India, the number is dwindling. With construction industry in India growing rapidly and the increasing value of rupee against the dirham, companies are finding it difficult to convince recruits from India to take jobs in the Gulf.

Mohammad Jindran of Sharjah-based Overseas Labour Supply said there has been a severe drop of interest from Indian construction workers.

“We do not like to go to India for selection anymore as we only manage to get 30 per cent of our requirement. Bangladesh, Nepal and even Vietnam have emerged as the new recruiting areas.

“In Bangladesh, we are able to get quantity and we are trying our best to train them and improve their quality. The problem with hiring semi-skilled workers from the Phillipines and China is that their salary structure is way too high,” said Jindran.

While a qualified worker from the Phillipines can charge almost 50 per cent more in wages compared to Bangladeshis, recruits from China often expect three times more, Jindran said.

The Gulf’s shortage has turned into a boom for labour exporters Bangladesh and Nepal. Total remittance receipts to Bangladesh from migrant workers hit a record $4.8 billion (Dh17.6bn) in the first eight months of the current fiscal year, marking a 26.23 per cent growth over the same period last year, according to figures from Bangladesh Bank.

Battling the labour shortage

Companies in the GCC are devising innovative methods to handle the labour shortage problem, including renting out their staff, industry experts said.

As part of the new trend, sub-contracting companies have begun renting out their workers for short period of time from one to three months to other companies.

“If I do not need some of my workers for one or two months, there is no harm in renting out their services to companies that are in need of manpower,” said Mohammad Jindran of Overseas Labour Supply.

While unskilled employees are generally paid Dh3 per hour in the UAE, their companies are renting them out for almost Dh12 per hour.

“The cost of sub-contracting a semi-skilled worker goes as high as Dh18 per hour. Such is the demand,” added Jindran.

Meanwhile, Majeed Al Gassab, President of the Bahrain Society of Engineers, suggested owners and contractors align their business plans by working together to examine the feasibility and timing of projects.

“Just by deferring some projects we can eliminate redundancy and duplication of efforts. This will not only benefit local economies but will also eliminate competition between overloaded contractors, and manufacturers. Maximum benefit could be achieved by concentrating efforts and by using the best expertise on projects.”

OmniaLuo to Exhibit Summer Line at Largest Trade Show in China

OmniaLuo, Inc. (“OmniaLuo” or the “Company”) (OTCBB: OLOU), a China-based company engaged in the business of designing, developing, marketing and distributing fine women’s apparel under the brand name OMNIALUO, announced today that it will attend the 16th annual China International Clothing and Accessories Fair (“CHIC 2008”) in Beijing from March 28 – 31, 2008. CHIC 2008 is the largest international trade show in China and second largest in the world, attracting more than 120,000 visitors from around the globe. The Company will exhibit its new summer line, recruit new distributors and gain international exposure for the OMNIALUO brand.

“As part of our domestic expansion strategy, attendance at CHIC 2008 presents a tremendous opportunity for us to recruit prospective distributors and move closer to our goal of more than 250 retail stores,” stated Cindy Luo, OmniaLuo Chairwoman and CEO. “We anticipate recruiting at least 10-15 new distributors, contributing up to 10% of total 2008 revenue,” added Ms. Luo.

Hong Kong’s Jobless Rate Fell to 3.3%, Lowest in 10 Years

Hong Kong’s unemployment rate unexpectedly fell to the lowest in a decade, aiding household consumption in a city where overseas sales are weakening.

The seasonally adjusted jobless rate for the three months ended Feb. 29 was 3.3 percent, the lowest since March 1998, the government said today on its Web site. The median forecast of 13 economists surveyed by Bloomberg News was for the rate to be unchanged from January’s 3.4 percent.

Banks, retailers and accounting firms are hiring workers as Hong Kong benefits from its proximity to China, the world’s fastest-growing major economy. Low unemployment, tax cuts and falling interest rates may boost consumer spending and help the city weather an export slowdown led by weaker U.S. demand.

“A strong labor market, stimulating fiscal policy environment and negative real interest rates will support domestic consumption, putting it on a solid, upward trend,” said Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong.

Among 802 employers in Hong Kong, 33 percent said they plan to add workers in the second quarter of 2008, up from 27 percent in the previous three months, according to a survey by U.S. recruitment company Manpower Inc.

Yuanta Securities, Taiwan’s largest brokerage, will increase staff at its Hong Kong unit by four times this year, President Alex Lee said last month.

Hong Kong’s economy expanded 6.7 percent in the fourth quarter from a year earlier, the 18th quarter of uninterrupted growth and the longest expansion since 1997. Household spending jumped 10 percent on rising wages and lower borrowing costs.

Economic growth will slow to between 4 percent and 5 percent this year from a 6.3 percent expansion in 2007 as external demand weakens, Financial Secretary John Tsang forecast last month. The government cut profit and salary taxes, waived property rates and scrapped wine and beer duties to encourage consumption.

An improved job market may escalate inflation as companies pass on higher labor costs to consumers.

Consumer prices rose 3.2 percent in January from a year earlier. Eliminating the temporary effect of the property rate waiver, inflation accelerated to 4.3 percent, the highest level since May 1998.

Foreign investments, hot money come to China

Foreign investments and international hedge funds, some of which are speculative hot money, are now elbowing into the China market. They’re lured by the Chinese people’s emerging consumption power, and expectations of the Chinese yuan appreciating higher.

The Ministry of Commerce said on Wednesday that China drew $18.13 billion in overseas investments in January and February, shooting 75.2 percent year-on-year.

Chinese Commerce Minister Chen Deming, who was promoted to the post late last year, said at a news conference in Beijing that the reason for the big increase of overseas capital in the first two months was due to the big increase in large-scale investing projects and a stronger yuan.

Chen’s ministry, which oversees foreign trade and domestic consumption, said that during the first two months, investments from the European Union countries rose a whopping 109 percent, while investments from the United States increased 44 percent.

Wild expectations abroad that the yuan will continue to rise in value against major world currencies has led to money coming to China.

“When you bring US dollars to invest in China, you need to change it into the yuan. Naturally you would like your funds to enter China at an earlier date. Because, if you are late, the same amount of dollars will turn out to be less yuan bills,” Chen told reporters.

China’s foreign exchange administration, under the auspices of the People’s Bank of China, the central bank, said in its latest report that the country’s total foreign exchange reserve has reached nearly $1.59 trillion by the end of January, the world’s largest.

China’s currency, also called the renminbi, has been constantly rising in value. The People’s Bank of China, set the medium parity trading price at 7.0970 against one US dollar on Thursday, a new record high. The yuan has gained 3 percent against the dollar in value since the beginning of 2008.

The sharp increase in the stock of hard currencies has triggered another round of concern on speculative hot money flowing into China, posing potential risks to China’s financial system stability.

Wu Xiaoling, deputy head of the National People’s Congress’s Finance Committee, who was a former central banker, said that the American subprime crisis and the rising trend of the yuan’s value will make world speculative funds come to the China market to seek profits.

When asked by reporters whether the hot money has arrived in the name of foreign direct investments, Minister Chen Deming said: “I can hardly tell their entering channels, and their volume. It belongs to the management of the foreign exchange administration.”

Economist Suggests Quick Appreciation

Liang Hong, economist at the Goldman Sachs, argued in a written article published by a major Chinese financial newspaper on Thursday that Chinese monetary authorities should consider quickening the appreciation pace of the yuan, to fight domestic inflation, which approached to 8.7 percent in February.

Others have suggested another “one-off” big rise of the value of the yuan, possibly 5 percent against the greenback by the central bank, to block more hot money from flooding in.

Liang said in her article that “allowing a marked rise in the yuan value is the most opportune policy instrument to curb inflation, as well as rectify the foreign trade imbalance”.

She also argued for immediate interest rate hikes to thwart inflation, otherwise the Chinese economy faces an increasing risk of a hard-landing.

China’s Baidu To Offer Instant-Messaging Service

Beijing — Baidu.com, the most popular search engine in China, is throwing its hat into a new instant messaging (IM) service designed to let Internet users in the country communicate with one another, a fast-growing market dominated by Tencent’s QQ and Microsoft, with this morning’s introduction of Baidu Hi.

Baidu said in a statement released on Friday that it has started testing the service internally of its IM product “Baidu Hi,” which only Baidu employees who have submitted applications through internal networks can get approval to download.

“IM is one of Baidu’s few ‘strategic’ products and it has been developing it for over a year,” a company statement said.

Baidu is currently recruiting new developers and engineers to help develop the software, but the company refused to disclose the scale of the test, and stopped short of saying when the instant-messaging service would be offered to the general public.

The move makes perfect sense. Baidu has used its search engine prowess to launch sticky community sites devoted to everything from discussion boards to social networking. It is the perfect pivot point. If folks are text chatting in real-time online, why would not Baidu want a piece of that?

It is also a booming market. According to Web information company Alexa, QQ.com is the second most popular website in China, trailing only Baidu. Yes, the hot IM platform is getting more traffic than SINA and Google. It is not as easy to monetize an IM application as it is with search, but it is more about keeping up with the trends and eyeballs than the pocketbooks.

Since last year, rumors have been rife that Baidu has been eyeing the IM market in the hope of finding another revenue generator outside its online search business, in order to maintain rapid growth.

The Beijing-based company stated that all aspects of Baidu Hi development will be done completely in-house, eliminating the need for jobs to be contracted out to other companies.

“The statement did not say whether Baidu Hi will offer features besides messaging, such as the ability to make voice over IP (Internet Protocol), or VoIP, calls.”

Baidu may dominate Internet search in China and routinely trounce Google in market-share surveys there, but that is unlikely to translate into dominance of the instant-messaging market in China.

“That market is currently dominated by Tencent, a Shenzhen-based company that runs the popular QQ instant-messaging service.”

The company has 580 million registered users and earned 1 billion yuan in the third quarter of last year, mainly through providing Internet value added services.

“Microsoft’s MSN is a distant second and attracts many white-collar workers.”

Liu Bin, an analyst at research firm BDA China, said Baidu’s entry into China’s IM market will not trigger direct competition with Tencent and Microsoft in the short term because it will be difficult for Baidu to attract users from other providers.

“Baidu’s IM software will have a significant impact on Tencent and Microsoft in the next two to three years,” he said.

Many search engines, facing an increased level of competition, have been forced to adapt and launch complimentary services to keep users coming back to the site for more than basic Internet searches.

The key to success comes from paddling into new revenue streams without diminishing the brand as a search engine workhorse. Yahoo! did not necessarily fall behind Google in search usage because it dove into things like job listings, dating personals, and instant messaging, but the lack of focus probably did not help.

Baidu stormed on the Internet search engine scene with its “MP3 Search” feature, which made it fast and easy for users to locate and download free music from Chinese and other artists. Another example is Google; the top search engine in the United States has a full range of software and services in development and available to users.

Baidu also branched out by launching a Japanese language search engine, though it does not appear the Chinese search giant has plans to launch a site for the US market.

The good news is that Baidu has not slipped despite launching dozens of similar forays in the past. Even more recent moves like launching its search engine in Japan and developing an eBay clone have not diluted the brand’s popularity. New initiatives also have not materially weighed down the company’s earnings power, going by this month’s fourth-quarter report, which found earnings soaring 79% despite the Japanese expansion.

Since 2005, Baidu has posted annual growth rates of over 100 percent. But Liu said the company’s growth rate may decline to 30 percent within five years due to a larger revenue base.

“Although IM may not bring direct revenue for Baidu in the short term, it will be lucrative if Baidu can combine it with other services.”

“Baidu declined to comment when asked about Baidu Hi and its future endeavors in the instant messaging space.”

Largest Russian bank opens first China branch in Shanghai

SHANGHAI, Feb. 26 (Xinhua) — Venshtorgbank, Russia’s biggest bank, opened its first Chinese branch in Shanghai on Tuesday, marking the start of a new era in Sino-Russian finance.

“China’s banking service industry is the fastest-growing and most promising in the world economy. I believe the Shanghai branch will grow as energetically as China’s economy,” said Andrei Kostin, Venshtorgbank Group (VTB) chairman and president.

VTB has entered into credit granting agreements with a number of Chinese banks and the China Export and Credit Insurance Corporation to provide Russian importers with long-term financing and insurance services when purchasing Chinese goods and services.

Clients can receive up to 1.3 billion U.S. dollars in financing from Chinese banks.

According to Kostin, the Shanghai branch will cooperate with China UnionPay system to provide banking card services to both domestic and Russian clients. It also plans to apply for offering RMB services within three years, and will broaden the business scope of the branch for a larger operating scale “very soon”.

VTB even plans to issue its own union cards in China.

The lender is the largest international banking group in Russia. It has branches and financial firms in 17 countries, with assets of 80 billion U.S. dollars.

While it established a Beijing office 20 years ago, VTB is a latecomer to China’s lucrative banking sector, now crowded with more than 300 foreign banks.

Robert Walters opens headhunting in China

Robert Walters, the recruitment specialist, is buying its first business in China, a headhunter that provides a range of jobs in the commercial sector.

Walters, which also today announced operating profits up by a third to £26.1 million, is paying RMB 20 million (£1.4 million) for a 70 per cent stake in Talent Spotter, a consultancy with 49 staff and a head office in Shanghai and another in Suzhou, a city with a population of ten million, 75 miles inland from Shanghai.

Robert Walters, the chief executive, said that 62 per cent of fee income was generated outside the UK last year.

The company has a growing presence in the Far East and an office in Hong Kong. Alan Bannatyne, the finance director, told Times Online that the Chinese market was especially lucrative, paying fees representing 25 per cent of annual salary. “Shanghai is a very strong and growing market.”

Talent Spotter typically provides a variety of commercial jobs such as sales and marketing and human resources, with a small involvement in accountancy.

During 2007 Walters opened offices in Madrid and Osaka, and an office in Kowloon was opened this year.

The trading statement for 2007 said that activity levels remained strong, with a healthy balance between permanent and contract recruitment.

A final dividend of 3.35p makes a total raised from 4p to 4.7p.

New individual tax threshold to go into effect March 1

China’s amended individual income tax law, which raises the tax levy threshold from 1,600 yuan (about US$220) a month to 2,000 yuan, will go into effect on March 1, accompanied by some regulations on its implementation.

Individuals who earn money from contractual operations and contract to lease businesses will also enjoy a raised tax threshold from 1,600 yuan to 2,000 yuan, according to the regulations.

This was out of consideration that the living costs of those individuals and their family members had increased, said a joint explanation on the regulations made by the Legislative Affairs Office of the State Council, Ministry of Finance and the State Administration of Taxation.

Individual tax payers who have housing in China but work overseas, or live overseas but earn income in China, will keep their tax threshold of 4,800 yuan a month unchanged, according to the regulations.

This will help reduce the gap between tax thresholds of different taxpayers, the joint explanation said.

The raised individual tax threshold will reduce government revenues by 30 billion yuan annually, according to official statistics. It will also mean that 70 percent of income earners will be exempt from income tax, against 50 percent now.

The individual income tax cutoff point was raised from 800 yuan a month to 1,600 yuan starting in 2006. This was based on consumption expenditures for basic living costs at the time.

However, the consumer price index rose several times last year, further burdening low- and medium-income earners.

20% university graduates fail to find jobs in 2007

About 20 percent of university students in China, who graduated in 2007, have so far failed to find jobs, according to a blue paper issued by the Chinese Academy of Social Sciences.

Nearly five million university students graduated in 2007, but one million of them have still not found jobs, according to the blue paper released earlier this month.

“This is not because China’s policy to expand university enrollment has resulted in labor supply outweighing demand on the labor market,” Yang Weiguo, associate professor of Beijing-based Renmin University said.

“In fact, the gap between supply and demand reaches 13 to 14 million people annually in recent years,” said Yang, also the deputy director of the Employment Research Institute of Renmin University.

Only 270,000 students were admitted to study in universities when China resumed its university entrance exams in 1977. Thirty years later, the number of undergraduates and postgraduates surged to 5.7 million and 424,000 respectively.

However, official statistics show only five percent of China’s total population have the opportunity to receive higher education,

“One of the reasons for the difficulty in university graduates finding employment is that they are unable to satisfy the needs of employers,” he said.

“The other reason is that university graduates are unwilling to go to backward or remote areas, yet are unable to find jobs in metropolises such as Beijing and Shanghai,” he said.

He said the universities need to adjust their teaching methods and content quickly to conform to social development and demand.

He also called on the social security, educational and personnel departments to adopt more favorable policies or offer subsidies for university graduates working in relatively backward regions.

Policies to actively promote employment

China is stepping up its policy support to promote employment, said a circular released on Tuesday on the official government website.

The circular allowed localities to raise the ceiling of the amount of small loans – a policy partly designed to help the unemployed open their own businesses – and lower the threshold for qualified borrowers when necessary.

The preferential tax policies, which reduce or exempt the tax burden on the unemployed and the disabled, should continue to be carried out till the end of this year. New policies would be introduced in 2009.

The government has been taking measures to encourage companies to recruit those who have had difficulty in finding employment. It was also creating more public service jobs.

China has implemented active employment policies since 2002. It has increased the number of the newly employed in cities from 8.4 million in 2002 to 12.04 million people last year.