Category News of China

America¡¯s Job Bank Gets Laid Off

The Labor Department sent a notice to state officials earlier this year saying the benefits of America¡¯s Job Bank “no longer outweigh the costs of operating and maintaining this system. Therefore, AJB will be phased out during the next 18 months and cease to be operational on June 30, 2007.”

The notice argued that maintaining and improving the site no longer makes sense “given that AJB duplicates what is already available in the private sector.”

That logic rings true to Peter Weddle, recruiting analyst and executive director of the International Association of Employment Web Sites industry group. Weddle says the Labor Department is wise to shutter America’s Job Bank because it replicates services offered by a range of private-sector sites. These include sites targeted at lower-wage and blue-collar workers, says Weddle, whose association includes the major job boards CareerBuilder.com, Monster.com and Yahoo HotJobs.

“Why should the government duplicate what the private sector is providing already?” Weddle says.

But shutting down America¡¯s Job Bank will be a major blow to employers and job seekers, says Gerry Crispin, co-founder of job-site consulting firm CareerXroads. Crispin says the site has been a way to aggregate all the job postings of some 2,000 state employment offices around the country, giving smaller, local employers the ability to broadcast their jobs nationwide for free. And the AJB site is often used by lower-skilled people who turn to state employment offices, he says. Those people may have to rely on a fragmented network of state job sites or private-sector job boards that will not have all the job listings that employers currently give to America¡¯s Job Bank, Crispin says.

“We are basically losing a public resource that provides job seekers a more convenient and easy way to identify the employers who were local and had smaller budgets,” he says.

America¡¯s Job Bank dates to 1995, and the free site currently lists more than 2.1 million jobs and more than 682,000 r¨¦sum¨¦s. But it has been criticized as difficult to use. The Labor Department said in a notice that the cost of operating AJB has been as high as $27 million a year, but that “AJB has not been able to keep up with private-sector job boards or industry standards regarding up-to-date technology.”

The slated closure of America¡¯s Job Bank could force both companies and states to change the way they do business. Idaho, for example, enticed employers to list jobs on its state job bank with the promise that the listings would get on the better-known America¡¯s Job Bank site.

“We¡¯ve used the national distribution of job postings through AJB as a promotion,” says Bob Fick, communications manager at the Idaho Commerce and Labor Department.

America¡¯s Job Bank also has been used by companies as a way to abide by the guidelines of the U.S. Equal Employment Opportunity Commission, Weddle wrote in an online newsletter last month.

“Because this site was operated in conjunction with state employment agencies and open to all U.S. citizens, posting an opening there was a de facto commitment by the organization to consider any qualified person, regardless of their race, ethnicity, age, gender, religion or sexual orientation,” Weddle wrote. “The openings may have also been posted on other job boards or on the employer¡¯s own Web site, but as long as candidates from America¡¯s Job Bank were considered, the government was (usually) content that the company had made a conscientious effort at compliance.”

An alternative for demonstrating a good-faith effort at EEOC compliance, Weddle wrote, is posting jobs on a variety of sites, including general-purpose employment sites and “diversity” sites such as those that specialize in candidates of a particular race.

The notice sent to state officials said that during the past two years, the Labor Department’s Employment and Training Administration had reviewed and evaluated the ongoing viability of maintaining a national job site. “Since the launch of AJB, the number of private-sector Internet-based job boards (Career Builder, Monster, Yahoo! Hot Jobs, etc.) has proliferated, calling into question the need for a Federal government-sponsored job board,” the notice said.

The notice, titled “The Phase Out of America¡¯s Job Bank,” also said: “The cost of operating AJB has been as high as $27 million per year, with a current operating budget for maintenance-only of $12 million per year¡­ . The cost to maintain AJB and constantly upgrade the foundational technology and make improvements to the site is no longer justifiable given that AJB duplicates what is already available in the private sector.”

The notice said the Labor Department has developed an initial transition plan “to ensure that states and other entities, which currently utilize the AJB platform as part of their suite of services, are able to plan and make changes accordingly.”

It also indicated that the federal government could contract with a private-sector employment Web site to create some kind of national job board in the future.

“The (Labor) Department recognizes there will be a periodic need for a national job board due to unique circumstances, such as the recent dislocations related to the hurricanes in the Gulf Coast,” the notice said. “It is the Department¡¯s assessment that it will be more cost effective to contract for this type of service with the private sector on an ¡®as needed basis.¡¯ ”

In addition to the notice, the Labor Department also sent state officials a set of questions and answers about the phase-out.

Workforce Management received copies of the two documents from Ted Daywalt, president of private-sector job board VetJobs. Daywalt said he received them from a contact who works in the U.S. Labor Department, and that the documents were sent to state officials. Daywalt declined to identify his contact.

The U.S. Labor Department confirmed the documents were authentic and sent to state workforce administrators in March. In a statement, the department also said a conference call on the subject was held with state workforce administrators on March 17. The department did not respond to a request for further comment.

Although the demise of AJB amounts to a headache for Idaho state officials, it is a relatively minor one, Fick says. Of greater concern, he says, are cutbacks in federal grants for programs such as unemployment insurance and workforce training. “It¡¯s another problem, but in a long list of problems,” he says.

In Crispin¡¯s opinion, the loss of America¡¯s Job Bank adds to the economic insecurities faced by many Americans, and is likely the result of political lobbying.

“It¡¯s simple greed on the part of job boards and newspapers who have always feared that a free site will hurt them,” he says.

Weddle, though, says he had no knowledge that the decision to close America’s Job Bank was based on any lobbying. He also noted that there still are other free job-posting sites, such as Craigslist.

Weddle gives the government credit for launching the site more than a decade ago and helping to spark the online job board field. “It was so successful that it spawned a $2 billion industry,” he says.

China-Africa trade expected to top US$100 bln

China and Africa should fully tap cooperation potential and strive to bring their trade volume to US$100 billion by 2010, Premier Wen Jiabao proposed here Saturday afternoon at the High-level Dialogue and 2nd Conference of Chinese and African Entrepreneurs.

The figure will more than double the 2005 level, about $39.7 billion. In the first nine months, China-Africa trade surged to $40.6 billion, up 42% year-on-year.

“Although China’s trade has been running a deficit against Africa in recent years, China still hopes to further expand its import from African countries,” Wen said.

At the opening ceremony Saturday morning of the Beijing Summit of Forum on China-Africa Cooperation, Chinese President Hu Jintao made fresh pledges to facilitate bilateral trade and cooperation, saying China will double its aid to Africa by 2009, increase from 190 to over 440 the number of tariff-free import items from the least developed African countries having diplomatic ties with China.

China will also provide 3 billion dollars in preferential loans and $2 billion of export credits over the next three years and establish a special fund of $5 billion to encourage Chinese investment in Africa.

Calling these measures “pragmatic and simulative,” Wen made five proposals to entrepreneurs from both and Africa.

He said both sides should work closer in service sectors, tourism, finance and telecommunications in particular, to cultivate new economic growth points and facilitate trade in a more balanced and healthier manner.

Wen said China would encourage capable and reputed indigenous companies to invest in Africa and spread their technology and management experiences. “We will also encourage capable Chinese companies to invest in the trade and economic cooperation zones inAfrica,” he said.

“African companies interested in investing in China are welcome,” Wen said.

Nortel ramps up China R&D staff

Beijing — After two years of slashing jobs at home, Nortel Networks Corp. has revealed another big increase in its engineering staff in China, accelerating a trend that has seen it shifting to lower-cost countries for its manufacturing and R&D.

Nortel disclosed Thursday that its R&D staff in China has grown by almost 30 per cent in the past year. The company now has about 1,800 research and development employees in China, compared with about 1,400 last year. This means that China now accounts for 15 per cent of Nortel’s worldwide R&D jobs, up from 12 per cent last year.

Canadian politicians have criticized Nortel for shifting jobs overseas. The company announced in 2004 that it was cutting 950 jobs in Canada, including a large number at its R&D headquarters in Ottawa. It announced another 1,900 job reductions worldwide this year, and some of those job losses will be in Canada.

Four months ago, in another cost-cutting move, Nortel shifted its procurement office from Ottawa to Hong Kong. And within three years it plans to buy 80 per cent of its components and materials from low-cost countries, primarily in the developing world, compared with 30 per cent last year. The company has announced that it is adding about 800 new jobs in two low-cost countries — Mexico and Turkey — by 2008.

“China is becoming much more important for Nortel — not just in revenues but also in employment, as an R&D centre,” Nortel chief executive officer Mike Zafirovski said Thursday at the official opening of its new China headquarters in Beijing. “We have more and more operational responsibilities for all of Asia now being handled out of Beijing. It’s a very good commitment to China but also very smart from a Nortel perspective.”

He would not rule out the possibility of further job cuts in North America as the company focuses more on opportunities in the developing world.

“We are not as competitive as we need to be,” he said. “Our costs are not at world-class levels, but they will be. Nothing will stop us in our pursuit of being the most competitive enterprise out there.”

Most of the planned cost savings, however, are likely to be from efficiencies such as better on-time delivery and improved systems, rather than shifting jobs to low-cost countries, he said.

The state-of-the-art office in Beijing is an example of the trend toward low-cost countries. With 180,000 square feet of space in the high-tech Wangjing industrial zone, the gleaming glass-and-steel campus is making it easier for Nortel to recruit China’s new generation of R&D engineers. About 1,000 of its 1,800 R&D staff are based at the new Beijing campus, which was built as part of a $200-million investment announced in China in 2003.

China is also an increasingly important centre for Nortel’s operations in Asia. A growing share of its Asian executives and R&D staff are based in China with a mandate to serve all of Asia. “We’re utilizing the skills here for the benefit of Asia,” said Michael Pangia, president of Nortel’s Asia division.

As it expands its operations here, Nortel is hoping for steady revenue growth from China, which accounts for the biggest share of the Asian division that now provides almost 14 per cent of Nortel’s global revenue. China is also likely to benefit from Nortel’s plans for greater investment in Asia.

“China would be a logical place for that to happen,” Mr. Zafirovski said Thursday. “We view China to be a major growth opportunity. We’d love to be twice as big in China.”

Intel to train 1 million Chinese teachers

Chinanews, Beijing, November 3 ¨C Intel announced yesterday that it will help train 1 million Chinese teachers in the field of information technology to enable them to improve their teaching quality.

Intel has already helped with the training of about 72 thousand Chinese teachers and a large number of undergraduates.

This is Intel¡¯s biggest educational project ever, which will work as a supplement to its current educational cooperation program with the Ministry of Education.

Besides the training project, Intel will donate 10,000 PCs to schools in Chinese rural areas. With the help of Microsoft software and the effort of the MOE, all these PCs will be able to get access to the Internet before 2008. MOE will also provide courseware programs to these schools.

¡°Now our cooperation with the MOE is complete,¡± said Craig Barrett, CEO of Intel. Wu Qidi, Vice Minister of Education, was vocal in expressing China gratitude to the company.

Google seen setting up China joint venture with Ganji.com by yrend – report

BEIJING (XFN-ASIA) – Google Inc is expected to set up a new China joint venture with Ganji.com by the end of the year, in order to qualify under Chinese rules governing Internet Content Provider (ICP) licensing, Sina.com reported, citing an unidentified source.

The two companies have already started recruiting staff for the joint venture, the report said.

The rules bar foreign companies from providing Internet services in China without an ICP license.

Google has a partnership with Ganji.com, using the latter’s ICP license to operate the Google.cn service in China.

Skilled labor shortage in China

U.S. companies in China continue to make some nice profits, but they are increasingly finding that it’s difficult to staff their operations there with qualified workers. Ruth Kirchner reports.

SCOTT JAGOW: U.S. companies in China have a staffing problem: They can’t find the right people to work for them. Ruth Kirchner reports from Beijing.

——————————————————————————–
RUTH KIRCHNER: For the first time in five years, the skills shortage has emerged as the No. 1 headache for companies doing business in China.

The American Chamber of Commerce says recruiting and retaining capable Chinese managers has become a real problem. Even finding suitable entry-level staff is difficult.

Most experts put the blame squarely on the Chinese education system which does not teach independent thinking or real-world skills.

Andrew Grant of McKinsey says China’s university system needs a radical overhaul .
ANDREW GRANT: “A lot of learning is very individual in the Chinese system. There’s not a lot of learning in teams, which again is much more akin to real life and what we particularly see in business where you’re solving problems in teams”.
Grant says the universities churn out millions of graduates every year, but only a tiny fraction has the skills to work for international companies.

In Beijing, I’m Ruth Kirchner for Marketplace.

Heidrick & Struggles Reports Third Quarter 2006 Financial Results

Consolidated net revenue of $124.6 million increased 13.7 percent from $109.6 million in the 2005 third quarter. The positive impact of changes in foreign currency exchange rates in the quarter, primarily in Europe, represented 1.8 percentage points of the growth. Net revenue grew 4.1 percent in the Americas, 23.4 percent in Europe (18.2 percent on a constant currency basis) and 42.8 percent in the Asia Pacific region. The total number of confirmed executive searches increased seven percent from the 2005 third quarter, and decreased seven percent sequentially, compared to the 2006 second quarter. The number of consultants increased to 343 as of September 30, 2006, compared to 335 at June 30, 2006, and 306 at September 30, 2005. Productivity, as measured by annualized revenue per executive search consultant, remained strong at $1.4 million and the average fee per executive search increased to $108,100.

Operating income was $17.6 million, representing an operating margin (measured as a percentage of net revenue) of 14.1 percent. This compares to operating income of $12.9 million in the 2005 third quarter. Excluding restructuring charges in both periods, which management believes more appropriately reflects core operations, operating income in the 2006 third quarter was $17.4 million and the operating margin was 14.0 percent, compared to 2005 third quarter operating income of $14.5 million and an operating margin of 13.3 percent. The year-over-year improvements in operating income and operating margin reflect continued efforts by the company to improve its operating cost structure, as well as the increase in operating leverage inherent in the company’s business model at higher net revenue levels.

Kevin Kelly, chief executive officer, said, “We are pleased with the solid results achieved in the third quarter and for the first nine months of 2006 and believe that we are in a good position to meet our objectives for revenue growth and profitability for 2006. We welcomed the employees of Highland Partners on October 2 and we are actively managing a comprehensive plan for their integration, where the focus is on realizing revenue and operating synergies.”

Net income in the 2006 third quarter was $11.2 million and diluted earnings per share were $0.60, reflecting an effective tax rate of 41.9 percent. Comparisons to third quarter 2005 net income of $30.4 million and diluted earnings per share of $1.58 are not meaningful as those results reflected a significant non-cash tax benefit as a result of reversing a portion of the valuation allowance on certain U.S. deferred tax assets.

Consolidated salaries and employee benefits expense was $83.7 million, an increase of 17.4 percent from $71.3 million in the comparable quarter of 2005. As a percentage of net revenue, salaries and employee benefits were 67.2 percent for the quarter, compared to 65.0 percent in the year-ago period. The increase in compensation-related expenses in the 2006 third quarter is primarily a function of an increase in the number of consultants added during the last year, and also reflects higher bonus accruals based on the year-over- year increase in net revenue levels. Total stock-based compensation expense was $7.1 million during the quarter, including $0.7 million in stock option expense, compared to $3.9 million in last year’s third quarter.

Consolidated general and administrative expenses were $23.5 million, down 0.9 percent from $23.7 million reported in the comparable prior year period. As a percentage of net revenue, consolidated general and administrative expenses declined to 18.9 percent from 21.7 percent in the 2005 third quarter. The improvement reflects a continued focus on cost control, and operating leverage from higher revenue levels.

The company was limited from repurchasing any of its common stock during the third quarter due to the discussions with Hudson Highland Group to acquire Highland Partners. As of September 30, 2006, $40.9 million remains authorized under the current $50 million stock repurchase program authorized in May 2006.

Regional Review for the 2006 Third Quarter

The Americas reported net revenue of $67.9 million, up 4.1 percent over the third quarter of 2005. The Consumer, Financial Services and Industrial groups were the largest contributors to revenue in this region. Operating income of $14.9 million was up 2.8 percent over last year’s third quarter. The 2006 third quarter operating margin was 22.0 percent compared to 22.3 percent last year, primarily reflecting higher fixed compensation cost related to increased consultant hiring in the last year. Consultant headcount in the Americas was 182 at September 30, 2006, an increase of 24 consultants since September 30, 2005.

In Europe, net revenue of $42.3 million increased 23.4 percent from the prior-year quarter, driven by strong performance in the Financial Services, Consumer and Industrial groups. On a constant currency basis, year-over-year net revenue growth in Europe would have been 18.2 percent. Operating income of $5.9 million increased 57.4 percent from last year’s third quarter and the operating margin improved to 13.8 percent from 10.9 percent in last year’s third quarter, reflecting continued cost containment initiatives and higher revenue levels. Consultant headcount in Europe was 121 at September 30, 2006, an increase of 14 consultants since September 30, 2005.

In Asia Pacific, record net revenue of $14.5 million increased 42.8 percent from the prior year quarter, driven by continued strong business across the region with especially strong growth in the Financial Services, Industrial, and Consumer industry groups. Operating income of $4.5 million was up 68.3 percent over last year’s third quarter and the operating margin of 30.7 percent increased from 26.1 percent in last year’s third quarter. Consultant headcount in the Asia Pacific region was 40 at September 30, 2006, compared to 41 consultants at September 30, 2005.

Nine Month Results

For the nine months ended September 30, 2006, net revenue was $346.3 million, an 11.1 percent increase from $311.6 million in the first nine months of 2005. The effect of changes in foreign currency exchange rates on nine-month revenue results was negligible. Operating income in the first nine months of 2006 was $41.5 million, representing an operating margin of 12.0 percent, compared to operating income in the first nine months of 2005 of $11.5 million. Excluding restructuring charges in both periods, operating income for the first nine months of 2006 was $41.9 million and the operating margin was 12.1 percent, compared to operating income of $33.9 million in the 2005 period with a 10.9 percent operating margin. Net income for the first nine months of 2006 was $27.5 million and diluted earnings per share were $1.45, reflecting an effective tax rate of 40.3 percent. For the comparable period of 2005 net income of $32.3 million and diluted earnings per share of $1.62 included $22.4 million in restructuring charges and a non-cash tax benefit resulting from the reversal of a portion of the company’s valuation allowance on certain U.S. deferred tax assets.

2006 Annual Outlook Reflects Acquisition of Highland Partners’ Assets

The company has revised its 2006 annual guidance to reflect the integration of Highland Partners’ operations. For 2006, the company expects net revenue of between $465 million and $475 million, representing growth over 2005 net revenue of between 12.8 percent and 15.2 percent. The company expects the 2006 full-year operating margin to be in the range of 11 percent and 12 percent, reflecting the timing of spending associated with the integration, and the amortization of cash and equity retention bonuses for the former Highland consultants. Net income and earnings per share are expected to reflect a full-year effective tax rate of approximately 40 percent. The quarterly and full-year tax rate estimates can be significantly impacted by country-level results and can vary significantly by reporting period, as well as by discrete items that require immediate recognition in a particular quarter.

Kelly added, “Looking beyond 2006, we are very excited about opportunities for accelerating profitable revenue growth. We have invested in the past year in strategic hiring and in our acquisition of Highland Partners, and we are committed to maximizing our return on those investments, which in turn should enhance our market leadership position around the world. In addition, we will be driven to find innovative ways to build upon our established executive search experience, to expand the distribution of our intellectual capital, to leverage our C-suite relationships through new partnerships, and to enhance our service offerings. Working closely together as one global firm, our common goal is to optimize how we service our clients in helping them to build world-class leadership teams.”

Quarterly Conference Call

About Heidrick & Struggles International, Inc.

Safe Harbor Statement

This press release contains forward-looking statements. The forward- looking statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate and management’s beliefs and assumptions. Forward-looking statements may be identified by the use of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” and similar expressions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in the forward-looking statements. Factors that may affect the outcome of the forward-looking statements include, among other things: our ability to attract and retain qualified executive search consultants; the condition of the economies in the United States, Europe, or elsewhere; social or political instability in markets where we operate; the impact of foreign currency exchange rate fluctuations; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; delays or difficulties in integrating the Highland Partners search operations; an inability to achieve the planned cost savings from our cost-reduction initiatives; an inability to sublease or assign unused office space; our ability to realize our tax loss carryforwards; the timing of any deferred tax asset valuation allowance reversals; the mix of profit and loss by country; an impairment of our goodwill and other intangible assets; and delays in the development and/or implementation of new technology and systems. Our reports filed with the U.S. Securities and Exchange Commission also include information on factors that may affect the outcome of forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Heidrick & Struggles International, Inc. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended September 30, 2006 2005 $ Change % Change Revenue: Revenue before reimbursements (net revenue) $124,636 $109,605 $15,031 13.7% Reimbursements 6,268 4,339 1,929 44.5% Total revenue 130,904 113,944 16,960 14.9% Operating expenses: Salaries and employee benefits 83,697 71,291 12,406 17.4% General and administrative expenses 23,525 23,732 (207) -0.9% Reimbursed expenses 6,268 4,393 1,875 42.7% Restructuring charges (149) 1,580 (1,729) Total operating expenses 113,341 100,996 12,345 12.2% Operating income 17,563 12,948 4,615 35.6% Non-operating income (expense): Interest income 1,412 1,539 Interest expense (18) (18) Net realized and unrealized gains on equity and warrant portfolio 319 426 Other, net (83) 43 Net non-operating income 1,630 1,990 Income before income taxes 19,193 14,938 Provision for (benefit from) income taxes 8,042 (15,458) Net income $11,151 $30,396 Basic earnings per common share $0.64 $1.63 $(0.99) NM Basic weighted average common shares outstanding 17,462 18,694 (1,232) -6.6% Diluted earnings per common share $0.60 $1.58 $(0.98) NM Diluted weighted average common shares outstanding 18,455 19,269 (814) -4.2% Salaries and employee benefits as a percentage of net revenue 67.2% 65.0% 2.2% General and administrative expense as a percentage of net revenue 18.9% 21.7% -2.8% Operating income as a percentage of net revenue 14.1% 11.8% 2.3% Operating income as a percentage of net revenue (excluding restructuring) 14.0% 13.3% 0.7% Effective tax rate 41.9% NM NM Heidrick & Struggles International, Inc. Segment Information (In thousands) Three Months Ended September 30, 2006 2005 Margin Margin 2006 2005 $ Change % Change * * Revenue: Americas $67,855 $65,181 $2,674 4.1% Europe 42,278 34,267 8,011 23.4% Asia Pacific 14,503 10,157 4,346 42.8% Revenue before reimbursements (net revenue) 124,636 109,605 15,031 13.7% Reimbursements 6,268 4,339 1,929 44.5% Total revenue $130,904 $113,944 $16,960 14.9% Operating Income: Americas $14,919 $14,511 $408 2.8% 22.0% 22.3% Europe 5,852 3,718 2,134 57.4% 13.8% 10.9% Asia Pacific 4,456 2,648 1,808 68.3% 30.7% 26.1% Total regions 25,227 20,877 4,350 20.8% 20.2% 19.0% Corporate (7,813) (6,349) (1,464) -23.1% Operating income before restructuring charges 17,414 14,528 2,886 19.9% 14.0% 13.3% Restructuring charges 149 (1,580) 1,729 Operating income $17,563 $12,948 $4,615 * Margin based on revenue before reimbursements (net revenue). Heidrick & Struggles International, Inc. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Nine Months Ended September 30, 2006 2005 $ Change % Change Revenue: Revenue before reimbursements (net revenue) $346,290 $311,560 $34,730 11.1% Reimbursements 16,835 15,735 1,100 7.0% Total revenue 363,125 327,295 35,830 10.9% Operating expenses: Salaries and employee benefits 234,841 207,257 27,584 13.3% General and administrative expenses 69,529 70,375 (846) -1.2% Reimbursed expenses 16,835 15,735 1,100 7.0% Restructuring charges 406 22,417 (22,011) Total operating expenses 321,611 315,784 5,827 1.8% Operating income 41,514 11,511 30,003 260.6% Non-operating income (expense): Interest income 4,666 3,960 Interest expense (39) (359) Net realized and unrealized gains on equity and warrant portfolio 434 230 Other, net (534) 1,161 Net non-operating income 4,527 4,992 Income before income taxes 46,041 16,503 Provision for (benefit from) income taxes 18,574 (15,786) Net income $27,467 $32,289 Basic earnings per common share $1.52 $1.70 $(0.18) NM Basic weighted average common shares outstanding 18,024 18,957 (933) -4.9% Diluted earnings per common share $1.45 $1.62 $(0.17) NM Diluted weighted average common shares outstanding 18,957 19,886 (929) -4.7% Salaries and employee benefits as a percentage of net revenue 67.8% 66.5% 1.3% General and administrative expense as a percentage of net revenue 20.1% 22.6% -2.5% Operating income as a percentage of net revenue 12.0% 3.7% 8.3% Operating income as a percentage of net revenue (excluding restructuring) 12.1% 10.9% 1.2% Effective tax rate 40.3% NM NM Heidrick & Struggles International, Inc. Segment Information (In thousands) Nine Months Ended September 30, 2006 2005 Margin Margin 2006 2005 $ Change % Change * * Revenue: Americas $191,766 $179,060 $12,706 7.1% Europe 118,141 102,679 15,462 15.1% Asia Pacific 36,383 29,821 6,562 22.0% Revenue before reimbursements (net revenue) 346,290 311,560 34,730 11.1% Reimbursements 16,835 15,735 1,100 7.0% Total revenue $363,125 $327,295 $35,830 10.9% Operating Income: Americas $40,775 $39,174 $1,601 4.1% 21.3% 21.9% Europe 12,614 5,789 6,825 117.9% 10.7% 5.6% Asia Pacific 9,926 7,389 2,537 34.3% 27.3% 24.8% Total regions 63,315 52,352 10,963 20.9% 18.3% 16.8% Corporate (21,395) (18,424) (2,971) -16.1% Operating income before restructuring charges 41,920 33,928 7,992 23.6% 12.1% 10.9% Restructuring charges (406) (22,417) 22,011 Operating income $41,514 $11,511 $30,003 * Margin based on revenue before reimbursements (net revenue). Heidrick & Struggles International, Inc. Condensed Consolidated Balance Sheets (In thousands) September 30, December 31, 2006 2005 (Unaudited) Current assets: Cash and cash equivalents $137,399 $203,689 Short-term investments 60,000 – Accounts receivable, net of allowance for doubtful accounts 84,570 53,334 Other receivables 5,181 4,463 Prepaid expenses 10,614 8,178 Income taxes recoverable, net 5,777 3,536 Deferred income taxes, net 7,090 8,579 Total current assets 310,631 281,779 Non-current assets: Property and equipment, net 18,413 21,104 Assets designated for retirement and pension plans 29,807 26,727 Investments 3,173 1,839 Other non-current assets 6,465 5,216 Goodwill 47,717 46,655 Other intangible assets, net 5,831 6,239 Deferred income taxes, net 22,001 21,363 Total non-current assets 133,407 129,143 Total assets $444,038 $410,922 Current liabilities: Accounts payable $5,293 $6,019 Accrued salaries and employee benefits 111,516 84,169 Other accrued liabilities 28,996 25,314 Current portion of accrued restructuring charges 3,279 6,313 Total current liabilities 149,084 121,815 Non-current liabilities: Retirement and pension plans 35,442 31,446 Non-current portion of accrued restructuring charges 10,287 12,297 Other non-current liabilities 8,231 7,879 Total non-current liabilities 53,960 51,622 Stockholders’ equity 240,994 237,485 Total liabilities and stockholders’ equity $444,038 $410,922 Heidrick & Struggles International, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended September 30, 2006 2005 Cash flows from operating activities: Net income $11,151 $30,396 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,289 2,672 Deferred income taxes 303 (18,512) Net realized and unrealized gains on equity and warrant portfolio (319) (426) Stock-based compensation expense, net 7,100 3,947 Restructuring charges (149) 1,580 Cash paid for restructuring charges (1,006) (8,546) Changes in assets and liabilities: – Trade and other receivables (6,207) 850 Accounts payable 363 (548) Accrued expenses 29,760 27,308 Income taxes recoverable and payable, net 1,069 542 Other assets and liabilities, net (52) (975) Net cash provided by operating activities 44,302 38,288 Cash flows from investing activities: Capital expenditures (2,229) (1,343) Proceeds from sales of equity securities 532 456 Payments to consultants related to sales of equity securities (413) (198) Proceeds from sales of short-term investments 12,501 20,050 Purchases of short-term investments (22,501) (10,050) Other, net 17 71 Net cash provided by (used in) investing activities (12,093) 8,986 Cash flows from financing activities: Proceeds from stock options exercised 1,239 2,590 Purchases of treasury stock (3,924) – Excess tax benefits and accruals related to stock-based compensation 507 – Other (68) – Net cash provided by (used in) financing activities (2,246) 2,590 Effect of foreign currency exchange rates on cash and cash equivalents (2,329) 371 Net increase in cash and cash equivalents 27,634 50,235 Cash and cash equivalents: Beginning of period 109,765 83,676 End of period $137,399 $133,911 Supplemental schedule of noncash financing activities: Total value of treasury stock purchases $- $- Cash paid for treasury stock purchases (3,924) – Change in accrued treasury stock purchases $(3,924) $- Heidrick & Struggles International, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended September 30, 2006 2005 Cash flows from operating activities: Net income $27,467 $32,289 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,361 8,628 Deferred income taxes 850 (16,366) Net realized and unrealized gains on equity and warrant portfolio (434) (230) Stock-based compensation expense, net 18,271 10,074 Restructuring charges 406 22,417 Cash paid for restructuring charges (5,450) (28,625) Changes in assets and liabilities: Trade and other receivables (29,932) (23,680) Accounts payable (849) (5,182) Accrued expenses 25,485 31,188 Income taxes recoverable and payable, net (2,393) (11,485) Other assets and liabilities, net (1,409) (5,043) Net cash provided by operating activities 39,373 13,985 Cash flows from investing activities: Capital expenditures (3,556) (4,468) Proceeds from sales of equity securities 929 1,769 Payments to consultants related to sales of equity securities (625) (18,202) Proceeds from sales of short-term investments 72,500 176,925 Purchases of short-term investments (132,500) (112,600) Other, net 64 112 Net cash provided by (used in) investing activities (63,188) 43,536 Cash flows from financing activities: Proceeds from stock options exercised 4,023 8,050 Purchases of treasury stock (49,460) (27,498) Excess tax benefits and accruals related to stock-based compensation 2,289 – Other 247 – Net cash used in financing activities (42,901) (19,448) Effect of foreign currency exchange rates on cash and cash equivalents 426 (2,590) Net increase (decrease) in cash and cash equivalents (66,290) 35,483 Cash and cash equivalents: Beginning of period 203,689 98,428 End of period $137,399 $133,911

Heidrick & Struggles International, Inc.

China’s GDP to grow by 7.5 pct annually

China’s gross domestic product (GDP) is expected to grow by about 7.5 percent annually in the next five years, said Ma Kai, Minister of the National Development and Reform Commission (NDRC), on Monday.

Ma told the World Industrial and Commercial Organizations Forum in Beijing that GDP would reach 3.2 trillion U.S. dollars under the current foreign exchange rate.

He said the macro-control policies had started to take effect this year, while the consumer price index (CPI) remained very low.

In the first nine months, GDP grew at 10.7 percent, down 0.2 of a percentage point from the first half, and CPI stood at 1.3 percent, down 0.7 of a percentage point from the previous year.

Ma said the government would further strengthen macro-control efforts by implementing more stringent financial and monetary policies and using administrative means.

“China will strive to make its economy to grow in a more healthy way by focusing on reining in the fast growing investment, loans and trade surplus.”

He also said the booming economy would create new jobs for 45 million urban people and migrant workers between 2006 and 2010.

The government would further strive to reduce the widening income gap. The per capita net income of urban people would rise to 13,390 yuan (1,699 U.S. dollars) in 2010 from 10,493 yuan (1,332 U.S. dollars) in 2005, while that of rural people would rise to 4,150 yuan (527 U.S. dollars) from 3,255 yuan (413 U.S. dollars).

China-ASEAN summit to focus on regional trade

NANNING, Oct. 30 – China and ASEAN leaders are gathering here for a high-level summit meeting on Monday, with the aim to pursue regional free trade and enhance political mutual trust.

Leaders of eight ASEAN countries arrived in Nanning Sunday for the summit include prime ministers of Cambodian, Singapore, the Laos, Myanmar, Malaysia, president of the Philippines, Indonesian President Susilo Bambang Yudhoyono and Brunei Sultan Hassanal Bolkiah. Leaders of the remaining ASEAN members are expected to arrive here Monday.

This is the first time leaders from China and the ten ASEAN member countries to convene in China. They are widely expected to chart a future direction of China-ASEAN relations in the coming years.

Chinese Premier Wen Jiabao will hold bilateral meetings with the ASEAN countries leaders respectively on the sidelines of the summit.

A joint statement is expected to be inked by China and ASEAN countries upon the conclusion of the summit, charting the future China-ASEAN cooperation blueprint.

The third China-ASEAN Expo and China-ASEAN Business and Investment Summit are to kick off on Tuesday.

Chinese experts on international studies believe that the summits and Expo will push the China-ASEAN strategic partnership to a new level.

Shen Shishun, an expert with China Institute of International Studies, said Chinese and ASEAN leaders will probably review the development and achievements of the bilateral relations and set out the future China-ASEAN cooperation.

BLUEPRINT FOR CHINA-ASEAN FREE TRADE AREA

The upcoming commemorative summit is widely believed to lay a solid foundation for accelerating the establishment of China-ASEAN free trade area, which will realize free flow of goods, services and investment.

China-ASEAN free trade area, which will comprise China, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, encompass 1.8 billion population and realize a combined gross domestic product of 2 trillion U.S. dollars when completed in 2010. It is expected to be the most populous free trade area of the world and the largest free trade area amid developing countries.

To fulfill the scenario, a series of measures have been taken.

Beginning from July 1, 2005, China and ASEAN countries started their tariff reduction process. The two sides will gradually reduce or cancel tariffs on 7,000 kinds of products.

By 2010, China and six old ASEAN member nations — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand — will impose zero tariffs on most normal products, while China and the other four new ASEAN members — Cambodia, Laos, Myanmar and Vietnam — will do the same in 2015.

China and ASEAN’s ambitious free trade area project is based on their 15-year-long comprehensive and brisk trade development. According to Chinese statistics, China-ASEAN bilateral trade grew over 20 percent annually over the past 15 years, reaching 130 billion U.S. dollars last year, 15 times the figure in 1991. China is now ASEAN’s fourth largest trading partner and ASEAN is China’s fourth largest as well.

The trade volume between the two sides is expected to reach 200billion US dollars by 2008, two years ahead of schedule, as construction of the China-ASEAN free trade area is surging ahead.

The World Bank has predicted that China-ASEAN free trade area, upon completion, will turn to be one of the most influential economic powers in the Asia-Pacific region.

ENHANCED MUTUAL POLITICAL TRUST

The upcoming commemorative summit is believed to enhance the mutual political trust between China and ASEAN.

By 1991, China established diplomatic ties with all members of ASEAN. It became ASEAN’s all-around dialogue-partnership country in 1996. Currently, China and ASEAN are bent on cementing the “strategic partnership oriented to peace and prosperity”.

China has established a multi-level and regular dialogue mechanism with ASEAN with the “ASEAN plus China summit” as the core.

Shen Shishun said the China-ASEAN summit demonstrated that ASEAN countries have put ASEAN-China relations at a more prominent position and the China-ASEAN relations has ushered into a new stage characterized with dialogue, cooperation and common development.

A latest report released by the ASEAN-China Eminent Persons Group (EPG) pointed out that on the political front, the establishment of a strategic partnership for peace and prosperity has laid a solid foundation for the long-term ASEAN-China dialogue partnership.

In the security area, the report said China and ASEAN countries are carrying out cooperation in eight important areas including in the fight against drug trafficking, trafficking of people, illegal immigration, piracies, terrorism, arms smuggling, money laundering and international economic crimes.

The political and security relationship between ASEAN and Chinais relatively new and developing. The report said ASEAN and China should focus on confidence-building measures to create a climate conductive to engagement and cooperation.

ACCELERATED CULTURAL EXCHANGES

“Well implementation of policies hammered by China and ASEAN state leaders requires understanding and support from common citizens. Cultural exchanges is one of important channels to promote mutual understandings and trust among peoples of China and ASEAN,” said Zhai Kun, an expert with the China Institute of Contemporary International Relations.

China and ASEAN countries are taking various measures to promote cultural exchanges, including holding personnel training, promoting tourism and holding art festivals.

The China Guangxi International Youth Exchange Institute has trained more than 200 young officials from ASEAN countries.

China and ASEAN countries are becoming the major tourism destinations and tourist sources for each other.

Some grand art festivals, such as Nanning International Folk Song Festival, are held annually to showcase the splendid arts and culture of China and ASEAN countries.

China interested in hiring RP nurses

MANILA — China is interested in hiring around 500 Filipino nurses to teach there, the Commission on Higher Education (CHEd) said on Friday.

CHEd Chair Carlito Puno said that two big nursing schools in China have expressed interest in hiring Filipino nurses. “I can’t disclose yet the names of these schools pending the signing of an agreement between our government through CHEd and the China government through its education ministry,” Puno said.

He said that China has “high regard” for the country’s nurses as compared with its own nurses. “China admitted that the quality of their nursing education is not good compared with those of other countries such as Philippines. China’s nursing graduates could barely pass the National Licensure Examination,” he said.

Puno announced the news as a result of his recent visit to China where he met with 41 education ministers from all over the world to discuss trends and improvements in cross-border education programs.

He also said the country will be sending to China next year the first batch of 1,000 nursing students who will share their knowledge with their counterparts on nursing care and hospital work.

“This (student exchange) is part of a cross-border education program between our country and the education ministry of the China government that would be formalized soon between the two governments,” Puno said.

Puno said that those who will be sent to China for a one-year tour-of-duty in the student exchange program are 4th year nursing students from two prestigious schools in the country.

“These nursing students will spend their last year of practicum in different hospitals in China. “That’s the initial agreement that has still to be signed by both governments. CHEd is already considering two top schools where the 4th year nursing students would be tapped to be sent to China ,” Puno explained.

Puno also expressed confidence that the nursing profession in the country will continue to produce more competent and qualified nurses in the future.

“Despite the leakage controversy wreaking havoc in our nursing profession, some countries are still interested to share and impart knowledge with us. This is a very positive development for our Filipino nurses who should also try to go to other countries other than the United States and Europe,” he said.

Puno believes that the controversy over the licensure exams leakage that hit the Philippine nursing education in 2006 will “die down naturally.” “I’m hoping the issue will be resolved soon and let our new nurses move on with their life and future,” he said.

On Friday, the Philippine Regulation Commission (PRC) started to administer the oath to those who passed the last nursing board exams last June.

Out of around 43,000 examinees, 41.24 percent or 17,323 passed.