Category News of China

Tens of Thousands of Jobs Go as China’s Biggest Banks Cut Costs

China’s four biggest banks reported that staff numbers fell by the most in at least six years in the first half, highlighting the possibility that employment has peaked at the firms that are the world’s biggest providers of banking jobs.
A decline of 1.5 percent from the end of last year left 1.62 million workers at Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd., earnings filings showed. Agricultural Bank, the No. 1 bank employer, saw its number of employees slip below half a million.
While a fall in the first half is not unusual, the 25,000-job decline is the biggest since at least 2010 and analysts at firms including BOC International Holdings Ltd. and DBS Vickers Hong Kong Ltd. say changes to how banking is done will limit prospects for increases.
“Chinese banks went through years of expansion, adding physical outlets that helped to push their staff numbers to a peak,” said Polar Zhang, a Beijing-based bank analyst at BOC International. He expects the workforce to “dwindle” on technological advances and cost cutting.

Chinese lenders take four of the top five slots for employment by listed banks around the world, ahead of the likes of Wells Fargo & Co., HSBC Holdings Plc, JPMorgan Chase & Co. and Citigroup Inc., data compiled by Bloomberg show. Russia’s Sberbank PJSC is in the top five.
Economic Slowdown
Lenders from Citigroup to Deutsche Bank AG have cut staff and costs in revamps since the global financial crisis.
While Chinese banks have avoided the multi-billion dollar fines for compliance breaches that have weighed on their international counterparts, they’re under pressure from an economic slowdown and a rising quantity of bad loans. Margins are falling as the government deregulates the industry and online and mobile players like Zhejiang Ant Small & Micro Financial Services Group — also known as Ant Financial — and Tencent Holdings Ltd. eat into their businesses.
Chinese lenders have generally reduced numbers by not replacing staff who leave, according to Shujin Chen, a Hong Kong-based analyst at DBS Vickers Hong Kong. Workers are departing in search of better pay, she said, adding that banks would need less staff as artificial intelligence and online and mobile transactions played a bigger role and lenders developed robots that would interact with customers.
Besides a reduced number of workers, the first-half data also pointed to pressure on pay. The big four banks’ combined staff compensation costs — including salaries, bonuses, allowances and post-employment benefits — fell 2.6 percent from a year earlier. At the mid-sized China Minsheng Banking Corp., the decline was 22 percent.

Flat revenue and rising pressure on asset quality means “banks have been pushing even harder in cost optimization,” Wei Hou, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in a note.
— With assistance by Jun Luo

Banking Layoffs Continue in China as Salaries Slashed in First Half

The departures come as the banking industry struggles against strong financial headwinds.

China’s biggest banks have eliminated thousands of jobs in the past six months to June 2016, as the nation’s banking industry, despite avoiding the huge fines for compliance breaches that weighed on their Western peers, has seen a challenging year amid a sluggish economy, lower interest margins and top-down financial reforms.

Big banks in China have announced almost 1.62 million new job cuts this year, and thousands more are expected, as the wave of lay-offs that began in 2013 shows no sign of abating.

So far, 10 out of the 16 listed mainland banks have reported a headcount drop. The top six listed banks, which reported their weakest profit growth in a decade, have cut a combined total of 34,691 jobs in the first half of the year, the semi-annual reports of the banks showed. This marks the biggest scale of employee departure ever recorded in China’s banking sector, which has expanded uninterrupted over the past 10 years.

Salaries are also going down
According to several media reports, many banks have been easing staff for different reasons, with China Merchants Bank scaling back the most, cutting 10 per cent of its workforce. Bank of China said its headcount at the end of June 2016 had decreased by 6,881 to a total of 303,161 employees. Agricultural Bank, the nation’s biggest bank employer, lost 4,023 staff while Industrial and Commercial Bank of China cut back by 7,635. China Construction Bank also shed 6,721 staff to 362,462.

Besides a reduced number of workers, salaries are also going down as Chinese banks’ profits slid 3.5 per cent on the year, while the four state-owned banks reported profit growth below one per cent. In addition, the first-half data showed that Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank reduced their salary expenses, including salaries, bonuses, allowances and post-employment benefits, by 1.6 percent, 2.9 percent, and 2.18 percent respectively.

Compensation structures are generally different in Chinese banks compared to their Western peers. For example, the average annual income for a mid-level banker can typically range between $100,000 to $125,000 while similar international counterparts offer more than double those salaries. They also offer longer holidays and fewer travel curbs, while Chinese staff can only get five days annual leave and must request approval from authorities before being allowed travel abroad.

China’s Belt and Road Initiative to stimulate Asian, global economic growth: Bangladesh economist

Belt and Road Initiative proposed by China could stimulate sustainable Asian and global economic growth, a leading Bangladeshi legal economist told Xinhua.

In an exclusive interview recently, MS Siddiqui, a professor at Dhaka’s Daffodil International University, said the Belt and Road Initiative will connect countries that represent 30 percent of world gross domestic product (GDP), 63 percent of global population, and most of known energy reserves.

PROMOTE INFRASTRUCTURE DEVELOPMENT

In particular, countries along the Belt and Road routes, especially those with underdeveloped infrastructure, low investment rates, and low per-capita incomes, could experience a boost in trade flows and benefit from infrastructure development, said Siddiqui.

The Belt and Road Initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, in a bid to revive the historic trade routes by boosting cooperation between China and other nations.

The Silk Road Economic Belt revival project could involve more than 60 countries and regions.

According to the economist, Chinese investment in large infrastructure projects constitutes the basis of the China-led initiative, which consists primarily of infrastructure that facilitates east-west trade over land, such as railways, roads and pipelines.

China has committed a total of about 100 billion U.S. dollars to a trio of new infrastructure funds, allocating 40 billion U.S. dollars to the Central Asia-focused Silk Road Fund, 50 billion U.S. dollars to the new Asian Infrastructure Investment Bank (AIIB), and 10 billion U.S. dollars to the BRICS-led New Development Bank, he mentioned.

The vision document for the Belt and Road Initiative, goes well beyond just infrastructure, and envisions closer coordination of economic development policies, harmonization of technical standards for infrastructure, removal of investment and trade barriers, establishment of free trade areas, financial cooperation and “people to people bonds” involving cultural and academic exchanges.

Personnel exchanges and cooperation, media cooperation, youth and female exchanges, and volunteer services, are also major components of the initiative, he said.

“China would be able to better secure its energy and raw materials supply, which now predominantly gets shipped through the Strait of Malacca and the South China Sea as China is gradually becoming more influential economically and diplomatically. Eventually it will shift geo-strategically from a ‘low-profile’ international strategy and take on a far greater role in global affairs.”

With the Belt and Road Initiative, Siddiqui said China as “a new great power is trying to supplement the international economic order.”

OPPORTUNITY FOR BANGLADESH

“Bangladesh is in a strategic location between China, India and ASEAN countries and hence is well placed to be a trading and manufacturing hub. Bangladesh needs such increased connectivity with other economies in this region and China’s Belt and Road Initiative will see the realization of this economic area.”

He added that Bangladesh should seek more Chinese support to help develop more mega infrastructures and develop other facilities related to finance and technology.

“Following China’s construction here of the multipurpose road-rail Padma Bridge bridge, we are expecting China to help develop a deep sea port,” the economist said.

Bangladesh also needs Chinese support on regional and global issues and has invited China to be involved in regional issues with other relevant countries, he said.

Siddiqui went on to explain that the current infrastructure and energy sector projects bottlenecking in Bangladesh transpired mainly from a shortage of long-term investments.

The Bangladeshi government’s budgetary allocations and long-term financing from local and foreign enterprises including banks, non-banking financial institutions and insurance companies, were not sufficient for maintaining the required investment for these sectors, he said.

“Bangladesh will have to spend between 7.4 billion and 10 billion U.S. dollars a year until 2020 to bring its power grids, roads and water supplies up to the standard needed to serve its growing population. In total, the country will require between 74 billion and 100 billion U.S. dollars between 2011 and 2020, or between 7.38 to 10.02 percent of its gross domestic product to improve infrastructure.”

BCIM (Bangladesh, China, India and Myanmar) economic corridors will increase trade, transport, tourism and investment for Bangladesh, due to its strategic location between India and China, he said.

“The availability and affordability of workers and its geographical location are important aspects of Bangladesh developing into regional hub, yet it urgently needs a port, and related infrastructure to boost connectivity with other nations through ocean and land routes. The Belt and Road Initiatives will open up numerous opportunities for Bangladesh,” said Siddiqui.

CONNECTING WORLD EFFICIENTLY

He said Chinese investment in large infrastructure projects constitutes the basis of the Belt and Road Initiative and emphasizes the commercial and open nature of the modern version of this network, he said.

He further explained that the ambitious programs of infrastructure construction along the main Asia-Europe shipping route will also result in connecting the world more efficiently.

“Firstly, China is gradually becoming more influential economically, diplomatically and geostrategically in regions close to Europe, therefore stronger investment and trade relations between China and countries in Africa, the Middle East and Central Asia are increasing China’s stake in regional affairs, as friendly relations with Beijing increase,” Siddiqui said.

“Secondly, the Chinese government has an increased ability to influence routes trade between China and the European Union. And in the long term it is likely that transport and supply chain routes involving Asia and Africa will increasingly bypass those of Europe,” the economist concluded.

Chinese Job Recruitment App Raises RMB200 Million

Shanghai-based online recruitment app HunterOn says it has raised RMB200 million to expand its recruitment services to more sectors, including finance, healthcare and consumer.

UOB Venture Management, an investment arm of Singapore’s United Overseas Bank Group, led the series C round, and existing investor IDG Capital Partners also participated in the round.

Founded in 2012, HunterOn provides a platform connecting recruiters and headhunters. Its web and mobile apps aggregate 20,000 headhunting companies and 60,000 headhunters, providing services to 30,000 companies.

The company previously raised US$10 million in a series A round from IDG and China Growth Capital in 2014. It completed a US$20 million series B financing led by Sequoia Capital with participation from IDG Capital in the same year.

The hiring of senior level professionals is mostly conducted via headhunters in China, and HunterOn is creating an Alibaba-like platform for human resources, UOB Venture Management said in a statement.

Tencent is top Asian company

Gets big boost from mobile Internet services

Internet giant Tencent Holdings has become the company with the highest market value in Asia at HK$1.99 trillion ($255.8 billion), overtaking domestic rival Alibaba Group Holding and many time-honored brands in China, media reports said Monday.

It is also the first time that Tencent surpassed China Mobile, which is valued at $254 billion, to become the top company in Asia, domestic news portal -wallstreetcn.com noted.

Alibaba ranked third at $250.2 billion, followed by South Korea-based tech company Samsung Electronics Co at $229.4 billion, according to the report.

“Tencent’s market value is based on its current and previous good financial situation, which is driven by the company’s core businesses including advertisements, games, e-commerce and financial services,” Li Chengdong, a Beijing-based independent e-commerce strategy -analyst, told the Global Times on Monday.

Tencent’s first-half revenue reached 67.7 billion yuan ($10.21 billion), up 48 percent year-on-year, said the financial report released by the company on August 17.

Gross profit rose 40 percent year-on-year to 39 billion yuan, the report showed.

Tencent has benefited from China’s fast-developing mobile Internet industry, which tops the world with 700 million to 800 million users, noted Liu Dingding, an Beijing-based independent industry analyst.

Li said that Tencent has a large base of active users who spend a long time on its products such as online chat tools QQ and WeChat, which makes its products unique in the era of mobile Internet.

Apart from its robust mobile game business, the growth of Tencent has been fueled by other activities such as video, digital reading, music, streaming media and Web ads, domestic news portal lanjinger.com reported Monday, citing an industry study from JPMorgan Chase & Co.

Tencent’s mobile game revenue will approach 40 billion yuan in 2016, up 89 percent year-on-year, the JPMorgan report said.

It also forecast that the revenue of Tencent’s social network will increase 30 percent this year and 25 percent in 2017.

“Tencent’s WeChat business also reported a great performance in recent months,” Liu told the Global Times on Monday.

For WeChat, including Chinese version Weixin, monthly active users reached 806 million in the first half of 2016, up 34 percent year-on-year, said Tencent’s interim report.

Weixin further penetrated into communication scenarios at work, with more than 20 million registered users of -Weixin enterprise accounts, which facilitate internal office automation operations, the report noted.

“The company will continue to boost such businesses as WeChat, cloud computing and big data,” Liu said.

Tencent has much scope for growth in businesses like finance and e-commerce, experts noted.

“Tencent has become the biggest shareholder of JD.com Inc and will join forces with jd.com to further develop its e-commerce business, posing tougher competition for Alibaba,” Liu said.

Salary rise of 8-15% for skilled talents

SKILLED professionals in China are receiving an average pay rise of 8-15 percent this year as demand for talents continues in the information technology sector, ZW HR Consulting said in a report yesterday.

However, those “with desired skills such as leadership capabilities, on-the-job experience and language proficiency can receive up to a 25 percent rise in salary,” said Frank Yu, chairman of ZW HR Consulting.

He added that candidates are now getting 8-15 percent increase in salary.

The pay rise and growth in recruitment this year will continue to be as active as last year as employers pursue a small pool of workers with strong technical and business skills, the firm said from analysis of job placements and interviews with firms and job seekers.

The IT sector will continue to outperform and drive growth in 2016 as demand will be particularly high for specialists, mobile engineers and software developers, ZW said, adding that engineers in research and development are also highly sought-after.

“We anticipate high levels of hiring activity will continue throughout 2016. Many companies are still positive when it comes to their hiring activities,” said Yu .

Demand for professionals in digital marketing, client relationship management and e-commerce continues to exceed the supply of candidates as online businesses in China are set to grow rapidly, according to the report.

GlobalSportsJobs works with China’s Alisports

GlobalSportsJobs, a specialist digital media and talent acquisition platform for the international sports industry, has entered into a partnership with Alisports to support the Chinese online sports marketing firm’s domestic and international expansion plans.

Under the terms of the agreement, GlobalSportsJobs will provide Alisports, owned by Chinese e-commerce giant Alibaba, with a range of digital talent acquisition solutions including the rights to advertise career opportunities across its multi-language platforms.

The partnership also sees GlobalSportsJobs help Alisports develop its international corporate branding through a range of content aimed at educating and inspiring professionals who are looking to further their careers in sport or make a transition into the industry from outside.

China Billionaires Chasing Electric-Car Talent Power Salaries

China’s biggest iPhone maker, largest e-commerce company and leading internet-video producer are all in the hunt to build electric cars — and to grab the small pool of available talent to build them.
All of this is great news for marketing professional Ronan Lu, 32. The bidding wars see some workers earning double their peers’ salaries and others landing jobs with minimal experience, according to recruiters.

Jia Yueting Photographer: VCG via Getty Images
“Many companies offered me job opportunities with good payment, but I chose LeEco because I believe it has great potential,” said Lu, who left Toyota Motor Corp. to join LeEco’s auto division in Beijing last month. “Startup EV companies usually can offer a higher salary than traditional automakers. You can get good rewards from stock holdings in such companies.”
More than 200 Chinese companies — with backers including Terry Gou, Ma Huateng, Jack Ma and Jia Yueting — are developing 4,000 models of new-energy vehicles and unveiling prototypes at motor shows and home-electronics expos. Traditional automakers and a bevy of startups see opportunity in the government’s commitment to boost yearly sales of NEVs by a factor of 10 in the next decade.
China surpassed the U.S. last year to become the world’s biggest market for new-energy vehicles, a fleet comprising electric vehicles, plug-in hybrids and fuel-cell cars. Domestic automakers sold 331,092 units in 2015, according to the state-backed China Association of Automobile Manufacturers.

An electric car charging station in Beijing. Photographer: Qilai Shen/Bloomberg
In a country with some of the worst urban air pollution on the planet and a rapidly urbanizing populace, the government has set a sales target of 3 million units a year by 2025. China also is accelerating construction of charging stations to serve 5 million electric vehicles by 2020.
‘Prying Talents’
“Internet companies that want to make cars are prying talents from us, and other rival automakers are also trying to lure them away,” said Wang Jun, vice president of Chongqing Changan Automobile Co. “It’s not only bolstered human-resource costs but also changed people’s expectations about their future.”
For QuickTake explainer on cleaner cars, click here.
The positions in top demand include designers, software developers and engineers focusing on systems architecture and creating “smart cities,” said Shirley Xia, an auto-industry recruiter in Beijing for Aimsen & Company.

Recently, Xia and seven colleagues suspended all projects for 45 days to search for an engineer to design charging poles for electric vehicles. Their client, an auto parts maker, wanted someone with at least three years of experience but settled for a candidate with half that.
“For some positions that only emerged over the past couple of years, there aren’t that many talents in the market,” Xia said. “It’s challenging for us to find candidates.”
Salaries for key research-and-development workers have risen 30 percent this year, with some reaching 1 million yuan ($151,000), said Jennifer Feng, chief human resource expert at Shanghai-based 51job Inc. That’s almost 16 times the national average for urban Chinese, based on data from the National Bureau of Statistics.
DeLorean Doors
Park Piao left Changan Automobile to run the R&D department for startup Zhiche Auto in Shanghai. Zhiche’s chief executive officer is Shen Haiyin, who formerly worked for Chinese e-commerce company 360.com.
“I received quite a lot of offers from all kinds of companies before I decided to join Zhiche,” said Piao, 38. “A startup company can be more focused on EV products and thus can achieve innovations more quickly.”
Zhiche displayed a concept electric SUV before the Beijing Auto Show this year, complete with DeLorean-style doors that flip up. Zhiche plans to release the car next year.
There’s also strong demand for branding and marketing specialists to help make household names out of startups with sights on initial public offerings.
Foxconn, Tencent
“Part of this EV startup bubble can be explained by hot money,” said Jochen Siebert, managing director of JSC Automotive Consulting in Singapore. “It reminds me a bit of the 1990s, when almost everything with internet or e-commerce was supported by private equity, and the stocks went through the roof.”
A lot of that money is being spent on recruiting for the corporate suite, with companies backed by some of Greater China’s richest people hiring top executives from rivals and from Silicon Valley to help distinguish themselves.
Take Future Mobility Corp., an EV-maker backed by Gou’s Foxconn Technology Group and Ma’s Tencent Holdings Ltd. The company hired Daniel Kirchert, who was president of Dongfeng Infiniti Motor Co., and Carsten Breitfeld, project manager for BMW AG’s i8 plug-in sports car. Then it lured more managers from BMW.
“It is such a huge opportunity and advantage to start from zero,” Kirchert said. “Our company offers a really big platform for talented people to reach their goals without hitting the glass ceilings they would have hit at traditional automakers.”
Tesla Challengers
Internet entrepreneur William Li’s NextEV Inc. hired Padmasree Warrior, Cisco Systems Inc.’s former technology chief, to lead its U.S. operations.

The Faraday Future FFZero1 concept vehicle. Photographer: Qilai Shen/Bloomberg
Jia’s Faraday Future Inc., an electric-car startup planning a $1 billion factory in Nevada to challenge Elon Musk and his Tesla Motors Inc., recruited Porter Harris from Musk’s Space Exploration Technologies Corp. Harris left Faraday earlier this year.
The presence of those high profiles usually attracts workers who can actually build cars. Only about a quarter of the 4,000-plus NEVs approved by the government are in production, according to a National Development and Reform Commission survey. Ma’s Alibaba Group Holding Ltd. is partnering with SAIC Motor Corp. on an internet-connected SUV called the Roewe RX5.
Yet public subsidies that can total 60 percent of an EV’s sticker price are helping fuel a manufacturing boom. For the first half of this year, China produced 177,000 NEVs, more than double the same period a year ago, the manufacturers’ association said.
“Talent is one of many things these EV startups need to get right,” Robin Zhu, a Hong Kong-based analyst at Sanford C Bernstein, said in an e-mail. “It may even be the most important, given how early stage many are at this point, and particularly given the realities of fund raising (investors back the best people).”
— With assistance by Yan Zhang, and Tian Ying

Apple to build first R&D center in China by the end of the year

Reuters reports that Apple is to build its first research and development center in China, citing a statement by the official Chinese state broadcaster.

Tim Cook reportedly made the commitment to Vice Premier Zhang Gaoli, stating that the center will be built by the end of the year.

The pledge comes after the head of China’s industry and technology regulator in May told Cook he hoped Apple could deepen its cooperation with the country in research and development and stressed information security.

Apple likely has two reasons for investing in R&D within China …

First, Apple wants to be able to recruit the best research staff worldwide, not all of whom are willing to relocate to the USA. It has established – or is establishing – R&D centers in a number of locations around the world, including France, Israel, Japan, Sweden and the UK. A center in China has long been rumored.

Second, the company is seeking to establish closer ties to protect its interests in what is currently its second-largest market.

Apple has long had a somewhat precarious relationship with the Chinese government. China has in the past questioned the security of iPhones and banned government purchases of Apple products. More recently, China has said that Apple will be subjected to greater security scrutiny, its iBooks and iTunes Movies services were shut down by a government agency, and a Beijing patent office has ruled that the iPhone 6 copies a Chinese phone.

Reuters even suggests that Apple’s $1B investment in Chinese Uber competitor Didi Chuxing – key to Uber abandoning its own operations in the country – may have been partly motivated by political considerations.

Before Cook’s charm offensive in Beijing in May, Apple announced a $1 billion deal with ride-hailing app Didi Chuxing, a move many experts saw as an attempt to curry favor with Beijing.

Apple’s Q3 earnings report revealed that the company’s sales in China were down 33% year-on-year as it battles local brands.

Pre-opening costs at Shanghai Disney drag down earnings

A general view of Shanghai Disney Resort.

Higher pre-opening costs at Shanghai Disney Resort partly contributed to a lower operating income of Walt Disney’s international operations, according to a recent quarterly earnings report of the U.S.-based media conglomerate.

The lower-than-expected income of Walt Disney’s international segment, dented by the costs of opening Shanghai Disneyland and lower attendance and higher operating costs at Disneyland Paris, was offset by an increase in domestic operations due to guest spending growth and lower costs, the report reveals.

Parks and Resorts revenues for the past fiscal quarter increased 6 percent to US$4.4 billion and segment operating income increased 7 percent to US$994 million, against staggering total quarterly earnings of US$2.6 billion, up by US$114 million over the prior-year quarter.

Disney’s newest park in Shanghai, with a cost of approximately US$5.5 billion, has received close to a million visitors during less than a month after its opening, Disney Chief Executive Officer Robert Iger said last month.

Wang Jianlin, China’s richest man and chairman of Dalian Wanda Group, a real estate and entertainment conglomerate, made a uncharacteristically bold remark prior to the theme park’s opening, saying that “Wanda would make it impossible for Disney China to make profit in the next 10 to 20 years.”

He also expressed doubt over the high cost of building such a theme park in China and believed that it would have to charge high prices in order to be profitable.