Category News of China

Shoppers warned about sale scams

The city’s consumer rights advocate warned shoppers to be wary of tricks that online stores might employ Monday during the annual Singles’ Day sales on the shopping websites taobao.com and tmall.com.

The Shanghai Consumer Council issued the warning ahead of what has become one of the busiest online shopping days of the year in China, the equivalent of “Cyber Monday” in the US. Taobao.com and tmall.com sold more than 19.1 billion yuan ($3.14 billion) in goods on November 11, 2012, up about 72 percent from the previous year’s sales, according to Alibaba Group, which owns the two websites.

In its warning to consumers, the consumer council said that some online stores on the sites might raise their prices in advance of the sale so they can claim to be offering larger discounts Monday.

Consumers should also be on the lookout for stores that replace products with poorer quality items, according to a press release from the Shanghai Consumer Council. The counsel stressed that consumers need to pay more attention to the quality of the products, as opposed to the size of the discounts.

The consumer council also warned shoppers that some stores might sell more goods than they have in stock and then tell buyers that they can’t fill their orders unless they pay more money. The stores usually offer excuses such as computer problems or employee negligence.

The council said that it isn’t easy for stores to accidently oversell a product because their inventory is computerized.

Consumers should also expect delivery delays for the items they buy Monday as most courier services will be running at near capacity. After last year’s sale, some customers complained that it took a week or longer for their purchases to be delivered. The council advised consumers to shop elsewhere if they need something immediately.

The city’s commerce authority advised consumers to call its 12315 hotline if they run into any online shopping scams. The Shanghai Administration for Industry and Commerce said it will send officials to monitor advertisements and will punish stores that try to trick consumers.

China Needs 7.2% GDP Growth for Jobs, Says Premier

Thanks to the Workers’ Daily, we now know a little bit more about how Chinese economic growth translates into jobs creation—or at least how top Chinese officials view that crucial equation.

Speaking at a national congress for China’s official trade union two weeks ago, Premier Li Keqiang said that China needs economic growth of at least 7.2 percent in order to ensure adequate employment, the Beijing-based newspaper reported on Nov 4. “The reason why we want to stabilize growth, in the final analysis, is to preserve jobs,” Li said at the union meeting on Oct. 21.

Li’s comment contrasts with the once oft-intoned rallying cry of “bao ba” or “protect eight,” meaning China must ensure growth does not fall below 8 percent in large part to ensure adequate employment. That mantra was common among Chinese policymakers until just a couple of years ago.
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Now with gross domestic product growth of 7.2 percent, China can create 10 million new jobs annually and ensure that registered urban unemployment is around 4 percent, Li said. (Keep in mind that the official figure is of limited value in measuring China’s true unemployment rate, given high numbers of migrant workers and others that aren’t counted in the official rate. We wrote about that earlier here.)

Li also pointed out how important the rest of the world remains for ensuring adequate employment in China. All told, China has some 30 million workers who are directly dependent on China’s export industries, and an additional 100 million serving in supporting industries, Li said. “If exports fall rapidly, it will create an employment problem,” he said.

Li said however, that the Chinese economy today is doing better at making jobs. While in the past, one percentage point of GDP growth created about one million new employment opportunities, today the same gain in China can create from 1.3 to 1.5 million new jobs.
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That’s because of economic restructuring—and particularly, the development of the job-producing service sector, Li noted. Over the last decade, China has grown its service industries from 41 percent of the economy to about 45 percent now. And China has an official goal of raising it to 47 percent by 2015. Still that’s probably too low. “Compared to countries with a similar income level, the proportion of GDP made up by the service sector lags by probably 10 percentage points,” Li said. “As a big country, in China we still must rely the most on domestic demand.”

Overseas degree no guarantee of higher salary in China

Chinese students possessing a degree from an overseas university do not necessarily receive a similar wage when seeking jobs at home, with a huge gap of up to 100,000 yuan (US$16,400) existing between them, a recent survey shows.

Their salaries are instead determined by their work experience during their time abroad, a survey conducted by the Beijing-based EIC International Education revealed.

The survey found that a Chinese job seeker with less than five years of overseas work experience receives an annual salary of 165,000 yuan (US$27,100), while individuals with at least five years working experience abroad can command a salary of up to 267,100 yuan (US$43,900) a year.

Most of the positions offered by Chinese companies do not specify a requirement for a domestic degree or a foreign degree, the EIC International Education said, while 62% of recruiters placed greater emphasis on a candidate’s professional skills when hiring rather than merely whether they hold a foreign diploma. Around 84% of the Chinese firms polled stated that they considered job seekers who had overseas experience, innovative abilities and proficiency in a foreign language.

It is not an easy task for Chinese students to find work overseas, however. A total of 38.9% of the respondents said the major obstacle they faced while looking for jobs in a foreign country was the prevailing local economic situation. Moreover, their possession or lack of cross-cultural social abilities also affected their chances of working abroad, accounting for 33.6% of the total polled respondents.

Meanwhile, the dropout rate of Chinese students at Ivy League schools in the US, including Harvard, Yale, Cornell and Columbia was as high as 25% this year, according to Li Zhu, president of EIC International Education. Li said that some Chinese students are unable to adapt to the educational system and the language requirements in western countries.

The survey was conducted over a nearly six-month period. A total of 9,173 valid responses were collected from industries, such as finance, education, healthcare, real estate, tourism and science in 23 cities across China, including Beijing, Shanghai, Guangzhou and Shenyang.

Online jobs marketplace used by China’s web giants gets $2.5 million funding from Innovation Works

Chinese IT job listing website Neitui today announced it received RMB 2.5 million ($410,000) investment from Innovation Works, bringing the company’s total valuation to RMB $10 million ($1.64 million). The funds will be used to expand the current three-member team.

The website lists IT jobs from China’s most high-profile tech companies: Alibaba, Baidu (NASDAQ:BIDU), Tencent (HKG:0700), Sina (NASDAQ:SINA), Sohu (NASDAQ:SOHU), Renren (NYSE:RENN), and dozens more.

Neitui was founded by two former Shanda Games (NASDAQ:GAME) employees. It features an internal recommendation system that verifies headhunter profiles and limits the number of job posts to avoid spam and scams. It also let’s users contact potential employers through the company’s WeChat account, email, and private messaging to lessen its own role as the middle man.

Neitui has about 20,000 registered users with 4,000 to 5,000 unique veiws per day. More than 1,700 job seekers have posted their resumes, and the website has done very little marketing or promotion.

Recruitment services targeted at specific verticals are a growing trend in China, exemplified by websites like Nashangban, Lagou, and Renren Headhunting.

More students back from abroad

The number of Chinese students returning from overseas is set to exceed those going abroad within the next five years, a survey released on Monday shows.

The report by the Chinese Academy of Social Sciences on Chinese talent returning home said the number coming back has continued to increase since 2004.

By 2018, the balance is likely to tilt in favor of the returnees.

Last year, about 2.6 million Chinese went overseas for education, training or on exchange programs, compared with more than 1 million who returned from abroad.

The most popular cities where those returning chose to stay were Beijing, Shanghai and Guangzhou.

To attract more talent from abroad, many cities have offered favorable policies on housing, children’s education and spouses’ jobs.

The report says more than 60 percent of those returning found jobs within six months. Some 25 percent were hired by foreign companies and their branches in China, with the finance sector being the biggest attraction.

“The younger generation feels comfortable living in China after studying overseas, because it would be very difficult for them to merge into mainstream society in a foreign country,” said Xia Yingqi, 64, chief adviser at the Beijing Overseas Chinese Talent Center.

Xia was among the first batch of students sent overseas by the government. He studied in Canada from 1978 to 1987, gaining a doctorate degree in engineering. He said there were only 5,000 Chinese students in Canada then, compared with at least 500,000 now.

Liu Yuxuan, 28, a PhD candidate at a university in the Netherlands studying the pathogenesis of hematological cancer, said, “It feels so good to be back home.” She wants to return to Beijing after graduating in December.

She said students returning from overseas enjoy many preferential government policies in China, and she, as a medical researcher, can make the best use of her knowledge at home.

But despite the increasing number of students returning from overseas, the cream of them — those with doctorate degrees in science or engineering — are still unwilling to come back.

Statistics from the Organization for Economic Cooperation and Development show that from 1990 to 1999 nearly 90 percent of overseas Chinese students falling into this category chose to stay abroad. The situation shows no sign of changing.

The Chinese Academy of Social Sciences’ report said more than half of the Chinese who returned from overseas in 2012 were undergraduates.

They studied mostly in Britain, where the requirements for overseas graduates who want to stay are stricter than in many other countries, including the United States.

Rui Zi, 30, whose husband gained a doctorate degree in engineering in the US, said: “I think I will stay in the United States for at least the next decade. I enjoy the free social benefits and better public services. At least we have fresh air here and not so many people.”

Xia said that most of his younger friends who went overseas as the country’s top students are staying aboard.

His 34-year-old son gained a master’s degree in Britain. “But he loves Beijing. I persuaded him to stay in the UK, but then he insisted on coming back because he could not stand the sense of loneliness in a foreign country.”

Li Wei, a professor at Arizona State University, said more Chinese parents want to send their children to study in the United States for a bachelor’s degree. She said the number of Chinese students studying for such degrees in the US increased from 8,000 in 2000 to 30,000 in 2010.

“The number of those seeking postgraduate studies is growing slowly,” she said.

Britain, the US and Australia are the top three destinations for Chinese students going abroad, the academy’s report said.

Alcatel-Lucent to lay off 10,000 workers by 2015

Telecom equipment maker Alcatel-Lucent unveiled plans Oct.8 to cut about 10,000 jobs worldwide by end-2015 in a cost-cutting drive to save 1 billion euros ($1.36 billion) and reverse years of losses.

The company intends to axe 4,100 posts in Europe, the Middle East and Africa, 3,800 in Asia Pacific, and 2,100 in the Americas, it said ahead of a meeting with its European works council Oct.8.

Alcatel announced in June the “Shift Plan” to focus on networking products and high-speed broadband and lower fixed costs by more than 15 percent, but it had yet to detail job cuts.

“The Shift Plan is about the company regaining control of its destiny,” Chief Executive Michel Combes said in a statement.

Shares in Alcatel rose 2 percent in early trading and were up 1.4 percent at 2.927 euros by 0712 GMT. The stock has almost tripled in value this year, with hopes that Combes can turn around the business.

The group, which employs 72,000 staff worldwide and competes with larger rivals Ericsson, of Sweden, China’sHuawei and Finland’s Nokia, has posted five straight quarters of net losses.

Last year it swung to a net loss of 1.2 billion euros – the biggest since 2008 – largely because of a writedown on its mobile unit and restructuring costs from an earlier plan to lay off 5,000 workers.
Alcatel confirmed it would dedicate 85 percent of its research and development budget in 2015 to next-generation technologies, up from 65 percent today. Spending on older technologies would be cut by 60 percent.

By the end of 2015, Alcatel will halve the number of its business hubs globally, it added.

The layoff plan is the latest in a series at Alcatel-Lucent. In autumn 2012, it announced moves to trim 5,000 workers from its base of 76,000 at the time, with the heaviest burden falling in France.

Vancl to follow Xiaomi’s model, laying off 20% of staff

Vancl has faced a rough two years. Now Lei Jun, founder of Xiaomi, may take over Vancl and could even replace its current CEO and founder, according to Tencent’s technology news portal.

The trouble began when the online retailer started cutting inventory last year. Now it has become one of the main platforms to dump excess inventory.

In May, Vancl tried to introduce third-party brands into its channels. In September, it tried to become its own brand. The industry began to wonder: is Vancl a product brand or a channel brand?

Since June, major investors in Vancl’s board meetings have repeatedly questioned its direction and strategy, with CEO Chen Nian finally deciding to stick with starting its own brand of apparel, the report said, citing unnamed insiders.

Chen has consulted with Lei several times since June, whose ideas and his unqiue way to run Xiaomi have been stimulating to Chen, the Vancl CEO told the tech site. “Lei’s advice has a direct impact on Vancl’s following adjustments,” Chen said.

Vancl recently moved headquarters to a Beijing suburb from the downtown district, cutting rent from six yuan per square meter to just one yuan. Along with the move, Chen integrated the company’s three business units into one — resulting in the layoff or early retirement of 20% of its staff. During the process, Vancl delayed payments to its suppliers, the report said.

Chen said investors have given him pressure on him, but not to the point of replacing him. Vancl will soon get new financing to cover its delayed payments to suppliers, according to the report.

Chen emphasized that Vancl’s operations remain normal, but it will begin restructuring based on Xiaomi’s model, which focuses on simple, attractice products and continuously improving product quality. Vancl aims to be profitable and cleared of inventory, Chen said.

After meeting with Lei for a total of 60 hours, Chen decided to adopt his advice wholesale, simplifying management levels and focusing on making a few products well.

In 2011, Vancl expanded excessively in anticipation of an IPO, which failed. The quick expansion pushed up Vancl’s inventory to 1.445 billion yuan (US$237 million) by the end of 2011, with a total loss of nearly 600 million yuan (US$98 million), while its 2011 sales reached only 3.8 billion yuan (US$623 million), far below its goal of 10 billion yuan (US$1.6 billion) set in early 2011.

When Vancl was full steam ahead between 2007-2010, it was capitalizing on a high profit margin thanks to its empty inventory. Vancl’s inventory level now is just one-fifth of its level a year earlier after it practically gave it away for dirt cheap prices, Chen said.

Taiwan asked to cooperate with free trade zone

The mainland and Taiwan adopted 19 joint proposals at the Ninth Cross-Straits Economic, Trade and Culture Forum, one of which encourages the island to cooperate with the new Shanghai Free Trade Zone.

The proposal, announced by John Chiang, vice-chairman of the Kuomintang, calls for cooperation between a pilot free economic area in Taiwan and the Shanghai Free Trade Zone as well as with three other pilot economic areas in eastern Fujian and Jiangsu provinces.

The free economic zones established by the two sides should cooperate and learn from each other to achieve common development, according to the proposal.

The Shanghai Free Trade Zone, which began operating in late September, is a 28.78-square-kilometer district billed as a test site for deepening market-oriented reforms.

Wu Poh-hsiung, KMT honorary chairman, said during his speech at the closing ceremony on Sunday he was delighted that both Taiwan and Shanghai have planned or established free trade zones and pilot free economic areas.

“We anticipate that the mainland and Taiwan will also consider cooperation opportunities in this field to give us more power to create a prosperous future,” he said.

The forum, a key platform for communication between the mainland and Taiwan, ended on Sunday in Nanning, Guangxi Zhuang autonomous region.

With closer cross-Straits economic cooperation, the two sides should explore ways to keep pace with the Asia-Pacific region’s economic integration, participants at the forum said.

The 19 proposals, which also cover cross-Straits cooperation in technology, finance, agriculture, education and tourism, are important and achievable, said Zhang Zhijun, the mainland’s Taiwan affairs chief. The proposals reflect an urgency from both sides of the Taiwan Straits to stay competitive within international economic and scientific fields. The proposals will also provide a useful reference point for policymakers, said Zhang, head of the State Council Taiwan Affairs Office.

Zhang said both sides should seize opportunities to cooperate in order to increase advantages in global economic, scientific and technological competition.

“I truly hope relevant authorities from both sides turn these proposals into feasible policies and measures,” Yu Zhengsheng, chairman of the National Committee of the Chinese People’s Political Consultative Conference, said at Sunday’s closing ceremony.

Yu urged both sides to overcome difficulties and seek opportunities to promote the peaceful development of cross-Straits ties and realize China’s rejuvenation through cooperation.

Sun Zhaolin, deputy head of the Department of Taiwan, Hong Kong and Macao Affairs under the Ministry of Commerce, said it’s advisable for the mainland and Taiwan to first reach a consensus on cooperation within the free trade zones before discussing details of cooperation.

In the proposals, participants urged both sides to expand financial cooperation by further opening their financial markets, jointly maintain stability in markets and build financial institutions on both sides to enhance exchanges. Participants also called on the two sides to promote cooperation in such sectors as culture, film, publishing, education, agriculture, medicine, as well as tourism and youth exchanges.

Heilongjiang Establishes Domestic Service League to Boost Industry

The Heilongjiang Provincial Longmei Domestic Service League was founded in Harbin, capital city of northeast China’s Heilongjiang Province, on October 23, 2013, to boost the province’s domestic service industry.

The launch ceremony was attended by more than 50 members from domestic service agencies under the Heilongjiang Women’s Federation.

Attendees discussed the league’s development plans for the next three years as well as the industry’s development trends, national policies and local regulations and standards.

Women’s federations of all levels in Heilongjiang Province have achieved great progress in promoting the industry. There are now 57 domestic service agencies in the province and several brands have been launched.

There are about 20 million domestic workers and 600,000 domestic service agencies in China. As average income increases, the demand for domestic help continues to increase. Forty percent of urban Chinese families have a need for domestic help, indicating an additional 15 million potential job opportunities.

Approximately 90 percent of domestic workers in China are female, and ages range from 16 to 48 with the majority being 30 to 40 years old. These workers are primarily less-educated rural migrants and urban
laid-off workers.

Several government agencies share the responsibility of overseeing, regulating, and enforcing aspects of domestic work. The Ministry of Human Resources and Social Security (MOHRSS) is responsible for issuing policies, laws and regulations related to labor relations, employment, and vocational training. The Ministry of Commerce (MOFCOM) is in charge of monitoring domestic service associations at different administrative levels. The State Administration for Industry and Commerce (SAIC) issues business licenses and monitors market activity.

Domestic workers are more likely than workers in other sectors to use formal recruitment services. These services often include training, and are available from labor bureaus, and the All-China Women’s Federation (ACWF). The ACWF runs 465 domestic service agencies in 16 provinces and cities, and cooperates with labor bureaus at different levels to provide vocational training and issue certificates to trained domestic workers.

The Rise Of Self-made Billionaire Entrepreneurs In China, And What It Means For The Future Of Chinese Corporations

Anyone who has followed China’s business billionaire lists in recent years will probably have noticed an encouraging trend: self-made entrepreneurs are climbing the charts. Six out of the ten billionaires topping this year’s list are genuine entrepreneurs.

There is, for instance, Baidu ’s (NASDAQ:BIDU) founder Robin Li, Tencent’s founder Ma Huateng, and Alibaba’s founder Jack Ma. They all developed true enterprises that parallel those developed by American, European, and Japanese entrepreneurs—they began with consumers and their needs, and came up with innovative products and services to accommodate them, amassing wealth in the process.

Baidu’s CEO Robin Li, number 3 in this year’s list, is a case in point. He made his billions by building a pioneering company in China’s brutal Internet market, where most companies fail to monetize their business model. Baidu’s revenues have been growing by leaps and bounds; reaching $4.17B in 2013, up from $515 million in 2008. Most notably, revenues come from several sources: Internet search, video stream (iQiyi),on-line travel services, on-line recruitment, and on-line payment systems (BaiduPai).

Baidu’s Financials

Forward PE Operating Margins (%) Qtrly Revenue Growth (%) Qtrly Earnings growth (%) Total Revenues Debt Cash
24.66 43.11 38.60 -4.50 4.17B 1.88B 5.43B
The rise of self-made billionaire entrepreneurs who build true enterprises which serve the interests of consumers is a significant departure from the old days, when entrepreneurs were government-made entrepreneurs who build “units” that served the interests of bureaucrats rather than the interests of consumers. This is true for three reasons.

First, it is a sign that China is making good progress in allocating its resources better, having entrepreneurs rather than government bureaucrats make important economic decisions. Second, it is a sign that Chinese corporations are making progress in moving from imitation to innovation, to catch up with their overseas counterparts.

Third, it is a sign that the government is loosening up its grip on the economy, releasing the ingenuity and creativity of the Chinese people.

To be fair, the government may be loosening its grip on the economy, but it continues to be on the driver’s seat, as guanxi –connections with government bureaucrats — continue to be a determining factor in who will get in what business, and for how long.

Nonetheless, this cruel reality doesn’t undermine the success of the self-made entrepreneurs – rather, it supports and re-enforces that success.

Hopefully, this trend will continue in the future.