Category News of China

Home prices keep rising in August

New home prices in 100 major cities averaged 10,442 yuan ($1,706) per square meter in August, rising for 15 consecutive months in month-on-month terms, and indicating the recovery of the property sector, a survey has shown.

Of the 100 cities tracked by the China Index Academy, the research arm of Soufun, China’s largest property website, 71 cities posted month-on-month increases, with 31 of them seeing prices rising at a pace above 1 percent, two cities fewer than in July.

The other 29 cities saw monthly declines, 10 cities fewer than in the previous month. Of those, 14 cities saw drops more than 1 percent.

On an annual basis, new home prices in those 100 cities increased 8.61 percent on average, 0.67 percentage point higher than in July.

Among the 10 largest cities, Beijing saw the biggest property inflation with a 3.22 percent month-on-month increase in August, trailed by Wuhan, Hubei province, which posted a 2.16 percent month-on-month increase.

On a year-on-year basis, new home prices in the 10 top-tier cities grew 12.18 percent in August, extending the period of gains to 10 months and pointing to robust housing demand.

“It’s increasingly less likely that we’ll see new tightening measures in the property market, and investors and homebuyers are returning to the market and pushing up prices because of the limited supply,” said Huang Zhijian, chief analyst at Shanghai Uwin Real Estate Information Services Co.

Loosened purchase restrictions in Wenzhou, Zhejiang province, and Wuhu, Anhui province, have sent signals lately that a relaxed policy environment might be in the works by local governments, and trading is now more active than a few months ago, said the report.

In August, Wenzhou quietly loosened purchase restrictions in the housing market by allowing local and non-local residents to buy second homes, while Wuhu decided to abolish transfer taxes and start paying a 20,000-yuan subsidy to undergraduate homebuyers with three-year work experience in the city.

Zhang Dawei, research director at real estate company Centaline Group, said there will likely be more cities following those moves across the nation to ease purchase restrictions. Local governments rely heavily on the property market, a key driver of economic growth and a cash cow for them, Zhang added.

However, Hui Jianqiang, research director of Beijing Zhongfang-yanxie Technology Service Ltd, said that Wenzhou and Wuhu tweaked the policies to stop the continuous fall of home prices in the two cities.

Wuhu saw the heaviest losses in the home price list after shedding 2.29 percent month-on-month, while Wenzhou saw home prices decrease 0.31 percent.

Xu Shaoshi, minister of the National Development and Reform Commission, said in a report delivered to a meeting of the Standing Committee of the National People’s Congress on Aug 28 that the government will launch pilot property tax programs in more cities.

“There will be between six and eight more cities with trial property tax programs this year, with some of them possibly levying the tax on pre-owned homes,” said Chen Sheng, vice-president of the China Real Estate Data Academy.

Most opposed to increasing retirement age

An overwhelming majority of those questioned in an online survey expressed opposition to a proposal pushing back the retirement age.

Nearly 95 percent of some 25,300 polled netizens said they were against the prospect of the retirement age being increased, according to the survey jointly conducted by the Beijing-based China Youth Daily and Sohu, a leading news portal.

The retirement age in China is 60 for male employees, 55 for female officials and 50 for female workers. Retirees can claim a pension immediately.

Delaying the pension age would relieve the State’s financial burden in supporting a rapidly aging population, according to a proposal released by Tsinghua University earlier this month. It suggested that the government should lift the pension age for workers, both men and women, to 65 from 2030.

Yang Yansui, director of the Tsinghua Center for Employment and Social Security and one of the drafters of the proposal, said it is a matter of urgency for China to lift the pension age given the accelerated imbalance between the working-aged population and the number of senior citizens.

Currently, it takes about seven workers to support one pensioner over 65.

If there is no change to the system, in 2035, it will take two workers to support a pensioner and this would place a heavy burden on the economy, Yang said.

However, about 91 percent of respondents said that they were unwilling to work until 65. Most of the surveyed were aged between 24 to 53, according China Youth Daily on Thursday.

Some 60 percent believed they would be physically incapable of working up to 65 and half of them said increasing the retirement age would make it harder for younger people to get work.

Ma Chenkai, department manager of a toy company in Dongguan, Guangdong province, said it is unrealistic to require blue-collar workers to postpone retirement.

“It’s physically demanding to work in manufacturing workshops, eyesight and energy levels deteriorate,” Ma, 43, said.

“Plus, their wages will not rise that much even if they continue to work. So the option of looking after their grandchildren at home becomes even more attractive.”

More than 60 percent of those polled believed China should introduce more flexible retirement arrangements for people from different walks of life.

Li Guizhen, associate chief technician from the department of laboratory medicine in the Tianjin Academy of Traditional Chinese Medicine Affiliated Hospital, said she would be happy to prolong her working life, as she believes it is a waste of medical expertise to let female paramedics retire at 55.

“It takes years of education and training to become a senior medical professional and I feel energetic, so I prefer to contribute more to society,” said Li.

There is no one-size-fits-all solution in terms of the retirement age and the government should allow people to have more options, based on health and their attitude, Li said. She also agreed that the retirement age for government officials should not be pushed back as this would increase the taxpayers’ burden.

China to expand employment for the disabled

BEIJING – At least one disabled person should be employed in China’s provincial-level Party or government organs and municipal working committees for the disabled by 2020, according to an official statement.

Those bodies are asked to offer more preference to help the disabled get employment and ensure their rights to apply for the civil service, according to the statement posted Thursday on the website of China’s Disabled Persons’ Federation (CDPF).

At least 15 percent of disabled people should be employed in provincial-level disabled persons’ federations, according to the statement.

The statement was jointly issued by seven departments including the Organization Department of the Communist Party of China Central Committee, the Ministry of Finance and the CDPF.

China has more than 85 million disabled people. The number is expected to exceed 160 million by 2050, according to the federation.

China’s National Human Rights Action Plan (2012-2015) provides that the country will stabilize and expand employment for the disabled.

Telstra China chief executive Xiaowei Chen exits

Telstra’s China chief executive Xiaowei Chen has left the company for “personal reasons” and not been replaced.

The move is potentially a blow to Telstra’s plans to expand into Asia to offset falling domestic fixed-line profits.

Chen Xiaowei’s departure was first revealed by industry publication Communications Day. A Telstra spokesman said she had left the company several months ago and not been replaced.

The McKinsey & Co consultant and former TV presenter for China Central Television was responsible for Telstra’s assets in China and tasked with growing the telco’s business in China both organically and through acquisitions.

The executive was appointed in May 2011 with Telstra’s then group managing director of Telstra International Tarek Robbiati describing her hiring as “a significant milestone in our drive to recruit the very best people throughout our operations.”

The company runs several popular websites in China including Autohome.com.cn, which is a leading site for car-owners looking for products and services.

Chinese national Tim Chen quit the board of Telstra in October 2012, ostensibly to pursue opportunities away from the telco. But he re-joined the company as its head of international operations exactly one month later at the behest of chief executive David Thodey.

Telstra has a presence in several Asian countries through its submarine cable assets and is actively using them to expand its footprint in the region. Earlier this month it appointed Singapore-Chinese executive Chin Hu Lim to the board as a director to drive growth.

But it also faces significant competition from home-grown rivals in the region who offer similar products and services.

In Hong Kong, High-Skilled Jobs Decline

Hong Kong is facing an expansion of low-skilled employment at a time when the number of high-skilled jobs is contracting, reflecting a torpid environment for the territory’s financial services industry and other white-collar sectors.

In the second quarter, the number of high-skilled jobs slipped by 0.9% from a year earlier, following a 2.4% drop in the first quarter. By contrast, non-professional jobs surged 3.8% in the second quarter after rising 4.7% in the first.

Overall, total employment rose 2.5% year-on-year to 3.75 million positions in the second quarter. Of these, 1.38 million are high-skilled jobs while 2.37 million are in the low-skilled segment.

The reason for a contraction in the number of high-skilled positions, according to human resources professionals, is weak hiring in the financial sector. The financial-services industry contributes about 20% of employment and just under a fifth to national output but it’s share has been falling. That’s in contrast to rapid growth of the retail sector and other blue-collar industries that have driven GDP growth lately as more mainland Chinese shop here.

Hong Kong’s GDP grew 3.3% in the second quarter, a healthy clip. The jobless rate also remains a relatively low 3.3%. But economists are concerned the increasing reliance on low-skilled sectors could hurt productivity growth and drag on the economy in the future.

“I believe the contraction of Hong Kong professional sector is more related to financial deleveraging over the global economy,” said Hang Seng Bank economist Ryan Lam. “Financial centers like Hong Kong are more vulnerable to the end of the credit-driven era than Singapore, which has a diversified manufacturing base.”

Hong Kong’s recruitment agencies said they’d witnessed a decline in middle-management jobs, especially in financial services.

“The global financial headwind has made companies more cautious in creating permanent headcount or making replacement hiring, especially mid to senior positions,” said Lancy Chui, regional managing director for Greater China at ManpowerGroup.

She noted some financial institutions continue to downsize and restructure operations following the financial turmoil in 2008.

“I don’t see any new posts for professional jobs in financial services this year,” said another senior consultant for a recruitment agency in the city. “It’s only job replacements filled by a junior post, with lower pay.”

Some recruiters point to cost-cutting in the financial-services industry globally as a factor contributing to Hong Kong’s changing employment landscape.

“Managing costs is still the top priority for most organizations in financial services, and this is the main factor behind the current cautious hiring environment,” said George McFerran, Asia Pacific managing director of eFinancialCareers, a recruitment firm.

GDP has gotten a boost in recent quarters from the rising tide of spending by cashed-up Chinese mainlanders visiting the territory to hunt for everything from daily necessities to luxury goods. Between 2007 and 2011, the contribution of tourism, including the retail trade, to the city’s GDP rose to 4.5% from 3.4%.

Alexa Chow, managing director of Centaline Human Resources Consultant Ltd., said she expected demand for non-professional jobs in the retail and services sectors to remain strong for years to come as tourism from mainland China continues to boom.

Still, some economists worry that the trend toward lower-skilled employment may push down economic growth in future quarters.

“A structural shift of employment toward this low-profitability, labor-reliant sector could cause a gradual slowdown in GDP growth,” said Hang Seng Bank’s Mr. Lam. “If this trend continues, Hong Kong could turn into another tourism city filled with low-skilled labor instead of being an international financial center.”

Best Buy CEO indicates company will stay in China

In a memo to employees, Hubert Joly said Best Buy International, including China, remains critical to the company’s future.

Best Buy Co. Inc. CEO Hubert Joly suggested Friday that the company will stay put in China despite speculation on Wall Street that it will eventually sell off its operations in the world’s most populous country.

In an internal memo that announced international President Shari Ballard also will lead human resources, Joly said the company remained committed to its foreign businesses, which includes China, Mexico and Canada.

“Our international businesses are a significant part of our company, and leadership of those businesses remains critical,” Joly wrote.

In some ways, Joly’s memo is his strongest endorsement of China yet. Since joining Best Buy last fall, Joly has conveyed skepticism toward the company’s struggling international operations. The chief executive has devoted most of the company’s resources toward stabilizing its core U.S. retail business, which generates most of its $50 billion in annual revenue.

Last April, Best Buy agreed to sell its 50 percent stake in Best Buy Europe to joint venture partner Carphone Warehouse for $775 million in cash and stock. Analysts suspected Best Buy also would divest its Five Star business, a local electronics chain that Best Buy acquired in China a few years ago. The business has struggled of late, due to a slowing economy and the end of China’s stimulus program.

At the same time, however, China still holds considerable opportunity. The country has overtaken the United States as the world’s largest smartphone market. Of the top five smartphone vendors in the world, two — Huawei and ZTE — are Chinese firms selling smartphones mostly in their home country.

With Five Star, Best Buy seems uniquely positioned to benefit from this growth. Although the company has shut down its big-box stores in China, Best Buy has continued to open Five Star stores and is testing a Best Buy Mobile store-within-a-store concept in some Five Star locations.

“Shari and I recently traveled to China and Canada, meeting with the new business leaders there and spending time in our stores,” Joly wrote in his memo to employees. “I am encouraged by the progress we are making and look forward to continuing to work closely with Shari and our country leaders.”

In May, Best Buy named Meng “Max” Zhou, a longtime retail executive in Asia, as its new China CEO. Still, Wall Street continues to doubt Best Buy’s future in that country with some analysts speculating that the company hired Zhou as a type of caretaker to prepare Five Star for a sale.

Of China and Canada, it makes more sense for Best Buy to stay in the latter, said David Strasser, a retail analyst with Janney Capital Management. Canada’s stores are profitable, and many of Joly’s strategies toward fixing U.S. retail can also apply north of the border, he said.

“Canada was always going to be a part of Best Buy,” Strasser said. “It’s a legitimate and good part of the business.”

China, however, is a different animal, Strasser said. The country has not yet generated the necessary returns to justify Best Buy’s continued presence there, he said.

“I still believe China is a question mark,” Strasser said. “Over time, China will either work itself out or it won’t.”

Joly, though, seems like he wants to remain in China — at least for the immediate future. Earlier this summer, Joly visited China and Canada, Best Buy spokesman Matt Furman said.

“He is personally engaged in our international business,” Furman said.

In the memo, Joly revealed that Carol Surface, the current HR chief, is leaving Best Buy to join an undisclosed Minnesota company. Joly also sought to refute the idea that appointing Ballard to run human resources would somehow detract from her duties as international chief.

“To be clear, Shari also remains responsible for our international business,” Joly said. “The addition of HR to Shari’s responsibilities does not, in any way, diminish what is expected of her as President, International.”

That might seem a lot of work for one executive but it fits Joly’s preference for a lean, efficient management structure. For example, Chief Financial Officer Sharon McCollam also is chief administrative officer charged with revamping Best Buy’s supply chain operations and real estate portfolio.

In addition, the sale of Best Buy Europe and the appointment of Zhou will help ease the burden on Ballard, a company veteran who formerly led human resources and served as co-head of North American retail.

“I think she is competent, a good executive,” Strasser said.

Shanghai’s free trade zone trial gets official go-ahead

China has officially given the green light to setting up a pilot free trade zone in Shanghai, the Ministry of Commerce said yesterday, and an overall plan for the zone will be announced after legal procedures are completed.

“The State Council has proposed to adjust some laws in the free trade zone in an effort to accelerate transition of government functions, explore management of foreign investment through drafting a negative list for foreign investors, and seek innovation in the opening-up model,” according to a ministry statement.

The proposal is pending approval from the Standing Committee of the National People’s Congress, China’s top legislature.

“The free zone will benefit China with new advantages in international competition and provide a new platform for the country to cooperate with other countries and thus help it to explore economic potential and build an upgrading economy,” the statement said.

China plans to suspend some laws on foreign companies and joint ventures in free trade zones, including Shanghai, according to a statement released after a meeting presided over by Premier Li Keqiang on August 16.

The central government approved a draft plan in July, which involves further opening up the country’s service sector, speeding up transformation of trading methods, promoting openness and innovation in the financial sector and building a suitable regulatory system for the zone.

In a free trade zone, goods can be imported, manufactured and re-exported without the intervention of Customs authorities, thus improving convenience and efficiency and facilitating the free flow of commodities and capital.

Shanghai’s current bonded areas allow companies to import goods without paying tax unless they enter the Chinese mainland for sale in the domestic market.

The pilot free trade zone, the first of its kind on the Chinese mainland, will be in the Pudong New Area.

The 28.78 square kilometer area will cover Waigaoqiao Free Trade Zone, Waigaoqiao Bonded Logistic Zone, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone, where a series of preferential policies is already in place.

The Shanghai Financial Services Office said the trial will focus on facilitating trade and investment activities, promotion of cross-border yuan use, and decentralization and improvement of foreign exchange management.

The trial program and implementation will be designed with Shanghai’s own characteristics to pilot China’s new financial reform, opening up and innovation measures, the office said.

Some measures to be implemented in the trial are related to credit asset securitization and foreign direct investment by individuals.

Sun Lijian, head of the Finance Research Center at Fudan University, said: “The approval of the trial free trade zone in Shanghai indicates the government’s resolution to rebalance economic development from a government-led and policy-supported pattern to a deregulated and more market-oriented mode.”

Lu Zhengwei, chief economist with the Industrial Bank, said that building a free trade zone that follows international standards is expected to bring breakthroughs to China’s service industry, which is set to be a new engine for the Chinese economy over the next decade.

51job print job ads fall by half in China as demand drops

Chinese recruitment services group 51job, one of the country’s fastest growing companies, is seeing demand for print advertising dropping substantially.

The firm’s results for the second quarter of 2013 show print revenues down 50% to RMB11m (£1.15m) compared with Q2 2012, with the estimated number of print advertising pages it generated in 2012 declining 47% to 355.

51job says it has taken a “strategic decision to discontinue certain newspaper editions”, thus reducing the number of cities where its supplement 51job Weekly is distributed to five – half the number of cities covered in the same period last year.

In Q2 2012, print had made up more than 6% of the group’s revenue. As revenue has grown, this figure is now less than 3%.

Group-wide revenues of RMB404.4m grew by 12%, with online recruitment, representing two-thirds of the business, growing slightly above that rate.

The firm’s president and chief executive officer Rick Yan says: “Recent feedback we have received from enterprises continues to be favourable regarding their hiring plans for white-collar workers.

“We remain optimistic about market outlook as we focus on strategy execution and capturing opportunities in the evolving HR services industry in China.”

See next week’s August edition of Recruiter for the Global Spotlight on China, and stay tuned for more online on recruiter.co.uk, including thoughts from Totaljobs director Mike Booker, also the managing director of global job site alliance The Network.

Premier encourages students to find work in western China

Premier Li Keqiang told new graduates to be enterprising and innovative in hunting for jobs in what some say is the toughest time for them to find work in recent years.

At Lanzhou University in Gansu province on Sunday, Li assured students that the government will spare no effort in helping them succeed in the difficult job market.

“Young people should be resolute and brave to start their own businesses. By doing so, you create jobs not only for yourselves but also for many others,” Li said when he met a crowd of students. “Confidence and enterprising spirit are your biggest assets.”

Li said he’s been inspired to know that some graduates from the university have taken the initiative in shouldering social responsibility by setting up their own businesses.

Huang Zheng, a 25-year-old graduate, told the premier he has just given up a job offer in administrative management in Guangzhou to set up an Internet company in Lanzhou that will help local students find jobs.

Huang said by doing so he could follow his passion and hone his skills in the real business world.

“You’ve made a good choice,” Li told Huang. “Don’t be afraid of failure.”

However, Huang told China Daily that he now lacks capital and resources and he hopes the government can help.

Under the incentive policy for new graduates who are setting up enterprises, entrepreneurs can receive a two-year tax waiver.

“But we still need about 300,000 yuan ($49,000) start-up capital,” Huang said. “We’re applying to set up our company in the local venture industrial park so that we can have a free office site.”

Venture capital and social resources are harder to come by in a western city, he said, than in big cities like Beijing or Shanghai.

During his visit to the university, Li urged students to be confident in the job market.

This year might be the toughest time for college graduates to enter the workforce in recent years. A record 6.99 million students are leaving universities in summer, a 2.8 percent increase, to hunt for jobs at a time when employers are cutting back on recruitment due to a slowing economy, according to the Ministry of Education.

“Though the number of graduates is huge, the unemployment rate (in China) is still low compared with some developed economies,” Li said.

“Young talent is the future of the nation, and the government will try every way possible to help them.”

The premier also encouraged students to work in western and remote areas of China, as the western region has become a growth engine for the country, but it still lacks innovation and talent.

In 2012, the region’s GDP increased by 12.5 percent year-on-year, much faster than in the eastern and central parts of the country.

To help graduates find jobs, the State Council has called for the implementation of existing policies favorable to graduates’ employment.

The central government has also encouraged graduates to turn toward self-employment and start their own businesses, promising to provide training subsidies, small loans, tax breaks and other incentives.

However, setting up businesses might not be easy. “Starting up a company is challenging for fresh graduates as they have no social experience or capital,” said Chen Yu, deputy director of China Association of Employment Promotion.

Entrepreneurs on average are between 35 and 44 years old when they launch their companies, according to a report on entrepreneurship released by the management committee of Zhongguancun, China’s Silicon Valley. It said lack of access to capital and experience are strong barriers for young entrepreneurs.

“When jobs are unavailable, new graduates may have to create opportunities by themselves,” Chen said. “But this is difficult for many because it is not what they have been trained to do.”

He said traditional education teaches students how to perform a job that already exists, but fails to encourage broad and creative thinking.

Market open for bilingual job seekers

Zhang Daojian, vice-president of the Confucius Institute in Islamabad, said he has had numerous requests over the past year from Chinese businesses that want to hire local Mandarin-speaking students.

“Studying Chinese is a great help to Pakistani students because many Chinese companies here want to hire people who can speak English, Urdu and Mandarin,” Zhang said.

Urdu is the national language of Pakistan, and both Urdu and English are the official languages.

“Last year a Chinese company asked me to recruit such talent, and I apologized because we had no students available,” said Zhang, a former teacher at Beijing Language and Culture University. The university established the Confucius Institute in Islamabad in 2007.

Zhang said some of the students who are fluent in Mandarin went to China for further studies, and the rest were hired in Pakistan.

“Generally, their jobs are really good, and most of them are working in banking or for leading Chinese enterprises,” he said.

The Confucius Institute gave Mandarin lessons to 6,000 students in 2012 amid the nationwide drive to learn the language.
“Mandarin lessons are compulsory in the leading elementary schools here,” Zhang said.

The Confucius Institute also co-hosted a series of cultural events to boost public diplomacy. One such event last year impressed Zhang with the Pakistani public’s enthusiasm for Chinese culture.

Local enthusiasm

“We participated in a cuisine festival last year, and China’s booth attracted many people.

The traditional friendship between the two neighbors is one of the reasons Pakistanis want to learn Chinese, he said.

“Economic, political and cultural exchanges are frequent between the two countries, which naturally provides a major boost to the demand for learning Mandarin.”

Traditional Chinese culture also appeals a lot to the local people, Zhang added.

Although Pakistanis have a strong desire to learn Chinese, Zhang said maintaining that enthusiasm is difficult.

“Some students have been brought up in well-off families, and they went to Britain or the United States for further studies after abruptly ending their Mandarin lessons,” he said.

Others who get posts at branches of Chinese companies in Pakistan are not interested in furthering their studies, Zhang added.

Security concerns

The security situation in Pakistan also is a concern, Zhang said. The media seldom reports good news about Pakistan, and the country has been depicted as being overwhelmed by bombings and earthquakes, he added.

One recent explosion several kilometers from the institute killed more than 20 people.

One of the institute’s teachers was giving lessons near the site of the bombing, but no one with the institute was hurt.

The security issue is a concern for some teachers from Beijing before they leave for Islamabad, Zhang said.

But the situation in Islamabad is relatively safe compared with elsewhere in the country, and one will be all right if he or she takes precautions, he said.

No Chinese teacher may leave Islamabad without Zhang’s permission, and he suggests that they finish their shopping early in the morning.

“I told them to leave at 7:30 am to buy fruits and vegetables and ensure they return before 8:30 am. The fewer people there are on the streets, the safer it is.”