Category News of China

Chinese lessons for Yahoo’s boss

Marissa Mayer may want to take a leaf out of the Chinese HR manual when taking on the pyjamas-wearing home-workers as boss of Yahoo.

At many Chinese companies, even sinecures in the state sector, mid-level managers and above are required to keep their phones switched on and answer email within two hours – when they’re on holiday. That gives a new meaning to the concept of “work from home”: in China, it’s what you do when you ought to be on holiday.

Diligence like that comes with the territory, it seems: leisure has had a bad rap in China since the days of the iron rice bowl. And blurring the work-life boundary is nothing new either. Under communism, the party picked your job and your job determined almost everything else: where you ate, slept, birthed your offspring and even spent your dotage. Work and life were kept in perfect equilibrium – or else.

Even today, many Chinese workers find it hard to tell where work ends and life begins. Construction workers live on-site, in the same flimsy prefab shacks, festooned with seemingly the same pair of tattered underwear air-drying outside the window, throughout China. When the shack went up and the undies went out on the vacant lot opposite my home, I knew the cranes could not be long to follow.

And even after completion, Chinese apartment buildings are filled with live-ins – not maids but welders and plumbers and tilers and carpenters. Flats in China are sold as empty shells, and those who fill them with floors and walls and bathrooms and kitchens live there while they work (which is why the sound of drilling never takes a holiday either).

A few outliers in the business world have begun to sing the praises of something other than nonstop toil. Last week Jack Ma, founder of the e-commerce titans Alibaba and Taobao, used his swansong as CEO to announcethat “from tomorrow, my career is to enjoy life”.

Some Chinese companies have begun to offer lifestyle concessions to keep employees happy, says Jennifer Feng, chief HR expert at 51job, one of China’s leading recruitment agencies – such as allowing employees to refuse to take phone calls or answer emails for two to three days. Per week? Per month? “A year,” she says: two to three days out of 365.

And although that particular form of indolence known as “working from home” is out of fashion at Yahoo, where Ms Mayer has told staff to work from the office, it is getting its first tentative trials in China. One local government in Shanghai is trying to promote the concept by working with Ctrip, China’s largest, Nasdaq-listed travel agency.

Ctrip told local Chinese news that it had lowered its usual requirements for age and appearance, and focused more on honesty and responsibility when deciding which employees should be allowed to work without coming to the office.

The company’s CEO, James Liang, wrote up Ctrip’s nine-month experiment in home-working with Stanford University professor Nicholas Bloom, concluding that performance increased dramatically and attrition fell sharply – while the company saved about $2,000 per employee per year worked at home.

Half of the 1,000 studied employees stayed in the office as a control group, while the other half donned their telecommuting loungewear. Attrition rates among those in pyjamas were 50 per cent below the white-collar cohort. After the experiment ended, those who chose to continue telecommuting recorded performance that was 22 per cent higher than the work-at-works.
But Ms Feng of 51job says she thinks most Chinese workers and employers do not share Ctrip’s sanguine view of the supposed win-wins of telecommuting. Some Chinese IT companies banned working at home even before Ms Meyer got around to it and others that offered staff the chance to stay home one or two days a month have not found such offers to be that popular, she says.

Most telecommuters found they were working longer, not shorter, hours, says Ms Feng. “If they work at a particular place for particular hours, that gives them a reason to refuse after-work meetings, but when they work at home?.?.?.?they are required to reply to emails within half an hour, attend meetings and distance-learning courses at night,” she says.

At that rate, they might be better off on holiday: at least that way, they get a full two hours to hit the reply button.

Recruiting overseas judges the right thing to do for now

Our judiciary remains fiercely independent,” Secretary for Security Lai Tung-kwok said at a luncheon address in London last week. “We uphold the rule of law and Hong Kong people enjoy a wide range of rights and freedoms.”

An independent judiciary is one of Hong Kong’s most positive attributes, especially now that the civil service’s image is somewhat tarnished. However, while the quality of judges remains high, there is a troubling shortage of suitable candidates who can move up to the bench.

One reason is that Hong Kong did not develop legal education until very late. The Hong Kong College of Medicine for Chinese produced its first medical graduates in 1892 but the first law graduates from the University of Hong Kong did not appear until 80 years later, in 1972. Because of that, Hong Kong’s first local judges were all British-trained. Even then, there were disincentives to serve as judges under the colonial system.

Simon Li Fook-sean, who died recently, was the first Chinese person to serve as a high court judge in 1971 and retired in 1987 when he was vice-president of the Court of Appeal. Throughout this period, he complained bitterly about the discriminatory treatment accorded local judges.

In those days, however, Hong Kong could draw on other sources for legal and administrative talent – not just from Britain but from its colonies around the world. Those expatriate judges served Hong Kong well but many are now retired or close to retirement.

None of the original judges on the Court of Final Appeal in 1997 was locally trained. Currently, only one – Patrick Chan Siu-oi – graduated from the University of Hong Kong, but he is retiring in October and will be replaced by another British-trained jurist, Joseph Fok.

Fortunately, China was pragmatic when it enacted the Basic Law. That document stipulates that only the chief justice of the Court of Final Appeal and the chief judge of the High Court must be Chinese nationals. Other judges – and other legal personnel – can be recruited overseas.

Since 1997, there has been a perhaps understandable reluctance to recruit overseas judges. But Hong Kong has no choice if it is to maintain its high standards. The city itself simply does not have the depth and breadth of legal talent.

Chief Justice Geoffrey Ma Tao-li has acknowledged the problem and said: “So far as I’m concerned, it is better to leave a position vacant than to get people who are not qualified or are not the right people.” Of course, positions cannot be left open indefinitely. Already, the waiting time for both civil and criminal cases has lengthened beyond prescribed targets.

Overseas judges are at a disadvantage in not knowing the Chinese language and the local culture. But until Hong Kong can fill the void – by training top legal minds and perhaps also by widening the pool to include more solicitors and academics – there may well be a need to recruit judges from overseas.

Expat fair offers more than teaching jobs

The country’s major job fairs for foreigners have featured increasingly more high-tech and management-oriented positions than the formerly dominant teaching posts, said a senior official with the department that oversees attracting and managing international professionals.

Between 2005 and 2008, the majority of positions offered at top job fairs for foreigners were for language teachers, but the post-financial-crisis period has seen more enterprises seeking professionals with other expertise, Zhong Yanguang, deputy director of the Information Research Center of International Talent under the State Administration of Foreign Experts Affairs, said on the sidelines of a job fair on Saturday.

“In the past many enterprises hired foreigners mainly to show that they have international staff, but now as more and more Chinese enterprises are eyeing the global market, they tend to employ and efficiently use those international human resources,” he said.

Zhong’s organization has held major job fairs for expats every year in Beijing, Shanghai and Guangzhou since 2005.

In Beijing, most jobs at the fair tend to go to high-tech and management-oriented professionals; in Shanghai, financial talent is tops in demand; and in Guangzhou, enterprises need marketing professionals, according to Zhong.

At the Beijing job fair on Saturday, language-teaching posts accounted for less than 50 percent, which marked a major change.

Nearly 70 enterprises and organizations participated in the fair, posting more than 1,000 jobs.

China International Chamber of Commerce for the Private Sector looked for eight professionals to fill marketing and management positions provided by six private enterprises.

“Privately owned businesses, especially medium-sized ones, are thirsty for foreign professionals to help them explore the overseas market,” said Qi Tao, a spokesperson for the chamber.

The CICCPS has more than 140 members, and they have participated in the job fair for five years.

At the fair, the foreign experts affairs bureau in Rizhao city, Shandong province, was organizing local enterprises to seek foreign talent.

“The city’s high-tech industry is developing fast and we urgently need talent in fields such as agricultural-machinery manufacturing, biological medicine, environmental protection and seawater desalination,” said Li Jianyun, who was in charge of the recruitment for the bureau at the fair.

Li’s organization offered 70 positions in those fields.

Also at the fair, Hebei-based Great Wall Motor Co was looking for talent to manage overseas programs.

“We want to hire professionals from India and Thailand to manage our future projects in those two countries because we plan to set up factories there, and we need people who know local markets well,” a staff member with the company said on condition of anonymity.

More than 1,500 job seekers were expected to pass through the fair by the end of Saturday, according to Zhong Yanguang.

Natalia Pozdeeva, from Russia, has been working in Beijing for four years and now works at a Russian logistics firm, but she wants to change jobs.

“I hope to find a job at a Chinese logistics company in Beijing, and the reason I want to stay in the industry is because trade between China and Russia continues to be prosperous,” she said.

Pedro Hernandez, from Spain, studies computer science at the University of Alcala in Madrid.

Hernandez will graduate in July and he will end his exchange-student program in China’s Shandong University in months.

“China’s IT industry develops fast and there are many more job opportunities here than in Spain,” he said.

The 30-year-old said he wants to find a software-development job in Beijing.

Reve Tardivel is from Cameroon, and he will complete his master’s degree in economics and business management from a school in Beijing in July.

“I enjoy my life in China and I’m going to marry a Chinese next month. I also notice a lot of job opportunities here,” said the 27-year-old.

51job Q1 Profit Declines 10% On Higher Expenses; Provides Q2 Outlook

Chinese integrated human resource services company 51job, Inc. (JOBS: Quote) reported Thursday a profit for the first quarter that declined 10 percent from last year, reflecting revenue decline and lower operating margins amid higher expenses. The company also provided earnings and revenue outlook for the second quarter of fiscal 2012.

“Although the late Chinese New Year holiday meaningfully delayed the recruitment peak season and affected the amount of revenues we were able to capture in the first quarter, we have observed a solid increase in hiring activity and improved sentiment among employers in 2013,” President and CEO Rick Yan said in a statement.

The Shanghai, China-based company reported net income of 108.80 million yuan or $17.52 million for the first quarter, down 9.7 percent from 120.51 million yuan in the prior-year quarter. Earnings per share declined to 1.82 yuan or $0.29 from 2.03 yuan a year earlier.

On American Depository share basis, earnings increased to 3.64 yuan or $0.59 from 4.06 yuan last year.

Excluding items, adjusted net income for the quarter was 123.65 million yuan or $19.91 million, compared to 132.33 million yuan in the year-ago quarter. Adjusted earnings per share was 2.07 yuan or $0.33, compared to 2.23 yuan a year earlier.

On American Depository share basis, adjusted earnings was 4.14 yuan or $0.67, compared to 4.46 yuan last year.

Total revenues for the quarter edged down 0.1 percent to 380.38 million yuan or $61.24 million from 380.81 million yuan in the same quarter last year.

Online recruitment services revenues increased 8.3 percent, while average revenue per unique employer decreased 10.0 percent. From the year-ago quarter.

Other human resource related revenues grew 3.5 percent, while print advertising revenues dropped 48.1 percent from last year.

Operating margin contracted 430 basis points to 31.7 percent from last year as operating expenses as a percentage of net revenues increased 470 basis points, partially offset by gross margin improvement of 40 basis points.

The company noted that it discontinued the publication of 51job Weekly in Shenzhen in March 2013, but continued to maintain its facilities and all other operations in the city.

Looking ahead to the second quarter, the company projects adjusted earnings in a range of 2.20 to 2.35 yuan per share or $0.71 to $0.76 per ADS, on projected revenues between 395 million yuan and 410 million yuan, or $63.6 million and $66.0 million.

“For this year, we remain focused on expanding our customer base, deepening relationships with HR departments for cross-selling opportunities, and innovating new products to increase user engagement and effectiveness for our corporate clients and individuals alike,” Yan added.

JOBS closed Thursday’s regular trading session at $60.42, up $0.90 or 1.51% on a volume of 66,178 million shares. However, the stock lost a $2.42 or 4.01% in after-hours trading.

Calling all green talents

The Ministry of Environmental Protection and the world’s largest brewer, Anheuser-Busch InBev, announced recently the opening of this year’s recruitment of green talents in Beijing. The project aims to look for students dedicated to environmental protection and match them with green companies. Three student groups presented their green ideas involving recycling of boxes used in delivery and trading trash for vegetables. A leader of water saving in the beverage industry, the brewer said investment in green talents equals investment in the future.

Hong Kong Dockworkers Strike Attracts Huge Solidarity

After 40 days, the dockworkers have ended their strike with a settlement including a 9.8 percent wage increase. More details and an interview with a strike leader are here.

Five hundred dockworkers are facing down the richest man in Hong Kong (and, according to Forbes, eighth-richest in the world) in a strike that has entered its third week and brought transport in the world’s third-busiest port to a virtual halt.

Li Ka-shing, the billionaire behind Hongkong International Terminals (HIT), controls more than 70 percent of Hong Kong’s port container traffic and oversees a vast transnational network of enterprises including the oil and gas giant Husky.

Arrayed against this financial titan often referred to as “Superman” are dockworkers exhausted by 12-hours shifts lacking even toilet breaks, surviving in one of the world’s most expensive cities on wages that haven’t risen in 15 years, and now waging a labor battle that observers are calling pivotal.

The confrontation appears to have tapped a vein of indignation against the “greed economy” and its glaring inequalities, bringing the workers broad public support.

Strikes are rare in Hong Kong, and strikes that gain this much solidarity are unprecedented in recent memory. The dockworkers represent a new level of action among the fastest growing segment of workers: subcontracted, not yet unionized, hyper-exploited.

Fifteen days into the strike, union spokespeople say not more than 20 dockers have returned to work while 120,000 containers sit untouched, ships experience delays of up to 60 hours, and daily losses of half a million U.S. dollars mount.

On the other side of the fulcrum, thousands of Hong Kong citizens have rallied to “occupy” the Kwai Tsing Port, bringing vast quantities of food, water, and funds ($800,000 so far) to ease the strain on strikers.

Solidarity Sick-Out, Boycott

The dockers are holding firm in their demand for recognition of their newly formed Hong Kong Dockworkers Union, humane working hours, safety measures, and wage hikes of 15-20 percent. Under immense public pressure, Hong Kong’s pro-business government has had to intervene to make management negotiate.

A court injunction initially limiting strikers’ access to the docks was later amended, providing the right for 80 to picket at a time. But the sustained presence of hundreds of strikers and supporters camping out on surrounding streets has disrupted all normal flow of work, and a sympathy “sick-out” earlier in the week by port truck drivers reinforced the strike.

Meanwhile an activist student group, Left 21, has begun organizing a boycott of Li Kai-shing’s mega-supermarket chain Park and Shop, and the president of the International Federation of Transport Workers, the global organization of transport unions, traveled to Hong Kong for a solidarity event. The AFL-CIO’s Solidarity Center is donating $5,000.

While support floods in from students, other unionists, and citizens, buoying up the strikers, the solid commitment of the dockworkers themselves is driving this piece of history. The workers organized despite differences in craft and employer (at least four major contractors supply staffing to the Kwai Tsing Port), divisions between subcontracted workers and permanent port employees, lack of formal recognition of their union, and no precedent of collective bargaining.

The dockers have no illusions about the concentrated wealth and power of their ultimate boss Li Ka-shing, but they realize that they have in their hands something no one else controls: the ability to withhold their labor.

Repercussions on the Mainland

The colonial history of Hong Kong left little in the way of labor rights, and unions are rather weak, operating with limited legal rights to bargain or represent workers. Still, both of Hong Kong’s two major union federations are playing roles in this strike.

The larger, the HKFTU, has ties to mainland China’s official labor federation, the ACFTU, and is considered pro-business and politically conservative. In this strike its lack of legitimacy among workers was further weakened by revelations that one of its leaders holds a management position in Global Stevedoring Service, one of the contractors that employ dockworkers.

HKFTU tried to funnel management’s offer of a 5 percent wage increase to a subgroup of workers, but was shamed and now seems to have retreated entirely.

The smaller federation, the HKCTU, is considered a pillar in the pro-democracy movement in Hong Kong, and has taken the lead in supporting the strike: raising funds, organizing logistics, doing PR and outreach, making demands on politicians.

The conflicts between the two Hong Kong labor federations point to implications of this strike for mainland China. Though total reintegration of Hong Kong into China is still 35 years in the future, the two economies are already thoroughly enmeshed. Because of the strike, some portion of Hong Kong ship traffic will almost certainly be re-routed to the southern mainland ports at Shenzhen or Guangzhou, where labor conditions are way below those in Hong Kong.

A strike of crane operators at the Shenzhen port several years ago was met with swift government intervention and rapid agreement to workers’ demands, in an incident believed to show the government’s determination to prevent a spread of worker militancy—not through repression but through accommodation.

Given that there are already tens of thousands of wildcat strikes annually on the mainland, rising on 30 years of wage repression and an absence of union representation, the potential for this spark of Hong Kong labor militancy to jump the straits and ignite a prairie fire on the mainland may be on the minds of China’s leaders.

Ellen David Friedman is a retired union organizer, on the Policy Committee of Labor Notes, and a Visiting Scholar at Sun Yat-sen University in Guangzhou. Support the strike fund here.

Founder talks of IPO and beyond for Alibaba

China’s biggest e-commerce company, privately held Alibaba Group, has become the most profitable Internet company in the country, as the company is considering going public and will continue to invest heavily in mobile technology.

Alibaba said on Tuesday that its net profit in the four quarter was $640 million on revenue of $1.84 billion. Net profit was 172 percent higher than the same period of the previous year while revenue growth was 80 percent.

The $6.4 billion profit beat Tencent Holdings Ltd’s $550 million in the same period to become the most profitable Internet company in China.

Company founder and chairman Jack Ma said in a speech at Stanford University over the weekend that he doesn’t care where or when an initial public offering is conducted for his e-commerce empire, which saw total transactions of more than 1 trillion yuan ($160 billion) last year. What he cares about most is whether an IPO will help the company sustain growth and benefit shareholders.

The 49-year-old Ma, known for eloquence and wit, compared the IPO to a wedding and said it is more important to think about married life after the ceremony.

“If an IPO is a wedding, Alibaba is more concerned about the marriage after. The result that we don’t expect to see is the marriage becoming the grave of love,” he said.

Alibaba Group owns China’s largest business-to-business website, the online retail platform Taobao, and a PayPal-style online payment service, AliPay, among other services.

By itself, Taobao – a platform akin to eBay on which a variety of retailers sell products and services to consumers and small businesses – recorded transactions of more than 1 trillion yuan in 2012.

Yahoo Inc has a 23 percent stake in Alibaba after reducing its holding from 40 percent for $7.1 billion last year.

With explosive growth and huge potential in online retail in the world’s most populous country and No 2 economy, an Alibaba IPO would be regarded as one of the biggest in the technology industry, and international and Chinese investment banks are vying to underwrite an offering.

Stock exchanges are also trying to attract the Internet giant. Alibaba.com had traded on the Hong Kong Stock Exchange but delisted last year.

Various investment banks have valued Alibaba at $40 billion to more than $100 billion. According to a survey by Bloomberg News of eight investment banks, the latest valuation is about $62.5 billion, based on 84 times the company’s profit-to-earnings ratio.

Ma also said his company is an industry trend-setter and will continue to invest in operations.

Last week, Alibaba paid $586 million for 18 percent of Sina Weibo, China’s most popular microblogging site with over 400 million users, and has an option to increase the stake to 40 percent.

The company has acquired many smaller Internet companies in businesses tied to Internet search software, group-buying deals, online coupons and even an online taxi-reservation service to build its mobile Internet portfolio.

“The mobile phone will become the device of data consumption and is changing people’s lifestyles,” Ma said at Stanford. “If the PC has changed the way we work and produce, the wireless Internet is a revolution in lifestyle, and China will see revolutionary changes with wireless Internet.”

He said Alibaba will invest more in infrastructure including “big data”, unlike its main domestic competitor Tencent. Hong Kong-listed Tencent is the third-most-valuable Internet company in the world, after Google Inc and Amazon.com Inc, and is investing in Internet applications.

China HSBC April services PMI falls to lowest in nearly 2 years

Growth in China’s services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday, in fresh evidence that economic revival will remain modest and may be facing wider risks.

The HSBC services Purchasing Managers’ Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.

The HSBC services PMI follows a similar survey by China’s National Bureau of Statistics, which found non-manufacturing activity eased to 54.5.

“The cooling of service sector activity in April likely reflected the knock-on effect of slower manufacturing growth, the impact of property tightening measures and the spreading bird flu,” said HSBC’s China chief economist Qu Hongbin.

A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing.

Two separate PMIs last week showed that China’s manufacturing sector growth had slowed, suggesting the country’s exports engine is running into headwinds from the euro zone recession and sluggish growth in the United States.

In the latest survey, the sub-index measuring new business orders dropped sharply to a 20-month low of 51.5 in April, with only 15 percent of survey respondents reporting an increased volume of new orders that month, HSBC said.

“Again, this started to bite employment growth. All these are likely to add some risk to China’s growth in 2Q, as there’s still a bumpy road towards sustaining growth recovery,” Qu said.

The employment sub-index decreased to 49.6 in April, the first net reduction in staff numbers since January 2009, although HSBC said job losses were marginal, partially caused by firms down-sizing and employee resignations.

Employment is a decisive factor shaping government thinking because it is crucial for social stability. The services sector accounted for 46 percent of China’s gross domestic product in 2012, as big as the country’s better-known manufacturing industry.

At the depth of the global financial crisis in 2008/2009, an estimated 20 million rural migrant workers lost their jobs, prompting Beijing to unveil a 4 trillion yuan stimulus package to shore up the economy and provide employment.

China’s annual economic growth dipped to 7.4 percent in the third quarter, slowing for seven quarters in a row and leaving the economy on course for its weakest showing since 1999.

The government has set a 2013 growth target of 7.5 percent, a level Beijing deems sufficient for job creation while providing room to deliver reforms to the economy.

University seniors struggle to find good job

A majority of university and college students set to graduate in the city next month are still looking for a job due to the grim employment situation.

Only 29 percent of 178,000 students who are to graduate this June have signed an offer, been admitted to postgraduate studies or decided to study abroad as of last month, according to the Shanghai Student Affairs Center.

The percentage was up 4 percent from March but down 3 percent year-on-year, even though the number of graduates is about the same as last year, the center said.

The center attributed the poor employment prospects for graduates mainly on the recovering economy, adding that the number of available positions declined from the past two years.

Some industries, especially manufacturing and foreign trade, have either suffered a downturn or are in a transition, making it especially difficult for students who majored in those fields.

In order to get a job, some students lowered their salary expectations while others accepted a position in a different industry.

“I would take a job as long as the salary is 3,000 yuan (US$488) a month,” said a student majoring in printing art design at University of Shanghai for Science and Technology.

The senior said he has had more than 20 job interviews, but hasn’t heard back from any of the companies.

In February, students were still expecting a starting salary of at least 4,000 yuan, up 225 yuan from the average salary of 2012 graduates, according to China International Intellectech (Shanghai) Corp.

Only 20 percent of seniors at University of Shanghai for Science and Technology have signed up for a job or have been admitted to postgraduate studies, said Niu Xiangyu, director of the student employment guidance center at the school.

Niu said the demand for mechanical and manufacturing graduates was down 40 percent from last year.

Teachers from student employment centers at other universities and colleges said the accumulation of jobless graduates from previous years and the increasing number of overseas students who return to China for jobs have made it more difficult for this year’s graduates to land a job.

“The overwhelming number of applicants have made competition for jobs harder and fiercer,” said Tan Yuxu, director of the employment guidance center at Shanghai University of Finance and Economics.

“But the students are reluctant to lower their expectations,” Tan said.

For example, some students refused to take jobs requiring different shifts even though the salary could be more than 4,000 yuan per month.

“Many students lost job opportunities like that simply because they don’t want to endure hardships,” Tan said.

Tan also said some students were spoiled by their parents and gave up easily after they failed to find an ideal job. They then relied on their parents and missed the best time to get a job, Tan added.

Tan suggested parents help their children lower expectations for their first job rather than compare them to their peers or help them become a NEET, defined as a young person “not in education, employment, or training.”

Nationwide, nearly 7 million university students are about to graduate this summer, the largest number since 1949.

Education focus shifts to filling labor gap

Vocational schools emphasize skilled training to meet growing demand

China is gradually shifting its education focus from a pursuit of diplomas to vocational training, in a bid to meet the growing demand for skilled workers in the country’s technical upgrade.

The supply and demand in China’s labor market has been mismatched, which resulted in structural unemployment, said Rong Lanxiang, headmaster of Shandong Lanxiang Vocational School, one of China’s largest training bases of skilled workers.

“The overexpansion of university enrollment generates millions of graduates who struggle to find a place in the government or public institutions. But, on the other hand, the shortage of skilled workers in China’s manufacturing sector was more than 4 million at the moment,” Rong said, explaining that high-skilled workers only account for 15 percent of the country’s workforce.

Another reason is the stereotyped, stubborn image that workers are ranked at a lower class of the social hierarchy and fail to win enough esteem, he added.

Rong said the issue has drawn attention from the government and corresponding changes in policy have been made, as reflected by the change in students’ subsidies.

In February, China decided that from 2014 it will do away with the publicly funded postgraduate education system that has been in place for several decades.

Meanwhile, the government has also been increasing fiscal support for vocational schools. Since 2012, the Shandong government has provided annual subsidies of up to 4,800 yuan ($773) for each of Rong’s students, on top of the 1,500-yuan national allowance.

“The policy came 10 years late, otherwise we would not have seen such a large gap in the supply of skilled workers,” Rong said.

His words were echoed by Xu Xiaoping, a senior technician from Shanghai Volkswagen Automotive Co, who said manufacturers are facing a severe shortage of skilled workers.

“Even if we offer a salary of 5,000 to 7,000 yuan per month, it’s still hard to locate the right candidates,” he said.

He attributed the malaise currently afflicting the industry to the absence of trained professionals as well as the lack of enterprise engagement.

To iron out the issue, Xu said Shanghai Volkswagen has signed several memorandums of understanding with local vocational schools to nurture technical practitioners.

As for the Lanxiang school, Rong said employers have to pay 1,000 to 3,000 yuan for each graduate they book. Even so, only companies with a noted brand and good track record are eligible to do so.

A student of the school who went on to become an excavator operator or motor mechanic could make as much as 10,000 yuan a month, an enviable salary level even for top university graduates.

Graduates from the excavator operating class have also been employed by State-owned enterprises and sent for overseas mining project in Russia and Mongolia, with even better pay.

Although Lanxiang has trained more than 300,000 skilled workers, the labor gap currently stands at 4 million people.

Therefore, Rong suggested that training bases for skilled workers should be established in each province, in order to equip the 250-million-strong migrant workforce with skills or proficiencies, so that they’ll have a better chance to settle down in the cities.

Meanwhile, he said, skilled workers should have a similar social status with public servants and university graduates.

Apart from cash payments, he called for job certification to be granted for vocational school graduates so as to encourage more young people to become skilled workers.

“Nowadays kids aren’t used to hard work, partly because being a worker doesn’t sound decent enough,” said Zhou Zhenbo, a technician at Shanghai Delixi Group Co Ltd who has a tenfold pay increase over the past nine years.

“I think it’s still worth the effort and young people should learn to put their feet on the ground,” he said.