Category News of China

China’s Alibaba Names Jonathan Lu as Next CEO

HONG KONG—Alibaba Group Holding Ltd. named Jonathan Lu to succeed founder Jack Ma as chief executive amid growing expectations that the Chinese e-commerce company is gearing up for a potential multibillion-dollar initial public offering.

The company portrayed Mr. Lu as a Mr. Fix It—an experienced manager put in place to run Alibaba’s growing operations. Alibaba on its website emphasized Mr. Lu’s operational abilities and said he “shuns the spotlight,” putting him in contrast with Mr. Ma, who long has been an outsize figure on China’s Internet scene. Though Mr. Ma has been stepping back from the day-to-day operations of Alibaba over the past year, many analysts expect him to maintain a strong influence over the company’s strategic direction.

Mr. Lu’s background as an executive vice president running important Alibaba units will be put to the test in his new role. The company faces increasing challenges from logistical complexities and competition from companies such as Beijing Jingdong Century Trading Co., which runs the 360buy.com site. Bankers say Alibaba is likely contemplating an IPO as early as this year, although the company hasn’t specified a time.

One of the tasks for Mr. Lu will be to make use of the massive amounts of data Alibaba collects on transactions and users. He also will need to expand beyond Alibaba’s command of e-commerce via personal computers to attract China’s growing number of smartphone users to the company’s mobile services.

“Serving as Alibaba Group CEO is an extremely challenging and difficult job, especially succeeding a founder CEO like me,” Mr. Ma said in an email to employees Monday. “Jonathan has impressed with his curiosity and ability to grasp new ideas, his judgment and decisiveness, and his strong execution capabilities.”

Alibaba said Mr. Lu, who takes his new position May 10, wasn’t available for comment.

Alibaba said in January that Mr. Ma, 48 years old, would step down as day-to-day chief of the company he founded but would remain chairman. With no background in business or technology, the former English teacher founded from his apartment in 1999 what is now China’s largest e-commerce company by sales. The Hangzhou-based company has more than 23,000 employees.

Last year the company took private Alibaba.com, which had been listed on the Hong Kong Stock Exchange, in a move that many analysts saw as a way to consolidate control ahead of a group IPO. Alibaba Group in May struck a roughly $7 billion deal to buy back around half of Yahoo Inc.’s YHOO +1.75% 40% stake in the group. The agreement created an incentive for Alibaba to list its shares before December 2015.

Mr. Lu, 43, has been the group’s chief data officer since last year, overseeing the company’s Aliyun smartphone operating software, a source of conflict with U.S.-based Google Inc. GOOG -0.12% When Taiwanese PC maker Acer Inc. 2353.TW 0.00% tried to introduce a smartphone using Aliyun last year, the U.S. company objected, saying that Alibaba created its system by making changes to Google’s Android operating system. Alibaba disputed Google’s allegation, though the phone wasn’t released.

Mr. Lu’s appointment comes as Alibaba has taken steps in the past year to streamline management of the company. Alibaba in January unveiled a reorganization that aimed to boost efficiency and give more independence to business units.

“With this appointment, Jack will be freed up to focus on maintaining the company’s good relationship with the government,” said Duncan Clark, chairman of BDA China, an investment advisory firm specializing in the Internet and e-commerce. He said Alibaba needs to ensure that the government won’t raise issues with the dominant market share held by Alibaba’s Taobao and Tmall shopping sites.

Taobao accounts for the vast majority of transactions among Chinese online shopping sites, similar to eBay Inc.’s EBAY +0.66% site, that cater largely to small merchants, mostly offering inexpensive, nonbranded goods and novelties. Tmall hosts online storefronts for branded products, including for U.S.-based Gap Inc. GPS +0.68% Taobao and Tmall last year surpassed one trillion yuan, or roughly $160 billion, in transactions, from which the sites generated revenue from advertising, services and commissions, the company said.

In the past decade, Alibaba took market share from eBay’s Chinese unit, mainly by undercutting the U.S.-based company on commissions. Ebay largely withdrew from China in 2006.

Multinationals flock to Shanghai

Multinational companies continue to set up China and Asia-Pacific regional headquarters in Shanghai, according to the city’s Municipal Commission of Commerce.

The commission reported that by the end of 2012, 403 multinationals had established regional headquarters in Shanghai, 95 of which serve as both China and Asia-Pacific headquarters.

“We were aware of this trend as early as 2000, when we entered the China market, but it has clearly increased in the past two years,” said Sergio Picarelli, chief sales officer and member of the Executive Committee of Adecco Group.

He added: “A lot of companies are moving from Singapore or Hong Kong or directly setting up their headquarters for Asia Pacific in Shanghai. It will probably further increase in the next five years.”

In Picarelli’s view, Shanghai is China’s foremost commercial hub and a key center for logistics, making it an ideal city for a multinational firm to base its China operations.

A joint venture may give a multinational company an edge in the China market, such as in the case of the Adecco Group, Picarelli said.

“Globally Adecco works with over 100,000 clients every day. Many of them are very interested in the opportunities offered by the Chinese market and want to fully understand the HR situation on the ground here. We can support them with our local know-how and our full range of services,” he said.

Adecco has created an expert team and offers a special platform that supports multinational companies exploring the Chinese and Asia-Pacific markets as well as assisting Chinese firms going overseas.

“Outbound Chinese companies will have the same difficulties that multinational companies have when they come to China. They have to discover a new world and a new way of doing business,” Picarelli said.

“We support them in their efforts to recruit good people. Once you have good people, you have a good organization,” he said.

Job forecast bright for retail sector: think tank

TAIPEI, Taiwan — Roughly 41,000 job opportunities, including 31,000 full-time positions as well as 10,000 part-time jobs in the nation’s retail enterprises, will open up this March, according to a survey conducted by 104 Job Bank.

The labor think tank released their March 2013 Recruitment in Local Enterprises survey yesterday, which showed the retail industry enjoying the most job growth compared to other sectors.

The retail industry has been quickly expanding over the past five years, according to the report, offering positions with monthly salaries ranging from NT$50,000 to NT$70,000.

Despite the abundance of jobs opening up in the sector, the report warns job seekers that positions in retail are known for tough requirements, and work-performance evaluations are often tied directly to sales goals.

Previously, the job bank said that local demand for new employees would increase after the Chinese New Year holidays. The statistics showed that demand for labor supplies was expected to increase in March, a month marked by the start of recruitment on college campuses.

According to the Directorate General of Budget, Accounting and Statistics (DGBAS), the unemployment rate in January this year was 4.16 percent, the lowest in the last six months.

Overall, strong demand for labor has been increasing since February as the job market has seen an expansion since the New Year holidays, said the DGBAS said.

The job bank said 24.5 percent of local enterprises are optimistic about the economy for March, while 17.2 percent of the enterprises surveyed are pessimistic over a possible economic recovery.

According to the report, 32.9 percent of enterprises are planning to take on new employees in March, while 44.6 percent of local enterprises will freeze hiring, and 9.7 percent will decrease their recruitment. Nearly 13 percent remain uncertain.

Chinese IT execs detained over alleged bribes

Summary: Two senior executives from China’s top futures exchanges have been detained after they allegedly received bribes from vendors supplying equipment for their companies’ transaction systems.

Senior IT executives from two large futures exchanges in China have been detained for allegedly taking bribes from suppliers for their companies’ transaction systems.

Yan Shaohui, who is in his 40s, and Zhang Guoyan, 38, were arrested and questioned by prosecutors, although it is not yet clear if they will be charged, Chinese financial news site Caixin Online reported Wednesday.

According to the report, Yan is the chief engineer of the electronic exchange system at Shanghai Futures Exchange (SHFE). Zhang, on the other hand, is the director of China Financial Futures Exchange’s (CFFEX) technology center, which he joined in 2006. The amount of bribes the two are accused of taking was not stated.

The report cited several sources familiar with the matter as saying investigations into the two men were likely connected, as the two companies often shared technology and talent.

The sources added the bribes Yan and Zhang took were likely from suppliers for the exchanges’ transaction systems. A large amount of capital is spent annually on updating the systems to meet demand of new products and trading techniques, so executives in charge of the systems’ design and operations hold significant sway over suppliers, they said.

Last year, an anonymous online message accused a former SHFE executive of illegally making billions of yuan by taking advantage of the loopholes he created in the exchange’s transaction system. But when SHFE examined the system, it found no such loopholes, the Caixin Online report noted.

Prosecutors said the investigations into Yan and Zhang are not related to the design of the transactions.

CFFEX and SFHE are the two largest futures exchanges in China in terms of transaction value. According to data from China Futures Association, CFFEX was placed first in 2012 with a turnover of 75.8 trillion yuan (US$12.1 trillion), followed by SHFE with 44.6 trillion yuan (US$7.1 trillion).

ZTE cuts senior, middle management roles in restructure

ZTE has reduced some middle and senior management positions amid an ongoing organizational review which begun last year to streamline the organization.

A spokesperson told ZDNet there will also be changes in underperforming parts of the company. “ZTE’s aim is to make our organization more streamlined and deliver improved business performance,” the spokesperson said, adding the company has a “natural” employee attrition rate of between 5 percent to 10 percent annually.

The company was responding to queries about reports about massive job cuts to its workforce in the first quarter of 2013.

The Investment Bulletin reported on Monday it learned the Chinese telecoms equipment manufacturer will be laying off 20 percent of its workforce in the first quarter of the year. The layoffs will also be staggered, with a certain percentage of contracts not being extended as they come up for renewal each month, the article said.

Streamlining underway
In January, ZTE announced plans to streamline itself to form a simplified, three layer structure comprising of headquarters, operational division and representative office, and some regional and structural grouping will be eliminated.

“The reorganization will strengthen competitiveness and risk-management, ensuring all departments have access to key operational resources,” ZTE said in the statement.

Rumors of large layoffs at ZTE have been circulating since ZTE’s vice president Shen Li announced his resignation on February 17, 2013. However, the company’s management has denied such claims that it laid off 10 percent of its workforce, explaining 5 percent left of their own will while 5 percent were those with the lowest performance and part of routine elimination, a separate report by Want China Times, noted.

In January, ZTE said it expected to book losses of up to US$439 million in its preliminary report for the year ending December 31, 2012, due to postponed contracts and decreases in revenue from terminals in the domestic market.

Tudou Founder to Poach U.S. Talent for New Chinese Animated-Film Studio

Gary Wang, who left his online video platform after its merger with rivals Youku in August, said he hopes to import foreign technical experts to staff his new enterprise, to be launched April 1.

HONG KONG – Having left the limelight more than six months ago when he sold his online-video brainchild, Tudou, to his erstwhile rivals Youku, Gary Wang is now gearing for a return with a bang – by unveiling a Beijing-based animated-film studio producing movies for domestic consumption.

But the enterprise may have an international twist on it: Wang is aiming to recruit animation-film experts from Hollywood so as to compete with imported U.S. blockbusters.

Speaking to the Wall Street Journal, Wang said he would build a team that includes U.S. members. He said he had met directors, storyboard artists and senior animators while on a two-week scouting trip in Los Angeles and San Francisco in January.

“I get the impression that everyone there is excited about the Chinese market,” said Wang, who was born in China but moved to New York in 1993 to study high school before graduating with a computer science degree at Baltimore’s John Hopkins University.

Wang said he has already secured hundreds of thousands of dollars from international investors for his latest project and that the output will be mainly aimed at domestic audiences.

Citing an improvement in his home country’s distribution, exhibition and copyright protection issues, and also the surge in opportunities and profit in what now stands as the second-biggest film market in the world, Wang said “the time is right” to launch an animation-film studio that could tap into this pool.

Wang’s studio will add a domestic competitor in a scene that has long been dominated by Hollywood blockbusters. While films like DreamWorks’ Kung Fu Panda franchise have proved to be massive hits in China, the local industry has failed to offer reputable alternatives beyond straightforward copies like Legend of a Rabbit, which flopped badly at home.

In fact, DreamWorks will be one of Wang’s major competitors on home turf as well, as the U.S. studio is now already proceeding with building a studio near Shanghai under the name Oriental DreamWorks, a joint venture owned alongside China Media Capital, Shanghai Media Group and Shanghai Alliance Investment. Upon the launch of the company last year, the company announced the making of Kung Fu Panda 3 as a co-production, with a release date in 2016.

Wang founded Tudou in 2005 and sold his company to Youku, his long-running rivals in the business of hosting online videos for Chinese audiences, in August in a stock deal worth about $1 billion. He said his investors, which he did not name, are with him in terms of looking at the new business from a “very long-term view.”

Outlook bright for services job seekers

Survey reports big rise in number of companies planning to take on staff

Service sector employers have reported one of their most optimistic hiring periods in years, with nearly 25 percent planning to hire more staff over the next quarter, according to a survey from global recruitment company, the ManpowerGroup.

Its Employment Outlook Survey, covering the second quarter of the year, said its net employment outlook – which compared hiring and layoff figures – for the Chinese sector was +22 percent, meaning more employers planned to increase than cut staff, a quarterly increase of 4 percent compared to the first quarter.

The company produces localized surveys for many countries, and the exercise is considered one of the widest-recognized of its type.

Zhang Jinrong, managing director of ManpowerGroup China, said: “Vacancies are increasing in the nation’s service sector as the central government aims to further boost its development in a bid to make its economy driven more by domestic consumption than by industrial investment and exports.”

Within China’s 12th Five-Year Plan (2011-15), the central government has prioritized improving the service sector to raise service levels and attract more talented staff to work in the sector.

The plan is to increase the added value of the sector by 4 percent, and add 4 percent more job opportunities by 2015.

In 2012, the added value of the service sector increased by 1.2 percent, 0.2 percent higher than expected.

“It is essential to boost the service industries and offer essential services for consumers to support the economic development of China gradually,” Shi Zihai, head of the policy research office under the National Development and Reform Commission, said in an online interview on gov.cn and xinhuanet.com on Friday.

Service sector companies said government policies have started to have a positive effect on business.

Zhuang Qingman, general manager of Happy Lemon Shanghai Ltd, a teahouse chain with 300 outlets in China, said: “The recovering global economy and the enhanced daily living standards of consumers in China are boosting the demands of the service sector, and helping offer more opportunities for job seekers.”

Happy Lemon is hoping to double its outlets across the country and recruit 80 percent more employees by the end of 2013.

Zhuang added that further development of the sector is essential, as Chinese residents spend more and their incomes rise.

The Manpower survey said Chinese employers expect to grow staffing levels in all the six main service industry sectors.

Opportunities for job seekers are expected to improve marginally for the second consecutive quarter.

China’s net employment outlook of +18 percent (seasonally adjusted) is 3 percent stronger quarter-to-quarter and remains relatively stable year-on-year.

During the second quarter, 21 percent of Chinese employers said they expected to increase staffing levels, while only 3 percent planned to cut staff.

Some 41 percent of employers reported that they have no plans to grow or cut staff levels in the quarter ahead.

Manpower’s Zhang added: “We are seeing sustainable growth being aggressively pursued.

“For instance, many enterprises in the coastal regions continue to search for the skills they need, and many are moving their search inland for management-level talent and technicians.”

He said that the moderate economic recovery had provided solid opportunities for many companies to develop new business, meaning a renewed search for talent.

During this time, companies should consider implementing improved training systems, and explore ways to increase productivity to prolong the recovery effects and drive long-term, stable development, Zhang said.

The survey showed that positive hiring activity is anticipated in the wholesale and retail sectors, with an outlook of +20 percent, and the finance, insurance and real estate sector, with a +19 percent outlook.

Strong levels of hiring are also expected by employers in both the manufacturing and the transportation and utilities sectors, where outlooks stand at +17 percent, and in the mining and construction sector, with an outlook of +15 percent.

“Chengdu in Sichuan province has seized development opportunities in recent years and benefited from industrial transfers from the eastern coastal provinces to the west,” said Zhang.

He added that to reinforce its position as the economic driver and largest market in western China, Chengdu is establishing a modern manufacturing base and creating conditions for its high-end service industry to flourish.

A total of 4,203 employers in the Chinese mainland were interviewed by Manpower to measure their staffing intentions between April and June 2013.

Globally, the survey said that employers in 32 of the 42 countries and regions surveyed expect to add to their workforces in varying degrees during the second quarter of 2013, compared to employers in 29 of 42 countries and regions in the first quarter of 2013.

Hiring optimism strengthened quarter-on-quarter in 21 countries and regions and softened in 15.

Saon joins the ‘big three’ with ChinaHR deal

Global recruitment company Saongroup is taking aim at the number one slot in the Chinese online recruitment market with the purchase last month of the market number three, China HR.com.

Ciaran Lally, chief executive of the Irish recruiter’s China business, said the company now has 3,100 employees in 179 cities in China, after buying ChinaHR from the US company Monster for an undisclosed sum. Some sites have reported this as about $30 million (¤22.86 million).

Lally says the purchase is timely given the Irish group’s expansion plans, and also a very good fit when the regional spread of myjob.com’s business is taken into account.

With the myjob.com brand, Saongroup had built up a strong position in the second-, third- and fourth-tier cities, he said, and was number four in the market.

The tier one cities, such as Beijing and Shanghai, were dominated by the “Big Three” – 5onejob, which is US-listed, Zhaopin, which is Australian-listed, and ChinaHR.

“Our most profitable businesses, with scale, are tier two or three. A city like Zhongshan has a population of two or three million people, which is small by Chinese standards but still a significant market, with strong GDP growth,” says Lally in an interview in the group’s headquarters in Beijing, in the old ChinaHR building.

“If you take a snapshot at the end of last year we had 2,500 people, avoiding the tier ones. That project had ran its course. We pumped up the country ; we were very strong in telesales and job fairs,” says Lally.

Denis O’Brien holds a 75 per cent shareholding in Saongroup, while its chairman, Leslie Buckley, holds the remaining 25 per cent. Both O’Brien and Buckley insisted that the company expand its presence across the country, including breaking into the tier one cities.

This was easier said than done. The first-tier cities are seen as too expensive and difficult to break into, as the big three firms already had such a strong presence there.

Then, fortuitously, Monster took a strategic decision to sell ChinaHR. In contrast to myjob.com, ChinaHR did not have a presence in the second-, third- and fourth-tier cities. It seemed a good fit.

The two firms entered discussions and the deal closed on February 6th. If you add the two pieces together, you ha ve
myjob.com in the tiers four, three and two, and then you’ve ChinaHR with its great brand and presence in tier one. Aggregating the two makes perfect sense, says Lally.

“It’s really positioned us in terms of the company . The old staff at myjob.com have gone from telesales operation to SMEs and now, all of a sudden, we can use this network we’ve built over the last years to talk to Fortune 500 companies.

“And ChinaHR’s clients really are a ‘who’s who’ of China – VW, China Mobile, Baidu and others,” says Lally.

“I’ve no excuse if we don’t achieve number one at this stage. We have the products that the number one and number two have, we have the footprint across the country in 179 cities and we have the depth within the team,” he says.

“We have funding available to market and rebuild the brand so we are positioned to keep taking market share.”

“We now have 3,100 people. We were well-placed and the timing was quite fortunate for us. The deal makes sense. All of the changes will happen in Q2 [the second quarter ]. We hope to have a very significant relaunch of the brand,” says Lally.

The group is on track to achieve 41 per cent growth in the first quarter, while the overall market is seeing low, single-digit growth.

“China must succeed for Saongroup. There is a good 10 -15 years of solid growth here.”

Saongroup.com has operations across four continents – Europe, Africa, Asia and the Americas – and websites in 30 countries.

China to recruit women for deep-sea research

The Chinese National Center for deep-sea research decided to recruit female divers to explore the ocean depths. According to the director of the center, Liu Feng, women are more accurate may contribute a lot into the field of deep-sea research.

According to media reports, in 2013, China plans to increase the number of deep-diving manned submersibles. Therefore, the center has decided to train new marine researchers. To date, the study involves only two deep-sea scientists from China. Last year, they tested a deep-sea vehicle in the area of the Mariana Trench. The vehicle reached the depth of 7,015 meters.

Currently, the deep-sea research center of China develops the program and standards to select would-be researchers. For women, requirements will be softer than for men, who, among other things, will have to make light repairs aboard the submersibles.

According to previous standards, deep-sea research was available only for men over 35 years old, with higher technical education.

Sands China announces pay rise

Sands China Ltd yesterday announced it would increase the salaries of its employees by 5 percent starting next month.

Additionally, the company said it is paying a bonus on February 14 to its staff, as a result of the company’s strong financial performance in 2012.The gaming operator has over 25,000 employees.

Sands China is the second casino company in Macau to raise salaries this year, after SJM Holdings announced a salary increase of five to six percent for all of its employees last month.