Category Working in China

China domestic demand still strong: Q&A with NXP regional executive for Greater China, Mike Yeh

While seeing demand for electronics in China not being dampen by heavy snows that fell there, NXP Semiconductors has a positive outlook for demand prior to the Olympics Games and sees several directions for potential business. Digitimes recently had the opportunity to talk with the company’s regional executive for Greater China, Mike Yeh, about his outlook for China and the global industry in 2008.

Q: What is the impact of the heavy snows that fell in China on the domestic market there? Will effects from the snowstorms have any impact on the market in terms of demand and supply in the second quarter?

A: Although China has revised down its gross domestic production (GDP) growth forecast due to effects from the snowstorms, the adjusted rate is just one percentage point. GDP in China is still going to maintain double-digit growth in 2008.

Based on feedback from downstream customers, they initially worried that product distribution and consumption would be affected by traffic delays and a reduction in the number of people being able to make it back to their hometowns for the holidays. But they now have observed that inventory has already been sold out and consumption has not been affected.

Such good news in turn has spurred sales of consumer electronics such as TVs and handsets. Sales of these types of electronics are expected to remain strong. Based on the observed situation, impact from the previous snowstorms on sales in China is under control.

Q: What do you think about the Olympic Games? How will the event impact sales of electronics in China?

A: The market is currently positive about the Olympics. As the Olympics is being hosted by China, domestic demand for electronics will pick up considerably. We see business potential in the video, audio, data transmission and battery sectors.

As people wish to see Olympic events in realtime, no matter whether through their TVs, handsets or portable consumer electronics, this will help spur corresponding demand. For those who are unable to receive realtime broadcasts, good quality audio transmission is also what consumers are looking for. And as people are going to share information or communicate about the events, demand will stem from here as well. When demand for portable electronics ramps up, this will also spur corresponding demand for battery and power management (PWM) ICs.

Q: What do you think about the industry outlook for the second quarter and 2008 as a whole?

A: Marketers mostly project that demand for electronics will have noticeable growth in the second quarter prior to the Olympics. Yet, as of today, the strength of customer pull-in is not clear nor strong. This may possibly be due to an economic slowdown in Europe and the US which has prompted many branded customers to be rather conservative.

In China, domestic demand is still strong without a doubt, but as new labor laws are being enacted, the higher labor cost has prompted local vendors to be more cautious about their business outlook. To conclude, industry players should be cautious about the trend in the China market and the overall global trend in 2008.

Q: What are your comments about the recent consolidation speculations about NXP?

A: Any consolidation that creates synergy is a possibility. For NXP, we cannot comment further. But I will say NXP continues to seek efficient consolidations in order to speed up growth of our sales and market share.

Q: What do you think about possible future relaxing of restrictions on the flow of IT professionals between Taiwan and China?

A: I think Taiwan professionals will have stronger incentives to develop in China. But as the quality of China R&D professionals grows, NXP will continue strengthening our R&D works in China, while recruiting experienced engineers from Taiwan. The most important impact from a possible relaxing of regulations is enhanced production efficiency and division of labor.

China could face a ‘very severe’ unemployment situation

With 20 million new jobseekers flooding the market every year, China could face a ‘very severe’ unemployment situation, the country’s labour minister has warned.

Tian Chengping predicted that the vast amount of new entrants to both the rural and urban job markets would continue for some time, according to AFX News.

Chinese premier Wen Jiabao recently called for more measures to limit unemployment, which he wants kept below 4.5 per cent in towns and cities.

They include retraining workers with out-dated skills and doing more to encourage small start-up businesses.

Currently there is no definite figure for unemployment in China, which the news agency blames on unreliable employment statistics, but it predicts that it is “probably higher” than the rate of four per cent given at the end of 2007.

Despite concerns about joblessness, it was recently reported that some big-name firms in China are having difficulty recruiting enough migrant workers to meet their needs.

All hail China’s new job-seekers

BEIJING, Feb. 27 — Guangzhou, capital of Guangdong province, held its first labor fair of the lunar new year a few days ago, but the job-seekers gathered there appeared not to be as enthusiastic as their counterparts of years past. For the first time, the number of job-hunters fell far short of the number of vacancies advertised at the fair: 4,000 versus 7,000.?

The employers could only raise their salary standards – on average, to 1,160 yuan (155 U.S.dollars) a month, representing an increase of 13 percent compared with previous years.

Similar phenomena also appeared in other cities in the Pearl River Delta area, one of China’s major manufacturing centers. The area has for years been the largest employer of migrant laborers from the country’s rural areas.

The changes sweeping over the job-seeking public have prompted some economic commentators to cry out in alarm that China is losing its advantage in cheap labor. But some others have argued against such worries, saying that on the whole, the country’s labor supply still exceeds the demand.

Though they contradict each other, the two sides share a common concern: the impact of changing labor costs on China’s exports, which have been a major engine driving the nation’s economic growth.

In my opinion, we should be pleased rather than worried about the situation. Manual laborers can now expect better wages, which is good for both social justice and the wellbeing of the economy.

Most of the manual workers employed by manufacturers in coastal regions are migrants from the country’s impoverished rural provinces. In the past two decades or so, they have contributed greatly to our nation’s economic development by working diligently, for whatever their employers would like to pay.

Their pay has been capped at too low a level for too long a time. An investigation in 2004 found that the average monthly wage for migrant workers in the Pearl River Delta region had risen only 68 yuan in 12 years.

In the past few years, that level has risen at a comparatively faster rate. The national average monthly wage for rural migrant workers rose from the 539 yuan in 2004 to 946 yuan in 2006.

The rises in pay and laborers’ wage expectations can be attributed to a number of reasons. Two of them merit our notice. One is that rural residents’ incomes have increased significantly in the past few years thanks to the strong economic growth and favorable government policies (the annulment of the agricultural tax, for instance). A survey by the statistics authorities late last year indicated that rural residents’ per capita cash income had hit 3,321 yuan in the first three quarters of last year, up 14.8 percent year-on-year.

The low wages at manufacturing plants are no longer enough to attract rural migrant workers.

The second reason is that rural migrant workers themselves have changed. The new generation is more knowledgeable and modern-minded than their parents and less tolerant of harsh working conditions and low pay. They are more ready to change jobs. And their consumption habits inspire them to seek higher pay.

These changes are encouraging signs of the progress our society has made. Rising living standards benefit our economy because they will bolster the population’s buying power, which is the most essential contributor to the growth of the economy.

Encouragingly, consumption has shown signs of growing. China’s GDP grew a hefty 11.4 percent last year, with consumption contributing 4.4 percentage points, investment 4.3 percentage points and exports 2.7 percentage points. Consumption surpassed investment for the first time in several years.

BMW to cut 8,000 jobs and warns more could go in the future

BMW, the world’s largest premium carmaker, will cut more than 8,000 jobs as it attempts to make radical savings.

The German carmaker also held up the threat of more job cuts in the future if the euro continued to strengthen above $1.50.

The majority of the job losses will come in Germany, in what is a shock at the company that has been an enduring success story. About 2,500 permanent jobs and 5,000 temporary positions will go there.

BMW wants to cut a further 600 permanent jobs overseas as it tries to make annual cost savings of €500 milion (£381 million) immediately and €6 billion by 2012. In December BMW said that it would need to restructure to turn around its profitability. BMW has a total workforce of 80,000.

The IG Metall union called the announcement unnecessary. Werner Neugebauer, the union’s chief in Bavaria and a member of BMW’s supervisory board, said that Ernst Baumann, the carmaker’s head of personnel, “appears to think he has to play the agitator in order to be able to push up the share price by leaving the work force in a state of permanent insecurity”.

Of BMW’s 28,000 overseas employees, the 600 job cuts are likely to fall at its sales subsidiaries. Mini, BMW’s successful operation at Oxford, and its Hams Hall engine plant near Birmingham are not thought likely to be affected.

BMW has increased its use of temporary workers in order to scale its workforce up and down. The company will increase flexible working across its operations, including partial retirement, so that it can boost employment in busy periods and scale it back when production needs subside. The group said that it needed to boost its productivity per worker.

BMW has been hit by the weakness of the dollar in its exports, although it has a factory in South Carolina making SUVs and its Z4 Roadster. BMW unveils its annual profits on March 18. Last year pre-tax profit excluding exceptional items increased 3 per cent to €4.12 billion.

Employment top of agenda in Jiangsu

Providing jobs for the unemployed and university graduates will be this year’s top priority for authorities in Jiangsu province, acting governor Luo Zhijun said in his report to the first session of the 11th provincial people’s congress yesterday.

Luo said the government will create more than 850,000 jobs and re-employ 250,000 laid-off workers to ensure all urban families have at least one person in work.

creating jobs has been high on the government’s agenda over the past five years, he said.

According to official figures, over the past five years, the provincial government has spent 5.16 billion yuan ($717 million) on employment and re-employment. Some 4.9 million new jobs have been created and 2.11 million laid-off workers have been reemployed.

But despite the government’s efforts, 600,000 to 800,000 people lose their jobs in Jiangsu every year, and some 600,000 join the labor force, official figures show.

“This puts great pressure on the government, but we will take an active approach and continue to carry out a positive employment policy to improve the situation,” Luo said.

As in the past, the government will provide free job training for laid-off workers to equip them with necessary skills for new positions, Chen Zhengning, director of the provincial labor and social security department, said.

“We will also take advantage of the rich vocational training resources in the province to organize skills training for high school graduates and unskilled workers,” he said.

The measures will be welcome news for Zhang Xin, a Japanese-language major who graduated in July from the Jiangsu Food Vocational School.

The 22-year-old has been out of work ever since.

“I have submitted job applications to dozens of companies and have gone for a few interviews, but they all said they had nothing for me,” Zhang said.

His mother, who earns 850 yuan ($118) a month, is the family’s sole breadwinner. His 49-year-old father was made redundant when the factory he worked for went through restructuring in 2001. He has held a number of part-time jobs but nothing since the end of last year.

Chen said the authorities are working hard to ease the financial burden on families like Zhang’s.

By the end of last year, 98 percent of retirees in cities and counties were covered by the pension system and 88 percent of people had medical insurance, according to the government’s work report.

Luo said the government will this year spend 200 million yuan ($27.8 million) on upgrading facilities at rural and community health clinics.

Web now a hub for job hunters and recruiters

JOB seekers have a new way to find vacancies with the emergence of Zhi Ke (Job Key) on the Internet, allowing well-connected people to make money by finding positions.

Several Websites featuring Job Keys have appeared, mostly since July last year.

Operators get their cut from the online trading platform, and are tapping into a strong demand: hundreds of thousands of Chinese are now surfing the net in search for better paid positions.

Job Keys, many of whom are professionals at headhunting firms, can get 70 percent of the money once their reference lands the applicants their desired positions. The rest is kept by the Website as its commission.

While these Websites are not reaping huge profits, it will take time to see whether they can seriously compete with professional job Websites which offer free job information to individuals and rely fees from companies posting vacancies.

But it’s good news for job seekers as there have been many cases where people have found better positions.

“What we want to do is to complement the current channels that job seekers use, given that it’s becoming difficult for many of them to find the right place, especially university

graduates,” said Zhou Changqing, general manager of Facejob.cn, a Beijing-based Job Key site.

China began to expand university recruitment in 1999 to improve the overall level of citizens’ education background. But this led to the number of college graduates reaching record highs, creating a tough, competitive environment for those seeking employment.

Adding to their difficulty is many students are graduating from their chosen majors only to find the job market has changed since they picked the so-called “hot courses,” which were expected to land them good jobs.

Zhou said college graduates had not yet emerged as loyal customers, although some had made offers up to 50,000 yuan (US$6,849) for a good job in Beijing.

Total offers on Facejob now are worth 8.86 million yuan, from about 5,600 job seekers, mostly with three years’ working experience. Meanwhile, it has nearly 2,000 registered Job Keys, according to Zhou.

The most sought-after jobs on the site are entrance level ones, such as secretarial, administrative support and sales staff.

They are priced usually at about 2,000 yuan apiece, as the site fee is generally based on their expected one month’s salary.

While Zhou’s site doesn’t require job seekers to deposit their offered money in advance to encourage users to register, Zkeer.com, also Beijing-based, does.

“It’s a common practice for Witkey Websites to receive the money before achieving the task,” said Gong Deping, founder of Zkeer.

The Job Key, indeed, is a specialized model of Witkey, or Wei Ke in Chinese, which allows users to sell their knowledge, information and ideas online, and enjoys greater

popularity than Job Key.

Yang Kexi, a spokesman for Taskcn.com which is China’s leading Witkey site, said job references account for only a small percentage of their business.

“We believe that the real advantage of the Witkey sites is to serve as an outsourcing platform for corporate users,” he said.

“There are more job-related tasks at the beginning of our operation but it seems such tasks are not well received, for the prize is usually very small,” Yang said.

The reason, probably, is there are tons of free vacancies on the professional human resource service Websites where competition is intense.

On ChinaHR.com, China’s largest HR service site by sales, there are two million vacancies every day on average, which are available to 15.6 million registered users

for free. It charges the corporate users for posting jobs and consulting.

Officials with ChinaHR declined to comment on the Job Key sites, or whether they have found any of their employees doing part time for such sites.

China Yahoo said to be cutting staff

CHINA Yahoo, a subsidiary under the nation’s largest e-commerce firm Alibaba.com Corp, is trimming its workforce and sending staff back to the parent company, sources close to the company said.

“Dozens of people,” including mid level managers and directors, are returning to Alibaba while others are asked to leave with compensation for their service, they said, asking for anonymity.

Tao Ran, a spokesman for Hangzhou-based Alibaba, refused to comment yesterday.

Alibaba took over Yahoo China – which was later changed to China Yahoo – in 2005 and was paid an additional US$1 billion from Yahoo Inc, which in return gained a 35-percent stake in Alibaba.

Since the deal, a revamp of the acquired business has been going on as Jack Ma, founder of Alibaba, is trying to integrate it into their e-commerce platform, with ideas like launching shopping search functions. The business was renamed China Yahoo last year.

China Yahoo had about 800 staff as of September 2006. It was still recruiting sales and marketing staff in October and November. The latest figure on its employee number was not known.

Chinese Boutique Hotel Company Plans Green Facility

URBN Hotels & Resorts says it will open its first boutique property in Shanghai in December 2007 and position it as an eco-friendly business.

Located on Jiaozhuo Road just north of Nanjing Road and close to the former French Concession district, the new 26-room URBN Hotels is positioning itself as a carbon neutral and earth conscious hotel. It has been converted from a former 1970s post office building and will feature contemporary design with Shanghainese influences.

In May 2007, URBN entered into an agreement with Climate Bridge, an international intermediary offering bespoke solutions for companies and industries to reduce and offset greenhouse gas emissions. The total amount of energy the hotel consumes, including staff commutes, food and beverage delivery, and the energy used by each guest, will be tracked to calculate the carbon footprint. URBN will then purchase credits to neutralize its footprint by investing in “green” energy development and emission reduction projects in China.

Hotel guests can also choose to purchase carbon credits from the program to offset their flights. All credits are verified and approved by the United Nations. This voluntary action by URBN Hotels is significant, considering China is the fastest growing emitter of greenhouse gases and is central to the success or failure of the global response to climate change. URBN is also committed to developing and operating a green property. By renovating an existing structure, focusing on using recycled and locally sourced materials such as reclaimed hardwoods and old Shanghai bricks, and introducing eco-friendly solutions like passive solar shades, rain water retention basins, and water based AC systems, URBN hopes to set an example for other Chinese businesses and industries.

There are plans to develop 20 URBN Hotels in tourist and business cities throughout the country in the next 3 years.

City’s top businesses selected

THE city’s 100 leading businesses for the past year have been chosen by the Shanghai Private Enterprise Association.

The chosen businesses show the top profits, pay the most tax and employ the most people.

Some of the best known city businesses in manufacturing, commerce and the service industry – like the Spring International Travel Service and the JuneYao Group – are in the list.

Commercial and service industry businesses make up two thirds of the top 100 companies which shows the accent of the city on these fields and the needs of the citizens, the association said.

The top 100 private enterprises have an average registered balance of more than 69 million yuan (US$9.3 million) and there are 12 of these companies with a registered balance of more than 200 million yuan

Less than 40% of office workers enjoy summer welfare

FEWER than 40 percent of office workers in Shanghai receive extra benefits during sweltering weather, a number that still surpasses other big cities around the country.

In the past, it was common for employers to hand out free drinks, ice cream and other treats to employees when temperatures rose, but that tradition has disappeared in many office to the discontent of modern office workers, according to a recent survey.

The survey, which was conducted by 51job.com, a Nasdaq-listed human resources company, asked office employees in 15 major Chinese cities, including 676 people in Shanghai, about their company’s summer benefits policy.

About 37 percent of the respondents in the city said that their company offered some relief to employees, a percentage that topped that of other cities.

Pre-paid shopping cards are the most popular summer benefit, according to the survery. Half of the benefit providers distributed a card with an average amount ranging from 800 yuan (US$105) to 1,000 yuan.

Beverages, daily necessities such as towers, suntan lotion and cash allowances are also popular summer, the survey reported.