Your resume should serve you, and not a recruiter’s possible whim

By M.B. OWENS
SYNDICATED COLUMNIST

THERE IS A lot of advice on how to look for a job. Sometimes it is contradictory. Much of the advice is from a human resource manager’s or recruiter’s perspective aimed at making their job easier. What you need to do is look at what is in your best interest.

Some managers involved with the hiring process frown on the use of functional resumes, for example. They prefer the chronological style. Others tell you to use the functional format in certain situations such as an extensive job history using multiple skills. So, what should you actually do?

Don’t try to please everyone! Look out for yourself. Try to get an interview.

If you don’t get an interview you have no chance of landing a job. You can always explain yourself in a face-to-face meeting. This does not mean lying on your resume or cover letter. It does mean preparing the resume and cover letter to make you look as attractive as possible.

The real reason that some managers prefer the chronological format is because they don’t want to spend the extra time having to scan a resume. They often don’t look past the most recent job. Since they have to spend extra time reviewing a functional resume looking for continuous work history and recent job skills, they don’t like them.

You must decide if because of the refusal of some managers to consider functional resumes the same as chronological, you are better off using the former style. If your resume is much stronger with a functional approach, use it — unless an employer says not to. You should have a better overall chance of finding employment.

The use of dates is another area that can be a stickler with managers. Some want to see complete information of day, month and year for every job held or period of time in school. If because of your age or special circumstances you don’t want to list complete dates, consider whether you will gain more by listing everything or using months and years or not listing any dates after 10 or more years.

For instance, this means that if you have a choppy work history where for months at a time you were not working and you probably stand little chance of finding a position if you show that on your resume, a chronological format may hinder your chances of getting an interview. You may have a few hiring managers not give you consideration in a functional format, but at least you will be considered by others.

Many hiring managers don’t like people applying who are not completely qualified for an advertised position. This is because it is more work for them to review resumes. Your goal is to get an interview, not to worry about their workload. Providing a resume that is truthful and gets you an interview should be your top consideration.

If you are partly qualified for a position and can perform the job duties — apply.

Employers don’t always get a perfect candidate. Applicants sometimes don’t take jobs that are offered. Hiring managers are often under deadlines and must fill a position.

You may be pleasantly surprised when you get an interview and an eventual offer.

So, when looking for a job, use the approach that will help you reach your goal. Use accepted guidelines within a framework that puts the percentages on your side.

China lures expatriates but success hard – study

TORONTO – China is one of the easiest places for recruiters to lure expatriate executives, but is also one of the hardest places for them to succeed, according to a study released on Tuesday.

A survey of more than 140 international recruiters by executive recruitment firm Korn/Ferry International found other popular places for expatriate workers were Western Europe, especially Britain, and North America, as well as Southeast Asia, especially Singapore.

The firm’s 10th quarterly executive recruiter index found that the most difficult places to attract expatriates to work included the non-Gulf Middle East, Africa, Central and Eastern Europe, and South America.

“High-growth emerging nations often offer the greatest opportunities for expatriates, but they can also come with the most challenges,” Chris van Someren, president of Korn/Ferry for Europe, Middle East and Africa, said in a statement.

Reasons that assignments failed included the lack of cultural fit, family or personal issues or a lack of direction from managers, the survey showed.

Things were toughest for expatriates in China, Japan and South Korea, the non-Gulf Middle East, and in Central and Eastern Europe, and South America, the poll found.

But 91 percent of the recruiters surveyed said executives with international experience were either extremely or somewhat desirable candidates.

“Expatriate assignments can be extremely beneficial for developing emerging leaders and for providing solutions for organizations undergoing significant growth or change – but expatriates are clearly not a substitute for local talent,” said van Someren.

Recruiters said expatriate programs helped promote better cultural understanding, facilitated the opening of a new branch or office, and were good as a professional development tool.

But expatriate assignments were least effective for addressing local talent shortages, generating new business abroad and improving staff retention.

The poll found the average ideal length for an expatriate posting was about two-and-a-half years.

Official: China to loosen control on RMB gradually

BEIJING, Oct. 23 – China will loosen controls on its currency gradually and should step up development of financial tools such as derivatives to help banks and companies cope with a more flexible exchange-rate system, offcial from the People’s Bank of China said.

China will “improve the yuan’s flexibility gradually,” Su Ning, deputy governor of the People’s Bank of China, said at an economic conference in the eastern city of Suzhou, Jiangsu Province at the weekend, Bloomberg News said.

“China needs to develop new financial tools and enhance financial reform to help remove the burden on its financial system,” Su said.

A record trade surplus has flooded the world’s fourth-largest economy with cash, spurring investment in factories and real estate that the government is concerned may lead to overcapacity and bad loans. Foreign-exchange reserves have surged to almost 1 trillion U.S. dollars, fueled by exports that the United States and Europe say are supported by an undervalued currency.

China has limited gains in the yuan to 2.6 percent since dropping a decade-old peg to the US dollar in July last year. The currency strengthened 0.1 percent to 7.9025 to the dollar on Friday, according to the China Foreign Exchange Trade System.

Chinese officials have said repeatedly that the yuan’s exchange rate will be loosened only gradually because the nation’s banks and companies aren’t prepared to cope with a free-floating currency. China has been introducing derivatives such as interest-rate forwards and swaps to provide tools to hedge risks, and plans to add interest-rate and stock-index futures.

The government should step up reform of the nation’s banks including Agricultural Bank of China, Su said. The Beijing-based lender is the last of the big four state-owned banks awaiting restructuring and a government bailout.

Agricultural Bank is close to completing a plan to create a shareholding company, the Xinhua news agency reported last week, citing central bank Governor Zhou Xiaochuan. The government may inject 100 billion dollars into the bank, the agency said.

Industrial & Commercial Bank of China, the nation’s biggest lender, raised 19.1 billion dollars in the world’s biggest initial public offering, bankers involved in the IPO said. Bank of China Ltd and China Construction Bank Corp have also listed in Hong Kong in the past year.

China becoming a strong nation in developing biomedicine

Chinanews, Beijing, Oct. 23 ¨C According to information from the Ministry of Science and Technology, nearly 30 kinds of biomedicines developed by China have been put to clinical use. About 170 kinds of biomedicines are at the stage of clinical research. China can produce eight of the ten major biomedicines in the world. China¡¯s SARS and bird flu vaccines are among the best in the world. All this shows that China is becoming a strong nation in developing biomedicines.

Wang Hongguang, director of the China Biotechnology Development Center, says that China has already finished technology accumulation in biotechnological field. At present, China is able to develop and industrialize biotechnology at the same time. This is shown in the following aspects:

First, China is the world¡¯s largest producer and user of vaccines. By applying human vaccines, China has eradicated or curbed the spread of major contagious diseases such as malaria, plague and poliomyelitis, making great contributions in increasing people¡¯s life expectancy. In China, people¡¯s average life expectancy has increased from 37 in 1949 to the present 73, and the use of vaccines has played a very important role in this aspect.

Secondly, the use of hepatitis B vaccine has prevented 20 million new-born babies from contracting the disease, and saved 700 billion yuan of medical cost for the country. The research of hepatitis B vaccine, an effectual remedy for the disease, has entered into the second stage for clinical use. Animal tests show that the vaccine can kill the virus inside animal body, and it might help change the virus condition of humans from positive to negative.

Research of the AIDS virus will soon enter the second stage of trial clinical use. Research of the AIDS vaccine which has a curable effect on the disease is also being conducted, and will be put to trial use.

China is also the world¡¯s largest antibiotics and vitamins producer. The use of antibiotics such as penicillin has played an important role in preventing infectious diseases, and the use of vitamins in improving the health of its people.

The bird flu vaccine will soon enter the second stage of trial research.

The online recruiter

BY ALEX ORTOLANI

WHEN Liu Hao quit his job to take over a failing Internet start-up, his friends thought he was crazy.

At the time, the company was shedding US$70,000 a month and had only US$250,000 in the bank. Liu¡¯s new salary would be less than the taxes he paid on his previous job as a private equity investor.

Four years later, sitting in the Beijing headquarters of that same company, Liu says of his friends¡¯ opinions: ¡°They were wrong.¡±

Liu Hao
The Internet start-up Liu helped save was Zhaopin.com, China¡¯s third largest online recruitment website. These days, the company has about 9.8% of China¡¯s 11.3 million online job hunters, according to iResearch, a Shanghai-based research agency specialising in China¡¯s Internet market.

A few weeks ago, Seek Limited, Australia and New Zealand¡¯s biggest Internet job site, agreed to buy a 25% stake in Zhaopin for about US$20mil, giving the company a cash infusion to grow its business in second-tier cities. Seek will not take part in management, according to Zhaopin.

Meanwhile, Zhaopin has launched a search engine that gives more targeted search results, as well as insider reports on companies for users to evaluate prospective employers. Liu says his company is the first to introduce such innovations.

Despite these moves, it¡¯s possible Liu¡¯s friends could still get the last word.

Zhaopin lags behind 51job.com and ChinaHR.com in a market Liu himself says is going to be dominated by ¡°two or three players.¡±

In 2005, 51job.com had 37.3% of all users and ChinaHR.com had 13.5%, according to iResearch. In the end, however, it¡¯s not about users, which can post resumes for free, but the number of recruiters who pay to post job listings.

Liu says Zhaopin¡¯s origins as a head hunter ¨C a business it still runs under the name Alliance Consulting Ltd ¨C means it has a good relationship with some of the biggest blue-chip companies such as Microsoft Corp and BMW AG.

¡°We have the better jobs,¡± Liu says. ¡°They¡¯re relatively higher paying positions and they¡¯re the kind of employment people in China are aspiring to.¡±

Zhaopin charges recruiters anywhere from 500 yuan (US$63) to 80,000 yuan (US$10,000) to post on their site.

China¡¯s online recruiting sector could grow by leaps and bounds if the economy keeps steady. In 2005, the market was worth 800 million yuan (US$101mil), and is expected to quadruple to 4.6 billion yuan (US$575mil) by 2010, says iResearch. It estimates online recruiters will jump from 1.1 million in 2005 to 4.81 million by 2010.

Software Engineer – TTC

Company Introduction:
XXX is a world leader in enterprise infrastructure software, delivering powerful standards-based platforms for building enterprise applications and managing Service-Oriented Architectures even in heterogeneous IT environments.

Job responsibilities:
1.Join as a member of the telco development team on the Telecommunications Technology Centre;
2.As a member of the Telecommunications Technology Centre, your job is to create high performance and scalable infrastructure code for the Telco network elements and Parlay X development;
3.Write functional and technical specifications for product features;
4.Code and unit test product features;
5.Diagnose and fix product problems/bugs;
6.Review product documentation;
7.Provide input to QA team on design and development of system tests.

Qualifications/Necessary Skills:
1.Detailed knowledge of Enterprise Java Beans (EJB) programming;
2.Detailed knowledge of Relational database and SQL programming;
3.High proficiency in J2EE programming including RMI, JDBC, JMS;
4.Experience with UNIX (one of Linux, Solaris, HP-UX, AIX) and Windows;
5.3-5 years of commercial software development experience in middleware products;
6.Experiences with JSR 175 Metadata Facility for Java is a plus;
7.Basic CORBA knowledge and Development experience;
8.Strong verbal and written English skills.

DESIREABLE KNOWLEDGE OR SKILLS:
1.Solid experience with Java (or equivalent) in the industry with the ability to write maintainable test code;
2.3 – 5 years of product and/or QA development in JAVA / J2EE or equivalent technologies;
3.Experience with analyzing and troubleshooting product problems;
4.Experience with test automation or test automation development (JUnit / Cruise Control a plus);
5.Solid UNIX environment experience;
6.Able to independently develop testing strategies and techniques;
7.Experience with testing SIP.
8.Experience with Parlay or ParlayX 2.0
9.Experience with commercial telecom testing equipment.
10.Knowledge of the SIPServlet API (JSR116).
11.Knowledge of VoIP related standards, specifically the SIP protocol (RFC 2543, 3261, 3262, 3265, 3428).
12.Knowledge of existing SIP server solutions.
13.Experience with MMSC and SMSC integration (SAMS messaging API, JSR 212).
14.Experience with JAIN/SLEE, JAIN/SIP.
15.Experience with other Java tools such as Findbugs and code coverage solutions.
16.Experience with CORBA/JAVA commercial project development
17.Working knowledge in J2EE Web applications.
18.Excellent oral and written communication skills.
19.Have good time management skills.
20.Demonstrated ability to be effective in a dynamic, fast paced environment.
21.An effective team player.

Education: BS or MS in Computer Science or related field of education

* Please send us your complete resume (both in Chinese and in English) to: ‘topjob_it079bj@dacare.com’

Talent Shortages Become A Global Issue

The Infosys campus on the outskirts of Bangalore looks like a chunk of the rich world that has been reassembled amidst the dust and debris of India. The echoes of Silicon Valley are everywhere. The journey there involves a wild ride along dirt roads, but the 22-hectare (54-acre) campus itself is all cut grass and neatly planted flowers. It has every possible amenity, from gyms to yoga studios, from banks to bowling alleys. The restaurants serve 14 different cuisines. Many of the buildings are in the low-slung Californian style, but some of the largest are modelled on Western icons, such as the Sydney Opera House, the Louvre pyramid or Rome’s Basilica of St Peter.

Infosys Technologies was started in 1981 by seven Indian entrepreneurs with 10,000 rupees (about $1,000 at the time) between them. The software giant now has annual revenues of $2.2 billion and 58,000 employees. But it is just one of a hundred companies in Bangalore’s Electronics City. Bangalore is India’s software capital, with 140,000 software engineers (more than in Silicon Valley, the locals boast), and Electronics City is a custom-built high-tech haven. The signs are a list of the world’s biggest IT companies, from multinationals such as Hewlett-Packard and Motorola to home-grown giants such as Infosys and Wipro.

Electronics City is the meeting point of the West’s demand for high-tech services and India’s supply of brain power. The dramatic fall in the cost of communications made it possible for Western companies to outsource services, and a newly liberalised India could offer a huge supply of cheap brain workers. Every year India produces around 2.5m university graduates, including 400,000 engineers and 200,000 IT professionals. India’s National Association of Software and Service Companies (NASSCOM) calculates that the country has 28% of the world’s IT offshore talent.

Indians point to the advantages that they bring to the market. They work while the West sleeps; they speak (splendid) English; they can throw huge numbers of people at a job. But at the heart of the boom is a simple sum. The cost of an Indian graduate is roughly 12% of that of an American one. Indian graduates also work more: an average of 2,350 hours a year compared with 1,900 hours in America and 1,700 in Germany. The bottom line is that you can buy almost ten Indian brains for the price of one American one.

The outsourcing boom shows no sign of slowing. Gartner, a research firm, estimates that global spending on IT outsourcing will rise from $193 billion in 2004 to $260 billion in 2009. But there are caveats. The most important is that Indian-based companies themselves are encountering severe skills shortages. Wage inflation in India’s IT sector is about 16% a year, and turnover is 40%. NASSCOM predicts that India’s IT sector will face a shortfall of 500,000 professionals by 2010. GE Capital has posted signs in its Indian offices saying “Trespassers will be recruited”.

Skills shortages are at their most acute among managers. Several Indian companies have had to bring in Western CEOs: the Tata Group, for example, has put Raymond Bickson, a Hawaiian, in charge of its hotel business. Good middle managers are rare: annual wage increases for project managers in IT have averaged 23% a year over the past four years.

Aspiring to world class

How can a country with a billion people suffer from talent shortages? Some reasons are familiar. The number of people with relevant skills is tiny: only 11% of the relevant age group go on to higher education, and older people have had their management skills blunted by the old licence raj. Moreover, growth is so fast that it would strain any educational system, let alone one as ramshackle as India’s. For example, in the four years to March 2006 Infosys increased its payroll from about 10,700 to over 58,000—a compound annual growth rate of 53%.

The second caveat is that Indian-based companies are determined to move upmarket. They have mastered the basics: almost 400 of the companies ranked highest by the Software Engineering Institute at Carnegie Mellon University are in India. Now they want to become world-class. This means pushing into more sophisticated areas such as “integrated solutions” and consulting. It also means adopting the latest productivity-boosting techniques, such as applying lean-manufacturing techniques to software development, a favourite strategy at Wipro. At the same time Western multinationals are exporting more and more complicated tasks.

The looming skills shortage and the drive upmarket have made companies obsessive about finding and holding on to the right people. They are investing heavily in education and training, partly to attract the best talent and partly to keep their existing workers up to speed. “We’re investing in training like the Dickens,” says Nandan Nilekani, Infosys’s CEO. The company has increased its training budget from $100m to $125m. It has also moved one of its board members, T.V. Mohandas Pai, from chief financial officer to director of human resources to show that it means business. In the year to March 2006 Infosys screened 1.4m applications, tested 164,000 applicants and interviewed 48,700 to make 21,000 appointments.

Companies are also getting much more imaginative about identifying new sources of talent. Wipro has different training programmes for different talent pools, including one to help people get a university degree while working for the company. Mr Pai describes Infosys as a “human-capital supply-chain company”. But to keep the supply chain going, India must improve its universities.

Versions of Bangalore’s Electronics City are in evidence in a number of developing countries, and so are skills shortages. China is seeing double-digit wage inflation and labour turnover in its IT sector. Senior managers are particularly scarce: two in three companies report difficulties in filling senior positions. Shanghai Automotive, China’s biggest carmaker, and Lenovo, its biggest computer-maker, have recently hired American bosses. But other skills are also in short supply: Chinese airlines, for instance, are importing pilots.

If Western companies were initially attracted to the developing world by the low price of talent, they have now moved on to other considerations. Srini Koppolu, the head of Microsoft’s India Development Centre (MSIDC), explains that one reason why Microsoft established a development centre in Hyderabad was to gain an edge in the talent war. Being in India gives you access to first-rate techies who do not want to move abroad. MSIDC has grown from 20 employees in 1998 to over 900 today.

The other advantage is local knowledge. Vijay Mahajan, a former dean of the Indian School of Business, which sits next to Microsoft’s campus, points out that the developing world is a booming market as well as a huge labour pool. GE calculates that 60% of its growth over the coming decade will come from the developing world, compared with 20% over the past decade. And the only way to understand the new market is to be immersed in it.

Many Western companies thought that their goods would almost sell themselves in the developing world. They reckoned without complicated distribution systems, feisty local competitors and idiosyncratic local habits. Packaged-goods companies found that customers did not want their jumbo packets, for example, because they had little money and little storage space. Local people could have told them that.

Hewlett-Packard has set up research facilities in India in the hope of building a stripped-down 5,000-rupee ($109) computer. Electrolux Kelvinator has developed a refrigerator that will stay cold even after a six-hour power failure. Nokia has produced a mobile phone that includes a built-in flashlight and a dust-resistant keypad. In GE’s John F. Welch Technology Centre in Bangalore, 2,200 highly qualified engineers work as part of digitally connected global teams on products as diverse as aircraft engines, power and transport systems and plastics. Cisco’s and Motorola’s Indian research centres are their largest outside America.

Most of these companies have research arms in China as well. Microsoft’s development centre in Beijing is a world leader in graphics, handwriting recognition and voice-synthesisation. Motorola has 16 R&D centres in China. Samsung has set up a handset laboratory with a staff of 300 in Beijing, and Siemens has moved a chunk of its mobile R&D to China.

Think global

This R&D boom in the developing world is part of a bigger trend: the globalisation of R&D. This allows companies to plug into national clusters of excellence (South Korea has been a trailblazer in digital displays, for example, and Israel has an edge in wireless telecoms). It gives multinationals access to once secretive university labs in Shanghai and Moscow. And it speeds up innovation, because global teams can work around the clock.

Still, it is one thing to send humdrum work to Electronics City and supervise high-tech drudges, quite another to outsource bits of your core business and manage world-class skills. That involves much more than co-ordinating activities across geographical boundaries. For example, how do you disperse innovation around the world without weakening your corporate culture? How do you motivate high-flyers from different cultures? And how do you manage prima donnas across borders? You need world-class management talent, and that, too, is extremely scarce.

Source: The Economist 5 Oct. 2006

Boards in China Need to be More Open as Chinese Economy Globalises

SHANGHAI, China, Oct. 18 /Xinhua-PRNewswire/ — Heidrick & Struggles
International, Inc. (Nasdaq: HSII), the world’s premier executive search
and leadership consulting firm, have announced key landmark findings from a study on Corporate Governance in China. Sponsored by Heidrick & Struggles and conducted with one of China’s world ranked universities, Fudan University in Shanghai, the study represents one of the most comprehensive studies on corporate governance in China to date.

In general, the study found that there is room for growth in corporate governance in China. Characterised by the cultural emphasis on local networks (guanxi), particularly with the government, boards in China tend to be tightly knit communities built on business or personal connections. Amongst the companies studied, 72% of board members were sourced through referrals.

“The study also shows that local enterprises tend to resist the
introduction of foreign directors to sit on their boards, even as China is increasingly part of the global economy. 48% of Chinese state-owned
enterprises and private enterprises would not consider employing foreign
directors. Only 26% will consider hiring foreign directors, amongst which, 69% expect to do so within three years,” said Steve Mulljiner, Managing Partner, Heidrick & Struggles China. “This mindset has to change, as China has yet to develop a pool of strong local talent with in-depth experience to bring Chinese companies into international markets. Chinese companies do not need to look too far to find Chinese-speaking professionals with years of international exposure and market knowledge. In fact, the research shows that the two of the top three preferred sources of foreign directors in the mainland are from neighbouring areas; that is Hong Kong (27%) and Taiwan
(19%), with America (15%) coming in third.”

“The unwillingness to recruit foreign directors indicates that the
internationalization level is low in Chinese enterprises,” said Professor
Lu Xiongwen, dean of the School of Management. “Chinese enterprises either don’t trust foreign directors or think it unnecessary to hire foreign talent. Some enterprises are afraid communication with foreign directors would be difficult due to cultural and language barriers.”

However, foreign invested enterprises have put the employment of
Chinese directors into their agenda as part of their localization strategy. More than 71% of foreign invested enterprises are considering the employment of Chinese directors, among which 87% plan to realize this
within three years. Only 30% of the foreign invested enterprises
interviewed do not intend to employ Chinese directors.

Note to Editors:

The points highlighted here represent partial key findings. Requests
for more data, information or recommendations from the study should be sent to Jennifer Tow, Manifesto Ltd, (852) 2526 1972 or
jennifer@manifesto.com.hk. Arrangements for exclusive interviews can be
made.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc. is the world’s premier
provider of senior-level executive search and leadership consulting
services, including talent management, board building, executive
on-boarding and M&A effectiveness. For more than 50 years we have focused
on quality service and built strong leadership teams through our
relationships with clients and individuals worldwide. Today, our leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit http://www.heidrick.com .

About School of Management, Fudan University

Strategically positioned in Shanghai, an emerging capital of national
economy, trading, finance and transportation, Fudan University can lay
claim to nearly one century of continuous existence. There is no clear date of the initiation of its business education, but teaching existed at Fudan in some form of management in 1917 and formally enrolled undergraduate class of Management Science in 1977.

About the Corporate Governance in China study

Sponsored by Heidrick & Struggles, this Corporate Governance in China
study is the result of 15 months of research, interviews, discussion and
consultation. The research is based on in-depth interviews with the
Chairmen or Presidents of 50 leading PRC and multi-national companies in
China. A total of 1,000 questionnaires were distributed, with over 100
returned. Questionnaire respondents included top-level board members and
executives. The Study covered various industries and different regions.

A strategic study that focused primary on the structure, function, and organization of the boards, as well as the roles of the board members and their relationships, this research is unprecedented in China, and internationally, and provides new and unique insight to corporate governance in China.

Media Contacts

Jennifer Tow
Manifesto Ltd
Tel: +852-2526-1972
Email: jennifer@manifesto.com.hk

Gene Huang
Fudan University
Tel: +86-21-65102737
Email: zhiyinghuang@fudan.edu.cn

Banking investment in China set to skyrocket

Beijing, Oct 17: Around 5.7 billion US dollars in insurance capital could flood into China’s banking sector this year after the nation’s insurance watchdog unveiled a package of investment rules.

According to detailed rules issued by the China Insurance Regulatory Commission (Circ) for insurers’ equity investment in banks yesterday, insurance institutions could invest no more than three per cent of their total assets in state-owned commercial banks, joint-stock commercial banks and city commercial banks.

By the end of last year, the total assets of China’s insurance sector had reached 1.5 trillion yuan (190 billion US dollars), implying that 45 billion yuan (5.7 billion dollars) in insurance capital could be poured into China’s banking sector this year.

“Equity investment in banks is just the first step, and we are considering regulations on investment in fixed-assets projects and state-owned enterprises,” a Circ official was quoted as saying by China daily.

In guidelines published in late June, the regulator expressed its support for insurers’ investment in banks, part of its efforts to boost insurers’ investment returns.

“We support insurance companies buying into, or even taking controlling stakes in, well-managed, profitable banks that have a strong customer base,” Circ Chairman Wu Dingfu said earlier.

The regulation stipulated that insurers could use their registered capital and provisions over 10 years for the investment.

In terms of purpose and scale, insurers’ investment in banks is divided into two types general and grand investment.

Those accounting for less than a five per cent stake in a bank are classified as general investment, while those greater than five per cent are regarded as grand investment. There are no upper ceilings for the investment.

If an insurer plans to make a grand investment, its total assets by the end of last year should be no less than 100 billion yuan (12.7 billion US dollars).

For any investment taking a 10 per cent stake or above, the insurer should have total assets in excess of 150 billion yuan (19 billion US dollars) by the end of last year.

Meanwhile, those target banks for general investment will have to meet a capital adequacy ratio of up to eight per cent, a non-performing loans ratio lower than five per cent and a return on net assets of up to 12 per cent.

In fact, China’s largest life insurers have been quite investors in banks.

In late July, Ping An Insurance (Group) company became the controlling shareholder in Shenzhen city commercial bank after it bought an 89.24 per cent stake in the lender for 4.9 billion yuan (620 million dollars).

Ping An has also been in talks with Beijing-based China Everbright Bank. Sources said the discussions are at a very early stage and it is uncertain whether they will result in an agreement.

Bureau Report

Insurance market after China´s WTO entrance

It is almost five years since China joined the World Trade Organization on December 11th of 2001.

On Wednesday, China’s insurance market regulators and some 200 industry players are meeting in Beijing to discuss their experience in the past five years and the possible challenges ahead.

Li Kemu, the vice chairman of China’s Insurance Regulatory Commission made the opening speech at the Insurance and Financial Market Forum on Wednesday afternoon. He stressed China is opening to all and will give them equal treatment, whether they are domestic or overseas players. He said there are now 44 overseas insurance companies operating in China, while another 135 have representative offices here. In big cities such as Shanghai and Guangzhou, overseas insurers claim some 20 percent of each city’s total premium.

In 1992, AIG set up the first wholly-owned foreign insurance company in Beijing, which is seen as the beginning of China’s opening up of the industry. Another milestone was made in 2004, when China lifted geographic restrictions against foreign insurers and allow them to operate corporate insurance, health insurance and annuity. At present, China restricts overseas life insurers to hold less than 50 percent in their joint ventures. But to foreign insurers, it is still a promising market.

Meanwhile, Li Kemu said the country will further broaden the investment channels for insurance companies. Besides involving in the stock market, banking industry and infrastructure construction, Li said his commission is negotiating with China’s Ministry of Railways, and there will soon be insurance capital flowing into China’s railway.