Tag NULL

Firms grappling with compliance talent shortage

Graduates seek prospects at a job fair in Hangzhou, Zhejiang province. They face tougher challenges in a slower economy.

Recruitment agencies find it difficult to satisfy demand as need for specialized regulatory professionals grows in several sectors

The Chinese job market will see rising demand for compliance professionals in 2015, a report suggests. The United Kingdom-based recruitment specialist Hays Plc said in its forecast that the huge growth in demand for compliance experts will be the most important trend in the next 12 months.

The government’s anti-graft campaign, as well as ongoing changes in the regulatory environment, will lead to the increased demand for compliance professionals, and the trend is expected to continue in the coming years.

According to Simon Lance, regional director of Hays in China, compliance staff usually see their salaries rise by 15 percent every year. But due to the huge shortage of candidates, experienced professionals are very likely to see their salaries increase by 30 percent or even 40 percent.

The closer cooperation between China and the United States after the 2014 APEC meeting, which was held in Beijing in November, will also result in higher demand for such talent, said Lance.

This is largely because the Chinese market will open further, and Chinese companies will need to learn more in terms of compliance.

Lance said that the demand for compliance talent will be even higher in the banking industry and elsewhere in the financial sector, including insurance, funds and securities firms, as well as in the pharmaceutical industry.

Global insurer Allianz SE got involved in compliance affairs in 2008 and set up its own compliance department one year later. The compliance staff increased from three to four people in 2014, of whom three have legal backgrounds.

Maria Zhang, head of the human resources department of Allianz China General Insurance Co Ltd, said: “Within Allianz, the compliance department is mainly responsible for working closely with the supervisory authorities and submitting reports or documents as required. It will also implement compliance projects within Allianz and manage contracts, internal controls and legal affairs.

“It is an independent department that also provides legal and compliance advice to other departments,” Zhang said.

Pete Chia, managing director of recruitment service provider BRecruit China, also said that the healthcare, vehicle, finance and high-tech sectors have a higher demand for compliance talent.

“We foresee cooperation between China and the US will be booming in the above industries. During this process, mergers and acquisitions are definitely the favored strategy for companies on both sides.

“Compliance people play the important role of making sure the acquisition and operations after the acquisition in one country obey the laws and policies of another country,” Chia said.

“Recently, we received many assignments from pharmaceutical clients, which urgently seek candidates who are well-versed in the laws of both China and the US.”

“Healthcare, vehicle, finance and high-tech companies are keen to find compliance staff. Generally, they have very specific requirements, but language skills, law certifications in both the US and China, and deep project experience are preferred by MNCs.

“Salary is not the only key factor in retaining these people. Based on feedback from our candidates, they care more about the job scope, authority and career development,” he said.

Zhou Tian, 30, received a law degree last summer and soon landed a compliance job in a local securities company in his hometown of Wuxi, in Jiangsu province.

To him, this is an ideal job, which is a little bit different from traditional legal work while also giving him a chance to enter an industry that provides opportunities to learn new things.

“The Chinese legal system is not yet mature. Neither is the Chinese finance industry,” said Zhou.

“There are only a few people working as compliance professionals at present. Therefore, if I can really obtain more financial knowledge, I can do the job really well in the long run. And the salary is also quite good, this is already quite attractive to me.”

Chia from BRecruit also added that the growing number of Chinese companies going public in overseas markets have helped boost the demand for compliance talent, with jobs in investor relations getting a lot of attention from Chinese companies.

“Many companies consider an IPO not as an end goal but as the starting point to enter the global market. This vision boosts the demand for compliance talent,” he said.

However, it is quite difficult to find the right compliance talent in China. Lance from Hays said that the pool of candidates is quite small in the country, but that is also the case globally.

Chia said that the major way to find such people is still the internal referral, as many compliance openings are not publicized.

SOE employees divided by pay gaps

Under pay reform measures which took effect Thursday, salaries and expense accounts have been slashed for senior executives at 72 centrally administrated State-owned enterprises (SOEs).

For many years, a widening gap between executive salaries and the wages of ordinary workers has been a major source of public discontent. Obviously, the new year’s salary reduction measures signify an important step toward social equality.

Nevertheless, some worry that mid-level managers could potentially outearn their bosses. Others believe ordinary staff may soon make more than their supervisors. In reality, those who contribute the most should be compensated more for their work, regardless of their standing within a company.

Of course, pay gaps exist throughout the State sector. Through their connections with Beijing, employees at central government-led SOEs typically enjoy higher pay and better working conditions than their peers in non-central SOEs.

To further promote fairness, relevant authorities should consider reducing salaries not only for senior executives at centrally administrated SOEs, but for rank-and-file workers at such enterprises as well.

Smartphones help boost e-commerce

People look at the new handset during a mobile phone trade fair on June 27, 2014.

Plans by Alibaba to boost its presence are a sign of vast opportunity

Looking for trustworthy suppliers of agricultural produce in India can be a tough job for Fan Chengliang, a Chinese businessman who exports Indian spices to China.

Fan, 40, launched his business in March last year in suburban Hyderabad, a city in southern India with a population of more than 6 million. During the harvest season, he had to travel hundreds of kilometers every day to purchase peppers from the local dealers.

“For newcomers like me, it’s difficult to appraise whether a supplier is credible or not,” Fan says. “It always takes a long period to establish trustworthy relationships with local businessmen.”

However, finding reliable suppliers using online business-to-business services is expected to become easier for businessmen like Fan, after Alibaba Group Holding Ltd, China’s largest e-commerce company, recently announced plans to boost its investment in India.

On Nov 25, Jack Ma, the founder and chairman of Alibaba, said while visiting India that the nation with the world’s second-largest population offered huge potential for e-commerce.

“We will invest more in India, and we will work with Indian entrepreneurs and technology companies,” 50-year-old Ma said at the India-China (Zhejiang) Business Cooperation Conference.

Alibaba currently has a small presence in the Indian e-commerce market. Ma, whose company is responsible for 80 percent of online retail sales in China, made the announcement two months after Alibaba’s record initial public offering in New York raised $25 billion.

“In the next three years, one of the key strategies for Alibaba is to globalize, to ensure that more small businesses around the world use our services,” he said.

According to Ma, Indian businesses have already become the second-largest presence on Alibaba after Chinese companies, and roughly 400,000 Chinese customers buy goods including spices, chocolates and tea from Indian sellers through the online platform.

Small business boost

There is huge scope for “mutual engagement” in technology between India and China, which could benefit many small businesses, Ma added.

The Economic Times, a Mumbai-based newspaper, said that during the visit, Ma was scheduled to meet with Kunal Bahl, the 31-year-old cofounder of Snapdeal.com, which styles itself as the Indian version of Alibaba.

Snapdeal, founded in 2010, has become the fastest-growing and largest online marketplace in India, with more than 25 million registered users and 50,000 business sellers.

In October, Japan’s Soft-Bank, the largest shareholder in Alibaba, pumped $627 million into Snapdeal to become the largest investor in the Indian online company as well.

Gu Jianbing, public relations director of Alibaba, did not confirm if a meeting took place between Ma and Bahl. It remains unclear how Alibaba will cooperate with its Indian partners.

The Indian government does not allow foreign direct investment in business-to-consumer e-commerce, but it does so in marketplaces where third-party sellers sell directly to shoppers through e-commerce platforms.

The online sales market in India is still at an early stage compared with China. According to Technopak Advisors, a New Delhi-based consulting company, the online trade volume in India was about $2 billion in 2013. The number was $300 billion in China at the same period.

However, the large population of young people in India has made the market more promising and attractive for investors like Alibaba.

Mobile shopping

The cheap smartphones that are popular in India are also expected to boost the country’s online trade volume. Bahl recently told Tencent Group, one of China’s biggest Internet firms, that about 65 percent of Snapdeal’s current sales were reached through mobile phones, far more than the 5 percent of only a year ago.

In India, smartphones are being sold in rural areas where “even the safety of purified water could not be guaranteed”, Bahl told Tencent.

Competition in the Indian e-commerce market has become fiercer with companies like Amazon, which entered India in 2013, stirring up the industry. Wal-Mart India has also taken its cash-and-carry wholesale stores into the virtual space, allowing customers to order online for home delivery.

India’s aggressive homegrown companies such as Flipkart, a leading e-commerce website launched in 2007, have also become powerful competitors. In June, Flipkart raised $1 billion in new capital to support its expansion, especially in mobile technology.

Flipkart says it has 22 million registered users and handles 5 million shipments per month. “The number of visitors on Flipkart.com is greater than the population of the top 10 Indian cities,” says the introduction on the company’s official website.

For Fan, the Chinese businessman, the rapid growth of the Indian e-commerce market means more choices when he selects business partners.

“If I can get more information about the suppliers through the Internet, I will not have to travel hundreds of kilometers every day during the harvest season, enduring the stimulant smell of peppers,” he said.

Working priorities shift for new graduates

A job seeker receives interview at a job fair for postgraduates in Beijing, capital of China, Dec 18, 2014. About 18,000 opportunities were offered at the fair.

More young people set sights on growth opportunities, good salaries

For Chinese college students, jobs in the Chinese government or at State-owned enterprises, government-funded institutions and NGOs have become less and less appealing in the past three years.

Recent survey of online jobs site Zhaopin Ltd found that only 36 percent of Chinese college students still want to work within the “system”, which refers to governments or government-related organizations in 2014.

The percentage was as high as 54 percent in 2012.

Among the top 10 employers of 2014 in the eye of college students, only two are State-owned enterprises?China Telecom and ZTE.

More and more college students prefer to work “outside the system”, including in multinational companies, private companies or even their own startup business, the survey shows. Internet companies are gaining much more attention than before.

Liao Wenyu, a senior student at Beijing Normal University, said she prefers to work in a place where she can achieve her personal values instead of one where she is holding an “iron rice bowl”.

“The parents’ generation prefers to have jobs with a fixed income with no risk of bankruptcy and being laid off, so they’d like me to work as a civil servant or teacher, but I’d rather not,” Liao said. “I care more about the work environment, opportunity for growth, and a salary that can support a decent life in modern cities like Beijing.”

Wang Wenping, human resources director with Qihoo 360 Technology, said the company is trying to attract talent by encouraging innovation, which has proved good for talent recruiting as well as the ompany’s development.

“The majority of our team is very young. The post-’80 generation accounts for most of our staff members,” Wang said. “In our daily work, we will not put limitations on the work. For an example, if you have a good idea, you can report directly to the president.”

Wang said the 360 portable Wi-Fi router is the result of innovation from a group of young people in their company.

“The president will also talk directly to the talented people we are interested in,” Wang said. “We will not say that we are the best employer. People can find that out from the salaries we offer, the working environment as well as the attention they get from the high level.”

Guo Sheng, CEO of Zhaopin Ltd, said the trend mentioned earlier in the article is closely related to the ongoing economic and industrial adjustment.

“The college students are not as keen to be civil servants or working for State-owned enterprises as before. I think this is a good trend. Because it means that private sector and even midsize and small enterprises are becoming more appealing,” Guo said. “The means the monopoly of State-owned enterprises in certain fields is not as strong as before.”

“Besides, China is also undergoing transformation to green and service-orientated industry and expects consumption to be the new engine of growth,” added Guo. “This also has some effect on job election.”

China may ease investment rules in free trade zones

China may to ease investment rules in three new free trade zones (FTZs) in south China’s Guangdong Province, southeast China’s Fujian Province and north China’s Tianjin Municipality and current Shanghai FTZ, if proposal to the effect is approved by the legislature.

The National People’s Congress (NPC) Standing Committee will Friday debate on the proposal from the State Council to temporarily adjust regulations about administrative approvals in these FTZs.

Toy factories face fight for survival

Producing more than $453m worth of goods annually, companies in one county are adapting fast to change

Every year, as parents select the Christmas toys that could make them the world’s best Mom and Dad, few will realize that the machines that made them, or the workers that packed them, were probably from eastern China.

More than 90 percent of the wooden toys produced in Yunhe county, in eastern Zhejiang province, are exported to the European Union and the United States.

With a toy production history dating back 40 years, the county now accounts for one-third of China’s wooden toy exports.

Its 732 toy-making companies manufactured more than 2.77 billion yuan ($453.1 million) worth of toys last year, however, new challenges are mounting, most obviously the rising cost of labor and stagnating global demand.

“The time has passed when wooden toymakers made high and quick profits,” said Lin Hongbing, chairman of Zhejiang Hongyuan Toy Co.

“Workers’ wages are increasing by 10 percent each year, and it is impossible for us to raise the price of our products by that,” he said.

Lin said that other costs, too, are rising, such as transportation and electricity. “Inevitably, as a result profit margins can only go lower and lower.”

Statistics from the General Administration of Quality Supervision, Inspection and Quarantine show that China’s toy exports were worth $24.73 billion in 2013, down 1.64 percent from 2012, as the global market for their goods stagnated.

“Overseas customers are much more cautious. Previously they would take a fixed number of products every year and often over-order, happy to cover that cost. Now they would place orders only for what they know they can sell,” said Lin, whose company managed to maintain its normal export level in 2013, about 30 million yuan.

But many firms have not been so lucky.

The majority of the country’s wooden toy-making companies are original equipment manufacturers?those that make parts or products that are used in another’s end products?which means low added value, or the difference between the price of their finished products and the cost of making them, said Mao Fengming, secretary-general of the Yunhe toy association.

For a toy that is sold at $8 in the US, for instance, a producer in Yunhe is now likely to make around 20 cents.

“They have to upgrade their facilities and technologies to keep competitive on the international market,” Mao said.

To move further up the value chain, many of Yunhe’s toy producers have started to realize the importance of building their brands.

A decade ago, the country had just 11 recognized wooden toy brands; now there are more than 240, according to the toy association. But branding can be expensive.

Liao Fuxin, vice-president of the China Toy Association and president of Zhejiang Xinyun Wood Industry Group, Yunhe’s largest wooden toy producer, said his company has 70 percent of its products made through OEMs, with 30 percent being its own brands. It is targeting parity in the two categories in the next two years.

Liao said compared with the company’s own brands, OEM products bring about much higher margins. It also functions as an original design manufacturer for retailers such as US retail giants Wal-Mart Stores Inc and Costco Wholesale Corp. “We are in charge of the design and manufacturing process. But products have to be rebranded for specific target markets,” he said.

Liao concedes that the business model might not be sustainable long term?but “we are trying to pitch our own brands to consumers whenever possible”, he said.

Also vexing many of the toymakers are the frequent changes in technical standards of some of their target markets.

“The technical barriers to trade in the developed markets, especially, are adding hefty financial pressure. All the companies here are working hard to keep up, raising the safety standards of products,” Liao said.

The EU makes the most frequent changes, according to Yao Ting, an official with the Lishui Entry-Exit Inspection and Quarantine Bureau.

The standards on the sounds produced by toys, for instance, have been revised twice in recent years. But despite the changing standards, the county has maintained a record on product safety, with not one single alert on quality issued from the EU or US for 60 consecutive months.

Yunhe is one of nine national quality and safety demonstration zones now certified by the AQSIQ for industrial export products.

“The changing standards and high requirements actually offer companies the opportunity to improve products quality,” Liao said. “Without the technical barriers, Yunhe’s toy industry would not have prospered as it has.”

The standards expected of this often labor-intensive industry also mean that companies constantly remain under pressure to upgrade their equipment, an issue becoming all the most urgent as labor costs rise, and staff shortages grow.

More than 20,000 people, or one-fifth of the county’s population, are employed in the toy industry, but fewer remain willing to do the work due to its often-tedious nature.

“Young people would not do this job. In most cases we can only recruit women in their 30s or 40s,” said Lin Hongbing from Zhejiang Hongyuan Toy.

Many toymakers, including Lin’s company, have automated some of their production, on painting, for instance.

Mike Sagan, supply chain director for the US-based toymaker KidKraft, which buys more than 2 million sets of toys from the county annually, believes Yunhe’s competitive edge remains in the skill of its workers. But he also warns that its competitiveness could be lost without adequate investment in machinery and technology.

HK and mainland markets to see strong new listings in 2015: Deloitte

Hong Kong’s stock market is forecast to raise 180 to 220 billion HK dollars (23 to 28 billion U.S. dollars) from about 110 IPOs next year, backed by a large pool of candidates seeking to be listed, according to a report by Deloitte China.

Seven to eight large-scale initial public offerings (IPO), mainly from financial institutions and pharmaceutical companies, are expected among Hong Kong’s IPO activities, said the report.

The financial institutions include small and medium-sized banks, insurance companies, and brokerages that serve clients across the border, Deloitte said, adding that Internet financing and interest rate liberalization are spurring the new listings.

Hong Kong’s IPO market performed well in 2014 and is expected to be the world’s second-largest IPO venue for the second consecutive year.

Deloitte expects the A-share market on the Chinese mainland to have about 180 to 200 new listings and raise 100 to 120 billion yuan (16 to 19 billion U.S. dollars) in 2015, given the regulator’s plan to moderately increase IPO activities.

Small and medium IPOs from companies in the manufacturing, technology and consumer business sectors will play a crucial role in the market.

As for this year, Deloitte said though more companies completed their IPOs in the second half, the total number of IPOs and IPO funds raised in the year was still far behind those in 2012.

Wumei to buy stake in B&Q China

Pedestrians walk past a B&Q store near Tiantongyuan, a residential community in Beijing.

Kingfisher, the United Kingdom-based home improvements retailer, said on Monday that it had agreed to sell a 70 percent stake in its loss-making B&Q China business to Wumei Holdings Inc for 140 million pounds ($219 million), a move that is expected to boost Wumei’s retail presence.

The agreement follows Kingfisher’s announcement in March of its plans to look for a strategic partner to help develop its B&Q business in China, which is made up of 39 stores and employs 3,000.

“I am delighted to have found a strong retail partner who will help us realize the financial value of our business in China,” said Véronique Laury, chief executive of Kingfisher. The transaction will enable Kingfisher to focus on its main businesses in Europe, including the UK market leader B&Q and Castorama in France, said Laury.

Kingfisher, which has B&Q and Screwfix in the UK and Castorama and Brico Depot in France, is Europe’s biggest home improvement retailer.

Beijing-based Wumei, the leading retail chain store operator, has a retail network of about 650 supermarkets under the brand of Wumart and 10 department stores in northern, eastern and western China.

The deal is subject to approval by the Ministry of Commerce, and if approved, is likely to be completed during the first half of next year.

Jason Yu, general manager of Kantar Worldpanel China, a global consumer information provider, said the bold step will help Wumart move into the highly fragmented and competitive home improvement sector. “But Wumart will have to learn how to survive in the challenging home improvement sector,” he said.

Wumart had a 6.7 percent value share in the North China region’s grocery retailing sector, Kantar Worldpanel said, adding that the year-on-year growth trend was more or less flat, despite it being the top retailer in the region.

As one of the key local players in the China grocery sector, Wumart has faced several challenges, including cutthroat competition from the e-commerce sector.

Yu said such deals are common in the retail sector. “B&Q may be able to leverage on the local market expertise of Wumart,” he said. “The combined group will have larger scale as well as a stronger eco-system, a shopping center with both Wumart hypermarket as well as B&Q store, and better negotiation power and property portfolio. It will also allow Wumart to expand their business in regions where they do not currently have a presence.”

In 2012, Home Depot Inc, the largest home-improvement retailer in the United States, closed its remaining seven big box stores in China after it decided to shift its focus to specialty and online outlets in China.

Yu said Western home improvement retailers rely very much on the do-it-yourself concept?consumers buy the raw material and do the home improvement at home. However this does not work well in China as consumers typically rely on home improvement specialists to do the work.

Though B&Q and some other Western retailers started to offer these kind of services at their stores, it was not as competitive as other players. Most of the Western retailers had fewer stores and relatively weaker negotiation power with suppliers. As a result, they are also not able to offer advantageous prices, Yu said.

He said the recent cooling down of the real-estate market has led to weaker demand for home improvement-related work. Within the home improvement sector, the only successful example is Sweden’s Ikea that really wins based on the unique customer experiences it creates, he said.

Macao sees more hotel employees in Q3

The number of full-time hotel employees in China’s Macao Special Administrative Region reached 45,584 at the end of the third quarter of 2014, up 2.6 percent year-on-year, official figures showed on Thursday.[Special coverage]

According to the Statistics and Census Service, the average earnings of the hotel employees in September rose by 10.7 percent year-on-year to 15,750 patacas (1,972 US dollars).

Restaurants in the region registered 23,831 full-time employees at the end of September, up 9.3 percent, with their average earnings growing 8.4 percent year-on-year.

The number of employees of the financial sector stood at 6,530 full-time employees at the end of the third quarter, an increase of 2.7 percent.

Experts say the increase of employees in the non-gaming sectors could be seen as an indicator of Macao’s efforts to diversify its gambling-dominated economy.0 In the region with a population of around 630,000, the gaming industry accounts for about 80 percent of its revenue.