Archives August 2006

Apple says it’s trying to resolve dispute over labor conditions at Chinese iPod factory

Apple Computer said Wednesday it was trying to settle a dispute over alleged labor abuses at an iPod factory in China, an awkward case highlighting the challenges big companies face in living up to their codes of conduct while outsourcing most of their production.

The case also reflects the pressures Chinese journalists confront in doing their jobs.

The dispute involves a defamation lawsuit filed by Hongfujin Precision Industry Co., a major exporter owned by a Taiwanese company, against two journalists at the state-run newspaper China Business News who ran stories alleging that some workers on iPod assembly lines were paid only US$50 a month while working 15-hour shifts.

Hongfujin is suing the two, reporter Wang You and editor Weng Bao, for 30 million yuan (US$3.8 million;euro3 million) in the Intermediate Court in the southern city of Shenzhen, which froze the journalists’ personal assets pending the trial, according to local media reports.

The case has provoked criticism in the Chinese media and an open letter from the journalists’ advocacy group Reporters Without Borders demanding that Apple’s chief executive, Steve Jobs, to intervene.

“We believe that all Wang and Weng did was to report the facts and we condemn Foxconn’s reaction,” said the letter, signed by Robert Menard, secretary-general of the Paris-based group. “We therefore ask you to intercede on behalf of these two journalists so that their assets are unfrozen and the lawsuit is dropped.”

Hongfujin is a wholly owned subsidiary of Taiwan-based Foxconn Technology Group.

“Apple is working behind the scenes to help resolve this issue,” an Apple spokesman, Jill Tan, said Wednesday. She said she could not comment further.

Court officials in Shenzhen refused comment Wednesday.

Apple’s iconic iPod players are made abroad, mainly in China. The Cupertino, California-based company has sold more than 50 million iPods since the product debuted in 2001.

The allegations of harsh conditions at the iPod maker’s factory in Shenzhen originally surfaced in a report in June by the British newspaper, the Mail on Sunday.

Apple responded by promising to immediately investigate conditions at the factory. It issued a report earlier this month saying that it found some violations of its stringent code of conduct but no serious labor abuses. It pledged to immediately redress some problems with overtime, employee accommodations and administrative issues.

The report discounted allegations of forced overtime, noting that a chief complaint among workers was a shortage of overtime during slack periods.

Staff who answered the phone at Hongfujin refused to take any media inquiries.

Earlier, Foxconn issued a lengthy statement denying the allegations and defending its labor policies. The statement detailed amenities it says the company offers to employees, including free medical care, “complimentary professional laundry services,” soccer fields, libraries and an Internet cafe.

“Foxconn has been recognized by Shenzhen government as a role model,” it said.

Foxconn is a trade name for Taiwan’s Hon Hai Precision Industry Co. It claims many customers, including Intel Corp., Dell Inc. and Sony Corp. It is one of many Taiwanese companies with operations on the Chinese mainland, despite the political divide that has persisted since China and Taiwan split amid civil war in 1949.

Hongfujin was reportedly China’s biggest export manufacturer last year, with overseas sales totaling US$14.5 billion (euro11.3 billion).

China Business News, a respected publication backed by several big media groups, has given Wang and Weng its unconditional backing, saying the two have evidence to support the allegations.

“Our newspaper will definitely back Wang You and Weng Bao since what they did was not a violation of any rules, laws or journalistic ethics,” said an official in the newspaper’s publicity department. Like many Chinese, he gave only his surname, Yang.

The financial magazine Caijing, meanwhile, accused the Shenzhen court of violating the law in freezing the journalists’ assets.

Wang and Weng were not available for comment Wednesday. However, they have set up a blog recounting their ordeal and reflecting on the risks associated with doing their jobs.

“This is the toughest time I have faced since I entered the media business 10 years ago,” Weng wrote.

Chinese journalists working in the state-controlled media have always had to cope with censorship and stonewalling by officials and threats and beatings from local henchmen. In recent years, companies have become increasingly aggressive in taking legal action against unfavorable reports.

At the same time, some reporters have come under fire for violating journalistic ethics for taking money in exchange for running favorable reports, or withholding unfavorable ones.

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China’s Lenovo Welcomes 4th Former Dell Executive in Eight Days

BEIJING, Aug. 24 (Xinhua) — Chinese computer giant Lenovo announced Thursday the recruitment of a fourth former executive of Dell, the world’s largest personal computer maker, in just eight days.

Christopher J. Askew, former vice president of Dell, joined Lenovo as senior vice president in charge of the service department.

Before joining in Lenovo, Askew has been in charge of Dell’s service in Asia-Pacific region and Japan.

Lenovo said on Aug. 17 that former president of Dell China David Miller had joined as president of its Asia Pacific operations. Miller, also senior vice president of Lenovo, will be based in Singapore.

The company has also named Sotaro Amanoas president of Lenovo Japan. Amanoas was formerly corporate director of Dell’s home and business sales division in Japan.

On Aug. 21, the Chinese company announced former Dell senior vice president David Schmoock had joined as senior vice president in charge of a new center of excellence on market evaluation and strategy.

Before taking the position, David Schmoock was in charge of Dell’s marketing in Asia-Pacific and Japan.

The participation of the four senior executives is considered a strong move by Lenovo CEO William Amelio to strengthen the company’s business in the Asia-Pacific Region.

Lenovo appointed Amelio as CEO to replace Stephen Ward last December, the latter being in the position for only eight months.

Lenovo announced in the first half its sales reached 3.5 billion U.S. dollars, up 38 percent from the same period of last year.

The company’s year-on-year sale growth of personal computers is 12 percent, with the sales in the Asia-Pacific region, excluding China, up 3 percent, in America up six percent and in Europe, the Middle East and Africa down 12 percent.

(c) 2006 Xinhua News Agency – CEIS. Provided by ProQuest Information and Learning. All rights Reserved.

Source: Xinhua News Agency – CEIS

Former QDI executive to join China-based SVA-NEC

Carrie Yu, DigiTimes.com, Taipei [Tuesday 22 August 2006]

Chen Jin-zhi, former vice president of Quanta Display’s (QDI) manufacturing department, will lead a team of factory directors and engineers from QDI to join China’s Shanghai SVA-NEC Liquid Crystal Display (SVA-NEC), with Chen to be the first vice president at SVA-NEC that comes from Taiwan, according to the Chinese-language Apple Daily.

Chen had been appointed special assistant at AU Optronics (AUO) to help in the preparation for the merger between QDI and AUO, which will completed in October of this year. He was recently reported by the Chinese-language Economic Daily News (EDN) to have already stopped working at QDI.

AUO declined to comment on the news.

SVA-NEC will work with Japan’s Fujifilm for a fifth-generation (5G) color filter (CF) plant, according to the Chinese-language Commercial Times.

The China-based panel maker has technology support from Japan’s NEC and is currently operating a 5G TFT LCD plant, with a maximum monthly capacity of 90,000 glass substrates.

SVA-NEC accounted for 41% of the 15-inch monitor panel market and continued to become the number-one supplier in this segment in June, according to WitsView Technology.

Recruiting Top Talent In China Takes a Boss Who Likes to Coach (WSJ)

SHANGHAI — Any company that wants to succeed in China — and the list grows longer every day — needs to understand what matters even more than an understanding of distribution networks and good relationships with government officials: executives on the ground who truly enjoy coaching their employees.

Whether they work in Beijing, Shanghai or Guangzhou, executives at multinationals who stay behind closed doors and rarely offer performance feedback or advice are bound to fail. That’s because the local hires they need to run their offices and plants will be seeking out bosses who will help them advance their careers.

With China’s economy growing so rapidly, multinationals and private and state-run Chinese companies are competing fiercely for talent. Young, educated Chinese from top schools with a few years of work experience often have their pick of entry and midlevel jobs in sales, marketing, finance, government relations and manufacturing.

They can also command much higher salaries now than they could a few years ago, though they’re still paid far less than expats. Money, though, isn’t necessarily their top priority when weighing offers. In a recent study of several dozen Chinese managers placed by Korn Ferry, Grace Cheng, the managing director of the search firm’s Beijing office, says she found that “money is a less important reason to change jobs than the potential to grow and have a close working relationship with an immediate boss.”

James Rice, a Tyson Foods vice president and the company’s general manager in China, understands this sentiment and has made mentoring part of his job. A 16-year veteran in China, he previously worked for Dannon and Kimberly Clark. One of his current sales managers first worked for him as a secretary at Dannon and, with Mr. Rice’s coaching, advanced to management. He quit Dannon when Mr. Rice moved to Tyson last May. “I didn’t want to poach [from Dannon] but he was going to take another job anyway, so I asked him to work for me again,” says Mr. Rice.

A few weeks ago, he recruited a young manager with an MBA degree from the University of North Carolina by promising training and promotion. The manager was weighing another offer from a multinational, and Mr. Rice didn’t have a specific opening for him. But he was determined not to lose the chance to hire him. “He’s very smart and speaks perfect English, and we’re growing by more than 20% a year so it makes sense to hire ahead,” says Mr. Rice, who plans to expand Tyson’s China-based operations through acquisitions. “I pitched him very heavily on what I’d do to work with him and help him grow his career. I told him that for the next 12 months, he’ll be my assistant, going with me wherever I go — and then he’ll get a line position,” Mr. Rice says.

Stella Hou, who manages the compensation measurement practice for Hewitt Associates in China, is often a personal counselor as well as a career coach to her 30 employees. In the U.S. and Europe, “managers don’t feel they should trespass into employees’ personal lives, but Chinese employees often expect their bosses to do that,” she says. She spent hours listening to an employee vent anger and grief when her marriage fell apart.

Young recruits, many of them products of China’s one-child policy, also often require coaching on how to gain independence from their parents. Mr. Rice has had to tell some prospective employees that their parents aren’t welcome to sit in on job interviews. And when an intern in Ms. Hou’s office talked constantly about how much his mother takes care of him, co-workers began counting the number of times he invoked his mother’s name and then subtly suggested he change that habit. “He’d say, ‘my Mommy bought me this shirt,’ or ‘my mommy made me this meal,’ ” says Ms. Hou. “One day he brought her up 25 times.”

She prefers hiring employees whose parents live in provinces far from Shanghai or who went to boarding school at young ages. “They’ve been less pampered” than only children who have had their parents’ and grandparents’ undivided attention, she says.

For their part, Chinese employees, especially those in their 20s and 30s, don’t want to stay in any one job for more than a few years. They are looking for training and frequent promotions, and they’re willing to job hop to advance.

Among the companies that has benefited is Beijing-based Sohu.com, one of China’s main Internet portals. Founded eight years ago, Sohu.com, which now has 1,400 employees, has wooed hundreds of upwardly mobile young Chinese from multinationals. Andy Zhao, a group leader in human resources at the company, formerly worked at McDonald’s, where he advanced from trainee to store manager over a six-year period. But then he quit, because his boss, he says, “was too vague” about his chances for future promotions.

He says he likes Sohu.com’s innovative culture and his “caring bosses,” who encourage him to “make fast changes every day.” But he adds that how long he stays there will depend on “whether I can keep growing and changing.”

This is the first of several columns about managing in China.

Local manufacturers struggle to compete with China

The World Today – Friday, 25 August , 2006 12:38:00
Reporter: Andrew Geoghegan
ELEANOR HALL: As BHP Billiton’s multi-billion dollar profit result revealed this week, China’s relentless growth has been a huge boon for many Australian business.

But there’s a downside. A survey of Australia’s manufacturing industry has found that this sector of the local economy is losing out to Chinese competition. In just the last year, manufacturers have suffered a net financial loss of almost $900 million in trade with China.

And as finance correspondent Andrew Geoghegan reports, some manufacturers are warning that the local industry will not survive.

ANDREW GEOGHEGAN: It would be an understatement to say China is a country on the move. The rapid pace of economic growth has created huge demand for private transport. In Beijing alone, 1,000 new cars are estimated to be pulling onto the roads every day.

JASON LI: The car and the growth of the car is just an extraordinary phenomenon in china.

ANDREW GEOGHEGAN: Jason Li, a Chinese Australian living in Beijing, works for the China Automobile Association.

JASON LI: It’s really stuff of dreams. It’s very much tied to growing economic development, the rise in middle class. It’s such a status symbol. It’s such a centrepiece of lifestyle now.

ANDREW GEOGHEGAN: And Australian business is cashing in on the Chinese dream.

GLEN DOBINSON: Certainly with the population based in China of around about 1.2 billion people, and that’s a lot more than the Australian population, quite a few fold.

ANDREW GEOGHEGAN: Glen Dobinson is the Managing Director of Dobinson’s Springs and Suspension, a Rockhampton manufacturer. He’s been successful in capitalising on the growth of China’s car industry.

GELN DOBINSON: So we are trying to capitalise on that four wheel drive market, particularly up there where they have suspension range of products and we’ve had a client dealing with us since early this year, who’s had around three orders, and we have to grow on that base.

ANDREW GEOGHEGAN: However, Glen Dobinson says he’s making hay while the sun shines. He sees some very dark clouds on the horizon in the form of cheap manufactured goods imported from China.

GLEN DOBINSON: We find, one of our competitors now is starting to import product out of China, and distributed though Australia as well, to our client base, we are going to have to compete head on with Chinese imports, which, I can only see in the long term, if that keeps up, we are … it’s not going to be an easy ride for us down the road further, yeah.

ANDREW GEOGHEGAN: To the point where you think you might struggle to survive here?

GLEN DOBINSON: Yeah, I think 10 to 15 years time it could be a different story to the stage, where if we can’t compete, yeah, we might have to look at maybe importing and rebranding our product ourselves, that’s, either that or you got no business. So that’s something that we’ll have to think seriously about in the long-term future.

ANDREW GEOGHEGAN: Glen Dobinson’s problems are symptoms of an Australian manufacturing industry in decline.

And the car components sector is suffering the most acute pain, as highlighted this week by the struggling Ajax fasteners business in Melbourne. It’s been bailed out by carmakers, because it can’t compete with cheap imports.

HEATHER RIDOUT: A lot of the benchmark prices are China prices, so, if Ajax have to quote for their fasteners, they have a benchmark, Chinese fastener producers, as a price they have to match. So it is very tough.

ANDREW GEOGHEGAN: Heather Ridout is the Chief Executive of the Australian Industry Group.

It’s surveyed 700 manufacturers and found that they’ve accumulated almost $7 billion in benefits from China. However, cheap Chinese competition has cost those businesses closer to $8 billion in lost sales.

Heather Ridout.

HEATHER RIDOUT: Australian manufacturers are now doing much more business in China. China has been identified as the strongest potential overseas market, for industry in terms of their exports, in terms of their overseas production, in terms of their overseas access to Australia. But in that term, the equation still remains strongly in China’s favour with a loss of approaching $1 billion.

ANDREW GEOGHEGAN: While the outlook may be gloomy for manufacturers the forecast for Australia’s services sector is bright.

Australian Andrew Stoler is a former deputy director general of the World Trade Organisation and is in China at the moment.

ANDREW STOLER: Just as the Australian manufacturing sector is nervous and sensitive up here in China, they have a very inefficient services sector, which is quite worried about increased competition from Australia.

ELEANOR HALL: That’s Andrew Stoler, the former Deputy Director General of the World Trade Organisation, ending that report from Andrew Geoghegan.

Manufacturers face testing times with China, study shows

Monday 28 August 2006
Australian manufacturers are experiencing increased competitive pressures in their dealings with China, while at the same time they now see China as the most important market in which to grow their business outside Australia, according to a major new study released today by the Australian Industry Group.

The report, Australian Manufacturing and China: Deepening Engagement has estimated that while Australian manufacturers in 2005/6 have accumulated over $6.8 billion in benefits from China (for example, through increased exports to China and savings from using Chinese global supply chains), the benefits fall short of the losses in sales in domestic and overseas markets from competition from China (totalling over $7.6 billion), resulting in a net financial loss of $880 million.

Ai Group chief executive Heather Ridout says the findings, based on a survey of 700 Australian manufacturers, confirm that China is imposing ever increasing competitive pressures on their businesses.

“Over the past two years, the proportion of companies impacted by China has grown from 70% to 84% and China is making deeper inroads into Australia’s domestic and overseas markets,” she says.

“Manufacturers identified China as the strongest potential overseas market”

The study found that among surveyed companies around 8% of manufactured exports go to China; one in every 16 surveyed companies has an operation in China; and China is the chief source of foreign inputs into domestic production. Annual income from manufacturing investments in China is estimated to be close to $1 billion.

“While very large manufacturers and affiliates of foreign owned entities are starting to reap slight net financial gains, the majority of manufacturers are finding it tough to secure benefits,” Ridout says.

“Overall there remain considerable concerns about non-tariff barriers in China, including the lack of intellectual property protection. A major finding of the study was that Australian businesses are highly concerned about the incidence of Chinese made counterfeit and pirated goods being sold on the Australian market.

“The perception of Australian manufacturers is that dumping of Chinese goods on the Australian market (at below the price to make and sell in China) is also accelerating significantly.

“Consequently, many manufacturers remain unconvinced of the overall benefits of a Free Trade Agreement, although support for an FTA is growing and has increased from 13% in 2004 to 24% in 2006.”

Ridout calls on the Federal government to put in place mechanisms as part of its planned Industry Statement so that Australian manufacturers can boost their competitive position in their business dealings with China.

“We need to strengthen our innovative capacities, build world-class skills among our manufacturers, and be prepared to deal with the ever increasing impact of Chinese competition, as well as helping to open up the Chinese market to Australian businesses so that they can establish partnerships and build supply chains,” Ridout says.

Ai Group has also welcomed the recent clarification of the government’s position that the existing tariff phase-down plans for the Textile, Clothing and Footwear and auto industries were “not negotiable” under FTA discussions with China.

Analysys International Says China’s Online Recruitment Market Reached RMB 160.9 Million in Q2 2006

BEIJING, Aug. 25 /Xinhua-PRNewswire/ — Analysys International, a leading Internet based provider of business information about technology, media and telecom (TMT) industries in China, says in its recently released report ”China Online Recruitment Market Quarterly Tracker Q2 2006”, that China’s online recruitment market reached RMB 160.9 million in the second quarter of 2006, increasing 8.44% quarter over quarter.

According to the report, in the second quarter of 2006, online recruitment revenues from nationwide recruitment websites accounted for 76.4% of the total online recruitment market in China, and revenues from provincial websites accounted for 19.3% of the total market.

As the entire market size expands, online recruitment service providers began to emphasize on mobile Internet applications and provided SMS services. China’s rapid growing working population brings huge development potential for online recruitment market. Overseas venture capitals are also giving attention to this market.

Analysys International says those vendors who can provide individualized services will be able to take the lead in charging service fees from users. More and more online recruitment websites have strengthened local market development.

Online service and offline promotion have become a major profit pattern of online recruitment business. As online recruitment industry develops, the market will gradually be segmented. Industry-based specialized services will be more and more favoured by users.

This subject is further discussed in Analysys International’s research report ”China Online Recruitment Market Quarterly Tracker Q2 2006”. For more information, please check the website: http://english.analysys.com.cn/ .

CareerBuilder.com Partners With 51job to Expand Into China

CHICAGO, Aug. 23 /PRNewswire/ — CareerBuilder.com, the U.S.’s largest online job site with more than 23 million unique visitors* and over 1.5 million jobs, announced it is adding another partner, 51job, Inc., to its international network to bring more recruitment resources to employers and job seekers. 51job is China’s leading human resource services provider and operates http://www.51job.com/ , the Web site with the most registered members, the largest resume database and the highest daily traffic in China.

Under the exclusive agreement, CareerBuilder.com and 51job will have links to each other on their sites as well as sell job postings and access to their resume databases. The alliance will provide job seekers in both countries instant access to a multitude of new job opportunities in virtually every industry.

“The recruitment landscape has changed dramatically; employers now need to have access to candidates in multiple countries,” said Farhan Yasin, President of the International Group at CareerBuilder.com. “Partnering with 51job will not only introduce CareerBuilder.com clients to China’s most influential recruitment site and vice versa, it will allow CareerBuilder.com access to the fast-growing Chinese recruitment market.”

“We are delighted to collaborate with areerBuilder.com in the U.S. and Canada,” said Rick Yan, President and Chief Executive Officer of 51job, Inc. “We believe this alliance will allow both companies’ clients access to millions of potential candidates.”

*comScore Media Metrix, May 2006 About 51job

51job, Inc. is a leading provider of integrated human resource services in China with a strong focus on recruitment related services. Offering a broad array of products and services, 51job connects millions of job seekers with employment opportunities and streamlines the recruitment process and human resource administration for tens of thousands of companies in China. Through print advertisements in 51job Weekly and online recruitment services at http://www.51job.com/ , both domestic Chinese employers and multinational companies alike are able to attract, identify and recruit new employees. 51job also provides executive search services and a number of other value-added human resource services, including training, business process outsourcing and salary surveys. 51job’s nationwide office network in China spans 25 cities operating 23 local editions of 51job Weekly and Hong Kong.

About CareerBuilder.com

CareerBuilder.com is the nation’s largest online job site with more than 23 million unique visitors and over 1.5 million jobs. Owned by Gannett Co., Inc. , Tribune Company , and The McClatchy Company , the company offers a vast online and print network to help job seekers connect with employers. CareerBuilder.com powers the career centers for more than 900 partners that reach national, local, industry and niche audiences. These include more than 150 newspapers and leading portals such as America Online and MSN. More than 250,000 employers take advantage of CareerBuilder.com’s easy job postings, 18 million-plus resumes, Diversity Channel and more. Millions of job seekers visit the site every month to search for opportunities by industry, location, company and job type, sign up for automatic email job alerts, and get advice on job hunting and career management. For more information about CareerBuilder.com products and services, visit http://www.careerbuilder.com/ .

U.S. staffing companies in China see chance for profits

NEW YORK, Aug 27 (Reuters) – China may have plenty of man power, but it could also use some help from Manpower.

U.S. staffing company, Manpower Inc. , is one of a number of business recruiters putting emphasis on the world’s most populous country, where a rapidly developing economy is driving the demand for engineers, finance professionals and technology specialists.

China’s growth rates of about 10 percent per year, which already makes it the world’s No. 4 economy, pushes companies to develop leaders at a faster pace than most other countries.

A McKinsey & Co. study estimates that, within five years, China will need 75,000 executives who have either Western technical skills or language ability — ideally, both. Only about 5,000 are in the work force now.

“The challenge is not in finding 500 or 1,000 people to man the factory. The challenge is in finding leadership skills and functional management skills,” said Iain Herbertson, president of Asia-Pacific for Manpower, which has 350 consultants in 11 Chinese cities. About half its contracts are for information technology workers.

For now, the numbers are relatively modest. Of Manpower’s $4.4 billion in second-quarter revenue, the “other” segment — which includes China, Japan and Australia, as well as Mexico — reported sales of $577 million. Its operating profit of $15 million was about 9 percent of Manpower’s quarterly total. ADVERTISEMENT

But the segment is among the company’s fastest growing. Within three to five years, Manpower will have a staff of 1,000 to 1,600 in mainland China.

New rules this month allowed foreign companies to own a controlling stake in their local joint ventures if they set up shop in Pudong, the fast-growing financial center in Shanghai.

The move is part of a broader relaxation of rules, which should help draw more companies to China, and will enable Manpower to expand its range of services, Herbertson said.

“Our business is more than doubling every year,” Herbertson said in a telephone interview from Shanghai.

Monster Worldwide , which this year raised its stake in ChinaHR.com to 45 percent, may take majority control of the venture by 2008, though the unit is currently losing about $2 million per quarter.

“We don’t expect it to be (profitable) because we are at the beginning of the beginning,” said Marcel Legrand, Monster’s senior vice president of strategy and corporate development. “Profit is not of great interest to us in that particular market — it’s about an investment.”

ChinaHR has about 600 staff and 4 million resumes on file, but those numbers will grow as more Chinese go online, Legrand said.

Monster, parent of the world’s largest recruitment Web site, followed customers like Procter & Gamble , L’Oreal , and Hewlett-Packard to China, which fits with a goal for international operations to account for more than half of its revenue by next year.

That global expertise, including serving multinationals in other markets, is what differentiates companies like Manpower and Monster from their smaller competitors.

“We can bring to China the best of what happens in Brazil, or what happens in Korea, and they can help us export their best practices,” Legrand said.

This week, Monster hired a former Nike Inc. executive, Tony Balfour, to head its Asia-Pacific operations.

He will have competition.

Rival job site Careerbuilder.com on Wednesday said it was entering the Chinese market in an exclusive deal with human resources company 51job Inc. , to link to each others’ sites and sell job postings and access to their resume databases.

At executive recruiter Heidrick & Struggles International Inc. , Asia-Pacific operations had faster revenue growth and highest profit margins than either the United States or Europe. The region accounts for 10 percent of total company sales, and China about a fifth of that.

Since rules are different depending on the services offered, Heidrick owns 90 percent of its Chinese joint venture, said Kevin Kelly, who heads Heidrick’s European and Asian operations, adding that consumer goods, technology and industrial companies are its main clients.

Financial companies, including investment banks, will need experienced staff starting in 2008, when new rules take effect under China’s commitment to the World Trade Organization.

Heidrick’s China operations are expected to double within three years, and the company is recruiting Chinese-speakers in the United States and Europe for positions there, Kelly said.

“European and U.S. markets are more mature, so everyone sees China’s huge potential for developing or expanding their businesses,” Kelly said.

Labour Law in China – Where are we now?

21/08/2006
By Frank Mulligan, Talent Software

The labor law in China is about to be changed radically. The current law has been in operation for many years but it was created many years ago and necessarily has weaknesses.

Setting out the basis of the current law, I thought, might be a good way to build a base for comparison with the expected changes in the new law.

So here is a quick summmary of where we are now. It is meant as a quick refresher and should not be taken as legal advice.

* Employer and employees need to enter into a written employment contract. However, an oral contract is also enforceable.

* Contracts can apply to a fixed period, an open period, or a specific project.

* There can be a trial period of no more than six months during which time the employer can terminate the employment contract.

* The law allows for a clause requiring employees to keep business information confidential.

* Employers can terminate on 30 days notice, if the employee is not able to do his work due to illness or injury but if he is still being treated this does not apply.

* Termination can be carried out if the employee is not suitable for the work he is doing. This decision must be made after training or alternative work has been given.

* The contract becomes unenforceable because a ’major situation’ has changed on which the employment contract mainly relies. This has not been defined.

* Employees should give 30 days notice except when they are are in the trial period or the employer does not satisfy his end of the contract.

* Redundancy is a vague area that allows an employer to dismiss an employee if the company is about to go bankrupt. Payments to employees equate to one month’s pay for every year with the company.

* The work week is an 8-hour day with no more than 44 hours per week and at least one day off per week, in practice always 2.

* Paid leave is mandatory but depends on local regulations. There is a 90 days maternity leave provision.

* Disciplinary action has a definite path. First an oral warning, then a written warning and finally, dismissal. If this is not followed the dismissal is invalid.

* If the breaches of discipline is very serious instant dismissal is available.

So we can easily see that the basic labor laws in China are not so complicated and many areas are sufficiently vague as to require a new definition.

The current regulations are under review and the government has invited submissions from concerned parties. The new contract law is likely to differ considerably from the current law in terms of details and provisions. The object is to make it fairer and clearer for all parties, and to underline the rights of workers in a market that is considerably different from the one that pertained when the original law was written.

Next week we can make a comparison with what is expected in the new law.