Archives April 2009

Wal-Mart rejigs jobs in China

Wal-Mart, the world’s largest retailer, yesterday launched a job optimization and regrouping program to reduce labor costs in China.

Under the program, the company plans to relocate some of the mid-management staff at its stores to similar posts in the new stores that are being opened in China.

The company intends to start this by shifting five to six mid-management posts from each of its present stores, said Leally Huang, public relations manager, Wal-Mart China.

Wal-Mart had 144 stores across China by the end of 2008, and plans to open 23 new stores by the end of the first-quarter this year.

“Those who are unsatisfied with the program and want to leave would be given adequate compensation, but we will try and see if we can retain them,” said Huang.

The company’s decision come close on the heels of a report in National Business Daily that Wal-Mart was implementing a lay-off program in China, its largest since entry in 1996.

Around 10,000 staff including 2,500-odd mid-management personnel and many others at different lower levels from Wal-Mart’s 144 stores were reportedly demoted or asked to leave with compensation.

Huang, however, has denied the report. “The program is not about job cuts. It is a corporate interior personnel reshuffle that has been necessitated due to the decline in our corporate business,” she said.

Hurt by the economic slowdown especially in the US, Wal-Mart’s global sales revenue dropped by 0.1 percent in the last five weeks of 2008, which according to the company, is far below its expectations.

The company, however, said markets like China, Brazil and Mexico are still showing robust growth.

Company executives maintained that they are still scouting for new opportunities outside of the US, especially in Asia-Pacific, with China figuring as one of the most prominent locations for growth.

Huang said Wal-Mart’s China business grew in 2008, but refused to disclose details. “Wal-Mart’s China expansion plan has not been deterred,” she said.

In 2008, Wal-Mart opened 19 stores, compared to 30 in 2007.

It is reported that Wal-Mart’s regrouping program has not gone down well with employees from the Guangdong and Hunan provinces turning to the local trade unions for protection.

“They are just special cases, and Wal-Mart will sort them out,” Huang said.

Wu Ruiling, deputy secretary-general of China Chain Store & Franchise Association, said supermarkets are one of the few areas in the retailing sector that has not been negatively affected by the financial crisis.

France-based Carrefour said it will not cut jobs in China, while Wu-Mart, another leading player with 700 stores nationwide, said it plans to recruit around 3,000 to 4,000 this year.

Best Buy: No Plan to Slash Jobs in China

Best Buy China has not gotten a job cut scheme from the headquarters yet, said Ms. Qian, noting that the New York-listed company will continue its expansion in the country in spite of the global economic downturn. By far, the electrical appliances retailer has opened more than 100 stores in China, one of its most critical markets abroad.

Earlier this February, Best Buy unveiled its plan to eliminate as many as 250 jobs at corporate headquarters in the US, part of its efforts to pare costs amid the lingering financial crisis. In addition, the company and its UK partner have decided to put off the opening of their first outlet till 2010, months later than planned.

McDonald’s to step up hiring in China this year

Fast food chain McDonald’s will recruit more than 10,000 people, hike salaries of existing staff and set up training and development programs for employees this year, its country head told China Daily yesterday.

Kenneth Chan, the newly appointed chief executive officer of McDonald’s China, said the chain will open more outlets this year to keep pace with rising business growth.

The company will also incorporate more performance-oriented metrics and raise employee salaries nationwide by at least 6.3 percent, Chan said.

This is Chan’s first public announcement of the company’s strategy for the year after his appointment last month following the exit of Jeffrey Schwartz, the former China chief who bid farewell to McDonald’s after working with the chain for 40 years.

Chan’s appointment comes at a time when the financial crisis has spared very few countries, including China. And, sustaining the growth momentum of McDonald’s under Schwartz will be a key challenge for Chan when Chinese consumers are actually tightening their belts.

“Actually, I am not concerned about China, as I am confident about the long-term potential of the market,” Chan said. “This year will mark the beginning of the company’s most rapid expansion in China.”

Last year, McDonald’s said it planned to add 175 new outlets in 2009 to the current 1,000 it has in China, the biggest addition ever. In the interview, Chan refused to disclose new outlet numbers for the year.

In 2008, the head count at McDonald’s China outlets grew by 8.9 percent, double that of the United States and the European Union, making China its fastest growing market worldwide.

Susanna Li, vice-president of human resources at McDonald’s China, said besides recruiting more people, it will also invest in training and developing Chinese talent.

“McDonald’s is not only a company that sells hamburgers, but also a talent-oriented enterprise. McDonald’s has been trying to create training opportunities for different levels of staff,” she said.

KFC is the largest fast food chain in China, with more than 2,300 stores in 450 cities. Company executives told China Daily last December that KFC would open more restaurants in 2009 than “the previous year’s average of 400” new food joints.

Sources said KFC’s annual recruitment figure for the year will also exceed 10,000 people.

McDonald’s set up its Hamburger University in Hong Kong in 2000, also its seventh worldwide, to train its Chinese staff. The company plans to open another on the Chinese mainland next year.

The company also launched the China Development Leadership Program this year, which aims to develop skills that will help employees find the best location for new outlets.

Salary gap in China widening

Salaries grew slower and pay disparities between various industries rose last year, the National Bureau of Statistics (NBS) said yesterday.

Salary increases for urban employees were down 1.5 percentage points in 2008, with average salary before tax at 29,229 yuan (4,280 U.S. dollars). The survey did not cover private enterprises or individual businesses.

The salary growth is relatively high given the backdrop of a global economic slowdown,” said Su Hainan, director of the wage committee of the China Association of Labor Studies.

“But as people earn more, they more than ever need an improved social security system so that they can spend more to expand domestic consumption.”

Su forecast pay increases of 13 percent this year while a report by the Hong Kong based HR Business Solutions predicted salary rises of around 11 percent on the mainland.

The NBS report also showed that the gap between eastern and western/central regions is narrowing, which Su described as a “good sign”.

This is partly because export-oriented enterprises in the eastern and coastal regions were the hardest hit in the financial crisis, leading to millions of layoffs.

The report also found the salary divide between the highest and lowest paid industries has widened, with the former 10 times more than the latter.

Salaries in the securities sector were 172,123 yuan, 5.9 times the average level. Employees in timber processing and wood and bamboo products were the lowest paid, with a salary of 15,663 yuan.

China publishes national human rights action plan

The Chinese government published its first working plan on human rights protection Monday, pledging to further protect and improve the country’s human rights conditions in an all-round way.

The National Human Rights Action Plan of China (2009-2010), issued by the Information Office of the State Council, or Cabinet, highlighted various human rights that would be promoted and protected in less than two years, from people’s right to work, to the rights of detainees and the disabled.

Death penalty will be “strictly controlled and prudently applied,” “impartial and fair trials” of litigants will be guaranteed, and the people will enjoy more rights to be informed and to be heard, the government promised.

More job opportunities will be created, per capita income will be increased, social security network will be broadened, and health care and education will become more accessible and affordable in order to guarantee the people’s economic, social and cultural rights.

The document also detailed how the government will do to “guarantee human rights in the reconstruction of areas hit by the devastating earthquake in Wenchuan, Sichuan Province” on May 12, 2008, in which about 87,000 people were confirmed dead or missing, more than 370,000 were injured, and at least 15 million people were displaced.

“The realization of human rights in the broadest sense has been a long-cherished ideal of mankind and also a long-pursued goal of the Chinese government and people,” said the document.

But the government admitted that “China has a long road ahead in its efforts to improve its human rights situation,” though unremitting efforts have been made to promote and safeguard human rights since the founding of the People’s Republic of China in 1949, which “fundamentally” changed the fate of the Chinese people.

The government said the plan was framed in response to the United Nations’ proposal, on the basis of past experience, “in the light of practicality and China’s reality,” and by following the essentials of the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights.

Insurers and banks to cut execs’ pay

CHINA said yesterday that executives of state-owned banks and insurers are paid too much and ordered those firms to cut their salaries to promote income fairness amid an economic slump that has wiped out millions of jobs.

Executive pay for 2008 at financial institutions, which many are still calculating, must be cut to 90 percent of 2007 levels, with deeper reductions at those experiencing financial trouble, the Finance Ministry said.

“Individual financial enterprises pay top executives too much. The gap between them and average workers is clearly expanding,” the ministry said in a statement on its Website. It said pay cuts were needed to “further equalize distribution of incomes.”

The announcement gave no details on how many levels of management would be affected or how authorities will decide which institutions require bigger cuts.

All of China’s major banks, insurers, stock brokerages and other financial institutions are government-owned. But many have Hong Kong subsidiaries that handle a portion of their operations and function as private companies, and it was unclear how executives linked to those entities might be affected.

The ministry praised executives who have already cut their pay, especially at institutions that are financially healthy.

Chinese executive pay is modest by Western standards but many times that of ordinary workers.

Yang Chao, chairman and chief executive of China’s biggest insurer, China Life Insurance Co, was paid 1.7 million yuan (US$248,000) last year. That was a reduction from Yang’s 2 million yuan in 2007 salary and bonuses.

China’s second-largest insurer, Ping An Insurance Co of China Ltd, has been the only such institution to suffer a major loss because of the global crisis. It said yesterday that its 2008 profit fell 99 percent from 2007 because of losses on its stake in European bank Fortis NV, which ran into trouble with credit derivatives.

Ping An’s chairman, Ma Mingzhe, announced in February he would give up his 2008 salary because of the Fortis loss.

China’s state-owned asset regulator earlier called for lower payments to senior executives at the 141 centrally administered state-owned enterprises.

The growth of senior executives’ salaries must be lower than profit growth and reflect performance, Shao Ning, deputy director of the State-owned Assets Supervision and Administration Commission, said last week.

Among the SOEs that have cut back, Wuhan Iron and Steel (Group) Co said it will reduce executive salaries by 50 percent and other employee salaries by as much as 20 percent. Aluminum Corp of China plans to cut executive pay by 50 percent and trim compensation for other staff by 15 percent.

The average gross salary for China’s urban residents rose 17.2 percent in 2008, 1.5 percentage points slower than in 2007, the National Bureau of Statistics said yesterday. The average salary for city dwellers amounted to 29,229 yuan last year, up 4,297 yuan from 2007.

The average salary in the securities sector – 172,123 yuan – was the highest among all industries last year.