Archives 2009

Biz moves

Hand joins LaSalle

David Hand has been promoted as investment head for China in Jones Lang LaSalle after seven years as managing director of Jones Lang LaSalle Beijing and head of the China Retail Business. Hand said he expects to leverage the strong relations he and the Pan-China Investments teams have had with local and international developers and investors to facilitate transactions between these groups in China.

Sang is Lafarge CEO

French cement and building materials manufacturer Lafarge SA has appointed Sang Kang as chief executive officer in place of Cyrille Ragoucy, who was previously in charge of its business expansion in China. Ragoucy is returning to the company’s French headquarters where he will take up a new position. Sang jointed Lafarge in 2003 after working for several years with Boston Consulting Group as partner and board director.

Ford new Starwood VP

Starwood Asia Pacific Hotels and Resorts has appointed Stephen Ford as vice-president and area managing director for South China, and general manager of Sheraton Sanya Resort. Ford has more than 40 years of management and work experience in the hospitality industry. Prior to this he was Starwood’s regional vice-president for India, Bangladesh, and Nepal. Ford joined Starwood in 2001 as general manager of the Westin Bund Center, Shanghai.

WuXi CFO steps down

WuXi PharmaTech has said Benson Tsang, chief financial officer, is leaving the company for personal reasons at the end of this month. Edward Hu, chief operating officer, will act as acting CFO until a replacement is found. Tsang joined WuXi PharmaTech in 2006 as CFO.

The company’s board has formed a search committee to recruit a new CFO. Tsang has agreed to provide transition services and to assist in recruiting his successor.

Unicom appoints Lu

China Unicom has appointed Lu Yimin as president, while Chang Xiaobing will continue to act as chairman and CEO, effective Feb 13. Zuo Xunsheng, Li Jianguo, Pei Aihua, Zhao Jidong, Li Fushen, Li Gang, Zhang Jun’an and Jiang Zhengxin were appointed senior vice-presidents of the company. Lu Yimin and Zuo Xunsheng remain as company executive directors.

The appointment signals the closing of the Unicom-Netcom merger.

McQuillan named GM

British Airways has appointed Kevin McQuillan as its regional general manager for the Far East with effect from March 2. Based in Hong Kong, McQuillan will be responsible for the airline’s commercial interests on the mainland, Hong Kong, Taiwan, Japan, South Korea, and Philippines.

Dark clouds loom over the horizon for jobs

Multinational companies, which had gone on a hiring spree a couple of years back, have started to slash payrolls and freeze hiring as they struggle to stay afloat in the financial maelstrom sweeping across the globe.

Employees at many multinational firms, the most sought after employers in the past, are being bombarded with news of layoffs globally from their headquarters.

According to a survey by FESCO, a Beijing-based recruitment services provider for multinational companies, nearly 70 percent of the firms it polled have said they would trim their recruitment requirements for this year, while 27 percent said they have already started laying off employees.

FESCO polled 356 of its clients spread across the country and engaged a wide range of industries for the survey.

Over 44 percent of the HR managers surveyed admitted that their companies have slashed jobs, while 25 percent of the companies polled said they have plans to cut jobs this year, according to a survey conducted by KingField Management, a Guangzhou-based recruitment and executive search firm.

KingField surveyed 216 companies based in South China’s Pearl River Delta region, half of which are multinational companies like Dupont and Bosch, according to Ren Ge, general manager, China operations, KingField.

Finance, telecommunications and IT industries were the hardest-hit industries, according to both the surveys.

Banks, insurers and asset managers worldwide had announced 325,000 job cuts since August 2007, when the credit crisis began to intensify, according to Thomson Reuters calculations until Feb 12.

The announced job cuts in technology and information technology firms worldwide have added up to 300,000 in late January, TechCrunch’s Layoff Tracker showed on Tuesday.

Some global companies have also begun to downsize staff at their China operations, but most of them are carrying out such plans cautiously, experts said.

According to the KingField survey, of the companies that have already axed jobs, 68 percent have only cut less than 10 percent of their workforce.

“It shows that a majority of the companies are treading cautiously on cutting jobs,” said Zeng Jiangtao, senior recruitment consultant, KingField.

Companies who have cut jobs or are considering such moves can be generally divided into two groups, said experts.

“The first category has firms like Citibank, Motorola, etc. who are actually impacted by the crisis and have no other choice other than to cut jobs to avoid bankruptcy,” said Charles Lee from the Beijing office of Antal International, a UK recruitment company.

“The other section are those who are restructuring operations due to the crisis and have resorted to layoffs as part of this strategy,” Lee said.

According to Zeng, most of the companies are charting layoff plans as a pre-emptive step to ward off recession.

“Many of our clients are unable to sell their products as before and so they are not too keen on investing further in the Chinese market. If they do not invest, we, who are largely reliant on their projects, cannot afford so many overheads. So we have to cut our cost base,” said an employee at a European engineering and construction company, which is slashing jobs.

“No one knows when the crisis will end, so no one exactly knows when the layoffs will cease,” said Antal’s Lee.

He also urged employees planning to change their jobs to think twice before taking the leap.

“Nothing beats a stable job in an economic crisis. Companies are trimming people to replace existing hires with newcomers who do not cost as much. Companies that have got the mandate from their headquarters to hire people would also be permitted to lay off employees,” Lee said.

Plan to cap pay for SOE executives

A draft of a general regulation to cap salaries of high-level executives in State-owned enterprises (SOEs) will be submitted to the State Council for approval soon, an expert said yesterday.

The new regulation, drafted by the Ministry of Human resources and Social Security, also clarifies the system to assess performance and rules for expenditure, Liu Junsheng, a researcher with the ministry, who has participated in the discussion of the draft over the past six months, said.

“The new regulation provides a guideline and legal basis for supervising the salary structure of high-level management of all SOEs,” he said.

The Ministry of Finance earlier this month solicited views on measures to regulate salary management in State-owned financial enterprises, which reportedly plans to set a ceiling of 2.8 million yuan ($411,765) on the annual pretax salary.

“Recent media reports on the fat salary packages of SOE executives have drawn the attention of the central government,” Liu said. “So they have asked related departments to put a limit on the amount.”

The new regulation limits the salary ratio between high-level and low-level executives to 10 to 12, the National Business Daily quoted sources as having said yesterday.

However, Liu said a final decision was yet to be taken. “The current average ratio is 10 to 14.”

According to the National Bureau of Statistics, in the first three quarters of 2008, the average income of SOE employees was 20,576 yuan ($3,026).

The 2006 statistics from the State-owed Assets Supervision and Administration Commission show that the average salary of principals with 149 large SOEs was 531,000 yuan ($78,088).

Liu said the salaries of SOE executives should be controlled “because they are appointed by the government, and not chosen by their market value, and SOEs enjoy more favorable policies and resources than their private counterparts”.

Dong Xian’an, a senior macro-economic analyst with the State-owned Southwest Securities, said the increasing income gap between high-level executives and common employees has affected the social stability, especially amid the global financial crisis.

“This regulation draft has come a little late. The gap has already grown too huge in recent years,” he told China Daily.

“The salaries of high-level executives in SOEs should be made transparent to the public,” he said.

However, industry experts said that a ceiling on salaries might affect the ambitions of some enterprising SOE executives.

“The government should pay attention to the incentive system in order to encourage SOEs to play a bigger role in the Chinese economy,” Ma Guangyuan, a business commentator, was quoted as saying in the Information Times.

Earlier this month, the State-controlled Guotai Jun’an Securities was reported to have a 320-million-yuan salary ($47.06 million) plan in 2008, an average of 1 million yuan ($147,059) for each member of the staff.

231 companies say no to pay cuts

A total of 231 local firms said they will not cut salaries this year, a survey has found.

Of the 308 companies polled by consultancy firm Mercer, 20 percent make consumer goods, 19 percent are hi-tech firms, 17 percent are in machinery and electronics, and the rest span a variety of other industries.

Sixty percent, including Lenovo, P&G, Unilever, Dupont and Wanke Real Estate, are based in major cities.

Just about six firms said they will resort to salary cuts as a means of combating the financial crisis, while 154 said they will offer lower pay rises.

The rest said they have not made a final decision yet.

Liu Jianli, director of salaries and welfare at Lenovo, said: “We don’t have any plans to cut salaries, but there will be limits on pay rises and we will be more cautious in recruiting new people.”

Xu Jun, public affairs manager at Dupont Inc in Shanghai, said it too has no plans to cut salaries.

In another survey, by Kingfield Management, 75 percent of the 216 Pearl River Delta firms polled said they will not lay off staff this year.

Forty percent said they will increase wages but by a lower percentage than last year.

With its high number of export-oriented firms, the Pearl River Delta has felt the full brunt of the financial crisis.

Last year, the central government implemented policies that allow companies to defer contributions to pension funds and make lower employee insurance payments.

Getting a grip on labor

A comprehensive survey of labor to be launched by national statistic authorities this year is badly needed to replace the current unemployment data that covers only urban residents.

As the deepening global financial crisis and domestic economic woes tightens the employment prospects of millions of migrant workers and college graduates alike, the narrowly defined urban-registered unemployment rate can no longer provide the accurate information needed by policy makers.

Though the Chinese economy significantly slowed down later last year, the official unemployment rate released quarterly by the Ministry of Human Resources and Social Security showed only a mild climb from 4.0 percent a year to 4.2 by the end of 2008, with the number of registered jobless urbanities standing at 8.86 million.

Compared with the 11.13 million urban jobs that the country created last year, such a 0.2 percent increase in unemployment did not really deliver a sense of urgency.

It was only when another government survey revealed that 20 million migrant workers lost their jobs before the Chinese lunar new year that the country was awakened to a grave reality.

The Ministry of Human Resources and Social Security recently estimated that the urban unemployment rate could reach 4.6 percent this year, the worst since 1980. But that figure is obviously far from enough to highlight the severity of unemployment pressure.

On one hand, salaries of migrant workers contributed about 40 percent of rural families’ income, so their job losses will make a huge dent in farmers’ income growth.

On the other hand, some 7.1 million university graduates, too, are expected to have a hard time this year as the number of new jobs falls in cities.

The Chinese authorities have urged governments at all levels to make every possible effort to expand employment.

Nevertheless, if they want to come up with adequate policy responses, they first need to have a firm grip on the problem they’re trying to address.

Therefore, statistical officials should do their utmost to ensure the success of the comprehensive survey of the labor force that they will conduct in four municipalities and more than 20 provincial capitals this year before extending it to the whole country in 2010.

Hire graduates without local hukou

In a move to further encourage companies to hire more young people, the State Council has asked every city in China – except four – to drop the permanent residency requirement when hiring non-native college graduates.

In a recent document, the State Council has asked cities, except for Beijing, Shanghai, Tianjin and Chongqing, to lift hukou, or the residency permit restriction so that applicants can move almost anywhere for a job.

The document comes after a job stimulus package was unveiled in early January intended to help college students find jobs amid the economic slowdown.

“The Chinese job market is grim amid the global financial crisis and college graduates are facing huge pressure finding jobs,” it said.

College graduates are a “valuable” human resource, and all local governments and all related departments should give top priority to the employment of college graduates with more innovative measures.”

The document also says that labor-intensive small enterprises can receive up to 2 million yuan ($300,000) in loans if they employ a certain number of registered jobless urban residents.

The major State-owned enterprises and scientific research institutions were also urged to offer more jobs for graduates.

The State Council also encouraged college students to broaden their job search and consider working in grassroots communities, central and western parts of China or SMEs, or start their own business.

The self-employed graduates can get individual small loans of up to 50,000 yuan.

An earlier report by the Chinese Academy of Social Sciences said the unemployment rate among new graduates surpassed 12 percent at the end of 2008, and that 1.5 million were without work.

According to the Ministry of Human Resources and Social Security, 6.1 million fresh college graduates will enter the job market this year.

“The employment of college students should come first in the whole employment stimulus package,” Zheng Gongcheng, the country’s leading social security scholar and senior lawmaker, told China Daily.

He said college students and their families have invested lots of money in education with high expectations for a future career.

“If many college graduates cannot find proper jobs, it is a huge waste of social resources,” Zheng said.

But most fresh job seekers want stimulus policies to be more concrete.

“I am not clear about the measures and I don’t think they have much to do with me,” Xu Baoxin, 22, a new graduate of Southeast University in Nanjing, Jiangsu province, said yesterday.

“They are too vague and the lifting of hukou restrictions may only be helpful for those who want to work in big cities,” Xu said.

Another job seeker, Tang Jianye, said the stimulus policies are a little bit late and they need more employment related services.

“It (the policy) is late but it’s better than nothing,” the graduate from Jiangxi University of Finance and Economics said.

In another step to help graduates find jobs, Beijing municipal government plans to hire college graduates as community assistants, a new position created by the local government, in a bid to encourage them to work at grassroots level.

1 million graduates to get job training

China will launch a graduate trainee program for one million unemployed college graduates in three years, according to a circular issued by the general office of the State Council on Sunday.

The program did not suggest a fixed length or pay scale of the training, but the circular demanded local governments and organizations which provided training to offer basic living subsidies to the trainees.

The government would build training bases for the program with responsible employers, and employers are encouraged to recruit graduate trainees, said the circular.

Besides the trainee program, the government would also enhance technical training for graduates from vocational schools with a “double certificates” program.

According to the program, schools would help the students get vocational qualification certificates when they leave school, in addition to their graduate certificates.

China had about 1.5 million unemployed college graduates by the end of 2008, registering an unemployment rate of 12 percent, the Chinese Academy of Social Sciences said in the Blue Book of China’s Economy (2009) last December.

McDonald’s to open 175 outlets in China, hiring more than 10,000

BEIJING (Xinhua) — McDonald’s China announced on Wednesday an expansion plan to set up 175 new outlets and create more than 10,000 jobs this year on the Chinese Mainland despite global economic downturn.

The expansion was the largest of its kind ever made by McDonald’s across the world.

“The move will bring more opportunities for cooperation to food-related industries in China,” said McDonald’s China CEO Jeffrey Schwartz.

The US-based food chain store group has 50 suppliers in China, with more than 95 percent of its food materials coming from local market.

On the same day, the group announced its decision to launch a 16.5 yuan (about $2.4) discount meal in its Chinese outlets.

“The price is even lower than that of a similar product in this market a decade ago,” said Schwartz.

He added the company’s management of material supply and its increasing presence in China helped cost control and made the big discount possible.

McDonald’s has opened more than 1,050 outlets in China in the past two decades.

Ericsson to hire more in China this year

Telecom giant Ericsson (ERICb.ST) may hire a few hundred more people in China this year, as it plans to shift some overseas operations to the country, a company source said on Tuesday.

Local media had earlier reported that the Swedish firm would axe 150 jobs, or 5 percent of its total workforce in China, as part of its previously announced global cutback of 5,000 employees, in an effort to curb cost.

But a source who works in the company’s human resources department said the firm was likely to hire, instead of firing, people in China this year.

“The technology unit would hire a few hundred staff this year and more people are needed in telecom service unit,” said the source who requested anonymity because of the lack of authorisation to speak to media.

A company spokeswoman in Beijing declined to comment on the hiring plan, but described the local media reports as a “rumour”.

Ericsson and its Chinese partners won about 26 percent of China Unicom’s (0762.HK) 3G network construction orders last month, totalling up to $2.3 billion, according to previous media reports.

Managerial staff still in demand

Chinese firms are continuing to hire managerial staff despite the economic slump, with media professionals and accounts in most demand, an international poll has found.

Recruitment has remained relatively strong in China, with 43 percent of businesses taking on managerial personnel, according to a quarterly survey by Antal International this month.

The figure is expected to fall to 20 percent next quarter but the number of companies letting staff go will also drop, keeping the market stable, the survey said. “The global financial situation has certainly had an effect on the jobs market here, but conditions are still relatively strong,” said Robert Parkinson, who runs Antal’s operations in China.

“Hiring activity is down from the last quarter but at the same time so is the number of companies firing managerial staff,” he said. “It suggests organizations are still looking for new talent but with caution, waiting to see what happens in the coming months.”

The media, particularly for those with IT and Internet technical knowledge, is a strong employment area, with hiring expected to rise to 60 percent in the next quarter and firms laying staff off set to drop by 7 percent.

“The demand for IT and Internet media professionals reflects a demand in distant communication through technical assistance, a result of companies cutting traveling budgets during the economic slowdown,” Parkinson said.

Hiring rates for accountancy firms plunged from 96 percent last quarter to 57 per cent, but sackings will fall from 27 percent to 7 percent next quarter, the survey said.

Automotive companies are expected to fire more people, with a predicted rise from 13 percent to 20 next quarter, while hiring dropped from 86 percent last quarter to 37 and is expected to fall again to 23 percent next quarter.

In banking “hiring has seen a rebound”, says Parkinson. The economic crisis highlighted the importance of managing personal wealth, resulting in a lift in private banking and risk management services, he said.

(China Daily February 9, 2009)