Category Announcements

Ping An Insurance Slammed by Fortis’ Crisis, Exec Salaries

As the global financial fiasco bubbles along, China’s Ping An, its second largest insurance company, has found itself in hot water indeed.

Six months ago Ping An invested big in Fortis, a Belgium-based banking and insurance provider. Fortis now looks to be doing a Bear Stearns and that investment may be gone. Earlier this year, Ping An’s attempted fundraising stock issue worth 160 billion yuan caused a crash on the A-share market. And lately news of the salaries of Ping An executives has investors and the public up in arms.?

On the evening of Sept. 26, China Ping An Insurance (Group) Company, Ltd. (Ping An), announced its investment losses for the drop in Fortis’ share price had reached 10.524 billion yuan.

Ping An announced that based on international capital markets and the stock price volatility of Fortis, it will decide soon whether to make provision for asset impairment in its third quarter financial report, at the same time it will reflect market value losses in its income statement.

The notice said that regardless of any provision for impairment, the company’s capital and solvency remain adequate.

According to a conservative estimate, the provision might amount to as much as 5 billion yuan based on 30% ratio for provision. Ping An’s net profit in the first half was 7.102 billion yuan.

At the same time, Ping An stated that neither it nor its subsidiaries have risk exposure to Lehman Brothers, American International Group (AIG), Merrill Lynch, Bear Stearns, Fannie Mae, Freddie Mac or Washington Mutual in the US.

Last November, Ping An invested 1.81 billion euros in the purchase of 4.18% of the shares of Fortis on the secondary market, making Ping An its largest single shareholder. Ping An has gradually increased share holdings to 4.99%, the upper limit agreed on by two sides. This is the Chinese insurance industry’s biggest overseas investment.

On March 19 this year, the two companies separately announced that they will establish a global asset management partnership. Ping An is slated spend 2.15 billion euros (about 24.02 billion yuan) to buy 50% of the shares of Fortis Investment Management, a Fortis subsidiary conducting global asset management business. The deal has not yet been granted regulatory approval, according to Bloomberg Press.

November last year saw Fortis shares selling for around 17 euros, while the latest closing price was 5.20 euros per share, a fall of 21% over the same day. The bank, which is highly important to the regional economy, is on the edge of collapse as seized-up credit markets have made it extremely difficult for it to finance its operations. The governments of Belgium, Luxembourg and the Netherlands are scrambling to shore it up.

On September 26, Fortis Group announced it will replace the current CEO Herman Verwilst with 52-year-old Filip Dierckx. Herman Verwilst took the position after the sudden departure of the former CEO.

Fortis’ second quarter financial statement showed that net profit during that period was 830 million euros, down 49% from 1.62 billion euros netted second quarter a year ago.

In July this year, as Fortis shares fell below 10 dollars, institutions begun selling Ping An shares.

In addition to its floundering investment in Fortis, Ping An caused a huge stir this year among the public and investors with its pay-outs. Pre-tax salaries in 2007 of three directors and senior executives topped 40 million yuan. The pre-tax salary of Ma Mingzhe, president and CEO, alone was 66.161 million yuan (almost $10 million), equivalent to 181,200 per day, the highest of any senior executive of an A-share listed company.
Particular resentment over Ma’s compensation may well be related to two things: first Ping An’s try at launching of a 160 billion yuan refinancing plan on January 21 this year was one of the triggers of the subsequent and continuous A-share slide; and second, Ping An’s share price has fallen from last October’s high of 149.28 yuan to its current lowest price of 48.30 yuan, a fall of 67.64%, a source of great pain for Ping An A-share holders. Against this backdrop, Ma’s 66.16 million yuan a year is conspicuous, and investors and the public see cause to be indignant.

On the last trading day before National Day, Ping An closed at 33.27 yuan on the news of Fortis Group, and fell 8.25% at closing, only one step away from its IPO price.

Workers’ rights get new boost

Workers in Guangdong province, under a new regulation, will now have the right to claim compensation for work-related injures or sickness within two years of ceasing employment.

Zhang Xiang, a publicity official of the provincial labor and security department, said yesterday the introduction of the new regulation “is partly due an illness suffered by a woman worker in Shunde district, Foshan city”.

The worker, Ye Biqiong, was employed by a packaging factory in Foshan in 1993.

Ye’s employer purchased insurance against injury for her in 2000.

Ye quit her job in 2006 because of illness.

In 2007, Ye was diagnosed with serious benzene poisoning, which had been certified as being caused by her work at the factory.

Ye and her former employer tried to claim work injury compensation from the social insurance fund bureau of Shunde, but they were turned down.

??The reason being Ye had left the factory before she was diagnosed with the disease.

In May this year, Ye and her former employer brought the bureau to court.

The case drew wide media attention, and the provincial government began to realize that many other people in Guangdong province were in a similar position to Ye, Zhang said.

The director of the Guangdong prevention and treatment center for occupational diseases, Huang Hanlin, the attorney of Ye, Huang Shumei, and a law professor of Sun Yat-sen University, Huang Qiaoyan, also jointly sent a petition letter to the provincial government suggesting that it require the labor and social security department improve its injury compensation regulation.

Under the new regulation a worker who has been diagnosed as having contracted an occupational disease can claim insurance compensation from the labor and social security department even though no longer employed.

The only precondition is that the claim must be made within two years.

The provincial labor and social security department said it released an official announcement on Saturday, and the new regulation would take effect from that day.

“The Shunde branch of the Foshan social insurance fund bureau has accepted Ye’s case and we have withdrawn our lawsuit,” attorney Huang Shumei said.

Spike in US unemployment claims

THE number of Americans filing first-time claims for unemployment benefits rose last week to the highest level since September 2001, as hurricanes kept residents of Texas and Louisiana out of work.

Initial jobless claims increased by 32,000 to 493,000 in the week that ended last Saturday, from 461,000 in the prior week, Bloomberg News reported the United States government as saying yesterday.

Hurricanes Ike and Gustav added 50,000 claims, the department said.

The figures may reinforce concern that consumer spending, which accounts for more than two-thirds of the United States economy, will falter.

Growth is already slowing due to the housing slump and the worst financial crisis since the Great Depression.

“The labor market is clearly in recession,” said Steven Wood, president of California-based Insight Economics LLC.

The number of people continuing to collect jobless benefits climbed close to a five-year high of 3.542 million in the week ending on September 13, from 3.479 million in the prior week.

Taiwan to mainland job boat is still afloat

Last year, Phoebe Sun began to feel that her native Taiwan was too small for her to develop her career as an advertising executive.

She had been working in Taipei since graduating from business school in 2001 and wanted to try somewhere new.

After going to mainland China for the first time last summer, the 30-year-old decided she wanted to work there.

So she applied for a job in Beijing, was hired and moved to the city last December, thus joining the growing number of Taiwanese who go to the mainland in search of better career prospects.

“The Chinese market is huge and full of opportunities. I was hoping to gain some experience that I would not be able to get in Taipei,” says Ms Sun.

China has long been a popular place for Taiwanese to set up business because of its proximity and low cost-base. More than 1m Taiwanese now live in mainland China, according to estimates by Hung Hxi-yao, deputy secretary general of the Association of Taiwan Investment Enterprises on the Mainland (ATIEM).

A number of Taiwanese companies, in sectors such as manufacturing and semiconductors, also have transferred their operations from the island state to China, where they can save on costs and develop their businesses on a bigger scale.

Some companies in China, meanwhile, like to hire Taiwanese because they speak the same language and are culturally very similar.

“Taiwan was once ruled by the Japanese, who have very high loyalty to their companies and respect seniority. We have learnt these qualities from them and they are what many Chinese employers look for,” says Alex Hsu, general manager of MGR Search & Selection (Pasona Group), a Taipei-based recruitment firm.

For multinational companies in China, which usually have top-level executives relocated from other countries and large numbers of mainland graduates for junior posts, Taiwanese employees can fill a wide gap at the middle management level.

Taiwan is the biggest source of foreign workers for Chinese employers, according to a 2008 survey by Manpower, the international employment services company.

“One of our surveys shows that the top three kinds of job in which foreign talent is most needed in China are senior executives, middle management and engineers. Taiwan has them all. It’s simply a question of supply and demand,” says Lucille Wu, managing director of Manpower Greater China.

Against a backdrop of warming relations between Beijing and Taipei, ATIEM’s Mr Hung expects the mainland’s population of Taiwanese expatriates to reach 1.5m by the end of the year.

Since Ma Ying-jeou became Taiwan’s president in May, his administration has overseen the resumption of direct air links with China, partly removed restrictions on Taiwanese companies’ investments in China, and liberalised cross-Strait investments.

“Taiwan and China are becoming closer and closer since Mr Ma took over. A lot of Taiwanese feel they are Chinese too,” says Beijing-based Mr Hung. “With China being such an important economy, it’s only natural for them to want to work here.”

According to a recent survey by 104 Job Bank, a Taiwanese headhunting agency, 45 per cent of jobseekers in Taiwan are interested in working in China. Nearly 70 per cent people say they are attracted by the potential of China’s economy, which expanded 10.4 per cent in the first half of 2008.

Economic growth in Taiwan, meanwhile, is less than 5 per cent, which contributes to a subdued job market in the island state.

Although higher salary is not one of the factors cited in the survey, some people, especially those who work for multinational companies, do get paid more in China. MGR’s Mr Hsu says a human resources manager who works for a US company in China could be paid one-third more than their counterpart in Taipei.

“Increasingly, many Taiwanese are being considered local hires in China. Many don’t get expat packages any more” says Mr Hsu.

To make themselves even more attractive to Chinese companies, Taiwanese employees sometimes ask for lower salaries than other workers from the region, who often pay lower employment taxes at home. Income tax rates in Hong Kong and Singapore, for example, are up to 17 per cent and 20 per cent respectively, compared with 40 per cent in Taiwan and 45 per cent in mainland China.

“We find that Taiwanese expats do not request full expat packages and do not need to be tax-equalized, as opposed to Hong Kong and Singaporean candidates, who obviously enjoy much lower tax rates,” says Andrew Chang, associate director at Michael Page, the recruitment firm, in Beijing.

Meanwhile, just as a larger numbers of Taiwanese and other foreign workers are moving to China, the country has also been nurturing its own talent.

But this does not mean that it is too late for those Taiwanese who want to try their luck on the mainland.

“Supply is growing but has not yet met demand. China still needs a lot of Taiwanese. It is never too late”, says Ms Wu.

Claims Fall As Firms Slow Pace of Job Cuts

INITIAL jobless claims in the United States fell for a third straight week, a sign companies may be slowing the pace of job cuts.

The number of Americans filing first-time claims for unemployment benefits decreased by 10,000 to 425,000 in the week ended last Saturday, from a revised 435,000 the prior week. The number of people staying on rolls rose to 3.423 million, the highest since November 2003.

Companies are trimming staff and freezing hiring plans as demand softens, forcing workers to stay on government assistance. Rising unemployment heightens job-security concerns and contributes to a slowdown in consumer spending.

“The job situation still looks bleak to many,” Joel Naroff, president of Naroff Economic Advisors Inc in Pennsylvania, said before the report. “Falling home prices and job losses are still hanging over consumer spending, and it is unlikely to change in the near term.”

Economists had forecast claims would fall to 425,000 from a previously reported 432,000 in the prior week, according to the median of 41 projections in a Bloomberg News survey. The four-week moving average of initial claims, a less volatile measure than the weekly figure, dropped to 440,250 from 446,250, the report showed.

So far this year, weekly claims have averaged 375,400, compared with 321,000 for all of 2007.

The jump in claims that began in mid-July is due to the extension of jobless benefits under the spending bill signed by President George W. Bush in June.

Official:Post-Olympic employment to remain stable

Growth in employment should stay stable after the Olympics. This is according to the Vice Minister of Labor and Social Security, who made the announcement on Friday.

Hu Xiaoyi says close to 10 million more people have been employed every year in urban areas over the last few years, with the figure rising to 12 million last year. Hu Xiaoyi also says the Olympics has promoted industrial development thus far, but that any boost from the Games will only have a temporary effect. He stressed that development in the employment sector should be judged in the context of the overall economic situation.

For example, wild fluctuations in the global economy has cut down on job-creation in some industries. But, even so, figures show new jobs for up to 6.4 million people in urban areas for the first half of the year. That’s 64 percent of the projected 10 million for the whole of 2008.

Recruiter’s takeover rejection hits stocks

SHARES in Michael Page International Plc, the United Kingdom’s second-biggest recruitment company, fell the most in eight months in London trading yesterday.

The dive came after Michael Page said it had rejected a 1.3-billion-pound (US$2.4 billion) takeover from Adecco SA and ended talks, Bloomberg News reported.

Michael Page fell as much as 8.4 percent, after turning down the Swiss firm’s offer of about 400 pence a share.

The proposal “materially undervalued” the company and the structure of the deal was “unattractive,” Michael Page said yesterday.

“People believe that the chance of an Adecco acquisition of Michael Page going through has diminished,” said Julian Cater, an analyst at Collins Stewart.

A takeover of Michael Page would have given Adecco a specialist recruiter with expanding operations in the Far East and central Europe.

Michael Page traded down 21.25 pence at 313.75 pence as of 11:46am yesterday. Adecco shares rose 0.1 percent to 50.7 Swiss francs (US$46.20) in Zurich trading yesterday.

Tackling youth unemployment

Quoting a report by the National Bureau of Statistics last month, the Minister of Youth Development, Akinlabi Olasunkanmi, said more that 80 per cent of Nigerian youths are jobless. The minister further disclosed that 10 per cent of the 20 per cent that are on paid jobs are underemployed. The report, he said, claims that only about 10 per cent of Nigerian university and other tertiary institution graduates get paid job yearly.

Olasunkanmi, who identified the implications of this dreadful development as prostitution, cult activities, armed robbery, drug and child trafficking and hostage-taking, said as a panacea to the problem, his ministry had initiated the entrepreneurship scheme to create jobs for the youths.

While the revelations are a mere confirmation of the nation’s situation and worries, the minister’s solution is weak and inappropriate.

It is common knowledge that the country’s artisans have been forced to abandon their trades to become Okada riders as a result of the chaos in the power sector. It is therefore strange that the minister’s solution is to train entrepreneurs when the business climate is still hostile to all forms of wealth creation. All such direct government interventions in job creation have never worked.

The problem of unemployment is largely caused by a comatose power sector. Prohibitive cost of doing business occasioned by decrepit infrastructure and unstable policy environment has led to the collapse of many small and medium scale businesses, thereby rendering the youths jobless. The shrinking real sector is also at the root of the mass exodus of Nigerian youths in search of greener pasture in other lands.

Unfortunately, some of them, in their desperate search for jobs outside the nation’s shores, have perished while scores of others are serving varying jail terms all over the world. Recently, scores of Nigerian youths reportedly perished off the coast of Spain. The rising crime rate in the country is also a direct consequence of mass unemployment.

The present administration should avoid voting huge sums of money for poverty alleviation schemes or skill training programmes. Such funds have always gone into wrong pockets. The N10bn voted by the Obasanjo administration in 2000 to prosecute a Poverty Alleviation Programme was frittered. The unemployment situation is where it is today because past employment schemes by government failed dismally.

The singular role of government in employment generation is to create a conducive environment for the private sector to flourish. To foster a business-friendly climate, the power sector should be fixed. Millions of barbers, welders, cold drink sellers and other small scale business operators will go back to work as soon as there is a stable supply of electricity. The economy will automatically attract human and economic capital from all over the world when the power supply crisis is solved. It is generally reckoned that fixing the power sector may reduce unemployment by up to 50 per cent.

To rehabilitate the nation’s infrastructure, the government at all levels should embark on different public-private sector partnership schemes. To fix the rail system, for instance, the various laws that put the rail system at the behest of the Federal Government should be repealed.

Since mass unemployment is a direct consequence of the nation’s undue reliance on imports, all government policies should now be targeted at creating an export-oriented economy. China, India and many Asian nations have created millions of jobs at home by producing goods and services which are exported at globally competitive rates.

China Mobile’s upgrade bid

BEIJING, June 18 — China Mobile has invested heavily in upgrading networks to consolidate its leading position in both 2G and 3G eras, Shanghai Daily learned yesterday.

The world’s biggest mobile carriers by subscribers has signed two IT companies to upgrade the networks, including its trial 3G network, during Chinese Vice Premier Wang Qishan’s visit to the United States for the economic summit.

Alcatel-Lucent, the world’s biggest telecom equipment maker, said it had signed a 1 billion U.S. dollars framework agreement for 2008 with China Mobile to provide mobile communication equipment and services.

The agreement was secured through Alcatel-Lucent’s flagship company in China, Alcatel Shanghai Bell.

“We are delighted to be selected to continue providing solutions and services to China Mobile. China Mobile is one of our company’s main strategic cooperation partners,” Olivia Qiu, Alcatel Shanghai Bell’s president, said.

The agreement signing ceremony was witnessed by Wang in Washington.

Under the frame agreement, Alcatel-Lucent will provide China Mobile with mobile core and wireless network solutions, TD-SCDMA equipment, applications, transmission and IP router equipment and the related services.

Meanwhile, Sun Microsystems Inc also announced a framework agreement with China Mobile on IT products and services projects in 2008. Sun will provide China Mobile with IT products and relevant services at an estimated price of some 34.8 million dollars.

Futurestep Opens Global Recruiting Research Center in Shanghai

New Facility Addresses Growing Demand for Futurestep’s Strategic Recruitment Process Outsourcing (RPO) Services in China and the Asia Pacific Region HOUSTON, May 27

HOUSTON, May 27 /PRNewswire/ — Futurestep, a Korn/Ferry Company

(NYSE: KFY), today announced the opening of its newest research center in Shanghai, China. For Futurestep’s global and Asia Pacific RPO clients, the center will provide crucial services, including research, name generation,
sourcing and screening, market mapping, competitive intelligence, and in-time outsourced recruitment administration.

The opening will provide an important resource for addressing the tremendous growth in demand in China and across Asia for Futurestep’s Strategic RPO services, as well as its complete portfolio of Talent Acquisition solutions. While Futurestep has talent acquisition research and support resources around the world, the opening of the Shanghai facility also represents a new branding approach for the company’s research centers.

“The global research center concept is a key part of our strategy for competing in the global RPO market,” said Futurestep CEO Robert McNabb. “By providing strategic sourcing support, it enables our RPO teams to expand their
level of service to meet market demands. It is a cost-effective solution that provides a broader reach into passive and active candidate pools, resulting in
improved quality and client satisfaction.”

The Shanghai Global Research Center represents Futurestep’s commitment to growing its presence as a truly global provider of Strategic RPO services. In addition to its current lineup of global locations and support resources on
four continents, Futurestep plans to expand its reach with multiple new global research centers opening in key markets over the next two years.

To learn more about Futurestep, Strategic RPO, and its complete array of Strategic Talent Acquisition services, visit futurestep.com.

About Korn/Ferry International

Korn/Ferry International, with more than 80 offices in 39 countries, is a premier global provider of talent management solutions. Based in Los Angeles,
the firm delivers an array of solutions that help clients to identify, deploy, develop, retain and reward their talent. For more information on the Korn/Ferry International family of companies, visit kornferry.com.

About Futurestep

Futurestep, a Korn/Ferry Company, is the industry leader in strategic talent acquisition, offering fully customized, flexible solutions to help organizations meet specific workforce needs. Our full-spectrum portfolio of
services includes: Strategic Recruitment Process Outsourcing (RPO), Project-Based Recruitment, Mid-Level Recruitment, Interim Professionals and Consulting Services. With locations on four continents and a record of success
in securing top talent around the world, Futurestep provides the experience and global reach to identify, attract and retain the people who drive business
success. To learn more, visit futurestep.com.

SOURCE Futurestep