Category Working in China

17 firms are targeted in fund misuse probe

CHINA’S securities watchdog has begun an investigation into 17 mainland-listed companies that allegedly misappropriated 9.2 billion yuan (US$1.15 billion) in corporate funds and failed to return the money, officials said yesterday.

China’s Securities Regulatory Commission had given the firms until the end of 2006 to make good on their debts.

The targeted companies include the Sanjiu Medical & Pharmaceutical Co, China Textile Machinery Co and Hebei Baoshuo Co.

Executives who misappropriated funds in these companies for their own benefit will be prosecuted, a CSRC spokesman said.

Officials working for at least nine of the 17 companies face criminal investigation, the commission said, without identifying the firms.

In all, 36 companies failed to meet the deadline to repay a total 14.6 billion yuan in misappropriated funds. But the other 19 companies have developed plans to recover the money and won’t face further sanctions.

Last year, 402 companies listed on the Shanghai and Shenzhen stock exchanges recovered 33.57 billion yuan that had been misappropriated by their controlling shareholders, authorities said.

The recovery campaign was aimed at improving the quality of the country’s 1,400 listed companies and safeguarding the interests of shareholders.

The misappropriation of large sums by controlling shareholders has long been a major problem afflicting China’s stock markets, officials acknowledged.

“It is a huge obstacle to the sound development of a listed company,” a commission spokesperson said.

As a result, some companies that should have enjoyed good earnings were hampered by cash-flow problems after their funds were siphoned off, the watchdog said.

On October 19, 2005, the State Council approved guidelines drafted by the regulatory commission that required controlling shareholders to return all the money they had misappropriated by the end of 2006.

In October last year, the commission also reiterated that corporate executives who misused funds must make a choice between returning the money or facing legal action.

In a related move, China’s prosecutors on Saturday vowed to intensify their crackdown on corruption, dereliction of duty and major economic crimes, Xinhua news agency reported.

“The prosecutorial organs are improving their efficiency in dealing with major corruption cases and have punished a large number of government officials,” said Jia Chunwang, procurator-general of the Supreme People’s Procuratorate.

In the last two months of the year, China’s prosecutors investigated 32,369 cases involving 38,457 officials who were accused of taking bribes or dereliction of duty. More than 17,440 cases involved large amounts of money, and 2,632 officials above the county-chief level were prosecuted or otherwise punished.

Find work for workers

More emphasis should be attached to the establishment of a long-term employment assistance mechanism, according to a commentary in Workers’ Daily. An excerpt follows:

Employment is the base of people’s livelihood. It is gratifying to see that Northeast China’s Liaoning Province recently carried out an employment relief act to help completely unemployed families.

In early 2005, the Liaoning government decided that there should be at least one person employed for every urban family in need of work. A total of 175,000 people from 143,000 families had new jobs by the end of that year. Another 34,000 families benefited from this project in the first 10 months of 2006. Now a balance has been sustained and the number of “zero-employment families” is zero. A long-term employment relief mechanism has been established. A report in People’s Daily points out that the local government has done a good down-to-earth job.

Various activities have aimed to help ordinary people nationwide in recent years, including many long-term relief mechanisms. Liaoning’s “zero-employment family” relief work is a typical example.

As the reform of enterprises deepens and labor relations adjust, some urban families are facing difficulties. Employment and re-employment have become the biggest issue for them. This is especially true as some laborers age, have no skills, or are in poor health. In some families both husband and wife have lost their jobs. Under such circumstances, it is extremely important to help them to get a job.

When completing the social security system including pension insurance, unemployment insurance and minimum-standard living insurance, governments at all levels should not forget building a long-term mechanism to promote employment. A job is always better than one-time financial relief. It would solve the problem at the root and show the government’s responsibility to concentrate on employment, activate all resources, carry out favorable policies and enable laborers to support themselves legally.

Broker rises from ashes of bankruptcy

DATON Securities Co has resurrected itself from bankruptcy and is searching for talent in its quest to move into the sector’s first tier, industry sources said yesterday.
The Liaoning-based broker, China’s first securities firm to revamp via bankruptcy, is recruiting a general manager and
four deputy general managers, according to people familiar with the situation.

The broker has received several dozen applications and may start interviews with candidates early next year, the sources said.

Daton re-registered recently with 500 million yuan (US$63.9 million) in capital after going bankrupt in August as part of a regulatory edict to reform troubled securities houses, the sources said.

The broker, which was set up in July 2001 with 1.12 billion yuan in registered capital, logged a loss of 133 million yuan in 2005, extending combined losses since it began operations to 1.11 billion yuan, the sources said.

Regulators decided to let Daton go bankrupt to facilitate its overhaul, they said. Original shareholders, including Beida Jade Bird Group, quit during the reform process, while new investors including Dalian Huaxin Trust & Investment Co have joined in, the sources said.

“Huaxin is now the broker’s biggest stakeholder, but Daton’s overall shareholding structure is still very fragmented,” said a source close to the company.

After the restructuring, Daton has net assets of 505 million yuan and net capital of 445 million yuan, which still lags a threshold of 1.2 billion yuan required by regulators to become one of the country’s top-tier brokers, according to the sources.

Hong Kong jobless rate falls to lowest in almost six years

HONG Kong’s jobless rate fell for a fifth straight month in November to the lowest in almost six years, helping sustain the longest economic expansion in a decade, the government said yesterday.

The seasonally adjusted unemployment rate for the three months ended November declined to 4.4 percent from 4.5 percent in October, the government said on its Website. That was the lowest since January 2001 and matched the median estimate of 13 economists surveyed by Bloomberg News.

Banks, transport companies and retailers have stepped up hiring as the special administrative region piggybacked on booming growth on the Chinese mainland. Rising wages, and soaring stock and property prices are underpinning consumer confidence, helping Hong Kong withstand a slowdown in the United States economy.

“This reflects the healthy expansion in Hong Kong that has translated into the labor market,” said David Cohen, an economist at Action Economics in Singapore. “It should be supportive to consumer spending.”

Total employment jumped by 12,900 from a month earlier to a record 3.51 million. The number of unemployed slipped by 7,200 to 161,700, the lowest in more than five years, the report said.

The Brunswick Purchasing Mangers’ Index, a gauge of economic activity in Hong Kong, climbed to 56.3 in November, the highest in three years. The index of employment rose to an eight-month high of 54.3, suggesting companies may step up hiring in coming months.

A tighter labor market has forced employers to raise salaries to keep workers and attract new ones. Wages rose 3.3 percent in the third quarter – an increase that may start to feed into inflation, economists said.

“Labor costs may push prices higher in the next two years,” said Vivian Chiu, an economist at UBS AG in Hong Kong. Still, inflation “isn’t a big crisis at the moment.”

Hong Kong’s consumer prices climbed one percent last year, the first annual increase since 1998. The government forecasts inflation will accelerate to two percent this year.

On November 21, the government raised its forecast for economic growth this year to 6.5 percent from as much as five percent previously, partly because of rising domestic demand. The economy expanded 6.8 percent in the third quarter.

The city has created about 311,000 new jobs since unemployment peaked at 8.6 percent in July 2003, the government estimates. The benchmark Hang Seng index almost doubled in the same period, breaking 19,000 for the first time last month.

As a result, residents are spending more on everything from clothes to transport. Sa Sa International Ltd, Hong Kong’s biggest cosmetics retailer, on November 30 said first-half profit climbed 11 percent as sales jumped.

Interviews to pick future teachers

East China Normal University will begin recruiting education majors next year based on personal interviews instead of scores on the national college entrance exam in order to train students who really want to become teachers, school officials said yesterday.

The university will recruit 200 students next year using the pilot admission plan, making it the third university in the city to accept students without looking at exam scores, following Fudan and Jiao Tong.

High school graduates who are interested in teaching jobs are eligible to apply for the teacher training courses.

Applicants will be selected on the basis of interviews to see if they have the communication skills and other abilities to become a good teacher.

“Our point is to make sure that we put the most elite and suitable professionals into elementary education positions,” ECNU President Yu Lizhong said at the Second International Forum on Teacher Education yesterday.

The country’s existing teacher enrollment relies solely on national college entrance exam scores. That system encourages many students who did well on the exam but aren’t interested in becoming teachers to enroll in education programs, said Wang Jianpan, an ECNU professor.

The school said a large number of education students apply to change their major at the end of the first year, and many graduates end up taking office jobs instead of teaching positions.

“The loss of trained education majors is a punch to the country’s teacher quality,” Yu said.

Most migrant workers find cities friendly

According to the ¡°Report on Migrant Workers¡¯ Life in Cities¡± by National Statistics Bureau, more than 70% of them find cities friendly, and over 50% want to stay.

Over 40% of migrant workers believe their working conditions are improving. About 40% find life in cities expensive, and their lack of training adds to their difficulties. Nearly 20% wish to enjoy social security benefits and housing allowances.

The great population shift from rural areas to cities is unavoidable in China¡¯s industrialization and urbanization, and migrant workers (especially migrant industrial workers) play an irreplaceable part in accelerating this process.

Social security guidelines issued in Shanghai

SHANGHAI: Scholars and experts welcomed Tuesday a guideline on the management of the city’s social security fund as an investigation into abuse that has implicated senior officials and business leaders continues.

They said Shanghai is one of the first cities to demand the fund be put into a special account, as required by top authorities.

In recent weeks, a pension fund scandal has gripped the city and led to the sacking of Shanghai Party chief Chen Liangyu and China’s top statistician Qiu Xiaohua.

Shanghai authorities are now investigating Yuan Yonglin, president and deputy chairman of the board of the listed Shanghai Haixin Group.

But an effective supervisory mechanism and transparent management are still needed to eradicate malfeasance and embezzlement, the scholars and experts said.

The guideline, issued during Monday’s municipal government meeting, requires the fund to be deposited in an account specially opened for the money, and its income and expenditure should be independent. It also required the fund be used only for specific purposes.

“The proper management and use of social security funds, in defending against all possible risks of abuse, is an extremely important and urgent task,” said a statement from the meeting.

China’s social security funds have witnessed an average increase of 20 per cent annually over the past years, posing new administrative challenges.

Figures from the Ministry of Labour and Social Security show that by the end of 2005, the total size of the nation’s five social insurance funds pension, medical care, work-related injuries, unemployment and pregnancy funds had reached 696.8 billion yuan (US$87 billion).

“Prior to the scandal, which involves the misuse of more than 3 billion yuan (US$380 million) of the city’s social security funds, Shanghai had been a model city in terms of management of the fund,” Feng Jin, a researcher at Fudan University said yesterday.

“Shanghai has taken some bold steps in the management of the fund totalling roughly 10 billion yuan (US$1.2 billion), including the guideline issued on Monday,” she added.

However, Wang Dewen, an analyst with Chinese Academy of Social Sciences, said yesterday that a special financial account cannot guarantee the money would not be misused.

“They could make up a false record that shows the money still exists on the account but secretly embezzle it,” he said. “The way to fundamentally resolve the problem is to set up an effective monitoring mechanism and require transparent transaction procedures.”

But he agreed that Shanghai is heading in the right direction and making positive changes.

According to Xiang Huaicheng, chairman of the National Social Security Fund Council, China’s social security fund racked up investment income of 12.14 billion yuan (US$1.52 billion) in the first nine months of 2006, at a yield of 6 per cent.

Thanks to the bullish market in the first half of the year, stock investments contributed 50 per cent of the figure, he said.

Procedures for foreigners working in China

Foreigners who want to work in China should first get in touch with a valid Chinese employer who has an employment license for foreigners issued by related labour administrative bureaus.

Foreigners with permission to work in China should apply for employment visas at the Chinese embassies.

Employers of foreigners should get employment permits for their foreign employees within 15 days after their entry into China by providing related documents.

Foreign employees who have received their employment permit should, within 30 days after their entry, apply for a residence permit from local public security bureaus. The term of validity of the residence certificate may be determined in accordance with that of the Employment Permit.

Chinese employers and their foreign employees should conclude a contract in line with law. The term of the contract should not exceed five years and such a contract can be renewed.

The employment permit of the employed foreigners shall cease to be effective upon the expiration of the term of the labour contract between the foreigner and employer.

(Source: Rules for the Administration of Employment of Foreigners)

Shanghai and Beijing lead national living standard

A latest evaluation report on social development released by State Statistics Bureau reveals that Shanghai and Beijing take the lead in national living standard in China.

The comprehensive social development index is made by State Statistics Bureau. Twenty-three items that reflect social developments are divided into four parts: population, living condition, social welfare and commonweal service. The average value that reported by local governments is calculated with 1 as the base, which can be used as comparison for social developments in different regions.

Places that have high social development scores are Shanghai, Beijing, Tianjin, Zhejiang, Guangdong, Jiangsu, Fujian and Liaoning.

The life of China’s knowledge wealthy class

Chinanews, Beijing, Oct. 16 ¨C There has appeared in Chinese society a new group of people that are termed as the knowledge wealthy class. Most of these people are aged between 25 and 39. They have received a good education and work in IT sector, finance, or the arts. They drive Audi instead of BMW, and put their money for investment instead of buying gold. Most of them like adventures and have little interest in golf.

Such is the way of life for the knowledge wealthy in China. Recently, the Sinomonitor International, a Beijing-based consulting firm, carried out a survey about them. The survey covered more than 10,000 young rich people in 12 cities across China. Compared with 2005, the proportion of the knowledge wealthy has increased by 2 percentage points to account for 45% of the rich people in China. In other words, 45% of the young rich people in China work in industrial sectors that are characterized by new knowledge, new economy and new technologies or in new service sector. A large number of the knowledge wealthy are concentrated in Beijing.

Deputy manager of the Sinomonitor International Liu Rong said the young rich have the following characteristics: they become rich at a very young age; most of them have a good financial background, either because they make good money or because they are born in a wealthy family; and many of them have received a good education and have a strong consumption power.

These people have become the main driving force of consumption. Every year, their family expenditure exceed 100,000 yuan, mostly in buying durable goods or fashion gadgets, dining out, traveling, or maintaining cars. They are willing to search for new information, as 80% of them read newspaper or surf the Internet everyday. In addition, these people advocate new lifestyle. 70% of them think that if they have enough money, they should enjoy life. So most of them travel out of town, go in for physical exercise or visit beauty parlours regularly.