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Why populous China is facing labour shortages

By Abdullah Al Madani, Special to Gulf News

It may be surprising to know that China, the world’s most populous country, whose economic boom has largely depended on the advantage of having a huge supply of low-cost workers, faces labour shortages. Studies conducted recently show that China’s problem of worker shortage, which first appeared sporadically in 2004, has now become a more persistent one. The problem has pushed up wages at a time when costs of manufacturing goods are already rising due to increases in energy prices. This is likely to weaken Chinese-made products’ competitiveness on world markets, and force investors to move to lower-cost countries such as India, Vietnam and Bangladesh.

Chinese factories had to raise the minimum wage this year by as much as 30 per cent to between $70 and $85 a month. With this increase, the largest in a decade, a worker in China today is paid 30 per cent more than his counterpart in Vietnam, for example.

Acute problem

The shortage of workers is most acute in the country’s export regions, namely the Pearl River Delta, which feeds into Hong Kong, and the Yangtze River Delta, which funnels into Shanghai. For example, it was officially reported that the city of Shenzhen, on the Hong Kong border, alone faced a labour shortage of about 300,000 workers this year. Commenting on the issue, a Chinese human resource expert said that a few years ago, millions of young people were still flooding into Shenzhen to search for any job at any wage, and factories did not need to put up advertisements to recruit workers or tempt them with incentives and benefits. He added: “Now we put up a sign looking for five people, and maybe one person shows up.”

Factors contributing to making a country with a population of 1.3 billion have a labour shortage of nearly two million people according to an estimate are numerous. First, demand on workers has enormously increased in recent years, owning to the vast expansion of industrial, construction and services sectors.

Second, low wages, tax cuts, and long-working hours have all pushed a large number of migrant workers to quit their jobs in the booming coastal pro-vinces and move back to their farms in western provinces. The government’s decision last year to eliminate the agricultural tax has fuelled the trend.

Third, Beijing’s recent policy of closing the income gap between the urban rich and the rural poor through developing the economies of poor inland provinces and launching housing and infrastructure projects has created many jobs. As a result, young workers from the countryside are less willing to leave home for booming areas in search of a better life.

Fourth, unlike China’s old generation, whose members sought employment without proper education or skills, members of the new generation are more ambitious and would rather first develop their skills or have university degrees in order to avoid jobs that are harsh and pay little. This can be supported by the increasing number of university students. Last year, for example, over 14 million Chinese students joined local colleges and universities, up from 4.3 million in 1999.

More old people

Fifth, China’s one-child policy, which was implemented in 1979, has turned it into a country of more old and less young people. This is most acute in Shanghai, China’s model of economic prosperity, where the age group of 60 and above is expected to account for 30 per cent of the population by 2020. Because of this policy, the number of Chinese aged 15-19 will decline by 17 per cent in five years, to about 103 million from 124 million today, according to a report.

China’s dilemma, however, is not confined to the shortages of unskilled or semi-skilled workers. In addition, both public and private companies are having trouble finding enough talented employees and highly skilled labour to fill junior and senior managerial and other posts.

The evidence can be derived from a decision last month by the Shanghai municipal government to hold job fairs in North America in an effort to attract expatriates and overseas Chinese professionals to work in the city.

According to a recent study conducted by McKinsey Global Institute, Chinese firms seeking to expand abroad and continue growing in the years to come will need up to 75,000 internationally experienced leaders. Currently, only 5,000 such leaders are available in the country. Local universities must be held responsible for this, given their failure in producing more graduates capable of working successfully in world-class-companies and brilliantly serving the fast-growing domestic economy. Among the 1.7 million students who graduated in 2003 from over 1,500 local colleges and universities, only a few hundreds had good English and practical experience a requirement of most multinational firms.

O’Melveny & Myers Receives 2006 China Practice of the Year Award

Annual Award Recognizes Legal Excellence in World’s Most Dynamic
Marketplace

HONG KONG, Sept. 29 /PRNewswire/ — O’Melveny & Myers LLP has been
recognized by Asian Legal Business (ALB) with the 2006 China Practice of
the Year award. Finalists were recognized for their “outstanding client
service as well as their ability to combine rigorous analysis with astute
judgment to give clients a competitive edge.” O’Melveny’s selection from a field of seven international law firms was announced at ALB’s annual awards dinner on September 22, 2006 in Hong Kong.

“O’Melveny & Myers is honored and very proud to receive this award,”
said Howard Chao, co-head of the firm’s China Practice. “We thank our many loyal clients in China for their support over the years and in connection with this award. Our growth and successes have derived from their confidence in us.”
ALB gathers peer nominations from a wide range of practitioners in the relevant jurisdiction. A summary of the nominations together with firm submissions and additional third-party material gathered by the ALB
research team are then forwarded to a panel of judges. The panel, mainly
composed of senior in-house lawyers, then vote for winners in each
category.
“This award acknowledges the great platform we have developed in China and the terrific work we are doing here,” said Michael Moser, co-head of the firm’s China Practice. “Our clients are very focused on the myriad opportunities in China and we are dedicated to ensuring their success.”
“As one of the world’s most important economies, China is a top
priority for virtually all of our clients,” said Arthur B. Culvahouse, Jr., Chair of O’Melveny & Myers LLP. “To provide the level of service to meet our client’s growing needs in Asia — and more specifically in China — we have assembled an outstanding group of lawyers. This honor from Asian Legal Business confirms the excellence and prominence of our China Practice.”
Asian Legal Business is the only independent magazine dedicated to the latest legal news, events, and developments in the Asia-Pacific region.
About O’Melveny & Myers’ China Practice
O’Melveny’s China practice is one of the leading international law firm practices in Asia. With close to 100 professionals in Shanghai, Beijing, and Hong Kong, we provide quality advice in the areas of foreign direct investment, mergers and acquisitions, capital markets transactions, private equity, financing, intellectual property and dispute resolution. Our China operations are closely integrated with China practice groups located in our U.S., Japanese and European offices. O’Melveny & Myers is licensed as a foreign law firm in China and works closely with local law firms on China law matters.
About O’Melveny & Myers LLP
O’Melveny & Myers LLP is a values-driven law firm guided by the
principles of excellence, leadership, and citizenship. With the breadth,
depth, and foresight to serve clients competing in a global economy, our
lawyers devise innovative approaches to resolve problems and achieve
business goals. Established in 1885, the firm maintains 13 offices around
the world, with more than 1,000 lawyers. O’Melveny & Myers’ capabilities
span virtually every area of legal practice, including antitrust/Competition; Appellate; Class Actions, Mass Torts & Aggregated
Litigation; Corporate; Corporate Finance; Electronic Discovery;
Entertainment & Media; Global Enforcement & Criminal Defense; Health Care & Life Sciences; Insurance; Intellectual Property & Technology; Labor & Employment; Mergers & Acquisitions; Private Equity; Project Development & Real Estate; Restructuring; Securities Enforcement & Regulatory Counseling; Securities Litigation; Strategic Counseling; Tax; and Trial & Litigation.

China Gaining Ground in Global ‘Head and Brains Race’

COLUMBUS, Ohio, Sept. 29 /PRNewswire-FirstCall/ — Global competition, once defined by the Cold War arms race, has evolved into a “head and brains race” where nations measure success through the development and application of technology.

That was one of the conclusions from a Battelle-R&D Magazine report on international research and development trends. The report frames international competition as evolving from the arms race to a “hands race” based on lower-cost manual labor and now to the head and brains race driving the current escalation of R&D spending.

“It is tempting, and certainly reasonable, to acknowledge the fact that each of these races has involved a reliable adversary,” says Dr. Jules Duga, senior research scientist at Battelle and co-author of the report. “These adversaries continue to present challenges to the United States that can be met and conquered or accommodated only by long-term strategic investment and will.”

While the U.S. remains the standard-bearer in terms of worldwide R&D, China is emerging as an R&D giant. That trend will continue, the report projects.

The U.S. is responsible for 32.4 percent of global R&D this year, compared to 13.4 percent for China. Those numbers were first and second, respectively, worldwide but represent a decline for the U.S. and an increase for China. The same trend will continue in 2007, according to the report, when the U.S. will be responsible for 31.9 percent of global R&D and China 14.8 percent.

“There still is a considerable gap,” says Duga, “but it’s closing.”

With China leading the way, Asia continues to seize more and more of the international R&D market. Asia’s share of global R&D grew from 34.9 percent in 2005 to 35.6 percent this year and should continue to grow to a projected 36.5 percent in 2007, according to the report. The U.S., over the same period, has declined from 32.7 percent to 32.4 percent this year and is projected to dip to 31.9 percent next year.

Changes in government attitudes, direct government investments, liberalization of their economies, and an increased emphasis on developing a highly educated, technology-oriented population are some of the factors leading to the R&D growth in Asia. These also are reasons why industry from all over the world is changing the way it develops relationships with the R&D communities from these burgeoning countries. The first steps could be characterized as casual, “testing-the-waters” interactions that included preliminary contract research arrangements. These quickly have evolved into major investments in institution-building, the creation of subsidiary operations, and the development of a wide range of joint ventures.

“It is apparent that the modifications in the internal policies of East and South Asia, in particular, have had and will continue to have an influence on the amounts and patterns of R&D performance in the U.S. and other nations,” says Tim Studt, editor of R&D Magazine and Duga’s co-author on the report.

Outsourcing of R&D has been a growing trend and will continue to grow as long as the cost of doing business makes sense for U.S. companies, concludes the report. The lower costs in most areas, especially China and India, enhance the competitive position as compared to other (usually domestic) resources and lead to measures of higher productivity. When other advantages, such as enhanced global R&D infrastructure and improved support for other global operations, are considered, the value of outsourcing becomes apparent, says Duga.

“Host countries like China and India have come well down the road in terms of providing a technology-friendly environment,” Duga says.

Battelle has prepared a report on U.S. R&D funding annually for more than 40 years, including the last 12 in partnership with R&D Magazine. Duga has co-authored that forecast for 27 years. This is Battelle’s second comprehensive report on international R&D spending.

The full report is included in the September issue of R&D Magazine. Reprints are available by contacting Battelle’s Jean Hayward at (614) 424-7039 or at haywardj@battelle.org.

Battelle is a global leader in science and technology. Headquartered in Columbus, Ohio, it develops and commercializes technology and manages laboratories for customers. Battelle, with the national labs it manages or co- manages, oversees 20,000 staff members and conducts $3.4 billion in annual research and development. Battelle innovations have included the development of the office copier machine (Xerox); pioneering work on compact disc technology; fiber optics for telecommunications; development of new medical products to fight diabetes, cancer and heart disease; breakthroughs in environmental waste treatment; homeland security technologies; and advancements in transportation safety and security.

Recruiters in China – Information Smart or Information Starved?

By Frank Mulligan, Talent Software

Unlike in the past, we are awash in information here in China right now.

We know the economy is developing at 9% every year and that Foreign Direct Investment is in excess of US$50 billion per year. We know about the ’War for Talent’ and that staff turnover is now in excess of 25% for most companies in China. So getting information is easy, especially numbers that underline the narrative of a growing, developing economy. On the other hand, getting validated information at the right time is always difficult to do, and costly.

Recruiters are essentially in the business of finding, evaluating and using information about the suitability of a candidate for the positions in their company or client.

In order to achieve their goals they must separate truth from fiction, fact from rumour. And to do this they have to be able to evaluate the information they have using the current toolset of the recruiter; behavioural interviewing, psychometric assessment, Performance Profiles, background checks, Topgrading, skills tests, Work Samples, reference checks and so on.

Missing Data
Each of these methods has it’s own limitations. There are figures for the validity of each method that would suggest that there is a strong case for using them.

However, a couple of years ago we asked 40 companies in China about their hiring processes and the results were not very encouraging. Few did reference checks (<10%) and very few did backgrounds check(<1%). Some did a scripted phone screen with candidates(<3%) but most had not even considered the idea. Many knew what Behavioural Interviewing was but less than 20% said they used it in practice. A majority of companies in our informal survery did not use any type of intelligence, skills or personality testing during the recruiting process. This was a bit surprising given that these kinds of tests have been available in China for many years. And in Chinese. Add to that the huge costs of hiring the wrong person and you have a strong justification for using them. But companies didn’t at that time. Since then we have seen the introduction of affordable background screening, and the arrival or more and more validated psychometric and skills tests. This has clearly increased the numbers of companies using these kinds of tools but we won’t know what the figures are until we check again. If you want to know a little more about the validity of various assessment methods this chart might be a good start. Selection Method - "Predictability" Handwriting Analysis - 0% Age - 0% Amount of Education - 0% Self Assessment - 3% Projective Tests - 3% Traditional Interviews - 4% Grade Point Averages - 4% Expert Recommendations - 4% Personality Tests - 4% Motivation - 4% Reference Check - 6% Biographical Data - 9% Situational Interviews - 9% Behavioral Event Interviews - 10% Mental Ability Tests - 25% Content Valid Simulations - 64% Adapted from a meta-analysis conducted by Hunter and Hunter, Psychological Bulletin, Vol. 96, 1984. Percentages have been rounded. Predictability refers to the explained variance.

Avon powers ahead with China recruitment

Having received the first license for a foreign-owned company to resume direct sales of cosmetic products in China, Avon added more than 33,000 new sales staff to its workforce there last month, according to data from the Chinese Ministry of Commerce.

The data, which was cited by Morgan Stanley in a note to investors, stated that the 33,339 new representatives were added to the work force in the month of August, bringing the total number of representatives to 188,273.
The figures indicates that the company is recruiting at an even faster rate than it had originally expected. Back in July the company said that its China sales force had reached 114,000 and that it was hoping to recruit a further 31,000 new employees.

Avon received the go ahead to resume door-to-door sales back in January of this year. The move followed the government lifting a total ban on direct sales implemented in 1998 in an attempt to quash pyramid schemes and other scams that were being offered on a door-to-door basis in the country.

Morgan Stanley reiterated in its note to investors that China remains Avon’s brightest hope for future growth at the moment, with the recruitment drive likely to boost sales for the second half of the year and helping to buoy the company’s overall results in the Asia Pacific market.

Although the general trend in the company’s global sales has been positive, the Asia Pacific region has proved particularly disappointing for the company as a whole. With the exception of China, the company reported a poor performance in other countries in the region, contributing to a 10 per cent drop in sales during the second quarter of the year.

But where other Asian markets are showing slow retail sales, the China market remains robust. Currently China is seeing some of the largest industry growth in the world, with almost all cosmetic and toiletry categories reporting sales growth well into double figures – figures that are in line with GDP that continues to exceed 10 per cent.

This growth could prove the key to getting Avon out of a difficult situation. Restructuring charges have hit the company hard of late, forcing investors to shy away from its shares. Following the announcement of its second quarter results at the beginning of August, the Avon share price fell over $5 to reach $27.40 on August 8. Since then the share price has leveled off and finished trading at $29.54 this week.

But the downward trend in the company’s share price reflects a general loss of confidence. The company’s latest results showed that sales had gone up, but underlying growth was below analyst’s expectations, due mainly to the heavy restructuring charges the company incurred.

During its second quarter net income dropped 54 per cent to reach $150.9m on the back $2.1bn in sales, up 5 per cent on the same period last year.

This figure was impacted by a $49m charge, as part of its massive $500m restructuring program, introduced in the last quarter of 2005. The scheme has seen profits tumble by 54 per cent but eventually could save the company $100m a year.

The restructuring costs have included organizational realignments and a reduction in the workforce, particularly in its middle management that has seen the elimination of more than 25 per cent of its management positions and lowered the number of management tiers from 15 to eight.

To date the company has now eliminated 10 per cent of its 43,000 worldwide workforce, however the expansion into China is helping to reverse that trend, emphasizing just how important the upturn in the China market is to the company.

About.com Eyes China

China, which is likely to become the largest broadband nation sometime in 2007, is attracting the attention of overseas Internet giants recently. Last week it was Rupert Murdoch’s MySpace1 plans, and their talks with China Mobile.2 This week it is The New York Times, and its About.com3 division.

GigaOM has learned that About.com is seriously eying China for future expansion. About.com’s CEO Scott Meyer confirmed that the company is in the process of planning a move into China, looking to build a team there and is headhunting for a general manager. Meyer said the plans are still in the early phase. Thirty percent of About’s unique visitors are from outside of the U.S., Meyer said.

Meyer wouldn’t disclose how the Chinese operations would be financially structured, or if the company would use a new Chinese brand or an About China brand. The timing of the launch remains fuzzy.

Like most non-Chinese Internet companies, About will have to figure out how to navigate the Chinese markets, and adapt to the local government regulations, the business models, and the consumer tastes of the Chinese market. Murdoch has said that he has struggled over the control of content with Chinese regulators1 in his attempts to move MySpace to China.

About’s content will likely face similar issues. When we asked Meyer what he thought of Murdoch’s troubles thus far in China, he said “We are spending a lot of time staying up to speed on the Internet market in China, and MySpace is just one of those examples.” He didn’t seem too concerned. We will call him in a few months and see if he’s still so relaxed.

Supplier Quality Engineer

Company:
a top European furniture manufacturing company

Major Responsibilities
1.supplier evaluation and management
2.technical supports for supplier
3.cooperate with supplier to improve the quality
4.quality control in supplier’s factory

Job Specifications
Education: Bachelor degree of financial or economic
Knowledge: at least 3 years experience of supplier management
Skills/Ability: familiar with ISO9001-2000 system;good command in English
** candidates with experience in sofa manufacturing or related is highly appreciated.

* Please send us your complete resume (both in Chinese and in English) to: ‘topjob_mn106sh@dacare.com’

Production Section Manager, Sofa manufacturing

Company:
a top European furniture manufacturing company

Major Responsibilities
1.Ensure the maximum performances of the unit with particular reference to the productivity.
2.Ensure the supplying and the relationships with the inner agencies.
3.Ensure the homogeneity of the management of the resources, the discipline, the relationships with the personnel administration.
4.Report functionally for the problematic to the production manager for all of routine not following any lines guide.
5.Interface with all the agencies of plant for the synergy of problematic production

Job Specifications
Education: Bachelor degree of financial or economic
Knowledge: At Least 5 years working experience in management of production line.
Skills/Ability: Basic skill both in English and Computer

* Please send us your complete resume (both in Chinese and in English) to: ‘topjob_mn105sh@dacare.com’

Supervisor Accounting

Company Introduction:
XXX is a world leader in enterprise infrastructure software, delivering powerful standards-based platforms for building enterprise applications and managing Service-Oriented Architectures even in heterogeneous IT environments.

Job responsibilities:
1.Ensure quality services and adequate controls over Accounts Payable, Payments and Expenses Reports re-imbursements. Ensure compliances with corporate policies and requirements;
2.Ensure accuracy and integrity in the local statutory accounts and tax reporting;
3.Play significant role in our tax planning and cost control initiatives;
4.Act as the coordinator re SOX 404 implementation in BEA China. Act as the coordinator in all external / internal audits;
5.Drive for continuous process improvements.

Qualifications/Necessary Skills
1.Solid accounting background. University graduate with major in Finance / Accounting is a must. Professional Accountant qualification is a plus;
2.*At least 5 years relevant work experience;
3.Good English proficiency;
4.Excellent communication skills;
5.Good analytical and problem-solving skills;
6.Prior audit background or SOX-related experience is a plus;
7.People supervisory experience is a plus.
Education: University graduate with major in Finance / Accounting is a must. Professional Accountant qualification is a plus.

* Please send us your complete resume (both in Chinese and in English) to: ‘topjob_mn110bj@dacare.com’

Channel Sales Executive

Company introduction:
Our client is a world leader in enterprise infrastructure software, delivering powerful standards-based platforms for building enterprise applications and managing Service-Oriented Architectures even in heterogeneous IT environments.

Responsibility:
1.Achieve revenue targets set for assigned channel partners.
2.Achieve individual sales performance and business objectives as agreed with Channel Sales Director.
3.Manage channel partners to deliver opportunities that are incremental to BEA Enterprise and Inside Sales efforts.
4.Develop partner relationships with existing partners by assisting in business and activity planning, and forecasting.
5.Coordinate partner links and activity with other business units (e.g. ESO, ISO, PS) as required.
6.Identify and sign up new partners that meet the parameters of the partner program.
7.Effectively manage opportunities that are forecast by each partner and assist in developing and closing these opportunities through such activities as joint sales calls.
8.Liaise with other business units as required to provide necessary resources to maximize each partner opportunity.
9.Coordinate sales and technical training of each partner ensuring that they are sufficiently certified to represent that this knowledge is current at all times.
10.Ensure channel partners have the technical expertise and knowledge to support products and that they have sufficient strategies in place to support ongoing education within their organisation.
11.Communicate new product offerings to each partner and coordinate any additional training required for new products.
12.Coordinate needs for each partner to ensure that both pre-sales and sales knowledge is in place and kept current at all times.
13.Participate in Channel Sales team planning and meetings to ensure all sales efforts are sufficiently coordinated.
14.Contribute to Channel Sales strategy and planning for the region.
15.Complete business plans for assigned territory as required.
16.Complete all reporting and administrative tasks as required and with the required time frame.
17.Monitor competitor sales strategies and report on significant developments.
18.Effectively communicate forecasting and revenue commitments to all partners and work with them to ensure these commitments are met.
19.Act as national spokesperson/account coordinator for assigned national partners and ultimately be accountable managing the overall relationship.
20.Liaise with other Channel Sales Executives on activity within national channel partners.
21.Coordinate and consolidate national partner business planning process where required.
22.Liaise strategically with national partner management where required.

Requirements:
Education:
Secondary degree in relevant field preferred, but not essential.

Experience/Skills/Knowledge:
1.In-depth knowledge of the IT industry, preferably Middleware.
2.Excellent understanding of growing and sustaining businesses in a highly competitive and changing marketplace.
3.Experience developing and managing indirect sales channels.
4.Proven ability to achieve quotas through channel partnerships.
5.Politically astute, good understanding of business, and able to ascertain key decision makers.
6.Excellent written, verbal and communication skills.
7.Ability to liaise with and motivate individuals at all levels of the channel partner relationship.
8.Proven ability at effectively making formal and informal presentations to all levels of management.
9.Excellent planning and time management skills.
10.Drive to succeed and results focused.
11.Good attention to detail, quality conscious.
12.Proactive and service oriented.
13.Self-motivated and able to retain enthusiasm and stay focused.
14.In-depth experience in the IT industry of at least five years.

* Please send us your complete resume (both in Chinese and in English) to: ‘topjob_mkt144sh@dacare.com’