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Taobao responds to disputed inspection report

China’s largest shopping website, Taobao.com, gave an official response to a controversial quality inspection report by the country’s commerce regulator on Wednesday.

The online store will file a complaint to the State Administration for Industry and Commerce (SAIC) based on accusations of a senior official’s improper supervision, according to an announcement on Taobao’s Sina Weibo account.

“Director Liu Hongliang followed improper procedures and his legal assessment was emotional,” Taobao said, “He reached a conclusion that was not objective, bringing a negative effect on Taobao and e-commerce businesses.”

“We welcome any supervision that is fair but oppose nonfeasance and random or malicious official actions,” the post said.

The move is the latest salvo between Taobao, the most profitable branch of e-commerce giant Alibaba Group, and the SAIC since the latter published a quality inspection report on Jan. 23 that gave Taobao the lowest rank in terms of certified product rate.

FAIR OR NOT?

At the core of the quarrel is the question of whether or not Taobao was fairly treated.

The SAIC’s sample test showed that only 37.25 percent of surveyed commodities sold on the website were authentic, lower than a 58.7-percent average of major online shopping platforms. Taobao’s major rival, JD.com saw its rating at 90 percent.

Taobao fired back on Tuesday and said it was unfairly treated.

It claimed the inspection was flawed in logic and contradicted previous data, pointing out the authority only made a sample of 51 items which cannot represent the enormous trade volume on the platform.

The SAIC’s survey had a 20-item sample for JD.com, a 10-item sample for Yhd.com and only a 1-item sample for Zol.com.

Tuesday’s post was deleted shortly after but still stirred heated public debates with majority opinions in favor of the company.

Shi Yuzhu, a celebrity and board chairman of Giant Interactive Group, said the sample was too small compared to the website’s 1 billion commodity categories (as Taobao claimed). “The sample was a little pale if statistically speaking,” He said.

Responding to the claims, an SAIC official Yang Hongfeng said the survey just aimed to evaluate market risks and warn against illegal activities and no e-commerce firms were targeted.

Yang said the survey was conducted by a third party to look for problems instead of showing how poor the product quality was in online shopping, and the results should not be over-interpreted.

On Tuesday, another SAIC official, Yu Fachang said strengthening supervising efforts in online market is their legal duty and related officials have conducted activities in line with the law.

FAKE OR NOT?

An anonymous government official in east China’s Zhejiang Province, where Alibaba’s headquarter is located, said Taobao, while refuting the survey, avoided the question that if there were fakes on its platform and the responsibility it should take.

Yang said Alibaba has not paid enough attention to illegal operations on its platform and with no effective measures to tackle the problems, which triggered a honesty crisis for the group and brought a negative effect to the sector.

On Wednesday, the SAIC published a white paper regarding Alibaba, which listed five problems in the company’s shopping platform including loose access requirement, slack inspection of commodity information, chaotic management of sales and a defective credit rating system.

Taobao.com, having grown to the most popular online shopping platform in China, allowed influx of fake commodities and illegal transactions, the white paper said.

The white paper was compiled based on a closed-door symposium of the SAIC and Alibaba in July, 2014. The meeting was chaired by Liu and no information was released at that time to avoid a negative impact on the group’s IPO.

Taobao’s announcement did not deny there were counterfeits traded via its platform but said the website was also a victim and would not shirk the responsibility of removing fake goods.

Alibaba’s chairman, Ma Yun described fakes as long-existing viruses that have always plagued economic development.

AT LEAST ONE THING AGREED

Although the SAIC and Alibaba still remain locked in debate over the certified product rate, both sides agree on tough action against counterfeits.

Ma promised the group would mobilize all the resources to help address the problem and called for combined efforts from society instead of unbacked accusations.

Taobao announced on Wednesday that it would initiate a “special operation battalion” comprised of 300 specialists to cooperate with officials to crack down on fake goods.

Yu said the administration will continue to act hard against illegal activities to safeguard online market order and consumer interests.

Jin Zhanming, economics professor of Tsinghua University, said a sound interplay should form between producers, online platforms and regulators with all sides having responsibilities to safeguard market order.

Ericsson on solid ground despite economic slowdown

Global telecom manufacturing giant Ericsson remained resilient despite large patches of economic slowdown around the globe, by reporting a solid $1.68 billion in net income last year.

The company, together with China’s Huawei, is a major supplier of fast mobile broadband that facilitates a blossom of new mobile business – online commerce, online social community and a flurry of other models.

Ericsson is also a major vendor contributing to 3G and 4G infrastructure build-up in China, supplying equipment and technology to China Mobile, China Unicom and China Telecom.

Ericsson’s sales were strong in Asia, the Middle East and Europe, but it said business in North America will remain sluggish with telecom operators there saving cash for more spectrum auctions later. Ericsson has anticipated the North American mobile broadband business to remain slow in the short-term.

“We will continue to proactively identify efficiency opportunities. Ericsson’s cost and efficiency program, with the ambition to achieve savings of approximately 9 billion SEK, with full effect during 2017, is progressing well,” said Hans Vestberg, president and CEO of Ericsson.

Last year, Ericsson made an end to its traditional chipset-making business, after terminating a handset joint venture with Sony in 2009.

Total sales of Ericsson hit 228 billion SEK ($35 billion), flat with the year earlier, adjusted for comparable units and currency factors.

Telecom services showed stable growth driven by managed services and systems integration sales. In Q4 2014 alone, Ericsson signed 17 new managed services contracts with a variety of major operators.

In 2015, Ericsson is said to continue its progress on the Networked Society strategy, focusing on market growth agenda, industrial transformation and corporate profitability.

“In line with our strategy, we have invested into our targeted areas — IP networks, cloud, TV & media, industry & society and OSS & BSS. Sales in targeted areas showed a growth of more than 10 percent in 2014, ” said Hans Vestberg.

Social media help companies tap into pool

A job hunter scans the code at a recruitment fair in Handan, Hebei province. Job ads are being seen more frequently in social media such as micro blogs and WeChat, in recent years.

With social media engaging massive numbers of users in China, platforms like WeChat and micro blogs are increasingly being used as recruitment tools.

Job ads from private recruiters and companies are seen more frequently on micro blogs and WeChat, a sign that Chinese employers have begun to embrace social media recruitment, a move that helps them tap into a larger pool of talent.

“The use of WeChat and micro-blogging is becoming a popular way to recruit. It’s fashionable among recruiters who have accounts on social media platforms,” Zhu Hongyan, a senior career consultant at Zhaopin, an employment website, told China Daily.

“Using social media enables recruiters to reach out to a wider audience more effectively, given that such platforms have become the major information-sharing tool among the prime working age population,” Zhu said.

WeChat enables 468 million monthly active users in the third quarter of last year, while micro blog users surpassed 275 million, according to the China Internet Network Information Center.

WeChat enable users to assemble a huge number of contacts and access a large audience.

Smile Xu, managing director at sports marketing agency Miles Group, posted a job ad for an account manager on her WeChat account in early December and quickly received a dozen resumes.

“Though the number of interested applicants was fewer than expected, they were of better quality compared with traditional recruitment,” said Xu, who regularly posts photos of work and events her agency promotes.

“At least people understand what they are applying for,” she said. “Friends, acting as matchmakers, will brief potential candidates they know about a job because they are in the same field and know what the job entails.”

Fu Zhu, the former recruitment head of e-commerce giant Jingdong, said the traditional hiring channel is facing the challenge of cost and quality, as social recruiting through platforms like WeChat and LinkedIn provides a more time-effective channel.

“Using traditional methods, we can only select from active candidates who send resumes for certain positions. But in China, more skilled employees are passive candidates who can be better reached through social recruiting channels,” said Fu.

Rather than submitting resumes randomly at job fairs and on employment sites, job seekers can now reach recruiters directly and take advantage of targeted job referrals.

“In my WeChat group talk, classmates, teachers and some alumni constantly forward selected employment information related to my specialty, which helps me to target employers more effectively,” said Zeng Qinbing, a senior student at Dongguan University of Technology in Guangdong province.

However, high-profile employers in China appear to prefer the traditional approach to recruitment.

In August 2014, Maximum Employment Marketing Group conducted research on the status of WeChat recruitment for Fortune 500 companies.

While 80 percent of Fortune 500 companies operate in China, only 7 percent have set up specific career accounts on WeChat, and of those, only 19 percent support direct application through WeChat.

“Despite the growing awareness, social media recruiting remains in the early adoption phase,” said Zhaopin consultant Zhu.

Profit growth of China’s state firms slows

Profitability of China’s state-owned enterprises (SOEs) was squeezed in 2014 amid slackening momentum in the economy as it registered the weakest growth since 1990.

Combined profits of SOEs reached 2.48 trillion yuan (404.66 billion US dollars), up 3.4 percent from one year earlier, the Ministry of Finance said in a statement on Thursday.

The growth slowed from 4.5 percent reported in the first 11 months last year and 5.9 percent in 2013.

Business revenue climbed 4 percent year on year to 48.06 trillion yuan while operating costs rose at a faster pace of 4.5 percent to 46.66 trillion yuan.

By the end of December, total assets gained 12.1 percent from the beginning of 2014 to 102.12 trillion yuan while liabilities grew 12.2 percent to 66.56 trillion yuan, the ministry said.

It said auto making and pharmaceutical industries posted strong profit increases, while sectors such as coal mining and chemicals saw notable declines in profits.

Bright prospects for job seekers in China

Multinational companies’ increased interest in the Chinese market and the rapid expansion of domestic companies will boost job prospects and salaries in the country this year, a new survey said on Wednesday.

According to the Salary Survey 2015 released by global recruitment specialist Robert Walters, Chinese employees who plan to change jobs in 2015 can expect their salaries to go up by 15 to 25 percent on average, while those who choose to stay may see wage increases of about 6 to 8 percent.

Employees in Beijing working in industries like accounting and finance, human resources, and marketing can expect a 20 percent growth in wages if they opt for a new company. Professionals working in sales, as well as in engineering-related research and development sectors are likely to see their salaries increase by up to 30 percent.

Employees in Shanghai can expect salary increases of around 20 percent if they are looking for new opportunities in sectors like finance and accounting, banking, human resources, information technology and sales.

The survey expects pharmaceutical and chemical industries to be the top hirers this year, with employees working in the operations and manufacturing sectors of these two industries expected to realize salary hikes of about 30 percent if they switch to another company.

Sales professionals in the luxury industry will see little growth in salaries this year due to the industry stagnancy.

Even though the rising salaries of Chinese professionals have prompted concerns about rising labor costs in China, Alistair Cox, chief executive officer of global recruitment firm Hays Plc, said it is needless to worry about the fewer opportunities. On the other hand, Cox finds it a good signal as the economy is becoming more developed, people are getting more disposable income and standards of living are improving.

“There is a massive domestic market as well, which in many ways is under-leveraged,” he said.

Though the number of employees planning to switch jobs is set to drop slightly from the level seen in 2014, it still remained quite high, with over 71 percent of the 2,448 respondents keen on a change.

The competition for qualified talent, preferably those with overseas working experience, solid knowledge of the domestic market, and higher bilingual proficiency, will be even more intense in 2015 among multinational companies, aggregated by the fact that a growing number of multinational companies are moving their regional headquarters to first-tier cities, said Wang Qiang, managing director of Robert Walters China.

Domestic companies are not lagging behind. In order to hire qualified candidates, a large number of them are providing competitive salaries and compensation packages, as well as equity incentive plans. As a result, some experienced professionals have given top priority to domestic companies, said Wang.

ZTE posts 94% jump in net profit in 2014

ZTE Corp, China’s biggest listed telecommunications equipment maker, yesterday posted a 94 percent jump in net profit in 2014 due to surging demand for 4G network equipment and high profit margins from growing sales of smartphones overseas.

Its net profit totaled 2.63 billion yuan (US$423 million) last year. Revenue reached 81.2 billion yuan, up 7.99 percent, ZTE said in a statement to the Shenzhen Stock Exchange yesterday.

The rapid development of 4G services in 2014 fueled the demand for 4G base stations.

By November, China boasted 75 million 4G users. China Mobile, China Unicom and China Telecom have built a total of 700,000 base stations, surpassing an original target of 500,000 stations.

On the other hand, ZTE expanded business in overseas smartphone markets which offer higher profit margins compared with the domestic market.

ZTE aims to double sales to 20 million units in the US market this year.

The company also plans to surpass LG to become the No. 3 US smartphone vendor within two or three years, according to Cheng Lixin, chief executive of ZTE North America.

China banks’ 2014 new yuan lending hits record high

China’s new yuan-denominated lending in 2014 hit record high at 9.78 trillion yuan (1.58 trillion U.S. dollars), up 890 billion yuan from one year earlier, latest data showed on Thursday.

In December, banks’ new lending reached 697.3 billion yuan ,up 214.9 billion yuan from the same month of 2013, said the People’s Bank of China (PBOC), the central bank.

M2, a broad measure of money supply that covers cash in circulation and all deposits, increased 12.2 percent year on year to 122.84 trillion yuan at the end of December, according to the PBOC.

The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, rose 3.2 percent year on year to 34.81 trillion yuan at the end of December.

Total social financing in 2014 stood at 16.46 trillion yuan, 859.8 billion yuan less than 2013, according to data released by the central bank.

Hainan drug firm sues Tencent over derogatory posting

Internet giant Tencent Holdings Ltd may be facing a lawsuit from a pharmaceutical company based in Hainan province for allowing the spread of false information via its instant messaging platform WeChat.

In July, a WeChat post claimed that a medicine known as nimesulide granules, produced by Hainan Honz Pharmaceutical Co Ltd, had caused at least four deaths.

The drug is intended for the treatment of ear, nose and throat infections.

In early August, Honz reported the case to the local public security authorities, which determined that the rumor was false.

In December, Honz posted on its official WeChat account what it said was an apology from the source of the rumor as well as the case description from the local police to refute the rumor, but this move had little effect.

It then served notice on Tencent, urging the latter to delete, screen out and break the links of the false information, but it said it received little positive response from Tencent. The drug firm visited the headquarters of Tencent in mid-December to negotiate, it said, but was disappointed again.

As a result, Honz filed a lawsuit against Tencent. Haikou city’s Xiuying District People’s Court has put the case on record, the pharmaceutical company said on its official website on Tuesday.

Tencent told China Daily on Thursday that it had not received any legal claims.

Since the rumor spread on the Internet, sales of nimesulide have been heavily affected, as have sales of other medicines under the same brand, Honz told China Daily.

According to Guosen Securities Co Ltd, annual sales of nimesulide were about 100 million yuan ($16 million) between 2012 and 2014.

Honz is the largest nimesulide producer in China.

“With the rapid development of social media, which is represented by WeChat, rumors go viral due to the incomplete oversight system. It is quite difficult to monitor users’ behavior and words on social media, let alone take any regulatory or administrative steps.

“If there are no effective measures taken soon, there will be more individuals and companies that are harmed by rumors. The task of refuting rumors will also become even more difficult,” the company said in the response.

However, there appears to be a silver lining for the company. The Supreme People’s Court in October issued a judicial interpretation regarding Internet infringement, in which the plaintiff could order the Internet service provider to give the name, contact information and Internet address of an Internet user who is suspected of infringement.

“Technically speaking, all the requirements set by Honz can be met,” said Liu Haiyang, partner of the Guangzhou-based Guangda Law Firm, who is the attorney for Honz in this case.

“Tencent has the obligation to delete, screen out and break the links of the false information as an Internet service provider. As there is no precedent of a similar case, the case from Honz is very likely to set a precedent for later Internet infringement cases.”