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Foreign firms hit by global gloom

By Liu Jie (chinadaily.com.cn)
Updated: 2009-02-23 19:53

Many foreign enterprises in China have been impacted by the global economic downturn, directly resulting in job losses since the end of last year, according to a recent survey.

Nearly 6 percent of companies surveyed have said that they have closed or merged, leading to the layoffs of all staff. Around 27 percent have cut employee numbers, while 68.7 percent have reduced their recruitment expectations.

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Job cuts at 5 percent of the interviewed companies exceeded 20 percent. Finance, telecommunications and IT industries were affected the most.

Beijing Foreign Enterprise Human Resources Service Co Ltd (FESCO), a professional human resources (HR) service provider to the Chinese arms of multinational companies, released the survey findings.

The survey also found that foreign companies in China have adjusted their salary and bonus packages. Nearly 44 percent of the respondents said salary increments will only be given to key employees while 19.8 percent said they would go slow on salary increases.

The poll was conducted by Taihe Consulting, a local recruitment and staffing services provider affiliated to FESCO and global HR consulting giant Towers Perrin. It covered 356 of FESCO's clients nationwide and involved the real estate, manufacturing, high technology, finance, automobile, energy, pharmaceuticals, logistics, fast moving consumer goods (FMCG) and services sectors.

FESCO chairman Huo Chenguang said the impact on corporate employment by foreign businesses in China could be divided into three categories – recruitment postponing, cancellation of recruitment plans and headcount reduction.

Some companies, mainly in the energy, pharmaceuticals and FMCG sectors, have started to postpone their recruitment plans as these have not yet been hit by the global recession. The gloomy market has only forced them to slow expansion plans.

Labor-intensive manufacturing firms and businesses that greatly depended on overseas funds have had to cancel their headcount addition plans due to a shortage in working capital.

The job cuts have largely happened in finance, telecommunications and information technology sectors, which were directly devastated by the global financial tsunami and forced to reduce costs immediately. Huo said the situation would worsen this year, given the economic downturn.

FESCO is offering resettlement solutions to bankrupt companies. For enterprises that have been seriously hammered by the global economic slowdown, the HR institution will provide value-added services, he said.