Economic Overview Global, Asia Pacific and China

Economic Overview Global, Asia Pacific and China World GDP and Inflation GDP goes up and Inflation goes down from 2013 to 2015 10.0 8.0 6.0 4.0 ...
Author: Jason Harrell
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Economic Overview Global, Asia Pacific and China

World GDP and Inflation GDP goes up and Inflation goes down from 2013 to 2015 10.0

8.0

6.0

4.0

2.0

0.0 2008

2009

2010

2011

2012

2013

2014

2015

Emerging market and developing economies Inflation

9.2

5.4

5.9

7.3

6.0

5.8

5.5

5.2

Emerging market and developing economies GDP

5.9

3.1

7.5

6.3

5.1

4.7

4.9

5.3

World Inflation

6.0

2.5

3.6

4.9

3.9

3.6

3.5

3.4

World GDP

2.7

-0.4

5.2

3.9

3.2

3.0

3.6

3.9

-2.0

MERCER

Source: IMF World Economic Outlook (April, 2014) 1

Shift in Global Business Landscape

Driving corporate growth in Asia Pacific Asia Pacific vs. Developed markets

Asia Pacific still leading the pack

2.0% GDP growth

1.1% GDP growth

4.3% GDP growth

To cash in where the growth is today, and for the foreseeable future, Increasing focus on Asia Pacific MERCER

Source: APAC Exec Brief, August, 2014, IMA Asia

2

Regional GDP, Inflation & Salary Increase 12%

10%

8%

6%

4%

2%

0% AU

CN

HK

ID

IN

JP

KR

MY

NZ

PH

SG

TH

TW

VN

GDP

3.0%

7.4%

2.5%

5.0%

4.9%

0.4%

3.6%

6.2%

3.3%

6.2%

3.2%

1.1%

3.8%

5.0%

Inflation

2.6%

2.5%

3.8%

5.7%

7.3%

2.7%

1.5%

3.5%

2.0%

4.6%

2.1%

2.3%

1.7%

4.9%

Salary Increase

3.5%

7.5%*

4.5%

10.0% 11.0%

2.1%

5.0%

5.6%

3.0%

7.0%

4.5%

5.9%

3.8% 10.7%

MERCER

Source: IMA Asia Brief Aug 2014 Mercer Global Compensation Planning Report 2014 July *Mercer TRS Surveys 2014 3

China on Track for Moderate Growth GDP per capita

7961 7333 6747 6078 5434

2011

2012

2013

2014(F)

China’s Ranking of GDP per capita Year

Ranking

2011

91

2012

88

2013

84

2014(F)

82

2015(F)

81

2015(F)

1. Source: IMF World Economic Outlook (April, 2014). 2. GDP is expressed in current U.S. dollars per person. Data are derived by first converting GDP in national currency to U.S. dollars and then dividing it by total population. 3. For the ranking, there are 186 countries and regions with the data of GDP per. capita MERCER

4

China’s Total Debt vs. GDP Raised rapidly since 2008 economic risk increased

Source: Financial Times reported on July 22, 2014, citing estimates from Standard Chartered. MERCER

5

China PMI : Manufacturing and Services

55

PMI Manufacturing PMI Service

54

54.1

Highest

53

since Mar 2013

52

Service

51 50

50.2 49

Down Again

48

after 3-month up

47

Manufacturing

46 45 Aug Sep

Oct

2013

Nov Dec Jan

Feb Mar

Apr May Jun

Jul

Aug

2014 Source: HSBC September, 2014

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6

China GDP Growth Rate Forecast

CHINA: GDP Growth by Component, %

15

Manufacturing

Construction

Services

GDP

12

9

6

3

0 2010

2011

2012

2013

2014

2015

2016

Source: China Forecast Book, IMA Asia, 2014 Q3 MERCER

7

China Foreign Direct Investment (FDI) China FDI Growth

2013 FDI Flow

Growth Percentage(Year-on-year)

40

30

20

100

124 10

USD, Billion

0 FDI Outflow

FDI Inflow

-10 2014 -20 Q1

Q2

Q3

2011

Q4

Q1

Q2

Q3

2012

Q4

Q1

Q2

Q3

2013

Q4

Q1

Q2

Outflow > Inflow

2014

Source : Ministry of Commerce of the People’s Republic of China Source: World Investment Report 2014 United Nations Conference on Trade and Development MERCER

8

Innovation – A Path to Transformation China has improved its innovation from 2013 to 2014 Global Innovation Index rankings Country/Economy

Score(0-100)

2014 Rank

2013 Rank

Switzerland

64.78

1

1

United Kingdom

62.37

2

3

Sweden

62.29

3

2

United States of America

60.09

6

5

Hong Kong (China)

56.82

10

7

Japan

52.41

21

22

China

46.57

29

35

Russian Federation

39.14

49

62

Brazil

36.29

61

64

India

33.70

76

66

Source: The Global Innovation Index 2014 Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) MERCER

9

Source: CBN Weekly 2014 MERCER

10

Population Demographics – Gender Asia 100+

2030

95-99 90-94

2010

85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4

6.0%

4.0%

2.0%

0.0%

Male

2.0%

4.0%

6.0%

Female Source: UN Population Statistics 2012

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Population Demographics – Median Age 55

Median Age of the Total Population (Years)

50

1990

2010

2030

45 40 35 30 25 20 15 10 5 0

India

ASEAN

USA

Australia

China

South Korea

Japan

Source: UN World Population Prospects 2012 MERCER

12

China’s Changing Demographics Age Group between 20 - 59 Unit: thousand

250,000

200,000

20-29 30-39

150,000

40-49 50-59 100,000

50,000 1990

1995

2000

2005

2010

2015

2020

2025

2030

The forecast of the future population adopts medium fertility rate assumption. Source: World Population Prospects: The 2012 Revision, United Nations MERCER

13

Human Capital Index – by Region

1 0.8

Human Capital Index

0.6

Health and Wellness

0.4 0.2 0

Education

-0.2 -0.4

Workforce and Employment

-0.6 -0.8 -1 North America

• •

Europe and Central Asia

Asia and Pacific Latin America Middle East and Sub-Saharan North Africa Africa and the Caribbean

Enabling Environment

Overall index is unweighted average of the four pillar scores Scores are weighted by population; population data from United Nations Department of Economic and Social Affairs, World Population Prospects, rev. 2012. Source: The Human Capital Report, World Economic Forum, 2013 The report is published in collaboration with Mercer MERCER

14

Human Capital Index - China Rank #43 Country

Rank

Score

Switzerland

1

1.455

Finland

2

1.406

Singapore

3

1.232

Netherlands

4

1.161

Sweden

5

1.111

Japan

15

0.948

United States

16

0.920

Malaysia

22

0.644

China

43

0.186

Thailand

44

0.158

Russian Federation

51

0.010

Indonesia

53

0.001

Brazil

57

-0.054

Mexico

58

-0.057

Vietnam

70

-0.202

India

78

-0.270 Source: The Human Capital Report, World Economic Forum, 2013

MERCER

15

Summary •

China still has strong-to-moderate GDP growth rate in next 3 years.



Economic risk is raising due to stimulation.



China may become a FDI net outflow country in 2014.



China is on the way improving its Human Capital Index and innovation ranking in the world, while the aging population will be a issue, China has to seek way to offset its negative impact.

MERCER

16

New Technology Brings New Practices of Talent Management

HR Revolution with business change

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Hiring

Communi cation

Learning & Developm ent

Saving

18

From Graduates’ points of view

• •

Strong financial power Competitive benefits

• •

Attractive company products/services Innovative culture



Fast promotion Job Security

• •

• •

Performance-based bonus Fast promotion Entrepreneurship environment

But lack of… • •

Innovative culture • Inspiring leadership •

Grey area Compensation for OT

Data source: Universum MERCER

19

Graduate Top 3 Preferences

MNC SOE POE

OWN-BIZ START-UP Data source: Universum

MERCER

20

MERCER 24 October 2014

21

FIFA World Cup and Social Network

350,000 tweets Per day

62% out of 500 million

1,000 + million discussion Data source: Peel, eMarketer MERCER

22

Revolution in Recruitment Channel

MERCER

23

Revolution in Recruitment Channel

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24

And Now…

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25

Once upon a time…

“……以最饱 满的诚意,招 聘最优秀的人 才加盟,共同 谱写辉煌的未 来!”

MERCER

我们将遵循公平、公正的 原则择优录用,同时提供 具有竞争力的薪酬待遇和 广阔的发展空间,欢迎优 秀人才积极报名应聘。 26

And Now…

“他就是传说中最理性的感性的管理者…

无论多少关键词 都无法代表他的全部 现在 快加入…吧 让我们一起创造属于我们的下一个神话!” “希望有美感,性格外向活泼敢想敢做,梦想无限 的亲们踊跃加入!” “领导炫酷:工作时带领你,指点江山帅你一脸, 不定期释放傲娇卖萌特技…只要你来,绝不辜负!”

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27

Communication CEO Corner

MERCER

28

Learning & Development

MERCER

29

MERCER 24 October 2014

30

MERCER 24 October 2014

31

Chinese 85% employees are not good at financial planning and investment MERCER

Smart Saving The new thoughts on Benefits

Financial Management Seminar Investment Platform Smart Saving Customized Financial Management Solution

Do not forget, you are an inflation-linked bond! MERCER

3333

Leadership and Retention - Key to Business

I have trust in Company Leadership, who has clear goals and is guiding the company in right direction 5

Company Culture

4

Convenient Location

3

Standardized Management

2

Open door policy for complaints and appeals

1 0

Colleagues Relationship

Team Building Activities

Democratic and innovative environment

Flexible Working Hours

Recognition for individual performance Health Issue

Data source: 2014 Mercer Retention Survey MERCER

34

MERCER

HRHiring Marketing

CommuniTranspacation rency

Learning & Developme Innovation nt

HR Saving Finance

35

Compensation and Benefit Trends

Increasing of Mercer survey database from 2010 to 2014 No. of Survey Participants

700 600 500

2010 2011 2012 2013 2014

400 300 200 100 0

MERCER

Auto

Chemical

Consumer

High Tech

Life Science

GD All Office

GD All Manu

Source: 2011-2014 Mercer China TRS

37

China on Track for Moderate Growth GDP, CPI, salary increase and turnover rate GDP

18

CPI(Inflation Rate)

Salary Increase 15.7

16

Staff Voluntary Turnover

16.3

14.6 12.2

13

12

13.6

13.4

13.5

14

13.6

11.3

7.2 2014 1st half year

11.6 10 8

10.4 8.2

8.2

8.6

9.6 8.7

10.4 9.1

8.5

9.6

7.8

5.9 3.3

2 1.8

1.5

2005

2006

7.7

7.5

7.7

7.4

6.7

2.5

2.8

5.4

4.8

4

7.9

9.3

6.9

6

9.4

2.6

2.6

2012

2013

0 -2

2007

2008

2009 -0.7

2010

2011

2014(E) 2015(F)

Source : National Bureau of Statistics of China IMA Asia (Aug 2014) 2004-2014 Mercer Total Remuneration Survey MERCER

38

Salary Increase Rate from 2009 to 2015 Comparison across industries 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% Auto (1st Tier) Chemical (1st Tier) Consumer (1st Tier) High-Tech (1st Tier) Life Science Guangdong All Industries Office Guangdong All Industries Manufacturing MERCER

2009 7.1% 6.0% 6.8% 5.7% 8.3% 6.8% 6.8%

2010 8.4% 8.2% 7.9% 8.2% 8.4% 8.1% 8.1%

2011 9.7% 9.1% 8.6% 8.9% 8.8% 9.0% 9.0%

2012 9.4% 9.0% 8.2% 8.1% 9.1% 8.7% 8.4%

2013 8.5% 8.2% 8.1% 8.3% 8.5% 7.9% 7.8%

2014 (E) 8.2% 7.5% 7.7% 7.5% 8.1% 7.4% 7.3%

2015 (F) 8.3% 7.8% 7.8% 8.2% 8.4% 7.7% 7.5%

Source: 2009-2014 Mercer China TRS

Turnover rises in 2014 first half Voluntary staff turnover rate across years 25.0%

22.5%

20.0%

17.5%

15.0%

12.5%

10.0%

7.5%

5.0% Auto(1st Tier) Chemical(1st Tier) Consumer(1st Tier) High-Tech(1st Tier) Life Science Guangdong All Industries Office Guangdong All Industries Manufacturing MERCER

2008 10.5% 8.7% 15.0% 14.6% 16.6% 13.7%

2009 11.7% 6.9% 13.8% 8.7% 15.2% 12.1%

2010 14.6% 9.5% 18.9% 14.6% 18.7% 13.5%

2011 15.1% 10.6% 17.3% 15.1% 16.9% 16.4%

2012 13.2% 9.6% 18.3% 11.1% 14.3% 15.2%

2013 12.1% 8.3% 17.8% 14.9% 15.2% 15.0%

22.0%

16.6%

20.5%

20.1%

19.2%

21.5%

2013 1st Half 7.6% 4.6% 8.7% 6.6% 6.4% 7.6% 10.0%

Source: 2009-2014 Mercer China TRS

2014 1st Half 8.1% 5.0% 8.6% 7.9% 8.4% 12.9%

Involuntary Turnover 2011-2013 %

7

6

5

4

3

2

1

0

2011 2012 2013

MERCER

Auto (1st Tier)

Chemical (1st Tier)

Consumer (1st Tier)

High-Tech (1st Tier)

Life Science

Guangdong All Industries Office

1.4 1.8 2.8

1.8 4 4.3

3.6 5.4 5.1

1.5 2.8 6.3

2.4 1.8 4.9

4.3 4.7 4.7

Guangdong All Industries Manufacturing 3.8 4.8 4.8

Source: Mercer 2014 China TRS report

Turnover Rate of Guangdong All Industries Office by Function (Recent 3 Years) 16.0%

14.0%

12.0%

10.0% 2011 8.0%

2012 2013

6.0%

4.0%

2.0%

0.0% Finance

MERCER

HR

Marketing

R&D

Sales

Supply&Logistics

Source: Mercer 2014 Guangzhou All industry Office TRS report

Turnover Rate of Guangdong All Industries Office by Function (Recent 3 Years) 18.00%

16.00%

14.00%

12.00%

10.00% 2011 2012 8.00%

2013

6.00%

4.00%

2.00%

0.00% Finance

MERCER

HR

Marketing

R&D

Sales

Supply&Logistic

Source: Mercer 2014 Guangzhou All industry Manufacturing TRS report

Talent market reflect economy: hiring intention shrinks in 2014 hiring intention also shrinks in 2013 2013-2014 hiring intention in next 12 months 69%

Auto

28%

73%

23%

52%

Chemical

7%

39%

58%

9% 39%

52% 59%

6% 37%

63%

Hiring intention in 2014 Hiring intention in 2013

4%

44%

52% 20%

6% 37%

47%

10%

6%

39%

59%

0%

6% 22%

54%

Guangdong All industry-Manu

4%

31% 72%

Guangdong All industry-Office

3%

42%

Life Science

MERCER

8%

41%

52%

Hi-Tech

4%

40%

52%

Consumer

3%

9% 43%

30%

40%

50%

60%

70%

5% 80%

90%

100%

Adding

No Change

Reducing

Adding

No Change

Reducing

Source: 2013-2014 Mercer China TRS

2014 Prize for Performance Target variable bonus as percentage of base salary 90% 80% 70% 60%

3 months payment

50% 40%

2 months payment

30% 20% 10% 0%

Auto(1st Tier) Chemical(1st Tier) Consumer(1st Tier) High-Tech(1st Tier) Life Science Guangdong All Industries Office Guangdong All Industries Manufacturing

MERCER

Executive

Mgmt - Sales

25% 23% 26% 26% 29% 26% 25%

22% 29% 41% 35% 57% 41%

Mgmt - Non Sales 20% 19% 18% 20% 22% 20% 19%

Prof - Sales 32% 33% 47% 46% 87% 49%

Prof - Non Sales 18% 17% 14% 18% 17% 16% 17%

Para-Prof White Collar 18% 16% 13% 17% 16% 15% 15%

Source: 2014 Mercer China TRS

Overall 21% 19% 19% 22% 23% 21% 20%

2014 Pay Mix Policy Guangdong All industries - Office Executive

Management -sales

Management -non sales

Professionalsales

Professionalnon sales

85%

84%

82%

ParaProfessionalWhite Collar

77% 72%

Guarantee Cash

70%

30%

28% 23% 18%

MERCER

16%

15%

Source: 2014 Mercer China TRS – Guangdong All Industries Office

Variable Cash

2014 Pay Mix Policy Guangdong All industries - Manufacturing Executive

76%

24%

Management Management Professional-non sales sales -sales

Professionalnon sales

82%

83%

73%

83%

Para Professional – Blue Collar

82% Guarantee Cash

71%

29%

27% 18%

MERCER

ParaProfessionalWhite Collar

17%

17%

18%

Source: 2014 Mercer China TRS – Guangdong All Industries - Manufacturing

Variable Cash

Year Over Year Comparison 2014 vs. 2013 Guangdong All Industries – Office (Annual Total Cash – Actual)

Staff

Prof

Mgmt

Executive

Position Class 60 59 58 57 56 55 54 53 52 51 50 49 48 47 46 45 44 43 42 41 40

P25

2014 2013

Year

Movement

2014 vs. 2013

+1.6%

2013 vs. 2012

+1.9%

2012 vs. 2011

+10.8% RMB

0

MERCER

Med P75

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Source: 2013 & 2014 Mercer China TRS – Guangdong All Industries Office

Year Over Year Comparison 2014 vs. 2013 Guangdong All Industries – Manufacturing (Annual Total Cash – Actual)

Para-Prof

Prof

Mgmt

Executive

Position Class 60 59 58 57 56 55 54 53 52 51 50 49 48 47 46 45 44 43 42 41 40

P25

2014 2013

Year

Movement

2014 vs. 2013

+1.8%

2013 vs. 2012

+7.2%

2012 vs. 2011

+5.7% RMB

0 MERCER

Med P75

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Source: 2013 & 2014 Mercer China TRS – Guangdong All Industries Manufacturing

Year Over Year Comparison 2014 vs. 2013 Guangdong All Industries – Manufacturing (Annual Base Salary) Overall RMB

2014

2014 vs. 2013 : 6.3%

2013

Annual Base Salary (Thousand RMB per annum)

2,400 2,200

Executive

2,000

2014 vs. 2013 : 5%

1,800 1,600 1,400

Management

1,200

2014 vs. 2013: 5%

Professional

1,000 800

2014 vs. 2013 : 7%

Para-Professional 2014 vs. 2013 : 8%

600 400 200 0 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 Position Class MERCER

Source: 2013 & 2014 Mercer China TRS – Guangdong All Industries Manufacturing

Year Over Year Comparison 2014 vs. 2013 Guangdong All Industries – Manufacturing (Annual Total Cash - Actual) Overall RMB

2014

2014 vs. 2013 : 6.8%

2013

Annual Total Cash - Actual (Thousand RMB per annum)

2,400 2,200

Executive

2,000

2014 vs. 2013 : 6%

1,800 1,600 1,400

Management

1,200

2014 vs. 2013: 5%

Professional

1,000 800

2014 vs. 2013 : 8%

Para-Professional 2014 vs. 2013 : 8%

600 400 200 0 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 Position Class MERCER

2013 & 2014 Mercer China TRS – Guangdong All Industries Manufacturing

Year Over Year Comparison 2014 vs. 2013 Guangdong All Industries – Office (Annual Base Salary) Overall RMB

2014

2014 vs. 2013 : 3.8%

2013

Annual Base Salary (Thousand RMB per annum)

2,400 2,200

Executive

2,000

2014 vs. 2013 : 4%

1,800 1,600 1,400

Management

1,200

2014 vs. 2013: 5%

Professional

1,000 800

2014 vs. 2013 : 3%

Para-Professional 2014 vs. 2013 : 3%

600 400 200 0 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 Position Class MERCER

2013 & 2014 Mercer China TRS – Guangdong All Industries Office

Year Over Year Comparison 2014 vs. 2013 Guangdong All Industries – Office (Annual Total Cash - Actual) Overall RMB

2014

2014 vs. 2013 : 3%

2013

Annual Total Cash - Actual (Thousand RMB per annum)

2,400 2,200

Executive

2,000

2014 vs. 2013 : 3%

1,800 1,600 1,400

Management

1,200

2014 vs. 2013: 4%

Professional

1,000 800

2014 vs. 2013 : 3%

Para-Professional 2014 vs. 2013 : 2%

600 400 200 0 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 Position Class MERCER

2013 & 2014 Mercer China TRS – Guangdong All Industries Office

Pay Progression to Higher Level SH All - Office vs. BJ All – Office vs. GZ&SZ All – Office (Annual Base Salary)

1,400,000

1,200,000

1,151,317

2.9

3.1

1,000,000

3.7

1,101,560 1,046,301

800,000

2.6

600,000

400,000

200,000

-

3.2

2.6

Shanghai

MERCER

3.3 394,270

4.1

369,060 152,514 140,373

47,921 41,977 37,594 Para-Professional

2.8

310,813

118,629 Professional Beijing

Management

Executive

Guangzhou&Shenzhen

Source: 2014 Mercer China TRS

Pay Progression to Higher Level SH All - Office vs. BJ All – Office vs. GZ&SZ All – Office(Annual Total Cash)

1,400,000

1,304,488

1,200,000

3.0

3.1

3.3

1,000,000

800,000

2.5

600,000

2.5

2.6 477,654

400,000

200,000

3.2

3.3

453,790

3.2

389,618

188,192 180,400

58,728 54,466 47,229

150,159

-

Para-Professional Shanghai

MERCER

Professional Beijing

Management

Executive

Guangzhou&Shenzhen

Source: 2014 Mercer China TRS

Pay Progression to Higher Level SH All - Manu vs. BJ All – Manu vs. GZ&SZ All – Manu(Annual Base Salary)

1,400,000

1,200,000

2.8

2.5

2.5

1,087,457

1,000,000

857,393

800,000

2.6

600,000

400,000

3.3

3.2

2.8

2.7

683,345

386,559

2.9

347,309 200,000

-

Para-Professional Shanghai

MERCER

150,633

45,441 38,738 34,641

271,003

125,028 100,840 Professional Beijing

Management

Executive

Guangzhou&Shenzhen

Source: 2014 Mercer China TRS

Pay Progression to Higher Level SH All - Manu vs. BJ All – Manu vs. GZ&SZ All – Manu(Annual Total Cash)

1,400,000

1,326,231

1,200,000

2.8

2.7

2.7

1,159,677

1,000,000

917,004

800,000

2.5

600,000

2.6

2.7 470,094

400,000

3.1

3.2

429,234

2.7 189,301

200,000

61,082 52,024 45,670

340,271

166,544 124,849

-

Para-Professional Shanghai

MERCER

Professional Beijing

Management

Executive

Guangzhou&Shenzhen

Source: 2014 Mercer China TRS

2014 Comparison By Locations Guangdong All Industries – Manufacturing (Annual Base Salary) RMB

Guangzhou

Shenzhen

Dongguan

450

Management GZ vs. SZ : 3%

Annual Base Salary (Thousand RMB per annum)

400

GZ vs. DG : 2%

Overall GZ vs. SZ : 3.3%

350

GZ vs. DG : 10%

Professional

300

GZ vs. SZ : 4% GZ vs. DG : 15%

250 200 Staff

150

GZ vs. SZ: 3% GZ vs. DG: 13%

100 50 40

MERCER

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

Source: Mercer 2014 China TRS – Guangdong All Industries Manufacturing

What’s in employee's mind?

MERCER

Hiring needs for fresh graduate? All industry- Guangzhou & Shenzhen 2.00%

Bachelor VS. Master

1.50%

1.00%

学士 Bachelor 硕士 Master

0.50%

0.00%

Fresh needs as percentage of total headcount. MERCER

Source: 2014 Fresh graduate survey

How do we pay our new generation? Starting salary trend –Base salary Bachelor

P75

Master

Average

Median

120000

P25 100000

80000

60000

40000

20000

0

MERCER

Source: 2014 Fresh graduate survey 2014 Guangdong All Industries Office

Career ladder Entry level to executive v13 years experience v15 times of salary

4 years 1 years 2 years

3 years 3 years

45Junior 46Prof.47 Number of incumbent

48 Prof.49& Sr.50Prof. 51

52 53 Supervisor

54

Mgr. 55

56

Mgr. 59 57 Sr. 58

60Executive 61 62

Career ladder

Less

MERCER More

Source: 2014 Mercer China TRS – Guangdong All Industries Office

Celebrate for 10 years graduation.

MERCER

ALL INDUSTRIES

MERCER

24 October 2014

2014 Benchmarking Company-China AstraZeneca Bayer Eli Lilly Pfizer Roche

BP Chevron ExxonMobil Schlumberger Shell

Life Science

Benz BMW General Motors Toyota Volkswagen

Petroleum

Chemical

Emerson GE Multi-industry Honeywell Philips Siemens

Consumer

Internet Alibaba Baidu Tencent MERCER

BASF Bayer Dow Chemical DuPont SABIC

Auto

High Tech Cisco HP IBM Intel Microsoft

Johnson & Johnson Mondelez Nestle P&G Unilever

2014 Comparison Benchmarking VS. 1st Tier Cities Annual Total Cash – Actual Overall RMB

BK vs. 1st Tier Cities : 13%

Benchmarking Companies (BK) 1st Tier Cities

Annual Total Cash (Thousand RMB per annum)

2,400 2,200

Executive

2,000

BK vs. 1st Tier : 7%

1,800 1,600 Management

1,400

BK vs. 1st Tier : 5%

1,200

Professional

1,000 800

BK vs. 1st Tier : 12%

Para-Professional BK vs. 1st Tier : 28%

600 400 200 0 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 Position Class MERCER

Source: Mercer 2014 China TRS report

2014 Comparison Benchmarking VS. Guangdong All Industries Office Annual Total Cash – Actual RMB Annual Total Cash (Thousand RMB per annum)

2,400

Overall BK vs. GD 29%

Benchmarking Companies (BK) Guangdong All Industries Office

2,200 Executive

2,000

BK vs. GD : 24%

1,800 1,600 Management

1,400

BK vs. GD: 21%

1,200

Professional

1,000 800

Para-Professional

BK vs. GD : 24%

BK vs. GD: 48%

600 400 200 0 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 Position Class MERCER

Source: Mercer 2014 China TRS report

Salary Increase Rate by Career Level Overall vs. Benchmarking All Industries – Guangdong Office vs. China Benchmarking 2013 2014 (Actual/ Estimate)

2012 2013 (Actual)

2014 2015 (Forecast)

Shanghai Guangdong All All

Benchmarking Benchmarking

Shanghai Guangdong All All

Benchmarking Benchmarking

Shanghai Guangdong All All

Benchmarking Benchmarking

Executive

8.7% 7.8%

8.3%

8.5% 7.3%

7.9%

8.3% 7.6%

8.0%

Management Sales

9.1% 8.3%

8.5%

9.0% 7.7%

8.1%

8.6% 7.8%

8.3%

Management Non Sales

9.0% 8.2%

8.6%

8.6% 7.9%

8.0%

8.6% 7.9%

8.4%

Professional Sales

8.9% 8.2%

8.6%

8.7% 7.8%

8.1%

8.6% 8.0%

8.3%

Professional Non Sales

9.1% 8.4%

8.8%

8.7% 8.0%

8.2%

8.7% 8.0%

8.6%

ParaProfessional White Collar

9.0% 8.1%

8.7%

9.0% 7.9%

8.0%

8.6% 7.9%

8.4%

Overall

8.8% 7.8%

8.3%

8.1% 7.4%

7.9%

8.3% 7.7%

8.0%

MERCER

Source: 2014 Mercer China TRS

Benchmarking companies turnover rate are lower than all industry Staff Turnover and Staff Retrenched 25.0%

5.0%

20.0%

4.0%

15.0%

10.0%

5.0%

1.0%

0.0%

0.0% Staff Turnover

MERCER

Guangdong Office Guangdong MFG BK

3.0% Beijing Office Beijing MFG BK 2.0%

Staff Retrenched

Source: 2014 Mercer China TRS

Market prevalence between benchmarking companies and all industries

79%

9%

High-end Medical

Flexible Benefits

24%

82%

80%

18%

Retirement

29%

100%

38%

Housing

42%

7%

Car 60%

40%

20%

0%

63%

0%

Benchmarking Companies MERCER

81%

Life Insurance

97%

20%

40%

60%

80%

All Industries 24 October 2014

Source: Mercer China Benefit Survey – 1st tier cities

100%

It is all about benchmarking

MERCER

What’s in HR’s mind?

Local Company VS MNCs China Executive VS Global Executive Local Employees VS Local Plus

MERCER

High tech company: Local companies vs MNC Annual Base Salary

Overall Local vs. MNC: -42%

RMB Annual Total Cash (Thousand RMB per annum)

1,200

Local

MNC Executive Local vs. MNC: -42%

1,000

800

Management Local vs. MNC: -36%

600

Professional Para-Professional

400

Local vs. MNC: -27%

Local vs. MNC: -15%

200

0 40

41 42 43

44 45 46

47 48 49

50 51 52 53

54 55 56

57 58 59

Position Class MERCER

Source: Mercer 2014 High tech report

60 61

High tech company: Local companies vs MNC Annual Total Cash

Overall Local vs. MNC: -34%

RMB Annual Total Cash (Thousand RMB per annum)

1,200

Local

Executive

MNC

Local vs. MNC: -37%

1,000

800

Management Local vs. MNC: -32%

600

Professional Local vs. MNC: -23%

Para-Professional

400

Local vs. MNC: -9%

200

0 40

41 42 43

44 45 46

47 48 49

50 51 52 53

54 55 56

57 58 59

Position Class MERCER

Source: Mercer 2014 High tech report

60 61

Top Executive Compensation Comparison Head of Human Resource- Annual Total Cash

P75 Average

2,500,000

Gross

Median

Net

P25

2,000,000

1,500,000

1,000,000

500,000

0

MERCER

CN

HK

JP

SG

US

Source:2013 Mercer Executive Rem survey

Top Executive Compensation Comparison Head of Sales - Annual Total Cash

P75 Average

Gross

2,500,000

Median

Net

P25

2,000,000

1,500,000

1,000,000

500,000

0

CN MERCER

HK

JP

SG

US

Source:2013 Mercer Executive Rem survey

How do we pay the local plus? - Office Local plus vs. local comparison—Annual Base Salary 64 63

Executive

62

P25

61

Med P75 Local Plus Local

60 59 58 57

Mgmt

56 55

Career Stream

Local Plus vs. Local

Executive

+30%

Management

+43%

Professional

+69%

54 53

Prof

52 51 50 49 0

MERCER

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2,400,000

2,700,000

Source: 2014 Mercer China TRS – Guangdong All Industries Office

RMB 3,000,000

How do we pay the local plus? - Office Local plus vs. local comparison—Annual Total Cash - Actual 64

P25

63

Med P75 Local Plus Local

Executive

62 61 60 59 58 57

Mgmt

56 55

Career Stream

Local Plus vs. Local

Executive

+37%

Management

+42%

Professional

+56%

54 53

Prof

52 51 50 49 0

MERCER

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2,400,000

2,700,000

Source: 2014 Mercer China TRS – Guangdong All Industries Office

RMB 3,000,000

Locally hired foreigner benefit 0%

MOST PREVELENCE BENEFIT : §

Insurance and medical are still most prevalence benefit for locally HOUSING

hired foreigners, followed by MEDICAL INSURANCE

housing and relocations.

TAX SUPPORT TRANSPORTATION

TOP ISSUE: §

Managing costs is always the

20%

RETIREMENT 80%

SPOUSE SUPPORT

headache. §

Localization issue has been recently raised by many companies. Most of them still doing localization case by case without formal policies.

60%

MERCER

40%

Main Challenges Company Faced With

Rising Total Rewards Cost

MERCER

Employee Attraction, Retention and Engagement

Benefit Award of Year 2014

Car (Top Mgt)

Healthcare

88%

100%

Life Science

Hi-Tech

Flex

Retirement

50%

MERCER

66%

Automobile

Housing

Chemical

LTI

19%

27%

Chemical

Life Science source: Mercer China Benefit Survey – 1st tier cities

Market Prevalence of Supplementary Benefit Items All Industries Annual leave Mobile subsidies Supplementary medical Personal accident insurance Life insurance Fully-paid sick leave OT transportation subsidy Long service award Overtime meal subsidy Education assistance Meal subsidies Company car Transportation subsidies Flexible working time Supplementary housing Car allowance Retention bonus Supplementary retirement Flexible benefits Loan

Must Have Benefits Common Benefits

81% 81% 77% 70% 68% 61% 56%

50% 47% 44% 38% 33% 30%

Differentiated Benefits

18% 7% 5% 0%

MERCER

96% 96% 94% 89%

20%

40%

60%

80%

100%

source: Mercer China Benefit Survey – All Industries (1st tier cities)

Innovative Benefits

Compensation

Benefits

Global Mobility Workforce

INNOVATIVE BENEFITS Lower cost Higher employee recognition Enhance employer brand Differentiate among competitors ……

MERCER

24 October 2014

Innovative Benefits in Internet Industry

MERCER

24 October 2014

Innovative Benefits in Internet Industry Extended to family members

Dependents

MERCER

Innovative Benefits in Other Industries • Latest New Car Test Drive • Premium Car for Marriage Use • Premium Car Monthly Rental • •



Friday Early Home Bring Your Own Devices

Working Time

MERCER

Holiday with Physical Check-up •

Auto

Relaxation

Premium Afternoon Tea

MERCER

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