China Economy Forum

[TaiShang]

More Chinese leave gov't jobs for start-ups - CCTV News - CCTV.com English

With power, security and a steady income, government jobs in China have long been coveted, even known as "iron rice bowls" due to their stability. But not so much anymore. As opportunities in start-up industry grow, more Chinese workers are leaving jobs in state-owned enterprises and the public sector.

Last year, Mu shan was a photo journalist for a state-owned news organization. But he quit, leaving the security of a government job to work at a new media start-up. He now writes car-travel stories on his own blog that are published on the popular messenging service WeChat.

"I want to start a new thing - WeChat subscriptions - that my old company won't support me in doing. My own account, named Auto-travel, is focused on travel information, and promoting car tips... It's more fun than newspapers..." Mushan said.

After less than a year, he says the start-up has almost a million subscribers between its contributors - and is making money. It's a sign that China's shift towards innovation-led growth is changing its labor market.

For decades, the most prized jobs in China involved working for the state - with a steady income and often, a job for life. But with the government now encouraging the private sector - to make the economy more competitive - small businesses and start-ups are offering increasingly attractive careers.

People like Jack Ma - founder of e-commerce giant, Alibaba - are inspiring a generation to seek greater freedom and fortunes in the private sector.

According to one Chinese human resources website, 34 percent more civil servants this year are looking to leave their jobs.

Tang Min - who advises the State Council - says more graduates are also joining private companies than state-owned enterprises.

"A recent survey shows... about 50 percent of college graduates found a job in the private sector. About five years ago, that number was just 40 percent... On the other hand, those working in state-owned enterprises, started from 32 percent and reduced to 23 or 24 percent," Tang said.

While the private sector is growing, he says SOES are hiring fewer new graduates.

"I think part of the reason is state owned enterprises are not performing well, so they do not have job openings. On the other hand, private sector does have better promotion opportunities. You can within four or five years, become a big boss," Tang said.

The government is also now supporting start-ups, through subsidies, tax cuts and training. While the country's crackdown on corruption is believed to be making official posts less lucrative.

As China's small businesses become big, they're likely to lure more talent in future.

 

[Götterdämmerung]

More Chinese leave gov't jobs for start-ups - CCTV News - CCTV.com English

With power, security and a steady income, government jobs in China have long been coveted, even known as "iron rice bowls" due to their stability. But not so much anymore. As opportunities in start-up industry grow, more Chinese workers are leaving jobs in state-owned enterprises and the public sector.

Last year, Mu shan was a photo journalist for a state-owned news organization. But he quit, leaving the security of a government job to work at a new media start-up. He now writes car-travel stories on his own blog that are published on the popular messenging service WeChat.

"I want to start a new thing - WeChat subscriptions - that my old company won't support me in doing. My own account, named Auto-travel, is focused on travel information, and promoting car tips... It's more fun than newspapers..." Mushan said.

After less than a year, he says the start-up has almost a million subscribers between its contributors - and is making money. It's a sign that China's shift towards innovation-led growth is changing its labor market.

For decades, the most prized jobs in China involved working for the state - with a steady income and often, a job for life. But with the government now encouraging the private sector - to make the economy more competitive - small businesses and start-ups are offering increasingly attractive careers.

People like Jack Ma - founder of e-commerce giant, Alibaba - are inspiring a generation to seek greater freedom and fortunes in the private sector.

According to one Chinese human resources website, 34 percent more civil servants this year are looking to leave their jobs.

Tang Min - who advises the State Council - says more graduates are also joining private companies than state-owned enterprises.

"A recent survey shows... about 50 percent of college graduates found a job in the private sector. About five years ago, that number was just 40 percent... On the other hand, those working in state-owned enterprises, started from 32 percent and reduced to 23 or 24 percent," Tang said.

While the private sector is growing, he says SOES are hiring fewer new graduates.

"I think part of the reason is state owned enterprises are not performing well, so they do not have job openings. On the other hand, private sector does have better promotion opportunities. You can within four or five years, become a big boss," Tang said.

The government is also now supporting start-ups, through subsidies, tax cuts and training. While the country's crackdown on corruption is believed to be making official posts less lucrative.

As China's small businesses become big, they're likely to lure more talent in future.

I don't necessarily see this as a positive development, because this reminds me of what has been happening in Germany in the last 25 years. Now, we have at best mediocre people making politics and thus becoming easy prey for smart business people who by the end of the day dictate the policies.

Do you think that private companies acts for the well-being of the whole country or more for the profit they generate for themselves?

 

[TaiShang]

I don't necessarily see this as a positive development, because this reminds me of what has been happening in Germany in the last 25 years. Now, we have at best mediocre people making politics and thus becoming easy prey for smart business people who by the end of the day dictate the policies.

Do you think that private companies acts for the well-being of the whole country or more for the profit they generate for themselves?

I am against absolutist free market economy. I do not believe that the market is honest or socially-oriented. Hence I support a government/public upper-hand over the market/private interests at all time.

As for the above, I guess, so long as the balance is maintained between public and private sectors, it is good for the economy for the entrepreneurship to grow.

 

[Bussard Ramjet]

I am against absolutist free market economy. I do not believe that the market is honest or socially-oriented. Hence I support a government/public upper-hand over the market/private interests at all time.

As for the above, I guess, so long as the balance is maintained between public and private sectors, it is good for the economy for the entrepreneurship to grow.

The private entrepreneurs are no doubt largely motivated by their profit, yet they are very cut-throat and competitive at that.

Till now there has not come a model where you have a government business, that is run as efficient as private ones. I was reading some Chinese policy makers and they were remarking the same thing. That while some of China's SOEs are humongous, they don't have the proportionate performance in innovation, ROI, patents, Intellectual property.

Companies like ZTE, Huawei, Alibaba, Tencent, are far more efficient with relatively less resources.

 

[Götterdämmerung]

The private entrepreneurs are no doubt largely motivated by their profit, yet they are very cut-throat and competitive at that.

Till now there has not come a model where you have a government business, that is run as efficient as private ones. I was reading some Chinese policy makers and they were remarking the same thing. That while some of China's SOEs are humongous, they don't have the proportionate performance in innovation, ROI, patents, Intellectual property.

Companies like ZTE, Huawei, Alibaba, Tencent, are far more efficient with relatively less resources.

The East India Company was such a boon for India, methinks. Innovative, efficient, high ROI and what not, ey?

 

[TaiShang]

The private entrepreneurs are no doubt largely motivated by their profit, yet they are very cut-throat and competitive at that.

Till now there has not come a model where you have a government business, that is run as efficient as private ones. I was reading some Chinese policy makers and they were remarking the same thing. That while some of China's SOEs are humongous, they don't have the proportionate performance in innovation, ROI, patents, Intellectual property.

Companies like ZTE, Huawei, Alibaba, Tencent, are far more efficient with relatively less resources.

There are sectors that are fine if mostly led by private interests, like tech companies. But there are sectors that are too sensitive to be left to private business, no matter how inefficient. Inefficiency is a relative concept, by the way. HSR in China is a state business. So is petroleum; upstream and downstream. If management is good and supervised enough, there is no reason they would not be as more competitive. China oil companies do compete well.

No matter what, national economy is in the end a national matter and to be publicly regulated. There cannot be laissez faire. When it comes to greater national interests, even the tech companies are being regulated and guided in order to ensure public protection and national interests.

 

[Bussard Ramjet]

The East India Company was such a boon for India, methinks. Innovative, efficient, high ROI and what not, ey?

From a purely business point of view, East India Company brought a lot of profits for its main stake holders, the businesses, traders, and British Industrialists.

Obviously, it was very bad for India, but we were being exploited, and that was what their job was.

Also, why do you bring this topic here? The fact of the matter is that an economy has limited number of human resources, which should be used efficiently, and if there is a really big state sector, that is inefficient, it puts downward pressure on the performance of an economy.

There are sectors that are fine if mostly led by private interests, like tech companies. But there are sectors that are too sensitive to be left to private business, no matter how inefficient. Inefficiency is a relative concept, by the way. HSR in China is a state business. So is petroleum; upstream and downstream. If management is good and supervised enough, there is no reason they would not be as more competitive. China oil companies do compete well.

No matter what, national economy is in the end a national matter and to be publicly regulated. There cannot be laissez faire. When it comes to greater national interests, even the tech companies are being regulated and guided in order to ensure public protection and national interests.

I am not calling for laissez faire, which obviously has its own problems.

The real issue is with the efficient utilization of resources. China has such huge companies and corporations. They beat all western companies in net worth, yet none come anywhere near in brand name, value, innovations, patents, and intellectual property generated.

And China already understands this. It is already trying mixed ownership reforms.

The problem with state owned firms is multi fold.

Firstly, it is always hard to ensure that the appointments to management are purely on merit, and don't have a political angle involved. No matter what the government, politics becomes an issue.

Secondly, the motivation of management comes into question, because they are not as closely scrutinized on their performance.

Thirdly, most of the state owned firms have political links, and hence they lobby governments in creating monopolies, to stifle competition. Competition is always good for innovation, and business, and final returns.

 

[TaiShang]

China has such huge companies and corporations. They beat all western companies in net worth, yet none come anywhere near in brand name, value, innovations, patents, and intellectual property generated.

That's also partly late-starter disadvantage. Some heavy industries hardly need brand recognition, by the way. They are strategically positioned, such as national grid or energy. When the country is powerful and influential, these national industries are powerful and ever expanding. Like China's oil companies or CSSR.

Other industries, such as high tech, the government has never wanted to run or dominate those. Again, against the backdrop of China's late industrialization, there are areas to be covered such as brand name or value. That should slowly build up.

Same goes with the auto sector. China is more than happy and willing to see the private firms to capture market share, innovate and compete.

And China already understands this. It is already trying mixed ownership reforms.

That was the plan in the very beginning. It is not a sudden realization of basic economics, but, timing and the national and international context. China's energy sector is a good example to restructuring and mixed ownership. Nonetheless, certain areas are a no-go for foreign or pure private interests.

Firstly, it is always hard to ensure that the appointments to management are purely on merit, and don't have a political angle involved. No matter what the government, politics becomes an issue.

When there is power, there is politics involved. It is everywhere in human life, not only in the halls of government offices. And this is not a bad thing. Even liberal arts departments of private universities involve politics, that is power sharing, distribution and competition. Let's say human nature.

Secondly, the motivation of management comes into question, because they are not as closely scrutinized on their performance.

That depends. There is always an option to set up the required supervision and regulation. That's an efficiency issue, not necessarily a structural problem.

Thirdly, most of the state owned firms have political links, and hence they lobby governments in creating monopolies, to stifle competition. Competition is always good for innovation, and business, and final returns.

Private firms do lobbying, as well. And they can be and play very nasty, from expensive dinners to revolving door politics. At least SOEs are what they are. Private companies suffer from corruption, mismanagement, going under and political lobbying. It is just that they are private, as some go under, many more are established. SOEs, however, are not easily to be discarded. Hence, if there is not a capable government, they remain a burden as the problems become chronic.

I am for monopolizing strategic sectors, by the way.

 

[IR-TR]

From a purely business point of view, East India Company brought a lot of profits for its main stake holders, the businesses, traders, and British Industrialists.

Obviously, it was very bad for India, but we were being exploited, and that was what their job was.

Also, why do you bring this topic here? The fact of the matter is that an economy has limited number of human resources, which should be used efficiently, and if there is a really big state sector, that is inefficient, it puts downward pressure on the performance of an economy.



I am not calling for laissez faire, which obviously has its own problems.

The real issue is with the efficient utilization of resources. China has such huge companies and corporations. They beat all western companies in net worth, yet none come anywhere near in brand name, value, innovations, patents, and intellectual property generated.

And China already understands this. It is already trying mixed ownership reforms.

The problem with state owned firms is multi fold.

Firstly, it is always hard to ensure that the appointments to management are purely on merit, and don't have a political angle involved. No matter what the government, politics becomes an issue.

Secondly, the motivation of management comes into question, because they are not as closely scrutinized on their performance.

Thirdly, most of the state owned firms have political links, and hence they lobby governments in creating monopolies, to stifle competition. Competition is always good for innovation, and business, and final returns.

China needed state companies, in order to catch up with multinational players that have a century of history. Slowely but surely, non-strategic companies will be divested, or at least partially. Brand names take time. Before too long, many Westerners will be wechatting on Xiaomi phones.

 

[Bussard Ramjet]

That's also partly late-starter disadvantage. Some heavy industries hardly need brand recognition, by the way. They are strategically positioned, such as national grid or energy. When the country is powerful and influential, these national industries are powerful and ever expanding. Like China's oil companies or CSSR.

Other industries, such as high tech, the government has never wanted to run or dominate those. Again, against the backdrop of China's late industrialization, there are areas to be covered such as brand name or value. That should slowly build up.

Same goes with the auto sector. China is more than happy and willing to see the private firms to capture market share, innovate and compete.

This is what I'm saying precisely. China has such huge champions in Oil, Gas, Power, Grid, etc, yet they are not able to bring better returns.

Even in Auto sectors, it is not state owned firms that are creating their brands, it is the private players like Geely, and BYD who are surging ahead. State owned firms are happy with JVs, and resting with the western branded cars.

Similarly, While Sinopec is huge, it comes no where near companies like BASF, and Toray in innovation and patents.

I'm not saying that they should be privatized. But they should be put on stricter leash. Also, China must have massive state venture funds, like Temasek and SoftBank Corporation, who bet on technology companies, and take a stake in them.

 

[Götterdämmerung]

From a purely business point of view, East India Company brought a lot of profits for its main stake holders, the businesses, traders, and British Industrialists.

Obviously, it was very bad for India, but we were being exploited, and that was what their job was.

Also, why do you bring this topic here? The fact of the matter is that an economy has limited number of human resources, which should be used efficiently, and if there is a really big state sector, that is inefficient, it puts downward pressure on the performance of an economy.

Well, you said that it's best to let private companies run all sectors of the economy. The East India Company in fact did this.

I don't think that you even understood the implication and consequence of what you write.

Society is not made of efficiency, it's made of human. Just because the Indian state is dysfunctional doesn't mean that other countries have the same problem. Germany was very well run, when companies such as Volkswagen, Lufthansa, Deutsche Post (post and telecom), Deutsche Bahn were all 100% or at least majority state companies.

 

[TaiShang]

This is what I'm saying precisely. China has such huge champions in Oil, Gas, Power, Grid, etc, yet they are not able to bring better returns.

Even in Auto sectors, it is not state owned firms that are creating their brands, it is the private players like Geely, and BYD who are surging ahead. State owned firms are happy with JVs, and resting with the western branded cars.

Similarly, While Sinopec is huge, it comes no where near companies like BASF, and Toray in innovation and patents.

I'm not saying that they should be privatized. But they should be put on stricter leash. Also, China must have massive state venture funds, like Temasek and SoftBank Corporation, who bet on technology companies, and take a stake in them.

I agree the SOEs must be more strictly regulated and pushed for competition and innovation. Energy sector, for one, is much leaner, competitive and innovative now as, although remain state-owned, they start to behave more like private enterprises.

China also encourages and subsidizes private investment and entrepreneurship. In fact, as I remember, recently, about half of the new graduates goes for setting up their own firms. Last year, every seven second, a new firm has been registered. There is a boom on that front, as anticipated from a developing country. A bulk of them will go under, for sure, but there is the interest and state support there.

China's venture capitals as well as sovereign funds are also investing in home and abroad tech companies although large-scale ventures like rail deals make more news.

Society is not made of efficiency, it's made of human. Just because the Indian state is dysfunctional doesn't mean that other countries have the same problem. Germany was very well run, when companies such as Volkswagen, Lufthansa, Deutsche Post (post and telecom), Deutsche Bahn were all 100% or at least majority state companies.

Yes, that's one of the problems. It is not that SOEs are chronically corrupt, inefficient and politicized. With effective regulation and supervision, SOEs can be as much leaner and effective. For one, China HSR system is entirely state-owned and it is able to innovate.

I, by the way, still am amazed at VW, because, as far as I know, it is owned by its employers. It is not state owned but can it be said that it is publicly-owned? Huawei is another example on the similar lines.

 

[Götterdämmerung]

Yes, that's one of the problems. It is not that SOEs are chronically corrupt, inefficient and politicized. With effective regulation and supervision, SOEs can be as much leaner and effective. For one, China HSR system is entirely state-owned and it is able to innovate.

I, by the way, still am amazed at VW, because, as far as I know, it is owned by its employers. It is not state owned but can it be said that it is publicly-owned? Huawei is another example on the similar lines.

IIRC, the majority share of VW belongs to the State of Lower Saxony. Another famous company that is still state owned is the Hanover Fair (Hannover Messe) the organiser of the CeBit Fair and the Hanover Fair. The shares are split 50/50 by the state of Lower Saxony and the City of Hanover.

 

[Jlaw]

There are sectors that are fine if mostly led by private interests, like tech companies. But there are sectors that are too sensitive to be left to private business, no matter how inefficient. Inefficiency is a relative concept, by the way. HSR in China is a state business. So is petroleum; upstream and downstream. If management is good and supervised enough, there is no reason they would not be as more competitive. China oil companies do compete well.

No matter what, national economy is in the end a national matter and to be publicly regulated. There cannot be laissez faire. When it comes to greater national interests, even the tech companies are being regulated and guided in order to ensure public protection and national interests.

Yup. Government controlled petroleum, HSR, and others are getting the overseas contract, not private sectors. Private sector without PLA backing will not win big overseas mega project.

 

[Audio]

IIRC, the majority share of VW belongs to the State of Lower Saxony. Another famous company that is still state owned is the Hanover Fair (Hannover Messe) the organiser of the CeBit Fair and the Hanover Fair. The shares are split 50/50 by the state of Lower Saxony and the City of Hanover.

Porsche family owns majority.....

Even in Auto sectors, it is not state owned firms that are creating their brands, it is the private players like Geely, and BYD who are surging ahead. State owned firms are happy with JVs, and resting with the western branded cars.

lel......Geely and BYD have no JV of foreign input?