The public sector and wages, +51% but …

China’s public sector generates 40% of the national GDP, which does not prevent it from being at the forefront. By 2020, the world’s 500 largest companies globally include 92 Chinese state-owned enterprises and 30 private enterprises, three times as many public companies. A company’s strength can be reflected in its costs. A 2018 study shows that access to short-term credit is cheaper for state-owned enterprises. They benefited from rates ranging from 5.06% to 5.17%, while the private sector ranged from 6.05% to 6.14%. The spread is the same for long-term and bonds. The public sector is advantageous, as are most, but not all, of its employees. What is the paradox?

Salaries,+51% compared to the private sector … on average

The average wage of employees of state-owned enterprises, 91607 yuan, is lower than that of foreign-owned enterprises 106,180 (about 14% lower), slightly higher than that of Hong Kong, Macao, and Taiwanese joint-stock and joint-stock companies (slightly higher) 90164, and higher than that of other private enterprises 60551 and thus higher than the national average, 75229. It is estimated that the average wage in state-owned firms is 51% higher than in private firms and 21% higher than in all sole proprietorships.
Given the more stable positions in state-owned companies, the social and security aspects, it is not difficult to understand why students are now rushing into them.

No higher salaries for “political” leaders

The Chinese banking sector is very profitable; the salary and benefits are also high. Statistics produced by China Economic Net, based on the 2019 annual report, show that the salaries and benefits of employees of the six major state-owned commercial banks range from 267,800 yuan (Agricultural Bank of China) to 375,100 yuan (Bank of Communications). The presidents of the six banks’ annual salaries range from 469,900 yuan (ICBC Chen Siqing) to 779,300 yuan (Bank of Communications Ren Deqi). ICBC is the “largest bank in the universe” with a profit of 313.4 billion yuan in 2019, but the annual salary of its president is only 1.65 times the average annual salary of the bank’s employees (285,200 yuan).
A state-owned enterprise in Chinese :

国企 public enterprise in China

Among the Big Six banks, there is a “pay “rollover” between government-appointed “executives” with wage restraints and 1. executives from the labor market, and 2. branch managers with no wage restraints. These annual salaries (including those of financial, risk, audit, information manager, secretary of the board of directors, etc.) can exceed one million yuan. The annual salary of some provincial or foreign branch presidents is more than two million yuan.
The salary levels of the chairmen, presidents, and vice-chairmen of China’s six largest state-owned commercial banks are significantly lower – three to four times less – than those of the ten largest joint-stock commercial banks (China Merchants, Pudong Development, CITIC, Everbright, Huaxia, Minsheng, Guangfa, Xingye, Ping An and Zheshang) If we compare the six largest Chinese commercial banks with their six foreign counterparts (JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs, and HSBC), the salaries of the president, chairman, and vice-chairman of the latter are 266 times, 225 times and 152 times higher, respectively. 

The salary restrictions for government-appointed executives are probably politically motivated, to show that the state’s money is not being wasted and that it is properly managed? Is this a model of socialist management with Chinese characteristics? I don’t think so!

Related articles :

Economy

Source :

秦朔:“国企弱势说”争议背后

10 0ctober 2020

Don’t speak Chinese!

When you have studied Chinese for many years and put myriads of characters on paper, you love to practice and speak the language. It can be considered an advantage to speak Chinese in China. I had to realize that this is not always the case! Contrary to what I always thought for a long time!

Shanghainese / non-Shanghainese

In Shanghai, in January 2015, Xu comes to see me in my office, explains that he needs me for a complicated case, and ends with a sentence in English “Don’t speak Chinese! ».
The business development director, Ma, has made an appointment with one of the city’s first Shopping Mall. The manager, Li Meihong, who is to receive him is Shanghainese.  The young executive has to negotiate an initially unattractive contract; the brand is paying a lot of money for a location. There is no profit to be made. Ma doesn’t feel in a strong position. On the other hand, he, a native of Jiangxi Province, when he considers the supposed “feeling of superiority of the Shanghainese,” he is not in the best conditions. So he asks his director, Xu, a Shanghainese, to arrange the meeting in order to be on an equal level. And Xu, the strategist, to put all the chances on his side, asks the Frenchman to come in order to put more weight in the process.

I do not speak Chinese

The tactics of languages

Xu details the tactic: “The deal’s not in our favor, so we’re going to play to our strengths to get her to lower the royalties. We’re not going to put her in the most comfortable position. She speaks English, but not very well. We will talk in English, not Chinese. If she doesn’t understand everything, I will translate. You don’t show her that you can speak Chinese. I know her, out of respect for you, she will try to speak English in front of you. I, on the other hand, I’m finer, I’m not going to speak Shanghainese when I translate, it would be too obvious.  She would understand that I want to play the local feeling and that would be counterproductive. I will translate into Chinese.”

We have fun, and we win

The meeting had a comical aspect because Li Meihong was speaking in limited English. She had to spend half the time composing in Shakespeare’s language. I had to avoid any reaction when she spoke in Chinese because I was supposed to not understand. Sometimes I wanted to put an end to her linguistic ordeal. At that time, I was working mainly in China, in a 100% Chinese professional environment, I never practiced English. The first reflexes came to me in Chinese, and I never speak English with Chinese people. I felt like I was participating in an upside-down comedy. Finally, the director lowered royalties’amount. Did the language strategy work? I don’t know!

I frequently found myself in situations where my Chinese colleagues were presenting me with a whole range of strategies during meetings or meals. The use of English is nothing more than an arrow with a sophisticated bow. I have often wondered how effective we can be with a more direct and less sophisticated Western approach.

Related articles :

The art of beautification in China

What does the boss mean?

What is an enterprise in China?

Alcohol says yes

Chinese language

22 June 2020

Alcohol says yes

In China, the meal is still a must for smoothing business relationships and moving forward together. On many occasions, alcohol is the order of the day, especially in the Northeast and Shandong. Xinjiang is not stingy on strong drinks either. It can save some deals. I must admit that I had to learn how to be smart in order not to fail. Drinking is not one of my favorite activities, especially since I’m usually preparing for a sports competition. You have to manage it.

Learning to manage

The animation becomes more animated when there are several tables among the guests, even dozens of tables. I’ve already found myself at parties of nearly a thousand people.
You have to manage the toasts well because it’s a blow to find yourself under the table. Whether we know you or not, we’ll come and toast with you. What’s more, if you’re the only foreigner in the game, as happened to me 99.99% of the time, your position is very vulnerable. Unless you play a tune, “I’m sick,” you’ll have to participate in the dance, and commercially, that’s not bad. 

The tactic

Forget the famous 干杯 gān bēi, bottoms-up, for the 随意, suí yì, as you wish (as you like). You signal to your friend that you don’t do bottoms-up. Then he can play a game of head-on. Sometimes the other person wants me to face him and drink bottoms up. And dodge moves don’t always work, so no matter how much you defend yourself “You drink bottoms up, and I’ll drink my way, 你干杯,我,随意!,” if the other person insists, you have no choice. 
Depending on your position in the company, you may have to go around all the tables and toast with everyone. Generally speaking, it’s understandable that this long tour – I’ve already done tours of over fifty tables – means that you don’t have to drink bottoms-up at every table. Phew!

喝酒 drink

A classic facilitator 

In 2015, I had to go and solve a problem in Daqing, an oil town between the Russian border and Harbin. Wei, the agent, was not to blame. I was the messenger of a news item that took him out of the deal. Contrary to what was said at first, the industrialist did not give him exclusive rights to the entire northeast, but only to one province, Heilongjiang. I had excellent relations with the Wei, and I offered to go and rub shoulders with the Siberian cold to avoid a catastrophe. Wei was very much recovered and was ready to go to war (which would have penalized both sides) to make sure the original commitments were respected. When I arrived in the middle of the meal, I felt that it would be difficult to convince him to give in. I left on the register of friendship and ordered a rice wine, quite strong, at 60 degrees. I told him that I had tried everything to avoid this situation and that we were both victims of a unilateral decision and that we would make up for it in the future.  Alcohol brought binder, and little by little, the tactic that was put in place softened the mood, and Wei was willing to listen to reason. Recently he confessed to me: “Luckily we drank, otherwise I wouldn’t have given in! We solved the problem! ». 

Meals in China often have a great atmosphere. The ceremony is sometimes important, and I am never bored. As an observer or/and an actor, one dives into the codes of society with curiosity and interest.

Articles related to business life here.

15 June 2020

The art of beautification in China

Embellish, my first Chinese teacher used to tell us, “Chinese people often embellish the other one in society. ” Students can see this when they say a few sentences in China to their interlocutor. They will often be remarked: “You speak Chinese very well, 你,中文说得很好 ! ». Even if three sentences later, they find themselves stuck! I’ve noticed this, especially in the business world.  Meals with business partners are sometimes quite playful. We toast and toast again.  The first glass tinkle often brings all the guests together at the table; then, the ceremony sometimes takes place in small groups or one-on-one. A salesperson will join a vital boss; the financial director will have attention to the supplier that he shakes all year round.  I learned the first rule.

drink in China

A little speech is necessary

It will be necessary to “embellish”, to raise the person that we invite to toast. Some people have become masters in this discourse. Our marketing director, little Liu, was a master at it. To show and praise the alleged skills of our manager in Wuhan, who does not have the highest position, she called him Professor Wang (王老师), saying that she had learned the whole job from him.  Using this clever tactic, she gave Wang face in front of the department store bosses and gave him credibility despite the bosses’ familiarity with the situation. Everyone accepted the game and approved of the praise and embellishment. When I told her that she was “coming on a little strong”, Liu liked to explain that a statement repeated over and over again became true over time and we had a great time!

Speak up then!

Sometimes I didn’t shine in this kind of operation. One evening, around a yellow wine in Jinan in Shandong province, I was sitting next to the boss of a group that was important to us. I raise the glass to toast, but perhaps a little tired from a busy day, I forget the rite. He looks at me and, after a few seconds, launches at me with a big smile: “你说啊!在中国,要说话!Parle then! In China, you have to talk! » 

In the beginning, this type of exercise didn’t amuse me much, but over time I learned the ropes and got a taste for these critical rituals. I keep an amused look on my face, like a child enjoying the world passing before his eyes. In society, conviviality and interpersonal skills are handled with great art and small strategies are put in place at mealtimes to bind or unbind alliances.  The positioning around the table, the face you have to give to this or that interlocutor, the number of times you toast with a person, but these are other stories, to be continued…

Articles about the company and its life in China, it’s here.

12 June 2020

In the land of the Zong 总

Being in contact with corporate and government leaders quickly taught me the importance of title and respect when speaking to a superior or simply a person in office.

So many Zongs

Working with a large group sometimes gives the impression that you are living in the land of the Zongs. Indeed the word zong 总 can be found in CEO, 总经理, Vice President, 副总经理 , and 总监, Supervisor (a position above department manager) – One of the meanings of 总 is principal, general.
And when you’re talking to one of these people, unless you’re really friends, you should use the title. When I went to a company in Hangzhou that had six vice presidents and a football team of supervisors, the word zong during meetings was flying around. Since there were several people named Wu in that meeting, it was decided to call the CEO, Great Wu Zong (大吴总), the marketing priestess Little Wu Zong (小吴总) and the head of the auditing department was renamed 总 for 局 in memory of his former position as 局长 office manager at the city hall. He was not bothered by being called zong; he did not have the long teeth of the intriguing marketing manager, who was fond of her zong and liked to be mistaken for the CEO when she was away on business.

title in china

Need Promotion

Sometimes even to give a manager a face and give him or her more clout in negotiations, a false promotion had to be made. He will be called zong on the outside and will even have an extra business card with the title of zong. 
Lu had come to my office on a Monday morning and explained the case to me. “I’m not 30 years old and I have to go and negotiate pitches with officials who can make it rain or shine. They are almost the age of my parents and have astronomical incomes. With my title of director, they barely look at me. If I am Lu Zong instead of Lu Jingli (director), I will carry more weight. I need it. »

Zong Tactics

Sometimes people would play with the word zong to send messages. For example, one director, who wanted to say “I am untouchable because of my supposedly special bond with the big chief”, pretended to make a one-time mistake by forgetting the word zong and showing more familiarity with the CEO. Many subtle scores on this theme in the nibbling of each other’s powers!

I was zong too and it took me a long time to get used to the title, me who had started Chinese at the age of 18 to read Lao Zi in the text! It’s not every day you turn 18.

Articles about enterprise in China

6 May 2020

Boss, strategy?

Some executives in China do not always manage to understand the strategy of their Chinese employer, we can reassure them, this is also the case for Chinese employees. I have often encountered this type of situation. Why is this?

A meteoric growth

It should be remembered that China has grown madly since reforms were launched 40 years ago. As Zhong Qinghou, founder of the Wahaha group (ex-partner of Danone) in Hangzhou, 宗庆后, pointed out in an interview a few years ago, :  China is moving too fast to make plans for the next 5 or 10 years. What is true today won’t be true in 2-3 years. 1 to 2 years is the reasonable maximum (I quote from memory). 

Facing fierce competition, being extremely reactive is mandatory.

On the other hand, entrepreneurs often face fierce competition in which there is no holds barred. The winning teams work schedules that would make a French labour inspector catch syncopations. Lee Kai-Fu, Taiwanese, a venture capitalist in AI in Beijing, explains it very well in his book, “The biggest change in history”.

QAI and China

You have to know how to turn around quickly and not stay in rigid patterns and when a dark horse, 黑马 (an outsider who wins the bet), comes along. Reactivity is certainly an asset in many businessmen I have known.

Cross the river by feeling the stones

The proverb “Cross the river by feeling the stones, 摸着石头过河” can also illustrate typical behaviour in a highly changing and swirling environment. Experiment first and move forward with the lessons learned. In fact, it has almost become a strategy. This proverb even became a slogan worn by the Deputy Prime Minister, economist Chen Yun 陈云, in 1950. It was later honoured by Deng Xiaoping, 邓小平, the “father” of reforms. It serves as a reminder of the importance of experimentation. Major theories must give way to pilot experiments that will teach lessons. In some areas, the reform policy has sought to build on pilot experiments, and it has been tried and tested to see whether the overall strategy can be applied to the entire country. Shenzhen, where the portrait of Deng Xiaoping is enthroned, was the first pilot city for the opening in China. When you look at the accomplishments of the past 40 years, you have to recognize the success.

jeu de go chinois

Nuances 

Of course, I am not saying that long-term strategy does not exist in companies. The last twenty years have seen training companies teaching the basics of business development and management; universities now have much better curriculum. Many executives have been trained at the best institutions abroad and have returned with excellent credentials. The progress is considerable.
At the political level, moreover, next to these stones on the river, the authorities are drawing up plans for decades, see for example the article yesterday on the island of Hainan, where there are plans to turn the province into a free zone by 2050. The advantage of not having governments that can change direction with every presidential election is that it allows long-term development strategies to be held without being too disturbed.
Obviously, this subject can be developed endlessly, I give some frameworks that allow a better understanding of a changing reality, these are not absolute truths, which can apply in 100% of cases. The larger the size of a company, the clearer the strategy becomes. Moreover, we should stop on the theme of the importance of change and the strength of adaptation in China, but that’s another story for another day. 

5 June 2020

What does the boss mean?

What’s he saying?

Since the birth of this site, I’ve been receiving a lot of messages. Some readers have asked me about the differences in the type of communication with company managers, asking me if it is usual for the boss to be rather vague sometimes on important points. My answer is simple: “It’s pretty standard! “I even attended a training session in Guangzhou where the speaker had spent an hour on the subject: “communicating with your boss, knowing what he says and wants”.

The implicit, 含蓄

Professor Pei had put the theme in the context of Chinese culture with a parenthesis on the word 含蓄 Hánxù, which means implicit, reserved. The first character 含 means to contain, to enclose and the second 蓄 to accumulate, to amass. It also designates a mode of communication, verbal and non-verbal, implicit and indirect. It is used to express emotions, reactions and even ideas. He explained to us its importance in Chinese literature and art, where the suggested abounds, as does the unsaid in language (see the article here). The Chinese world is not one of direct expression. One of my bi-cultural Pekinese colleagues highlighted to me with a smile: “The French are like children, they say everything they think. We Chinese are much more restrained. “It’s a caricature, of course, but the comment highlights the differences.

李白 Chinese poet

What to do?

Pei had asked us to think for a few minutes about how to behave in front of a boss who spoke in half-words (说半句话). The only answer which made the unanimity is summarized as follows: “It is necessary to learn how to manage your boss. “
I had a partner who fell into that category. At first, I imagined a lot of things, but soon I realized that his executives had the same problem as me. They avoided talking about important things on the phone because the problem would get worse.  Or if they had no choice, they would skillfully ask for confirmation in a message on We Chat or by SMS (before the We Chat era).  Or those who had the courage to be frank asked the Emperor to be more explicit.

Was it strategic?

When faced with complex situations, lack of clarity has its advantages; if there is a problem, the other can say that he never said that. 
Moreover, the Chinese proverb “言多语失, to easily make mistakes while talking more” sums up one aspect of this aspect in communication well, reserve is sometimes motivated by caution. I have always believed that China is the country of strategy and that many Chinese are strategists. This art of the implicit and the unspoken makes it possible to move one’s pieces forward with dexterity on certain occasions. 

Of course, the thirst for progress in China forces to forget about habits that do not lead to a company’s development. Moreover, trainers often insist on the importance of communication. Is this the end of the implicit? I don’t think so!

PS: Once again, China is varied and diverse. We should not take any of these observations as general laws that allow us to decipher everything. They help, they help a lot, but diversity forces us to be perceptive to know when they work, help a little or when they do and don’t work. In the North, especially in the Northeast, personalities are more direct… I have experienced situations that are not very “implicit” between Shenyang and Harbin… 

See the article on Subtlety in China

3 June 2020

What is an enterprise in China?

The employee

I have always enjoyed participating in training seminars in Chinese companies. Whether in large events with 5 to 10,000 people or in small groups of 30 employees. I was able to gain a deeper insight into Chinese life and culture and to dispel certain stubborn preconceived ideas, which are deep-rooted in us even when we think we are spared the prejudices of training. In the early 2000s, it was often said that Chinese employees were poor, hard-working heroes. These ignorant contemptuous people went to mass in the modern era more often than in Chinese companies. Even if it is far from perfect, the progress is immense and irrefutable, Chinese labour law has developed a lot and employees can defend themselves, especially in the big cities. The labour court (劳动局 at the time), sides very easily with the employees.

Man 人 and stop 止

In 2014, we were gathered in a room of 40 people for a training course for the managers of a group in Hangzhou. The boss had invited me to introduce me to an outstanding trainer. The aim of the three-day course was to raise awareness of the importance of each employee as part of a team.
Professor Pei started his first day with the word 企业, company, enteprise. The first character of the word company, 企 , was used to introduce the theme of the first day.
It is composed of two parts, 人, man and 止, stop. The explanation was simple. Without man, without anyone, the enterprise cannot exist, it stops. 企无人则止.
Hence the importance of choosing the right people, helping them to develop their talent. Each person is a treasure that must be cultivated. The company must put the person at the heart of the company. A Chinese character helps the management.

PS:

The historical explanation differs: we see a man above and below the feet, which gave the meaning of “standing on tiptoes to look”.

enterprise in China

The evolution of character over the course of history and the writing styles used :

企 Chinese character for enterprise

You can see more articles about Chinese characters and language here

26 mai 2020

Sentiment, relationship and money

For Wang, in China, a key concept for moving forward is 人情. It will be understood differently depending on the context (feeling, relationship, human feeling). In his environment, the development of a brand in China, this word meant for him the feeling, the feeling to be aroused in the other to get along well and go further. Below is the presentation of the colourful character and the story of a training session between two cups of tea that I attended in 2017.

The rise of Wang
Wang, in the initial phase of the conversation, ejects words and phrases with punctuation of laughter and smiles without giving you a break.  With a bite of crab, he will calm down and let his interlocutor take over. No coke or coffee to turn him on, his drugs are money, success and fame. Exhilarated by success, short on legs and with a broad chest, he has been waving his 161 cm and his limbs for more than a decade in a large distributor in southern China. While he was trying to place an insurance policy on a newly rich entrepreneur who was trying to expand a franchise network throughout China, he was recruited as early as 2005 by this boss who absolutely needed a marketing manager. A marketing manager with a very specific definition of China. The business barely reached 50 million yuan (7 million dollars) in turnover, a decade later, the 500 million are exceeded. Of course, he has contributed greatly to this rise in the country’s measure. Its monthly income, which was around 2,000 dollar, has been multiplied by 15 officially and with the grey zone at least by 30.

Must learn
On this morning of November 2013, the temperature flirts around 10 in the province of Canton. At 9:30 am, he welcomes a young recruit at the head office who, he hopes, will be able to assist him efficiently. Like any newcomer, she sits on the couch with measure and a concentrated gaze. She has already rolled her hump somewhat in this world of chiaroscuro distribution without touching the upper layers of the managers-cashers too much. She knows her basics, but Ling Ling hasn’t yet evolved into the subtle and unspoken arrangements between friends. Many Chinese brands like to employ a man and a woman to spawn with friends, who will not be insensitive to the charms of the opposite sex.

The weight of department stores
Most of the high-end distribution is done in department stores which can sometimes make rain and shine on your sales by giving you a place, if possible a good place, showing the most important customers, VIPs, the way to your store, directing shopping cards to your brand, and the opposite too, if your brand is not powerful enough and especially if you do not arrange with the right friends. Wang, in front of the alert eyes of the young woman, launches into a succinct explanation of a crucial point.

The three words
“In China, with the levers of power, be it from various governments or department stores to get what you want, there are three words to keep in mind: sentiment, relationships and money. Listen carefully and remember what I’m about to tell you, that’s the basics.

Business in China

Sentiment
First word: 人情, feeling. The current must pass with the person in the department store, whether he or she is the CEO or simply responsible for the brands. They need to “feel” you well to consider a relationship with you, they know they can trust you to share a few secrets. While everyone knows that in certain key positions everyone is affected, you have to remain discreet to avoid waves and possible complications.

Relationship
Second term: 关系, Relationship. From the moment the first light turns green, a relationship can be established and built. But you can’t take anything for granted, you’ll have to nurture it with some attention. Signs of attention, small gifts, a visit before the New Year with a small envelope or a shopping card at a party.

Money
Third word: 钱, Money. When the first two conditions are met, you can address the issue of sharing the money. Of course, the stronger your brand, the less you give. And even if they really need you, they’ll come looking for you, and conversely, they can contribute to some expenses. This is sometimes the case for big foreign brands. We, as a Chinese brand, go to the cash register and follow the laws of the game, much less so in recent years. Second mode of distribution: the key person in the department store has a relative or a trusted person, who has an outside company and who will be the manager, 托管商. In theory, he will take care of the management of the store, which will allow him to receive a 7% commission. 

One, two, three, feeling, relationship, money, 人情,关系,钱, it’s simple, right?

This afternoon, when I was updating this paper written in 2018, I came across this relevant note by Lu Xuefei, which goes in the same direction.



May 19, 2020