year of olympics capture real growth gd all cn in id vn th sg hk my ph tw kr au nz jp % 2011 2012...

Year of Olympics – Capture Real Growth奥运之年 — 激发下一个理性繁荣October 2012

Mercer

Guangdong

1MERCER

Today’s agenda

• Global and Regional Economic Trend

• China Economy and Labour Market Overview

• Compensation and Benefits Trend In China

• Four Questions to Answer about Talent Retention

• Simple & Effective - Making your benefits matter

Global and Regional Economic Trend

3MERCER

The world in 2012

€

4MERCER

Global GDP growthGlobal growth is moderate to 3.5% in 2012 and 3.9% in 2013

Source: IMF World Economic Outlook (July, 2012)

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

1 5 9 13 17 21 25

Perc

enta

ge o

f Gro

wth

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

Emerging and developing economies

2008 2009 2010 2011 20122007

World

Advanced economies

2013 Q4

5MERCER

-2

0

2

4

6

8

10

1 2 3 4 5 6 7 8 9101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960616263Pe

rcen

tage

Global inflation Inflation pressure is easing

Emerging and developing economies

US

Euro area

Source: IMF World Economic Outlook (April, 2012)

2007 2008 2009 2010 2011 2012 Mar

6MERCER

Very StrongStrongModerateLimitedInsufficient data

The effects of euro area crisis on various regions

Source: IMF World Economic Outlook (April, 2012)

7MERCER

APAC economic outlook 2012

Investors Growth

Strong Capital Inflows Debt Situation? Export Growth

Halved

8MERCER

India 68%Japan 135%

APAC economic outlook 2012

Investors

Strong Capital Inflows Debt Situation? Export Growth

Halved

AU | NZ<10%

SG | HKBig Net Savings

9MERCER

Soft landing is likely to continue……Asia Pacific regional GDP forecast

Source: Asia Forecast Book Q3 2011, IMA Asia

Regional: GDP Forecasts, % real growth, 2011 - 2013

2.02.3

3.5

5.6

3.0

3.64.24.4

2.62.7

5.5

6.16.1

8.0

2.0

-2

0

2

4

6

8

10

US CN IN ID VN TH SG HK MY PH TW KR AU NZ JP

%

2011 2012 2013

Source: IMF World Economic Outlook (July, 2012)

10MERCER

Inflation pressure varies widely but is generally projected to recede modestly …….

Regional: Inflation Forecasts, %CPI , 2011 - 2013

0

2.12.7

6.2

8.2

2.0

3.3

12.6

3.93.5 3.8 3.4

1.3

3.4 2.7

-5

0

5

10

15

20

US CN IN ID VN TH SG HK MY PH TW KR AU NZ JP

%

2011 2012 2013

Source: Asia Forecast Book Q3 2011, IMA AsiaSource: IMF World Economic Outlook (April 2012)

11MERCER

Apr’11 Apr’12 EU China US ASEAN

Japan -1.6 0.7 -7.7 -11.4 19.1 8.6

China 27.4 6.8 -2.0 - 12.3 10.8

Korea 27.9 0.9 -18.5 -0.3 18.6 12.5

Singapore 8.4 6.6 -5.0 1.4 2.1 9.5

Malaysia 4.9 4.4 -10.4 -3.2 5.5 9.1

Thailand 27.4 -3.9 -13.6 7.1 3.5 10.9

2012 ChallengesIMPACT: Asia’s export engine has stalled

Asia’s year-to-date exports to April 2012, % growth

• EU – a major collapse in demand rivalling the Global Financial Crisis• China – the main market for the rest of Asia unexpectedly stalls• US – modest recovery• ASEAN – steady demand growth

12MERCER

How will 2012 end ? ……

• Global growth weak through 2012

• The global recovery remains at risk

• Crisis management remains the top priority

• Asia needs to lift its stimulus

China Economy and Labour Market Overview

14MERCER

8.58.0

9.310.49.19.6

10.410.111.6

13.012.8

12.2

3.9

1.81.5

4.85.9

-0.7

3.3

5.4

3.3

3.07.3 8.2

8.2 8.6 8.7

6.9

8.59.6

9.4

13.5

11.3

13.4

14.615.7 16.3

-2

0

2

4

6

8

10

12

14

16

18

2004 2005 2006 2007 2008 2009 2010 2011 2012(E) 2013(F)

Perc

enta

ge

GDP CPI (Inflation Rate) Salary Increase Staff Voluntary Turnover

Source : National Bureau of Statistics of ChinaIMF World Economic Outlook (July, 2012)

2004-2012 Mercer Total Remuneration Survey

China World's second largest economy

2012 First half year turnover: 8.1%

15MERCER

-5

0

5

10

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8

Incr

ease

Per

cent

age

(yea

r-on-

year

)

CPI PPI

China Consumer Price Index (CPI) & Producer Price Index (PPI)Trend of PPI & CPI from 2010

Source : National Bureau of Statistics of China

- 3.5%

2.0%

6.5%

7.5%

CPI eases to 30-month low at 1.8%in July 2012 and PPI data marks sixth straight month of decline

1.8%

2010 2011 2012

16MERCER

China exports Export have been hurt by slumping demand from Europe

18.4

-0.5

15.311.3

1

13.4

8.84.9

-30

-20

-10

0

10

20

30

40

50

60

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

Incr

ease

Per

cent

age

(yea

r-on-

year

)

Source : General Administration of Customs of the People’s Republic of China

2010 2011 2012

17MERCER

China Foreign Direct Investment (FDI)The FDI growth is slowdown, China is exploring new advantages

Source : Ministry of Commerce of the People’s Republic of China

China FDI Growth

-8.7

-40-30-20-10

0102030405060708090

100110

1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7

Gro

wth

Per

cent

age

(Yea

r-on-

year

)

2009 2010 2011 2012

18MERCER

Moderate and steady growth in an uncertain 2013Different economists forecast 2012/2013 China GDP growth

World bank cut GDP growth forecast for China in 2012 to

8.2%

Source: World Bank, April 2012

The IMF set back the 2012 GDP growth for China from 8.2 to

8.0. Inflation stay in the 3-3.5%range 2012 and fall to 2.5-3% in

2013.Source: International Monetary Fund (IMF) ,

July 2012

Economic expansion will average 8.1% in the 2012-16 period.

Investment will remain a key driver of growth, with

consumption also playing a more important role.

Source: EIU, July 2012

China’s economic growth is still in a healthy and stablerange for the long

termShen Laiyun, NBS spokesman

19MERCER 19

Talent Employers

There is a clearmismatch between

What’sIN DEMAND

and

What’sAVAILABLEin the global talent pool

Talent & Skills GapTalent & Skills Gap

205 millionunemployed

globally

205 millionunemployed

globally

Globally 34%of employers can’t fill available jobs

Globally 34%of employers can’t fill available jobs

Source: U.S. Department of Labor – Bureau of Labor Statistics; 2011 Gallup Employment Survey; Manpower Group’s 2011 Talent Shortage Survey

The world is moving from capitalism to talentism supply and demand is mismatched across the world

20MERCER 2023 October 2012

Driving Successto next Olympic Cycle

Demographic change in ChinaA flat labour force growth that shed a light on the capacity to support business and economy growth and productivity.

Source: 2012 Global Employment Trend – International Labour Office

The increase in the workforce will slowdown to 0.2% in the next decade caused by aging population

By 2030, the old-aged dependency ratio will jump to 23.9%

The increase in the workforce will slowdown to 0.2% in the next decade caused by aging population

By 2030, the old-aged dependency ratio will jump to 23.9%

21MERCER

Labour in demandUrbanization accelerates demands in labour in inner region

73% 27%2nd/3rd tier cities

1st tier cities

% of the Branch Type

3544

21 48

1734

0%

25%

50%

75%

100%

1st Tier 2nd Tier

R&D Center

Plant

Office

Where to open new branches during 2012-2013?

China Urban residents accounted for 51.2% of the population in 2011, up 1.32% from 2010

The increasing number of urbanites offers huge potential for consumption

Manufacturers move inland, Increasing demands for production jobs

China Urban residents accounted for 51.2% of the population in 2011, up 1.32% from 2010

The increasing number of urbanites offers huge potential for consumption

Manufacturers move inland, Increasing demands for production jobs

Source: China Monitor, 2012. Mercer.

22MERCER

Labour in demand by industry

7%

14%

25%

14%

29%

11%

19%

Head count change rate

2012

10.6%83%Chemical

17.3%74%Consumer

15.5%86%Hi-tech

20.2%63%All industry-mfg

16.4%77%All Industry-office

16.9%86%Pharmaceutical and Medical Device

15.1%92%Auto

2011 staff turnover

% of Co.added Head

count in 2011

Industry

Source: 2012 Mercer China Total Remuneration Survey

23MERCER

Who are competing on talents in China?

• 1.33 million people attended China's national examination for 2012 admissions to the civil service

• Among the top 50 best employers (2012) voted by undergraduates in China, only 18 are multinational companies

• Attract senior talents from multinationals by offering attractive compensation and/or benefits programs; And, owning a business.

• Most have expansion plans in China and some are moving regional headquarters and/or R&D center into China.

Government Organization

State-owned Enterprises

Chinese Private

Companies

Multinational Companies

24MERCER

What are talent challenges in China restraining your business growth?

Workforce Supply

Changing Career

Expectations

Weak Leadership

Bench Strength

Competition for Talent

Compensation Trends

26MERCER

0

200

400

600

800

Auto 218 255 347 387Chemical 144 154 156 170Consumer 150 167 171 200High-Tech 86 102 117 127Pharmaceutical and MD 101 99 110 123All Industries Office - GD 421 513 570 585All Industries Manu. - GD 231 246 291 294

2009 2010 2011 2012

TRS in China: An iconic event in HR landscapeIncreasing of Mercer survey database from 2008 to 2012

Source: 2009-2012 Mercer China TRS

No. of Survey Participants

Participants Loyalty Rate: 88%

27MERCER

0%

5%

10%

15%

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62

Source: 2012 Mercer China TRS – Guangdong All Industries Office

TRS sample: What does the incumbent distribution look like?Guangdong All Industries - Office

P25 – P75Age ExecutiveMgmtProfStaff

35 – 4932 – 4227 – 3825 – 47

Position Class

Dis

tribu

tion

1.7%9.2%56.0%33.1%

(N=83,421)

28MERCER

0%

5%

10%

15%

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62

Source: 2012 Mercer China TRS – Guangdong All Industries Manufacturing

TRS sample: What does the incumbent distribution look like?Guangdong All Industries - Manufacturing

Position Class

P25 – P75Age ExecutiveMgmtProfStaff

37– 4833 – 4327 – 3822 – 35

Dis

tribu

tion

0.5%3.3%24.1%72.1%

(N=162,764)

29MERCER

China

India

South Korea

Japan

Taiwan

ThailandVietnam

MalaysiaPhilippines

IndonesiaSingapore

HongKongMacau

What is China's ranking in Asia salary score board?Top 3 countries of Asia in different career stream

Source: 2011 Mercer Asia TRS

Executive1. Japan2. Singapore3. HongKong4. China

Mgmt1. Japan2. Singapore3. South Korea7. China

Prof1. Japan2. South Korea3. Singapore8. China

Staff1. Japan2. South Korea3. HongKong8. China

30MERCER

Pay differential: entry level to functional headCan be a long way to go

Singapore

Taiwan

Functional Head Ratio

HongKong

Philippines

Vietnam

China

India

Indonesia

Thailand

Malaysia

South Korea

Japan

Entry LevelLocation

10.610.0

9.4

6.5

5.53.7

6.0

12.1

23.9

11.5

3.4

Source: 2011 Mercer Asia TRS

MatureMarket

EmergingMarket

5.5

31MERCER

0

200

400

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1,000

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1,400

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

Ann

ual T

otal

Cas

h (T

hous

and

RM

B p

er a

nnum

)

All industries Office Auto Chemical Consumer Pharma & MD High Tech

StaffAuto: 21.1%Chemical: 7.3%Pharma & MD: 6.7%Elec & Hi tech: 1.2%Consumer: -6.9%

ProfPharma & MD: 10.9%

Chemical: 8.7%Auto: 6.3%

Elec & Hi tech: -1.7%Consumer: -3.0%

Mgmt & abovePharma & MD: 15.6%Chemical: 10.4%Consumer: 1.5%Elec & Hi tech : -5.7%Auto: -5.8%

Comparison across industries - OfficeAnnual Total Cash - Actual


vs. All Industries - Office

32MERCER

0

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Ann

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otal

Cas

h (T

hous

and

RM

B p

er a

nnum

All industries Manufacturing Auto Chemical Consumer High Tech

Comparison across industries - ManufacturingAnnual Total Cash - Actual


vs. All Industries - Manufacturing

StaffAuto: 21.9%Chemical: 10.6%Consumer: -3.7%Elec & Hi tech : -0.6%

ProfChemical: 12.3%Auto: 6.2%Consumer: 5.1%Elec & Hi tech : -2.4%

Mgmt & aboveConsumer: 9.0%Chemical: 8.3%Auto: -3.5%Elec & Hi tech : -14.3%

33MERCER

Comparison by parent companyAnnual Base Salary and Total Cash (vs US parent companies)

Source: 2012 Mercer China TRS

StaffPC 40-46

ProfPC 47-52

MgmtPC 53-56

ExecutivePC 57 and above

-6% -5% -5% -4%-1%

-15%-25%

-33%-40%

-20%

0%

20%

-4% -3% -2% -2%

11%

-8%

-21%-30%-40%

-20%

0%

20%

StaffPC 40-46

ProfPC 47-52

MgmtPC 53-56

ExecutivePC 57 and above

Annual Base Salary Comparison

Annual Total Cash Comparison

Take US companies as 100%

Take US companies as 100%

EU companiesJP companies

34MERCER

0

200

400

600

800

1,000

1,200

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

Position Class

Ann

ual T

otal

Cas

h (T

hous

and

RM

B p

er a

nnum

)

Shanghai Beijing Guangzhou & Shenzhen

Overall

BJ vs. SH: 1.2%

GZ&SZ vs. SH: -9.4%

Staff

BJ vs. SH: 3.8%

GZ&SZ vs. SH: -5.5%

Prof

BJ vs. SH: 1.4%

GZ&SZ vs. SH: -9.1%

Mgmt & above

BJ vs. SH: -1.1%

GZ&SZ vs. SH: -12.9%

Comparison by city – OfficeAnnual Total Cash - Actual in 1st Tier cities

Source: 2012 Mercer China TRS

35MERCER

0

200

400

600

800

1,000

1,200

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

Position Class

Ann

ual T

otal

Cas

h (T

hous

and

RM

B p

er a

nnum

)

GZ SZ DG

Overall

SZ vs. GZ: -3.6%

DG vs. GZ: -16%

Staff

SZ vs. GZ: 4.1%

DG vs. GZ: -23%

Comparison by city – OfficeAnnual Total Cash - Actual in Guangdong


Prof

SZ vs. GZ: -3.2%

DG vs. GZ: -12%

Mgmt & above

SZ vs. GZ: -10.6%

DG vs. GZ: -12%

36MERCER

0

200

400

600

800

1,000

1,200

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

Position Class

Ann

ual T

otal

Cas

h (T

hous

and

RM

B p

er a

nnum

)

Guangzhou&Shenzhen 2nd Tiers

Overall

2nd vs. GZ&SZ: -10.8%

Staff

2nd vs. GZ&SZ: -16.2%

Prof

2nd vs. GZ&SZ: -11.3%

Mgmt & above

2nd vs. GZ&SZ: -5.6%

Comparison by city – OfficeAnnual Total Cash - Actual in Guangdong


37MERCER

0

200

400

600

800

1,000

1,200

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

Position Class

Ann

ual T

otal

Cas

h (T

hous

and

RM

B p

er a

nnum

)

Shanghai Beijing Guangzhou & Shenzhen

Overall

BJ vs. SH: -6.8%


Staff

BJ vs. SH: -5.0%


Prof

BJ vs. SH: -6.7%


Mgmt & above

BJ vs. SH: -8.5%


Comparison by city – ManufacturingAnnual Total Cash - Actual in 1st Tier cities

Source: 2012 Mercer China TRS – Guangdong All Industries OManufacturing

38MERCER

0

200

400

600

800

1,000

1,200

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

Position Class

Ann

ual T

otal

Cas

h (T

hous

and

RM

B p

er a

nnum

)

Guangzhou Shenzhen Dongguan

Comparison by city – ManufacturingAnnual Total Cash - Actual in Guangdong


Staff

SZ vs. GZ: -0.2%

DG vs. GZ: -10.1%

Prof

SZ vs. GZ: -3.6%

DG vs. GZ: -10.2%

Mgmt & above

SZ vs. GZ: -7.0%

DG vs. GZ: -10.3%

Overall

SZ vs. GZ: -3.8%

DG vs. GZ: -14.5%

39MERCER

0

200

400

600

800

1,000

1,200

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

Position Class

Ann

ual T

otal

Cas

h (T

hous

and

RM

B p

er a

nnum

)

Guangzhou&Shenzhen 2nd Tiers

Staff

2nd vs. GZ&SZ: -14.5%

Prof

2nd vs. GZ&SZ: -13.2%

Mgmt & above

2nd vs. GZ&SZ: -11.9%

Comparison by city – ManufacturingAnnual Total Cash - Actual in Guangdong


Overall

2nd vs. GZ&SZ: -13.1%

40MERCER

0 200 400 600 800 1,000 1,200 1,400404142434445464748495051525354555657585960

ThousandsSource: 2011 & 2012 Mercer China TRS – Guangdong All Industries Office

Year over year comparison 2012 vs. 2011 -Guangdong All Industries – Office (Annual Total Cash – Actual)

Staf

f Pr

ofM

gmt

Exec

utiv

e

+9.0%2011 vs. 2010

+7.5%2012 vs. 2011

+3.0%2010 vs. 2009

MovementYear

20112012

P25 Med P75

Position Class

41MERCER

0 200 400 600 800 1,000 1,200 1,400404142434445464748495051525354555657585960

Thousands

Year over year comparison 2012 vs. 2011Guangdong All Industries – Manufacturing (Annual Total Cash – Actual)

Source: 2011 & 2012 Mercer China TRS – Guangdong All Industries Manufacturing

+9.4%2011 vs. 2010

+4.6%2012 vs. 2011

+7.1%2010 vs. 2009

MovementYear

Staf

f Pr

ofM

gmt

Exec

utiv

e

20112012

P25 Med P75

Position Class

42MERCER

How do we pay our new generation?Starting salary trend – Guangdong All Industries Office


Diploma University Master PHD

0

50,000

100,000

150,000

2011 2012 2011 2012 2011 2012 2011 2012

+14.8%+12.1%

+5.1%

+11.7%RMB

P75

P25

P50

43MERCER

How do we pay our new generation?Starting salary trend – Guangdong All Industries Manufacturing


0

50,000

100,000

150,000

2011 2012 2011 2012 2011 2012 2011 2012

+17.0%+9.5%

+5.0%

+20.2%

RMB

Diploma University Master PHD

P75

P25

P50

44MERCER

How do we pay our junior and experienced employees?Comparison of 2-year and 3-year graduates –annual total cash median

0

50,000

100,000

Join when 2010 After 2 years

Join when 2010 72,174 68,832 65,331 61,964 54,364 54,021After 2 years 92,674 84,648 72,988 79,898 83,147 71,272

ENG Sales R&D HR FIN Admin


0

50,000

100,000

150,000Join when 2009 After 3 years

Join when 2009 59,144 56,355 62,605 54,427 47,222 48,944After 3 years 94,147 85,420 104,480 101,534 98,893 76,854

ENG Sales R&D HR FIN Admin

RMB

RMB

+32% AVG=+29% +53%+29%+12%+23%+28%

+57% AVG=+72% +109%+87%+67%+52%+59%

22 33 11 44 66 5544 55 11 22 33 66

11 22 33 44 55 6611 22 55 44 33 66

Compound Annual Increase Rate：13.6%

Compound Annual Increase Rate：19.8%

45MERCER

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

47

48

49

50

51

52

53

54

55

56

57

58

59

60

Thousands

How do we pay the local plus? － OfficeLocal plus vs. local comparison—Annual Base Salary


Pro

fM

gmt

Exe

cutiv

e

Local PlusLocal

P25 Med P75

+51%Mgmt

+18%Executive

+61%Prof

Local Plus vs. LocalCareer Stream

46MERCER

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

47

48

49

50

51

52

53

54

55

56

57

58

59

60

Thousands

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


Pro

fM

gmt

Exe

cutiv

e

Local PlusLocal

P25 Med P75

+53%Mgmt

+44%Executive

+64%Prof


47MERCER

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

48

49

50

51

52

53

54

55

56

57

58

59

60

Thousands

How do we pay the local plus? － ManufacturingLocal plus vs. local comparison—Annual Base Salary


Pro

fM

gmt

Exe

cutiv

e

Local PlusLocal

P25 Med P75

+60%Mgmt

+54%Executive

+66%Prof


48MERCER

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

48

49

50

51

52

53

54

55

56

57

58

59

60

Thousands

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


Pro

fM

gmt

Exe

cutiv

e

Local PlusLocal

P25 Med P75

+57%Mgmt

+60%Executive

+53%Prof


49MERCER

0%

10%

20%

30%

40%

50%

60%

Perc

enta

ge

Auto 17.7% 18.2% 20.9% 19.4% 21.2% 23.5% 19.9%Chemical 15.3% 15.9% 20.9% 18.6% 22.3% 22.9% 19.3%Consumer 15.3% 15.2% 20.5% 18.2% 22.7% 24.6% 19.8%Hi-Tech 14.0% 14.0% 19.0% 17.0% 21.0% 24.0% 17.0%Pharmaceutical & MD 15.4% 17.8% 52.6% 21.3% 40.9% 29.2% 21.9%All Industries Office 14.0% 15.0% 19.0% 17.0% 20.0% 23.0% 18.0%All Industries Manufacturing 12.0% 13.0% 17.0% 17.0% 20.0% 20.0% 17.0%

Para-Prof - White Collar

Prof - Non Sales Prof - Sales Mgmt - Non

Sales Mgmt - Sales Executive Overall


2012 prize for performanceAverage variable bonus as percentage of base salary

3 months payment

2 months payment

50MERCER

2012 pay mix policyAll industries - Office


80%

84%

87%

20%

25%

16%

30%

13%

13%87%

70%

75%

0% 20% 40% 60% 80% 100%

Executive

Mgmt - Sales

Mgmt - Non Sales

Prof - Sales

Prof - Non Sales

Para-Prof - WhiteCollar

Guaranteed Cash Variable Cash

51MERCER

2012 pay mix policyAll industries - Manufacturing

Source: 2012 Mercer China TRS – Shanghai All Industries Manufacturing

80%

84%

87%

87%

20%

25%

16%

26%

13%

12%

13%

88%

74%

75%

0% 20% 40% 60% 80% 100%

Executive

Mgmt - Sales

Mgmt - Non Sales

Prof - Sales

Prof - Non Sales

Para-Prof - White Collar

Para Prof - Blue Collar

Guaranteed Cash Variable Cash

52MERCER

Talent market reflect economy2011 hiring intention in next 3 and 12 months

74%

83%

86%

86%

82%

83%

92%

24%

15%

14%

14%

15%

17%

8%

65%

76%

86%

79%

64%

78%

87%

31%

21%

14%

18%

31%

22%

13%

1%

1%

4%

1%

5%

2%

0% 20% 40% 60% 80% 100%

All Industries -

All Industries - Office

Pharmaceutical

Hi-Tech

Consumer

Chemical

Auto

All Industries -Manufacturing


Hiring intention in next 12 months: AddingHiring intention in next 3 months: ReducingNo ChangeAdding ReducingNo Change

53MERCER

Talent market reflect economy: hiring intention shrinks in 20122012 hiring intention in next 3 and 12 months

57%

68%

82%

79%

77%

61%

75%

39%

27%

16%

19%

20%

33%

20%

4%

2%

5%

50%

61%

77%

74%

55%

53%

65%

43%

33%

23%

18%

41%

42%

29%

8%

5%

5%

4%

3%

2%

5%

7%

6%

6%

0% 20% 40% 60% 80% 100%

All Industries -

All Industries - Office

Pharmaceutical

Hi-Tech

Consumer

Chemical

Auto

All Industries -Manufacturing


Hiring intention in next 12 months: AddingHiring intention in next 3 months: ReducingNo ChangeAdding ReducingNo Change

54MERCER

5%

10%

15%

20%

25%

Auto 7.0% 9.8% 11.4% 10.5% 11.7% 14.6% 15.1%Chemical 10.6% 11.7% 10.9% 8.7% 6.9% 9.5% 10.6%Consumer 11.6% 14.3% 15.6% 15.0% 13.8% 18.9% 17.3%High-Tech - GD 12.0% 13.6% 15.3% 14.6% 8.7% 14.6% 15.1%Pharmaceutical & Medical Device 17.1% 18.8% 14.6% 16.6% 15.2% 18.7% 16.9%GD All Industries - Office 15.9% 13.5% 14.9% 13.7% 12.1% 13.5% 16.4%GD All Industries - Manufacturing 17.1% 18.7% 23.4% 22.0% 16.6% 20.5% 20.2%

2005 2006 2007 2008 2009 2010 2011

Turnover drops in 2012 first halfVoluntary staff turnover rate across years

Source: 2006-2012 Mercer China Total Remuneration Survey

10.5%13.6%

8.5%8.1%7.9%10.7%8.9%8.5%9.0%11.7%5.3%5.7%7.5%9.0%

2012First Half

2011First Half

Half year comparison

55MERCER

4%

6%

8%

10%

Auto 8.6% 7.1% 8.4% 9.7% 9.4% 9.3%Chemical 9.6% 6.0% 8.2% 9.1% 9.4% 9.1%Consumer 9.2% 6.8% 7.9% 8.6% 8.8% 9.1%High-Tech 8.7% 5.7% 8.2% 8.9% 8.7% 8.7%Pharmaceutical & MD 8.4% 8.3% 8.4% 8.8% 9.3% 9.9%All Industries Office 9.3% 6.7% 7.5% 9.0% 9.1% 9.0%All Industries Manufacturing 8.7% 6.8% 8.1% 9.0% 8.9% 8.7%

2008 2009 2010 2011 2012 (E) 2013 (F)

Salary increases rate from 2008 to 2013Comparison across industries


56MERCER

Salary increase rate by career levelAll Industries - Office

9.2%9.4%9.3%Mgmt - Non Sales

9.0%9.1%9.0%Overall

9.1%9.3%9.3%Para-Prof – WhiteCollar

9.1%9.4%9.2%Prof - Non Sales

9.2%9.3%9.3%Prof - Sales

9.2%9.6%9.4%Mgmt - Sales

8.8%8.9%9.1%Executive

2013(Forecast)

2012(Actual/Estimate)

2011(Actual)


57MERCERSource: 2012 Mercer China TRS – Guangdong All Industries Manufacturing

Salary increase rate by career levelAll Industries - Manufacturing

10.0%10.2%10.6%Para-Prof – BlueCollar

8.8%9.0%9.0%Mgmt - Non Sales

8.7%8.9%9.0%Overall

8.8%9.2%9.1%Para-Prof – WhiteCollar

8.9%9.3%9.4%Prof - Non Sales

8.9%9.0%8.9%Prof - Sales

8.9%9.3%9.0%Mgmt - Sales

8.5%8.5%8.5%Executive

2013(Forecast)

2012(Actual/Estimate)

2011(Actual)

58MERCER 58

Driving Successto next Olympic CycleHow to be Successful?Running business in China is like running the Marathon

Endogenous Factors

EffectiveMechanisms

ExternalEnvironment

Benefits Survey Results Sharing

MERCER

Typical benefit items

Medical

Medical

Life Insurance

Life Insurance

Working DurationWorking Duration

Flexible

BenefitsFlexible

BenefitsLoansLoansLong Term Incentive

Long Term Incentive

Allowance

AllowanceWork/Life

BalanceWork/Life

Balance

TrainingTrainingLeaves and Holidays

Leaves and Holidays

HousingHousing Car and

TransportationCar and

Transportation

61MERCER

Big evolution of China benefit survey

• Over 450 unique participants in 2012

• Multi-industries

• Delivered by key locations

• Rolling database

62MERCER

4%14%16%

39%51%

57%58%60%

64%79%

84%86%

91%94%

0% 20% 40% 60% 80% 100%

Flexible benefits

Club membership

Supplementary retirement

Supplementary housing

Long-term incentives plans

Car

Education assistance

Overtime meal subsidy

OT transportation subsidy

Paid sick leave

Allowance & perquisites

Life /PA insurance

Supplementary medical

Annual leave

Market prevalence of benefit items

Common Benefits

Differentiated Benefits

Data source: 2012 Mercer Benefit Survey (All Industries)

Must Have Benefits

63MERCER

Supplementary healthcare benefits

10%

21%

41%

71%

74%

89%

89%

98%

0% 20% 40% 60% 80% 100%

Dental

Hospitalization Subsidy

Public Pool

Maternity

Critical Illness

Inpatient

Outpatient

Medical Check-up

Healthcare

Preventive

Treatment

Cosmetics


64MERCER

Common benefit coverage for healthcare benefits

Outpatient

Inpatient

Maternity

MedicalCheck-up

Critical Illness

• Reimbursement rate: 90%-100%• Annual combined limit with inpatient: RMB 20,000

• Reimbursement rate: 100%• Annual combined limit with outpatient: RMB 20,000

•100% reimbursement with annual limit of RMB 8,000

• Typically offered once a year• Amount normally is RMB 350

• Lump sum payment of RMB 100,000

Medical Check-up

Medical Check-up

Outpatient

Inpatient

MaternityCritical Illness

Healthcare


65MERCER

Group life and personal accident insurance

Personal Accident Insurance

• 86% of companies provide

• Most are through commercial insurance

• Sum assured:• Fixed amount• Multiples of employee

monthly basic salary

Insurance

Term Life

• 71% of companies provide

• Most are through commercial insurance

• Sum assured:• Fixed amount• Multiples of employee

monthly basic salary


66MERCER

Supplementary retirement planNot common yet in China market

• Most are defined contribution (DC) plan• Employer contribution: 4% - 8% of employee monthly basic salary• Employee contribution: 1% - 4% of employee monthly basic salary• Some companies introduce matching mechanism

• Step vesting is common

• Normally started from 3 years of service with 20%, fully vested in 7 years of service

• Enterprise Annuity (EA) and group pension insurance product are common

• Retirement, death & disability in service, termination are common

• Some companies introduce in-service withdrawal feature to increase plan attraction

Contribution Level

Vesting Schedule

Operation Platform

Benefit Commencement

Retirement


67MERCER

Other common benefits in an innovative way

Car benefit Education assistance

Meal Allowance Transportation Allowance

Annual Leave Sick Leave

Others


Benefits Market Trend

69MERCER

Benefit practice between local package and local plus package

Leave Arrangements

Life Insurance

Medical

Prevalent Highly Prevalent

Life insurance and Leave Arrangements

Medical insurance

Not Common

Local Package

Local PlusPackage

70MERCER

Benefit practice between local package and local plus package

Relocation Assistance

Child Education Assistance

Housing

Local Package

Local PlusPackage

Prevalent Highly PrevalentNot Common

71MERCER

Social insurances for foreigners in China

New Social Security Law: 1 July 2011 Foreigners are subject to China social insurance

Beijing

Shenzhen

Guangzhou

Suzhou

Xiamen

Chongqing

Tianjin

Tianjin

72MERCER

＜

Eligibility

Contribution

Withdrawal Condition

Insurance Product

Fee Structure

Investment Return

Operation Mode

Tax deferred pension productProduct features

Product Feature

73MERCER

Flexible benefit is a trend Employees have different benefits needs during different life stages

Enter Workforce

Marriage

Parenthood

Children leave home

Retirement

Start Family

20 25 30 35 40 45 50 55 60

•Cash•Vacation•Car•Career - Training

• Life & Medical• House• Career Progression• Work/Life Balance

•Pension•Medical•Work/Life Balance•Children’s College

74MERCER

Key take-aways

• Everyone you compete with covers the basics

• Talent and budget issues require a fresh look at what you do

• There is no one-size-fits-all answer

• A benefits program is a success if:– Driven by real need/sense of value for both employer and

employee– Does not cost the employer too much, now and in the

future

• Communication is the key

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