Most job-hunting in China is done face-to-face by people leveraging their personal networks, or guanxi. But for millions of white-collar workers, looking for work online is becoming a more popular option. That’s led investors to pile into the sector.
Last month, online recruitment service Lieping announced that it had successfully raised $70 million from private equity firm Warburg Pincus and existing investor Matrix Partners. Similarly, Neitui, an online recruiting service focused on IT talent, received Rmb2.5 million ($407,000) of angel investment too.
But possibly the strongest indicator of interest in the online jobs market is Zhaopin’s recent fundraising exercise. China’s largest recruitment site, went public in New York this week after raising $76 million in an IPO. Prior to the listing Seek International, Australia’s largest online job site, owned a 79% stake in the company, while Cavalane Holdings held 19.3% (the remainder is controlled by the management).
Zhaopin was founded in 1997 and as of the end of last year had 74 million users (a demographic that consists mostly better-educated or skilled workers).
In the last 12 months, it recorded $160.1 million of revenue (although its net income was $26.9 million). It derives about 80% of its sales from the online fees generated when enterprises post job listings or view resumes, with the remainder coming from headhunting and campus recruitment services.
Zhaopin began trading in New York yesterday, rising 8.5% by the close (though it was up as much as 17% during the session).
Online sites say that more people are turning to the web to find work. Younger recruits and people who want to work for multinationals are a sweet spot. “Job seekers always want the best opportunities. Guanxi can tell you about some of the opportunities, but recruitment websites can tell you about all the opportunities and give you salary comparisons. At the entry-level or the mid-level that’s important,” Evan Guo, Zhaopin’s chief executive, told the Wall Street Journal in an interview.
But it’s a crowded marketplace. Zhaopin’s site competes head-to-head with 51job and ChinaHR. Search giant Baidu operates a recruitment site called Baidu Talent, while internet portals like Sina and Tencent’s QQ have released similar job searching functions. To grab market share, some rivals have been offering free listings for employers.
Critics say Zhaopin’s business model is hardly novel. “General recruitment sites like Zhaopin have already passed their explosive growth phase to a stage that’s relatively flat. Net profit growth is also likely to face slowdown or even decline,” says Sun Mengzi from Analysys, an IT consultancy.
“Zhaopin’s prospectus states that the proceeds of the IPO will be used to attract and retain more users through branding and enhanced user experience… and expand product offerings. All of these strategies are neither new nor exciting,” TMTPost, a telecoms portal, also warned.
Still, it’s not all gloom for Zhaopin. The number of jobseekers is growing at the white-collar level. This year alone, there will be 7 million university graduates looking to join the workforce (a decade ago there were just 2.8 million graduates). The Securities Times reckons that the increasing pressure to find work will mean that more graduates turn to the internet for help.
LinkedIn, the best known professional social networking website in the US, is also lurking. It recently revealed that it already has five million users in China. That follows the launch of a beta site in simplified Chinese in late February. Now LinkedIn is partnering with Tencent’s WeChat, the most popular mobile messaging app. Users will see their profiles linked to their WeChat accounts so they can save or forward their LinkedIn namecards within the messaging application.
“By virtue of our focus on creating economic opportunity [in China], we are in a position that can make a difference,” Jeff Weiner, the company’s chief executive, told CNBC in an interview. “We want to be really thoughtful in the way we are operating there.”
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