The 14 year-old Chinese e-commerce giant Alibaba, which resembles the Chinese Amazon.com, is beginning an initiative to drastically revamp its labor-force. The firm is looking to hire 1,000 recent college graduates as new employees for 2014. As the competition for human capital grows more intense, Alibaba has announced that it will offer qualified individuals as much as triple last year’s average pay! Last year, the average first-year earned 200,000 Yuan, which would make potential salaries as high as 600,000 Yuan—at roughly 6.09 Yuan/dollar this translates to $32,841 and $98,522 respectively. A headhunter from Beijing-Based iLietou Ltd., Selina Ge, claims that “the 600,000 Yuan offer is very likely only reserved for a very small number of people.” Either way, an essentially six-figure salary for recent graduates. The rising average wages for the educated reiterates the theme of Chinese economic development.
Competition in the Chinese internet market is heating up. Demand targeting engineers, product managers, and user-interface designers from China’s three biggest internet companies is rising. The ability for healthy competition within China to flourish is a positive demonstration of the continued market liberalization in China. The government is letting supply and demand price human capital, which should have a beneficial long-term effect as the supply of labor shifts to the most productive sectors in accordance with demand and incomes.
The three main players in the Chinese internet market: Alibaba, Tencent Holdings Ltd., and Baidu Inc. have announced a combined $3.5 billion of deals this year alone. The competition for the country’s 590 plus million web users coupled with the $230 billion spent annually on e-commerce and online advertising reveals both the firms and market’s opinion on the growth prospects in the Space, drawing the firms to seek out the best and brightest at Peking University and Tsinghua University. As the overall human capital rises in China, the leading indicator signals that the marginal productivity and transitively the income per capita of China will follow. If realized, this outcome would reinforce the commonplace investment thesis that upholds China as a key growth market going forward.
Works Cited:
Alibaba Splurge on Graduates Fuels Battle for China Talent: Tech
Another interesting news story that could impact this industry is that Walmart has announced that it is expanding its business in China to raise profitability in a slowing retail sector. Michael T. Duke, Walmart’s chief executive said, “Customers are using technology more, and especially here in China. We love customers to understand price and the safety of the product they’re purchasing. E-commerce is a great enabler, allowing Walmart to grow globally.” It will be interesting to see how companies such as Alibaba and Tencent Holdings respond to Walmart’s growing presence in the market.
Source: http://www.nytimes.com/2013/10/25/business/international/wal-marts-china-plan-to-focus-on-e-commerce.html
China currently has the most Internet users in the world, so this sure sounds like a good way for the company to take advantage of this. However, many Chinese are making more money, but they aren’t spending it on consumer goods, such as the ones that you would buy on the site. I wonder if the new human capital that will be going into this web giant will bring about more online consumers that could boost the consumer economy as a whole. Considering the operation is so large, it will also be interesting to see if Alibaba decides to go into other countries.