Are you worried about China’s job market?
As the largest online job boards in China, you would expect management of Zhaopin and 51Job to have keen awareness of the Chinese economy. Yet like most commentators on China’s prospects, the view from the top is quite divergent.
When discussing Zhaopin’s results for the March 2015 quarter, management described a market providing great opportunities for growth:
Zhaopin still has a much larger room for growth in a changing economy. People worry about the China economy … what we have seen on our platform is the economy is changing in favour of us, switching from manufacturing to service. We have continued to see the IT and Finance sectors growing faster than manufacturing … We will continue to invest into the future and reinvest into product, into marketing, into sales … to make sure we are number one continuously.
By contrast, management at 51Job was more cautious in their outlook and is tempering investment accordingly:
While recruitment activity has remained positive so far this year, we are sensing more employer caution and moderating demand. We believe that hiring pattern may see greater volatility and fluctuations this year as companies face the reality of a slower economic growth environment in China … We view that this year the overall environment is not as robust as we would like it to be and that’s something that we have to factor into our planning for the year.
The sheer size of China, combined with the under penetration of digital recruitment, provides both companies with considerable prospects for growth over the long term. But the investment decisions made at this critical juncture could result in two very different market positions for their sites.
Seek (ASX: SEK), which is held by the Montgomery funds, is a majority shareholder in Zhaopin, and so we are watching these developments with a keen interest.
Ben MacNevin is an Analyst with Montgomery Investment Management. To invest with Montgomery, find out more.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
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