Online recruitment market booming

IAC Travel, Amazon and MSN all have one thing in common. All of these massive firms are engaged in the Internet business. And they are leaders in their respective fields of search engines, online travel services, online shopping, and instant messaging. But one point related to the Chinese market is that they significantly boosted their investments in 2004.

As people wondered which international big name would be the next to come to the worldís second-largest market in terms of the number of netizens, US online job search giant Monster Worldwide Inc announced on February 2 that it had acquired a 40 per cent stake in the Beijing-headquartered counterpart ChinaHR.com Holdings Ltd for US$50 million, thus becoming the first leading Internet firm to enter the Chinese market in 2005.

Monsterís move makes sense, as the online job recruitment business has become a new bright spot in Chinaís Internet industry since last year, following search engines, online travel services, online shopping, and instant messaging.

Emerging business
Shanghai iResearch Co Ltd, a professional Internet industry research house, estimated that revenue from the online recruitment market in 2004 reached 550 million yuan (US$66.43 million), a year-on-year increase of 77.4 per cent.

It was a landmark year for the online job search business and the growth rate was very encouraging, said Henry Yang, president of iResearch. One major reason for the momentous growth is the constantly growing number of netizens.

According to the China Internet Network Information Centre (CNNIC), the nation had 94 million Internet users by the end of 2004, up 18 per cent year-on-year. At the same time, there was also a rapid rise in the number of job seekers. It is estimated that 3.38 million college students will graduate this year and enter the crowded job market.

Among the graduates, about 30 per cent may find it very difficult to find jobs, so the demand from these students to find jobs on the Internet is also great, said Zhang Jianguo, president of ChinaHR.com, which receives about 20 per cent of revenue from campus recruitment and is one of the market leaders.

On the other hand, more and more foreign companies are investing in China and local businesses are also trying to catch up and expand quickly, so they are desperate to find high-quality people and the Internet has become a good way to do this.

Yang from IResearch pointed out that with the growing demand from job-seekers, the advantages in terms of convenience and cost of the Internet are highlighted and it has become a favourite channel for employers, especially in big cities like Beijing and Shanghai.

Liu Hao, CEO of Beijing-based Zhaopin.com, a major player in the market, believed that with more and more well-educated people using the Internet to find jobs, the market means more opportunities for his company.

He said that Zhaopinís revenues more than doubled in 2004 and its workforce also doubled to 480. In the past year, Zhaopin expanded its regional network from three cities to 10. Besides developing the online job search business, Liuís company stepped up its efforts in the newspaper job recruitment market.

Since publishing the first job recruitment newspaper in November 2003 with a partner in Wuhan, the capital of Central Chinaís Hubei Province, Zhaopin has already established seven regional publications in co-operation with leading local newspapers around the country.

ChinaHRís Zhang also said that his company saw record growth in 2004 with its revenues more than doubling to over 100 million yuan (US$12 million). The key to our success lies in our íPressure Oní strategy, which means whenever a target area is identified, we will use all our resources to break into it, said Zhang.

While some of its counterparts are entering the newspaper advertising market, ChinaHR decided to focus on the online market and major customers in industries like medicine and information technology, as well as college students.

He said online job advertising contributed to about 70 per cent of his companyís revenues, 20 per cent from campus recruitment, and the remainder from headhunting. The company now employs over 600 people, 60 per cent of them working in sales.

Fragmented market
Like many other emerging businesses, the fast growth of online job recruitment is also accompanied by another characteristic - many players and no dominant leaders.

According to iResearch, the top three firms in the market - Shanghai-based 51job, ChinaHR and Zhaopin, only took 46 per cent of the entire pie, with a further 1,000 firms competing for the rest. Even NASDAQ-listed 51job, the biggest player in the market, only earned 105 million yuan (US$12.68 million) in revenue from online job search businesses and accounted for 13 per cent of the whole market, according to iResearch.

It only led ChinaHR and Zhaopin by 20 to 30 million yuan (US$2.4-3.6 million). At the same time, there are many regional operators. Although they are not nationally known and do not have a large number of users, their revenues are quite stable and their growth is also quite fast. Consolidation will be one major direction of the industry, said iResearchís Yang. Many companies are also trying to fight for a favourable position in the consolidation.

ChinaHR chose to team up with US giant Monster.
The agreement between the two firms gave Monster an option to boost its stakes in ChinaHR to 51 per cent, if the latter makes an initial public offering (IPO) or it does not float its shares in three years.

Although most of the money that Monster paid went to ChinaHRís shareholders and did not leave too much for its expansion, Monster will surely increase its investment in its Chinese counterpart and help it make an IPO.

Justin Tang, CEO of NASDAQ-listed Chinese online travel service firm eLong, said that the investment of the US counterpart IAC\Travel was a major factor in lifting his companyís profile and facilitated the IPO process. Zhang expected his company would double its revenues this year and the number of its employees will also grow to 800.

Zhaopinís Liu Hao took another road - expanding job advertising in newspapers and rapidly expanding the scale of the company. Liu said his company would continue to regard online job searching as a core business, but it should also accelerate its expansion in regional job advertisement markets through partnerships with local newspapers.

Zhaopin will try to publish job advertisements in co-operation with six to eight local newspapers this year. Liu said his company had identified the target cities and would act soon to find partners.

At the current stage, revenues from newspaper advertisements are inevitable, if we want to grow quickly, said Liu. Zhaopin got about two-thirds of its revenues from online recruitment and the remainder from newspaper advertisements last year.

The company also plans to go public when it is strong enough financially. For smaller firms, unique business models may help them narrow the gaps with market leaders and survive the consolidation.

Beijing-based e2ejob chose a direction to meet those unmet demands from customers. Some of our competitors like 51job are already quite big, but our aim is to serve those customers with unique demands, said Jin Hui, general manager of e2ejob.

Different from many players in the business, which charge customers on the number of resumes that they get from job search firms, e2ejob launched a pay-on-click service to small and medium businesses.

Customers only pay 10 yuan (US$1.2) per resume download, when they find a qualified resume on the e2ejob website and download it. Another area that e2ejob wants to take the lead in is video resumes.

Jin said he believed too many interviews have become a headache for human resources managers, because they often have to meet tens of people a day in the recruitment season, but a considerable proportion of applicants are kicked out of the game at this stage.

Jin also believed that with video resumes, human resources managers can save a great deal of time.

E2ejob and its agents will make a video for job applicants and store it on the e2ejob website for searches by employers. The charge is 200 yuan (US$24) for a three-minute video and users also need to pay 300 yuan (US$36) for storage.

Source: China Daily