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China
Beijing, 20 March 2007

Mercer unveils 2006 Internet Industry Compensation trends for China

• The number of participants and samples for the 2006 Mercer Compensation Survey for the Internet industry increased by over 38%. The departments where staff is the mostly concentrated as in 2005 remain sales, software development and website operation. Characteristics of employees in the Internet industry are a higher level of education, where more than 80% of employees have more than a college education, lower age with an average age of 28. 
  
• Compared to the traditional High-tech industry, the overall compensation in the Internet industry is still lower. However, the compensation for software developers is higher than other jobs in the Internet industry, but has no significant difference with their counterparts in the multi-national high-tech enterprises. 
  
• The Internet industry has been one of the sectors with a higher proportion of salary increases, and the average rate of such increase in the industry in 2006 was 8.5%. The Internet industry favors more graduate students with majors in computer and relevant studies, and the starting salary for graduates with undergraduate degrees in computer technology are 27% higher than non-computer graduates.   
  
• The Internet industry is also one of the sectors having a relatively higher level of employee turnover, where the voluntary turnover in the year of 2005 was 15.9%. Our data shows that the average term of service for employees in the Internet industry is less than 3 years.

Mercer Human Resource Consulting, a global leader for HR and related financial advice and services, recently released its 2006 Compensation Survey for the Internet industry in Beijing.

37 well-known companies from the Internet industry participated in the 2006 Mercer Compensation Survey, and the number of both participants and sample size increased by 38 % compared to the previous years. Participants included operators in the gateway category (SINA, SOHU, Tom Online, etc.); operators in the game category (Shanda Entertainment, Ninetowns, Ourgame, etc.); operators from the wireless value-added category (Linktone Ltd, Hurray, Chinatelecom Information Development Co., Ltd, Monternet, etc.); operators in the e-business category (Amazon, Alibaba, eLong, Inc, etc. ); operators from the search engine category (Baidu, etc.); and others (Baihe Net Work、21vianet, etc.).  

Salary & Compensation Management Status

At the present stage in the industry, management, including HR management in many companies is evolving from a stage of infancy to one of further development. Over 50% of companies surveyed are working on HR planning and the building of their HR management system.

On the level of salary and compensation, the main cause for the big gap that exists between the Internet industry and multi-national High-tech companies are:
 

• The Internet industry has long been a paradise for entrepreneurs attracting many ambitious people. With these people, the Internet industry in China was created from scratch and developed at record levels. Any company in this high-speed development process will take control of cost and improve productivity as their primary tasks. Therefore, their ability in paying salaries and compensation still lags behind the multi-national High-tech companies, which are mature and fairly developed;
  
• Whether in the aspects of compensation and age, employees in the Internet industry are in the lower level compared to those in other industries, particularly in the High-tech industries. A smaller number of employees with rich working experience, and shorter years of service may also result in such differences;
  
• Many companies in the Internet sector do not set clear annual reward objectives, or are unable to so in the fast changing and sharp competitive environment. They would rather reward employees based on the actual company performance at the year-end, particularly the reward to the sales staff. Such performance-related reward may account for 30% to 50% out of the annual total cash payment. Long-term motivation is also one of the means for compensation management commonly used in the Internet companies. All listed companies in the Internet sector provide shares and options to the staff holding important company positions.

Talent Attraction and Retention

In 2006, the employee turnover rate in the Internet industry remained at approximately 16%, which is rather high. The demand for development engineers, game designer and operation staff as well as artistic designers is especially high. According to the survey, the main reasons behind such employee departure were due to the personal development, dissatisfaction with compensation, family reasons, problems of communication with superiors and the lack of a clear organization system and structures, etc. With the development of companies in the Internet industry, talent is no doubt the most competitive asset for technical and knowledge-based companies. Therefore, how to attract and retain the employees has become an important challenge for the HR professionals in the industry. Mercer's China Employee Attraction and Retention Survey Report shows that the way for companies to retain employees is for these to believe they are offering attractive compensation and benefits, opportunities for promotion, meaningful and creative work, a unique organization structure, as well as good company location, etc.

If you would like to know more about Mercer's 2006 Compensation Survey for the Internet industry released by Mercer Human Resources Consulting, please contact Chris Feng at chri...@mercer.com or call +86 10 6533 4282; Elley cao at elle...@mercer.com or call +86 21 6103 5540.

About Mercer Human Resource Consulting

Mercer Human Resource Consulting is a global leader for HR and related financial advice and services, with more than 15,000 employees serving clients in more than 180 cities and 42 countries and territories worldwide. In Asia Pacific, we have over 2,000 employees across 31 offices in 13 countries and territories. The company is a wholly-owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, and London stock exchanges. For more information, visit mercerHR.com.

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