China Labor Market Stabilizing In Second Quarter 2016

• The labor market in China has stabilized, with the CIER index rising to 1.93 in the second quarter, from 1.71 in the first quarter.
• The CIER index for the best-performing sector, internet and e-commerce, was almost 47 times that of the worst-performing sector, energy/mineral/mining/smelting.
• Driven by the new economy, sectors including internet/e-commerce, funds/securities/futures/investment, and traffic/transportation are growing rapidly, creating robust job demand.
• Recruitment demand in the traffic/transportation sector increased by 58% year-over-year, the fastest growth rate among all sectors.
• About 40% of recruitment demand was in first-tier cities, 28% in emerging first-tier cities and 20% in second-tier cities.
• With government support for innovation and entrepreneurship, micro- and small-sized companies will continue to be the driving force in the labor market.
• The CIER index will most likely go up in the third and fourth quarters, due to seasonal factors and the long-term demographic trend.

Zhaopin and the China Institute for Employment Research at Renmin University have been publishing the quarterly CIER Employment Index for seven consecutive years to review and identify trends in China's employment market. With data from Zhaopin's online platform, the CIER Employment Index has become the barometer of China's labor market and the macro economic environment.

The CIER index score is calculated by dividing the number of job vacancies during a specified period by the number of unique job seekers that apply to jobs during the same period. A CIER index score of more than 1 indicates that confidence is high for job seekers seeking employment. A CIER index score of less than 1 indicates that confidence for job seekers is low.

China labor market stabilizing in the second quarter

Since the first quarter of 2015, the CIER index has been on a declining trajectory, indicating a cooling trend for the job market in China. The CIER index rebounded to 2.09 in the seasonally-strong fourth quarter of 2015, but dropped sharply to 1.71 in the first quarter of 2016. In the second quarter, the index rose to 1.93, indicating a stabilizing labor market in China.

Excluding the effects of seasonality and changing demographics, which have traditionally resulted in a long-term increase in CIER index scores, quarterly adjusted CIER index scores have demonstrated a declining trend from the first quarter of 2015 to the second quarter of 2016. However, the decline has narrowed significantly, suggesting that the labor market has stabilized.

According to Zhaopin's data, total online recruitment demand increased by 21% year-over-year in the second quarter, compared with a mere 4% year-over-year growth in the first quarter. The brisk labor market demand in the second quarter is an indication that the fast growth of the new and emerging industries has offset the decline in traditional industries.

CIER index by sectors

The CIER index ranking by sectors remains largely unchanged in the second quarter compared with the previous quarter. However, the polarization is noteworthy. The CIER index for the best-performing sector -- internet and e-commerce -- was almost 47 times that of the worst performing sector, energy/mineral/mining/smelting.

The top 10 best-performing sectors, with a CIER index higher than 2.1, had strong recruitment demand, while the ten worst-performing sectors had excessive job seekers and a CIER index below 0.5.

In the second quarter, internet/e-commerce, funds/securities/futures/investment, traffic/transportation, insurance, farming/forestry/animal husbandry/fishery, and agency were the best-performing sectors by CIER index rank. Insurance, farming/forestry/animal husbandry/fishery and agency sectors have strong recruitment demand, but these jobs are less attractive to job seekers, which pushes up the CIER index for these sectors. Driven by the new economy, internet/e-commerce, funds/securities/futures/investment, and traffic/transportation sectors are growing rapidly, creating robust job demand.

E-commerce and the sharing economy, which represent the new economy, have witnessed tremendous development since 2009. Transformed by the new economy, funds/securities/futures/investment, traffic/transportation, hotel/restaurant, IT service, and medical care/nursing/beauty/healthcare sectors have also been expanding quickly. The CIER index for these sectors has been increasing steadily over the years, despite a fluctuation between 2014 and 2015.

The worst performing sectors by CIER index rank in the second quarter were energy/mineral/mining/smelting, electricity/power/water conservancy, inspection/testing/authentication, environmental protection, and petroleum/petrochemical/chemical, which are all traditional manufacturing industries. Most of these industries are under pressure to reduce over-capacity and relocate affected employees.

IT and internet is the sector that has benefited the most from the new economy and, as a result, the whole sector enjoyed a high CIER index rank. The recruitment demand from the internet/e-commerce sub-sector increased by 49% year-over-year in the second quarter, followed by computer software (23%) and online games (2%). The job demand from computer hardware and IT service actually declined 5% and 4% in the quarter, respectively. For internet/e-commerce, 82% of job demand was posted by companies with fewer than 500 employees. While first-tier and emerging first-tier cities^[1] accounted for 72% of total recruitment demand in the IT/internet sector, job demand in third-tier and below cities increased the most, by 64% year-over-year, much higher than first-tier cities (20%) and emerging first-tier cities (38%).

The financial sector continued to enjoy fast growth with strong recruitment demand in the second quarter. The job demand from banking increased by 48% year-over-year in the quarter, followed by funds/securities/futures/investment (30%) and trust/warrant/auction/pawn (16%). Unlike other sectors, small and mid-sized companies (with employees from 20 to 9,999) had the most recruitment demand in the financial sector. Demand from companies with 100 to 499 employees increased by 48%, followed by companies with 20 to 99 employees (38%), companies with 1,000 to 9,999 employees (33%), and companies with 500 to 999 employees (29%).

Traffic/transportation sector has been booming, driven by expanding e-commerce penetration. Total recruitment demand in the sector increased by 58% in the second quarter year-over-year, the fastest growth rate among all sectors. The competition among e-commerce platforms is heating up with their coverage penetrating to small towns and rural areas around the country. The surging demand for courier services will further boost the growth of traffic/transportation sector.

The real estate industry was edged out of the top 10 best performing sectors in the second quarter. Total recruitment demand from real estate/construction/building materials/engineering sector increased by 10% in the second quarter year-over-year. Micro companies with fewer than 20 employees and large companies with more than 10,000 employees posted the highest increase in recruitment demand, jumping 52% and 33%, respectively. About 34% of recruitment demand was in emerging first-tier cities, more than first-tier cities (32%) and second-tier cities (21%).

CIER index by regions and cities

Eastern China is still the region with the most recruitment demand for talent. In the second quarter, Eastern China accounted for 73% of total recruitment demand in the country, while Central China and Western China accounted for 12% and 10%, respectively. The demand increased the most in Central China, up 29% in the second quarter year-over-year, followed by Western China, up 23%. Relying heavily on traditional industries, Northeast China still lags behind other regions in the economic growth and job demand. Recruitment demand in Northeast China increased by 14% in the quarter, only accounting for 5% of the country's total.

Of total recruitment demand in the second quarter, 40% was in first-tier cities, 28% in emerging first-tier cities and 20% in second-tier cities. Second-tier cities saw the highest growth rate in recruitment demand with 29% in the quarter year-over-year, followed by emerging first-tier cities (21%) and first-tier cities (16%).

CIER index by size of companies

In the second quarter, micro-sized companies with fewer than 20 employee had the highest CIER index at 3.58, while small-sized companies with between 20 and 499 employees scored the lowest at 0.61. As the spirit of entrepreneurship spread across the country, micro start-up companies have massive demand for talent, yet attract fewer job seekers, resulting in a high CIER index rank. With government support for innovation and entrepreneurship, micro and small-sized companies will continue to be the driving force in the labor market.

Of recruitment demand in the second quarter, 41% was from small companies (with 20 to 499 employees), 31% from micro-sized companies (fewer than 20 employees), 23% from mid-sized companies (500 to 9,999 employees), and 5% from large companies (more than 10,000 employees).

Labor market outlook

For the second half of 2016, the labor market in China is expected to keep stabilizing. The CIER index is most likely to go up in the third and fourth quarters with seasonality factors and the long-term demographic trend.

About Zhaopin Limited

Zhaopin is a leading career platform in China, focusing on connecting users with relevant job opportunities throughout their career lifecycle. The Company's zhaopin.com website is the most popular career platform in China as measured by average daily unique visitors in each of the 12 months ended March 31, 2016, number of registered users as of March 31, 2016 and number of unique customers for the three months ended March 31, 2016. The Company's over 115.3 million registered users include diverse and educated job seekers who are at various stages of their careers and are in demand by employers as a result of the general shortage of skilled and educated workers in China. In the fiscal year ended June 30, 2015, approximately 25.6 million job postings^[2] were placed on Zhaopin's platform by 418,423 unique customers including multinational corporations, small and medium-sized enterprises and state-owned entities. The quality and quantity of Zhaopin's users and the resumes in the Company's database attract an increasing number of customers. This in turn leads to more users turning to Zhaopin as their primary recruitment and career- related services provider, creating strong network effects and significant entry barriers for potential competitors. For more information, please visit http://www.zhaopin.com.

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995.  These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Zhaopin may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about Zhaopin's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: Zhaopin's goals and strategies; its future business development, financial condition and results of operations; its ability to retain and grow its user and customer base for its online career platform; the growth of, and trends in, the markets for its services in China; the demand for and market acceptance of its brand and services; competition in its industry in China; its ability to maintain the network infrastructure necessary to operate its website and mobile applications; relevant government policies and regulations relating to the corporate structure, business and industry; and its ability to protect its users' information and adequately address privacy concerns. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Zhaopin does not undertake any obligation to update such information, except as required under applicable law.

For more information, please contact:

Zhaopin Limited 
Ms. Daisy Wang 
Investor Relations 
[email protected]

ICR Beijing
Mr. Edmond Lococo
Phone: +86 10 6583-7510
[email protected]

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SOURCE Zhaopin Limited

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