Shanghai Bell Said to Trigger Unpaid Leave Plan
Feb 18, 2013 (Menafn - SinoCast Daily Business Beat via COMTEX) --Alcatel-Lucent Shanghai Bell Co., Ltd. (ASB), a subsidiary of leading global telecom equipment provider Alcatel Lucent in the Chinese mainland, is said to trigger an unpaid leave plan.
Sources said recently that Alcatel-Lucent was scheduled to hold an annual shareholders meeting on May 7 and after that, Ben Verwaayen would resign as CEO of it. Term of the labor contract he inked with it would expire, but the board had made a decision not to renew the contract.
Available information shows that Ben Verwaayen served as CEO of it in 2008 and under the leadership of him, it for the first time enjoyed a profit-making operation in 2011 after merger of Alcatel and Lucent. However, it had seen accumulated net losses reach about EUR 10 billion, or about USD 13 billion, since the merger in 2006, with cash reserves experiencing an average annual fall of EUR 700 million. In order to reduce cost, he announced a layoff of 5,500 staff globally last year and this was just a part of its EUR 1.25 billion worth cost-reduction plan. In December 2012, he signed an USD 2.1 billion worth financing agreement with Credit Suisse and Goldman Sachs with patents and some assets, an effort to pay back USD 3 billion worth bonds with expiration period in 2015 and loans. However, the moves seemed to help it little. Under such an environment, ASB is impacted undoubtedly.
People in the know disclosed in an interview recently that the Shanghai-based subsidiary will trigger an unpaid leave plan after the 2013 Spring Festival and there was great possibility for all staff of it, more than 10,000 ones, to be involved in. In accordance with the plan, the staff might be forced to take unpaid leave of 30 working days within half a year or two working days per month within six months. The move would help it reduce cost largely. In addition, it was likely not to distribute annual bonus to the staff for the fiscal year 2012 due to poor performance in the year. This would help it reduce cost, too.
Alcatel-Lucent regards China as a major market and at a conference held for financial results for the third quarter of 2012 last November, top executives of it pointed out that it would focus on special markets, especially the US and China. Thus there is no doubt that the poor performance of ASB will deliver an impact on its long-term strategy in the Chinese market.
Alcatel Shanghai Bell is not a profitable entity. This is an ALU satellite outlet in China where ALU hires 10,000 local workers to conduct business in China and compete against Huawei and ZTE. It is also very obvious that the Chinese government and its State-Owned-Enterprises prefer to give business to their own (Chinese firms). Case in point, both Huawei and ZTE have large contracts with China Mobile compare to ALU.
Therefore, ALU is basically ending up providing jobs in China with nothing much in return. I think this is a good area where ALU should exit (closedown Shanghai Bell) and cut 10,000 jobs which will help ALU’s margins. The only thing that the Chinese are interested is taking advantage of foreigners
unless I'm mistaken, alcatel only owns 51% of shanghai bell. the rest is owned by the state, or at the very least, a chinese company. I see a lot of people posting who seem to be jumping to unfounded conclusions. ASB *is* almost a 'chinese firm'.
and where did you get the '10,000 local workers' figure?
there are always politics at work, and maybe the staggered layoffs are to put pressure on the gov't to give shanghai bell more contracts....who knows? verwaayen also mentioned something about china getting their regulations and mobile licenses in order....I know google frittered away a year trying to wade through chinese red tape. there are many moving parts to the situation, and we're not in a position to judge with any certainty.
in one recent year, alu's growth in china was 40% while it was 2+% elsewhere. I think it's silly to make a blanket statement about exiting that market.
Good Sign for further Cost Reductions, but not a good Sign for ALU in Chinese Market... On last Call Ben told that there will be a Recovery for ALU in China and now they are going to to trigger Unpaid Leave Plan???
The chineese are untrusting people.. they say.. yeah.. yeah.. business.. business.. lead you on.. take your info.. lead you on.. Yeah.. we do business tomorro.. yeah.. take your info.... tomorrow.. business next day... and they know it.. their is not soul in business.. Anyone that falls into buying services or working with them.. is the worst senario ever.
szzzhhhhhttt.. they showed a small girl getting run over on the street and people drove around her for 5 minutes!!! before some old lady noticed to help out. .. yeah.. huawei not affliated with spying.. MY #$%$..