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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 122

China Business Intelligence No. 122

Samsung Economic Research Institute Beijing Office

June 24, 2009

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I. Economy

In the midst of the global economic crisis, many companies are implementing strategic personnel adjustments, including payroll cuts. It is a widely known fact that, when payroll cuts become inevitable, it is more advantageous to do it in a fast and resolute manner. However, although strategic payroll cuts have proved to be effective during normal times, it may endanger companies if carried out in times of an economic slump. Employees tend to become defensive and ready for emotional and collective actions when companies announce their plans to curtail the workforce. Considering China's cultural background, solutions that enable coexistence is better than personnel reduction. Before reducing the workforce, companies need to check the benefits and losses from the reduction very carefully.

II. Industry

Amidst the recent wave to develop new energy sources, there was a rapid growth in China's wind power industry. With optimal conditions such as abundant resources and development potential for developing the wind power industry, China has attracted investments from all around the world. The growth of the industry has also lead to the increase in local companies with technical expertise. These local wind power generation firms have overcome their technical limits through aggressive strategic alliances. And technological developments in the industry have been accelerated through technical collaboration between local and foreign companies. Finally, with various local leaders producing their own produce wind turbines and securing competitive edge in unit prices, the range of domestic products in China's wind power markets will expand.

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