51job, is a leading online recruiting player in China with ~40% market share, should continue to benefit from the online recruiting market expansion in China
The company saw 2.49mn total new online job postings in March 2013, up 13.3% YoY, largely in line with the growth rate recorded in January before the Chinese New Year. According to a recent survey published by 51job regarding the hiring demand for 2Q13, over 70% of the interviewed employers plan to hire more staff as compared to the same period last year. In addition, among medium size companies with total employees between 2,000 to 5,000, ~56% of them expect to step up their campus recruiting
efforts, up 11pts from a quarter ago.
According to the company, customer acquisition remains the firm’s top priority this year and it plans to expand its sales and marketing staff in 2013 to support such initiatives. As of 1Q, nearly half of its total 5,000 employees are sales and marketing staff, which may increase by ~10% by the end of this year. While such investments may negatively impact its near-term margin, we believe it will help strengthen 51job’s market leadership with a deeper customer penetration. In addition, we believe increasing operating leverage helped by the reacceleration of top line growth in 2H13 may partially offset such margin dilution.
Why Customers Come to 51Job?
According to the 300 respondents, the top selection criteria for online recruiting services include the quality of customer services, convenience of use, effectiveness in hiring, transparency of the recruitment process, and brand name. Interestingly, pricing seems to be less important when choosing different online recruiting service providers.
On our observation, to date, penetration for social network sites (SNS) recruiting remains low in China and poses minimal threat to the traditional online recruiting service providers. In our view, compared with newly established SNS recruiting sites, 51job may enjoy advantages as a well-known online recruiting site in China.
Notably, 51job has already incorporated social networking features to its online recruiting services. For instance, the company introduced a company fan club last year, allowing job seekers to follow their desired companies and exchange information with other followers.
In addition, 51job also launched a service a year ago called ‘cold call’, enabling communication between registered users via a searchable database with attributes such as company name, job function, location, school, and gender. Such functions should improve interactivity on 51job’s online platform and help its users broaden their professional networks.