Saon joins the ‘big three’ with ChinaHR deal

Acquisition opens lucrative new recruitment markets in China

Tue, Mar 12, 2013, 06:00

Global recruitment company Saongroup is taking aim at the number one slot in the Chinese online recruitment market with the purchase last month of the market number three, China HR.com.

Ciaran Lally, chief executive of the Irish recruiter’s China business, said the company now has 3,100 employees in 179 cities in China, after buying ChinaHR from the US company Monster for an undisclosed sum. Some sites have reported this as about $30 million (¤22.86 million).

Lally says the purchase is timely given the Irish group’s expansion plans, and also a very good fit when the regional spread of myjob.com’s business is taken into account.

With the myjob.com brand, Saongroup had built up a strong position in the second-, third- and fourth-tier cities, he said, and was number four in the market.

The tier one cities, such as Beijing and Shanghai, were dominated by the “Big Three” – 5onejob, which is US-listed, Zhaopin, which is Australian-listed, and ChinaHR.

“Our most profitable businesses, with scale, are tier two or three. A city like Zhongshan has a population of two or three million people, which is small by Chinese standards but still a significant market, with strong GDP growth,” says Lally in an interview in the group’s headquarters in Beijing, in the old
ChinaHR building.

“If you take a snapshot at the end of last year we had 2,500 people, avoiding the tier ones. That project had ran its course. We pumped up the country ; we were very strong in telesales and job fairs,” says Lally.

Denis O’Brien holds a 75 per cent shareholding in Saongroup, while its chairman, Leslie Buckley, holds the remaining 25 per cent. Both O’Brien and Buckley insisted that the company expand its presence across the country, including breaking into the tier one cities.

This was easier said than done. The first-tier cities are seen as too expensive and difficult to break into, as the big three firms already had such a strong presence there.

Then, fortuitously, Monster took a strategic decision to sell ChinaHR. In contrast to myjob.com, ChinaHR did not have a presence in the second-, third- and fourth-tier cities. It seemed a good fit.

The two firms entered discussions and the deal closed on February 6th. If you add the two pieces together, you ha ve
myjob.com in the tiers four, three and two, and then you’ve ChinaHR with its great brand and presence in tier one. Aggregating the two makes perfect sense, says Lally.

“It’s really positioned us in terms of the company . The old staff at myjob.com have gone from telesales operation to SMEs and now, all of a sudden, we can use this network we’ve built over the last years to talk to Fortune 500 companies.

“And ChinaHR’s clients really are a ‘who’s who’ of China – VW, China Mobile, Baidu and others,” says Lally.

“I’ve no excuse if we don’t achieve number one at this stage. We have the products that the number one and number two have, we have the footprint across the country in 179 cities and we have the depth within the team,” he says.

“We have funding available to market and rebuild the brand so we are positioned to keep taking market share.”

“We now have 3,100 people. We were well-placed and the timing was quite fortunate for us. The deal makes sense. All of the changes will happen in Q2 [the second quarter ]. We hope to have a very significant relaunch of the brand,” says Lally.

The group is on track to achieve 41 per cent growth in the first quarter, while the overall market is seeing low, single-digit growth.

“China must succeed for Saongroup. There is a good 10 -15 years of solid growth here.”

Saongroup.com has operations across four continents – Europe, Africa, Asia and the Americas – and websites in 30 countries.