Renewable Supply-Chain (BYD, Hymson) is in a Hiring Frenzy Post Zero-COVID in China - Job Posting Data Shows

"BYD is on a spree to expand its workforce." - Jan 2023 Recruiting data.

China is on a mission to create jobs in 2023. With 19.3% young people's unemployment rate in 2022 and 16.6 mil young people expected to join the workforce in 2023, the government is targeting the creation of 12mil new jobs. As we mentioned in the previous post, China's 2023 economic strategy emphasizes more on structural development than top line GDP---solving structural employment problems is part of this strategy.

Unique job posting data from BigOne Lab showed that the # of job postings on major recruitment platforms in China increased moderately post Chinese New Year. While recruitment activity has mostly returned to pre-Covid levels seen in 2020, the overall momentum remains weak compared to 2021 and 2022. The total number of jobs posted in Jan-Feb 2023 decreased by 23% year-on-year compared to the same period in 2022. Notably, the number of new jobs posted on major recruitment platforms has remained subdued since the second half of 2022.

Renewable Energy Sector Leading the Job Creation Race

More granular data showed that some companies are significantly expanding their hiring as they entered January 2023 despite overall sluggishness. Top companies with the greatest expansion in hiring are those that benefited from sector-wise tailwinds. The industry cluster that has the strongest momentum is the renewable energy value-chain (e.g. solar panel value-chain, EV value-chain). Most of them are local companies. Out of the millions of companies tracked in the dataset, we saw two companies that were especially worth highlighting: Hymson Laser (海目星激光 SH:688559) and BYD Auto (比亚迪 HK:1211).

Hymson Laser: Well-known among the watchers of the solar energy industry, Hymson Laser is a hidden champion of the market. The company produces laser equipment that is used during the production of solar inverters and lithium batteries. It saw a 2,300% jump in job postings in Jan 2023 compared to that in Dec 2022, a sign that Hymson is pushing out more equipment to its downstream clients in solar equipment and lithium battery makers. This is especially remarkable since Jan is the month of Chinese New Year, typically not a good time for hiring.

BYD Auto: With a whopping 402% month-to-month increase in hiring in January 2023, BYD was leading the charge of job creation within enterprise-scale companies (10,000+ employees). From production to distribution, BYD was concurrently preparing for its ramp-up of EV car sales to not just the domestic market, but also European and American markets.

The majority of BYD's new job posts were in the "Manufacturing" and "Sales" departments. Manufacturing and sales positions scored the greatest month-to-month gain in hiring positions.

BYD's ambition was not only targeted at the domestic market. Data showed that the majority of the new job posts were in Shenzhen, followed by Hefei, Xi'an and Jinan. Notably, the factory that BYD was filling up in Shenzhen was one that can ship to both the domestic market and the global market. Located 60km from Shenzhen, this is a joint project between the cities of Shenzhen and Shantou. More interestingly, the factory is only 3km from the Xiaomo International Logistics Port, a new port that started operation in Jan 2023 and has routes to the Middle East and other regions along the Belt & Road Initiative.

Photo credit: https://mp.weixin.qq.com/s/3Z_EboddMX2tM239J-clpA

The approximately 6,000 job posts at BYD was only 11% of the 54,000 total job openings planned for this factory. BYD is reportedly inviting RMB 25billion on this project.

Despite the whopping increase in job openings, BYD managed to maintain a relatively low labor increase for mid- and high-end positions. For instance, the average salary of integrated circuit engineering jobs at BYD was approximately RMB26,000 or US$3,700/month in Feb 2023, which was between the peaks and troughs in 2022. The average salary of algorithm and automation engineering jobs was approximately RMB26,000 or US$3,700/month in Feb 2023, which was similar to the highest in 2022. For reference, integrated circuit engineering jobs at Tesla Shanghai were approximately RMB29,000 or US$4,150/Month.

Our Take:

Despite the overall slowdown in China's passenger car market, the demand for EVs in China has continued to grow steadily. Leading EV makers Li, Xpeng and Nio all posted stronger sales in February. Considering the overall slowdown in the automobile purchase, we do think it is likely that stocks in this space such as BYD (1211.HK), NIO (NIO), Xpeng (XPEV), LI Auto (LI) will face short-term pressures on their stock prices. But BYD's hiring frenzy shows the management is confident and they are quite determined to build out their long-term competitiveness. A consensus is forming that BYD may become "Samsung of EV" (with Tesla as "Apple of EV"). We believe this long-term growth story has not changed, and it may be wise to wait for short-term fluctuation to create a buying opportunity for stronger names in this space.

In the next issue, we will look into the hard-hit sectors in 2022, including restaurants, education and internet sectors. Surprisingly, some of the players are rebounding and re-expanding their teams in one way or another. Let us know in the poll below which sector interests you the most. More details to come next time, stay tuned!

BAiGUAN is powered by BigOne Lab, China's leading data-driven provider of market research and analytics that was founded in 2016 by information services industry veterans from Bloomberg, BlackRock, YipitData, Nielsen. BigOne Lab's products and services are trusted by 100+ top institutional investors and corporates around the world. BigOne Lab is also invested in by a number of institutional investors, including S&P Global.