It never rains but it pours. E-recruiting, which was thought to have some immunity to the current slowdown in growth, is reportedly also experiencing a slowdown in growth.

The total China E-Recruiting market is estimated at RMB 1.1 billion by Iresearch, and this includes recent high growth of 13.6 percent in 2008. Month on month the growth rate was slowing during 2008, so the earlier growth was even higher.

It looks like 2009 will be dead flat.

The main cause of the slowdown, according to Iresearch, is that less employers are using online recruiting. This is counter-intuitive, as E-recruiting is less expensive than other methods like newspapers and radio. Employers should be moving to the internet in droves to save money on the little hiring that they are curently doing.

What Iresearch probably mean is that large employers are using their accounts less than before, and fewer small employers are setting up new recruitment portal accounts.

Budgets everywhere are being hammered, so I we should be looking at continued decline for Zhaopin, 51Job and ChinaHR. The smaller regional and niche portals will be affected as well. The bad news is that the Iresearch report was issued before the recent announcement that China’s exports had seriously declined in January.

The light at the end of the tunnel is that the E-Recruiting market should grow fast when current difficulties are over. Iresearch think the market will reach RMB 3.52 billion in 2012. This amounts to a healthy growth rate of of over 33% from now until 2012.

By then we should be looking at less players, and a bigger share of the pie for each individual recruitment portal. If the niche players can invest in new Web 2.0 tools, and offer services like video and automatic updates (RSS), you might see them eat into the big portals faster.

The investments that the Chinese government are making in the country’s infrastructure should help here. If they don’t then you’d have to question the validity of the overall investment package. China’s physical infrastructure is already developed.

You don’t need new roads and industrial estates when product demand is in decline. The high-technology layer that sits on top of the basic infrastructure, like telecoms and internet bandwidth, are where services operate.

If the focus is all on ’shovel-ready’ projects, China may miss the boat.