Two giant Chinese firms, Alibaba Group and Tencent Holdings are preparing to cut tens of thousands of jobs combined this year, as per a report in Reuters last week. This will be one of their biggest layoff rounds as the internet firms try to cope with China's sweeping regulatory crackdown.
As per the report, while e-commerce giant Alibaba is yet to specify a group-wide target for the layoffs, China's biggest e-commerce company could ultimately axe more than 15% of its total workforce or about 39,000 staff, as per the estimates of one of the sources with knowledge of the company's plans.
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On the other hand, Tencent, which is the owner of China's dominant messaging app WeChat, also plans to make employees redundant this year in some of its business units, as per sources in the report. Its unit overseeing businesses including video streaming and search will reportedly see a 10%-15% headcount cut this year.
The job cuts at the two giant Chinese companies would be their first major layoffs since Chinese regulators launched an unprecedented campaign about 1.5 years ago to rein in its internet giants after years of laissez-faire approach that drove growth at breakneck speed.
This regulatory crackdown, coupled with a slowing economy, has sharply slowed sales growth for most of the internet companies, besides smashing their share prices and making new capital raising and business expansion much tougher in the world's second-largest economy.
This has been forcing companies such as Alibaba and Tencent to look for ways to cut operating costs.
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The Reuters report stated that as per sources, Alibaba started to fire employees last month and discussed job cuts with several business units last month and left it to them to make specific plans.
Alibaba¡¯s local consumer services segment, which includes food delivery business and other groceries delivery and mapping services, intends to lay off up to 25% of its employees, besides expected layoffs in the company¡¯s video streaming unit Youku, as per the sources.
Alibaba reported in February its slowest quarterly revenue growth since going public in 2014, and its stock has tumbled more than 60% since the beginning of last year.?
The company has been under pressure since late 2020 when its billionaire founder Jack Ma publicly criticised China's regulatory system, triggering a chain of events that saw Beijing slapping the firm with a record $2.8 billion fine.
As per Reuters report, sources with knowledge of Tencent's plan said layoffs at the company are also set to start at its less profitable or loss-making businesses such as Tencent Video and Tencent Cloud.
During an internal meeting at Tencent at the end of 2021, chief executive Pony Ma told staff that the company should prepare itself for a "winter", according to two other sources who said this prompted insecurity among some staff about their jobs.
Also, China's biggest ride-hailing firm Didi Global Inc is planning to reduce its overall headcount by as much as 15% as its domestic business has been impacted by the crackdown, as per sources.
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