Alibaba and Tencent say they are preparing for big job cuts amid Chinese crackdown

Alibaba and Tencent are preparing to cut dozens of jobs combined this year in one of their biggest rounds of layoffs, while Internet companies are trying to deal with China’s highly violent regulation, sources said. While Alibaba needs to set a goal for the entire group for layoffs, China’s largest e-commerce company could cut more than 15 percent of its total workforce, or about 39,000 employees, according to sources familiar with the company’s plans.

Tencent, the owner of China’s leading WeChat messaging app, plans to lay off staff in some of its business units again this year, according to three separate sources with knowledge of the subject. His unit, which oversees video streaming and search business, will reduce the number of employees by 10 to 15 percent this year, said one of the three friends.

Alibaba and Tencent did not immediately respond to a request for comment.

The job cuts for both companies would be the first major layoffs since Chinese regulators launched an unprecedented campaign a year and a half ago to sustain its Internet giants.

Regulatory repression, along with the economic slowdown, has significantly slowed sales growth for most Internet companies, broken their share prices and made new capital raising and business expansion much harder in the world’s second-largest economy, forcing companies like Alibaba. and Tencent to look for ways to reduce operating costs.

Alibaba began firing workers last month, according to the first source. Last month he discussed job cuts with several business units and left it up to them to make specific plans, the source added.

Some business units have moved rapidly since then.

Its local consumer services segment, which includes the food distribution business and other food delivery and mapping services, plans to lay off up to 25 percent of its employees, the second source said.

The company’s video streaming unit Youku is also planning releases, according to another source. This includes the release of a group that is responsible for producing children’s shows, the source said.

Alibaba reported its slowest quarterly revenue growth since its launch in February 2014, driven by declining sales and increasing competition in its core business segment. Its shares have fallen more than 60 percent since the beginning of last year.

The company has been under pressure since the end of 2020, when billionaire founder Jack Ma publicly criticized China’s regulatory system, with a record $ 2.8 billion ($ 21.2 billion) fine ($ 21.2 billion) and a string of events. new rules for its internet sector.

Alibaba, which more than doubled the number of employees from 2019 to 2.51,462 last year, will not use the job separately. Two different sources said that Alibaba Cloud’s growth engine staff had not yet been notified of the layoffs.

Preparing for ‘winter’

According to sources familiar with Tencent’s plan, the company’s layoffs will also start in lower-profit or loss-making businesses such as Tencent Video and Tencent Cloud.

At an internal meeting at Tencent in late 2021, CEO Pony Ma told staff that the company needed to prepare for “winter,” according to two other sources, which led to insecurity among some employees about their jobs.

Tencent had 94,182 employees in June last year, up from 70,756 a year earlier, according to a 2021 interim report.

China’s largest travel company, Didi, also plans to cut its internal business by 15 percent as a result of the crackdown, said another person with direct knowledge of the subject.

Didi, who underwent a cybersecurity study after listing $ 4.4 trillion (approximately $ 33.37 billion) in New York last year, is set to end the release by the end of March.

Didi did not immediately respond to a request for comment.

© Thomson Reuters 2022

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