Didi Chuxing, the Chinese ride-hailing startup, ByteDance, the mobile app maker in China, and other Chinese tech firms are reining in perks such as free snacks and gym memberships, slashing bonuses and laying off workers amid a slowdown in the economy.
According to a report in The Financial Times, tech firms across the country are in cost-cutting mode after years of excesses. With capital raises slowing down amid the sluggish economy, startups are opting to reduce expenses rather than spend lavishly on their employees. According to The Financial Times, capital investments in tech startups in China began to slow down during the second half of last year, which resulted in lower valuations for the companies. At the same time, consumers have become more price-conscious and advertisers are rethinking their ad spends. All of this is weighing on Chinese tech companies, which are passing the pain on to employees.
Dianrong, the peer-to-peer lender, was the latest example of cost cutting going on with Chinese tech startups. It announced late last week that it is laying off 2,000. Meanwhile Zhaoping.com, an online recruitment website, said it is seeing a record number of resumes. “Changes in the market environment have brought the development of the internet industry back to a rational state,” said Li Qiang, executive vice-president, in an interview with The Financial Times. He said other issues hurting the sector are the fact that internet user numbers are flattening out and a regulatory clampdown by the government.
Didi, the Chinese ride-hailing app that launched in 2016, is laying off 2,000 workers or about 15 percent of its total employee headcount. Still, it said that even with the moves, it will end the year with the same number of employees as 2018, reported the FT. “We recently made adjustments to these [workplace] benefits, however, we have no plans to make any major cuts,” said a spokesman for the company. Meanwhile, JD.com is reducing its workforce by about 10 percent for those at the vice president level or higher. It also said it will hire at the same time, adding 15,000 new employees in 2019. The report noted two thirds will work in logistics, warehousing, and in entry-level management jobs. Alibaba, JD.com’s rival, said it was continuing to hire more.