China’s second-largest e-commerce company, JD. com, plans deep job cuts to staunch losses and reassure investors, according to a slew of recent media reports, highlighting the mounting challenges faced by Chinese tech firms as their nation’s economy loses steam.
The Information, citing investors, reported on April 9 that NASDAQ-listed JD.com is preparing to lay off as many as 12,000 people, or roughly 8% of its workforce. Bloomberg and Quartz also report the company is planning cuts and has rescinded some job offers.
Reports of layoffs at JD.com follow announcements of similar retrenchment at other Chinese tech companies. Tencent Holding, China’s mammoth social media and online games provider, said last month it would sack or demote up to 10% of senior and middle management. In February, ride-hailing giant Didi Chuxing said it would slash its workforce by 15%.
In some cases, the cutbacks are a response to governance failures or clashes with regulators. In the case of Tencent, Beijing slapped a nine month ban on new video games licenses for the company; regulators said they were concerned about online addiction and the deteriorating eyesight of the nation’s youth. Didi was chastened by the murder of two female passengers last year by drivers.
JD’s woes partly reflect the misadventures of its founder and CEO Richard Liu. Liu radiated confidence when Adam interviewed him at Brainstorm Tech in Aspen last July. But on August 31, the boyish entrepreneur was arrested in Minneapolis on charges of raping a 21-year-old University of Minnesota student. In December, the Hennepin County prosector dropped the case citing insufficient evidence. Liu, who controls 80% of JD.com’s voting rights, says the relationship was consensual and denies wrongdoing. But details of the incident cast him in a nasty light, and he has since shunned public appearances.
The layoffs also underscore a harsher operating environment for Chinese tech firms, igniting a broad debate about working conditions in China’s tech industry. Until recently China’s tech workers took a kind of perverse pride in working long hours at a feverish pace; the famed moniker for Chinese tech work culture is “996,” reflecting the notion that, to succeed, you have to be willing to work from 9 a.m. to 9 p.m. six days a week. But, as Quartz notes, with more and more Chinese ventures jettisoning workers, once-prized positions at the nation’s tech companies are starting to look every bit as precarious as work in China’s factories.