Two tech industry-related hashtags — ‘layoffs at Alibaba’ (#阿里裁员#) and ‘layoffs at Tencent’ (#腾讯裁员#) — were topping the charts on Chinese social media platform Weibo last week, following plummeting stock values for some of China’s most influential technology companies. The more general hashtag ‘layoffs’ (#裁员#) also generated plenty of attention online.
In the Chinese mainland on March 14, shares of Chinese shopping platform Meituan dropped by 16.8%, while Tencent and Alibaba sank by 9.8% and 10.9%, respectively.
In U.S. trading, 10 Chinese internet stocks were downgraded by JPMorgan analysts, who labeled them “uninvestable” due to “rising geopolitical and macro risks,” as well as China’s recent Covid lockdowns.
Looking at the slumping numbers and unoptimistic predictions above, even the casual observer could probably agree that Chinese tech stocks are under extreme pressure.
“I just saw my savings shrink by 50% during the last year. Some colleagues can’t even pay off their loans,” reads the top comment on Weibo, posted by a Millennial working at a tech company and who has invested in stocks in the same sector.
The stock exchange in the South China tech hub of Shenzhen
To add insult to injury, Chinese tech titans Alibaba and Tencent are planning major layoffs that could impact up to 20% of their staff. Some loss-making units will be cut entirely, and the companies will downsize areas with high regulatory risks.
Popular ecommerce platform JD.com has also recently announced that it would be slashing its headcount by 10-15%.
These mighty Chinese tech giants are the latest to see job cuts — a regular occurrence among tech firms over the past year resulting from sluggish revenue growth and intense regulatory crackdowns.
Many are surprised by the layoffs at Alibaba and Tencent, especially since the companies are first-tier industry leaders with business units in diverse sectors, generating tens of billions of USD in revenue every year. In the past, the size and reach of these titans made them less vulnerable to market fluctuations.
An SF Express deliveryman rides past a signboard at the headquarters of Alibaba Group in Hangzhou, in East China’s Zhejiang province
On Chinese social media, some predict (perhaps melodramatically) a ‘sandstorm’ and the imminent death of China’s tech industry. Others advise shifting to an ‘iron bowl’ (铁饭碗), meaning a career path that will last until retirement (aka government jobs).
Sure enough, the number of university graduates who participated in the national public servant contest — the gatekeeper for comfortable jobs in the civil system — reached an astonishing new high of 1.6 million in 2021.
“Don’t quit your government jobs and create a startup; it’s better to have stability. Because you never know what might happen next,” wrote one netizen in response to the tech layoffs.
All images via Depositphotos
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