Tech workers in China face a bloodbath of layoffs amid crackdown and losses | Technique

Beijing, China – Instead of a rosy gaffe from his boss, Zhang Wei discovers he’s about to lose his job at Chinese video streaming company iQiyi via a work group chat.

Zhang’s supervisor only confirmed the news after cuts at the Beijing-based company were leaked last December to the media.

“Even though I knew beforehand, I still couldn’t believe it,” Zhang, who asked to use a pseudonym, told Al Jazeera.

Zhang is just one of tens of thousands of workers in China’s tech scene who have been laid off in the wake of Beijing’s regulatory crackdown on stock price pressures on private companies and years of aggressive expansion within the sector that analysts say has left some companies exhausted.

Nearly 73,000 workers were laid off between July and mid-April alone, according to research by TechNode, a media outlet covering China’s technology and startup landscape. Later in April, the Xiaohongshu app, often described as the Chinese version of Instagram, fired about 10% of its workforce.

“The reasons for these layoffs, as well as the number frozen in many departments, current expiring hiring and paused internships, are a combination of poor macroeconomic prospects, pressure to focus on profits and discontinuation of unprofitable businesses, and increased regulatory oversight at Rui Ma, an angel investor. and founder of the Tech Buzz China podcast for Al Jazeera.

The worst may be yet to come.

Alibaba and Tencent, China’s internet giants, plan to lay off tens of thousands of employees combined this year, according to a March report by Reuters, citing anonymous sources close to the two companies.

Ali Baba and Tencent are reportedly preparing to lay off tens of thousands of employees [File: Thomas Peter/Reuters]

Many tech companies have exhausted themselves by trying to “replicate their business models” in new industries, said Gao “Noah” Zihao, co-founder of Beta, a headhunting company that has worked with major tech players in China, referring to the food delivery platform. Meituan’s push retail and e-commerce platform Jindong’s foray into groceries are examples.

“These moves were too aggressive to make money, and they left companies with few options other than to cut divisions and not make money,” Gao told Al Jazeera.

Zhao added that qualified technical candidates are finding it increasingly difficult to get job interviews as companies advertise fewer and fewer job opportunities.

iQiyi, Jindong, and Meituan did not respond to requests for comment.

Yuwan Hu, associate director at Daxue Consulting, said the Chinese tech sector is now going through a period of transition after facing the limits of one-off growth drivers such as e-commerce.

“Previously, China’s largest tech companies focused on games, e-commerce and other traditional ‘big internet’ businesses that saw a massive increase in users three to five years ago,” Hu told Al Jazeera, adding that rapid growth has led to unfocused focus. Balanced infrastructure neglected.

Market maturity

Hu Jintao said workers “can see the ceiling because the market has matured.” “And now government policies are not conducive to the big internet. It is not quite stable… Now, government policy is more suitable for what we call “hard” emerging tech industries like artificial intelligence, cloud computing, biotechnology and other infrastructure.”

The importance of one of these emerging industries, big data, is illustrated in the “Chinese government’s 14th Five-Year Plan for the Development of the Big Data Industry,” published in November, which describes the field as a “new driving force for economic transformation and development.”

With workers suffering the consequences of ill-advised business expansions, authorities have sought to push the “big internet” industry into areas deemed more sustainable by Beijing.

Now officials seem to be saying: We have a different strategy. “We care about the actual hiring,” Zhao said, “and internet companies can’t produce that. “These Internet companies have tried very hard and pumped a lot of money into the US stock market. The pandemic has shown everyone that the virtual economy is not and cannot be the only driver of growth.”

That growth is impossible without growing pains, according to Ashley Dodarinock, co-author of New Retail: Born in China Going Global.

“The industry is young and constantly changing at the Chinese speed, so we are just entering an adolescence stage, when there will inevitably be crises caused by management and excessive expansion of confidence,” Dodarinok told Al Jazeera.

“Technology ecosystems will continue to evolve, and they will better discover what their greatest strength is and how to better compete and collaborate with each other.”

After a difficult few years for the sector, there are nonetheless some signs of hope on the horizon.

Chinese state media has indicated in recent weeks that it will provide greater support to the embattled tech companies, raising expectations that the regulatory crackdown that began in 2020.

Food delivery platform Meituan is among the Chinese startups that have tried to branch out into other business areas [File: Aly Song/File Photo

Ma said she remains optimistic that tech jobs will remain attractive to workers, though perhaps less so than in the past.

“So far it [the tech sector] They still offer some of the highest salaries in China…Stock packages have taken a big hit of course, but this is also a global phenomenon,” Ma said. “Most of these jobs will be good jobs, but not necessarily a ticket to financial freedom as they were at the beginning of the last decade. “

Gao said that despite the recent pain, the maturity of big tech is likely to benefit skilled workers in the long run.

“People who can code, or key account managers who already have clients, will always be able to find a good job,” he said, expressing less optimism about the prospects for “luxury project managers, who tell stories through Powerpoint presentations.”

He expressed hope for the future.

“The short term will be difficult,” she said. “But in a year or so, there will be two types of employees: those who do not have the right technical backgrounds, and those who may need to focus on other industries. And then there will be people with relevant digital skills… who can develop newer ones. To promote jobs in the field of technology.”

For tech workers like Zhang, the turmoil in the sector has served as an alarm bell.

“Technology is upgrading very fast. We need to keep learning so we don’t get wiped out.” Not only the tech industry but also any other industry. I think we need to keep learning all the time.”

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