Chinese tech workers face layoff massacre amid crackdown, lose | Technology

Beijing, China – Instead of a pink slip from his boss, Zhang Wei learned through a workgroup chat that he was about to lose his job at Chinese video streamer iQiyi.

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

“Even though I knew it in advance, 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 world who have been laid off after China’s stock market crackdown on private companies and years of aggressive expansion within the industry, which analysts say has overstrained some companies.

Nearly 73,000 workers were laid off between July and mid-April alone, according to research from TechNode, a media outlet that covers China’s tech and startup scene. Later in April, lifestyle app Xiaohongshu, often described as the Chinese version of Instagram, fired about 10 percent of its staff.

“The causes of not only these layoffs, but also the frozen workforce in many divisions, the termination of current hires and interrupted internships, are a combination of poor macroeconomic prospects, pressure to focus on profits and eliminating unprofitable companies, and more regulatory oversight in the industry,” Rui Ma, an angel investor and the founder of the Tech Buzz China podcast, told Al Jazeera.

Worse is yet to come.

Alibaba and Tencent, the two titans of the Chinese internet, are planning to let tens of thousands of employees go together this year, according to a Reuters report published in March that quoted anonymous sources close to the companies.

Alibaba and Tencent are reportedly preparing to let tens of thousands of employees go [File: Thomas Peter/Reuters]

Gao “Noah” Zihao, co-founder of Beta, a headhunting firm that has partnered with China’s major tech players, said many tech companies had overextended themselves by trying to “duplicate their business models” in new industries, pointing to food delivery platform Meituan’s retail push and e-commerce platform Jindong’s foray into grocery shopping as examples.

“These moves were too aggressive to make money, leaving companies with few options but to cut the departments that weren’t making money,” Gao told Al Jazeera.

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

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

Yuwan Hu, associate director at Daxue Consulting, said China’s technology sector is now going through a transition period after encountering the limits of one-time growth engines like e-commerce.

“In the past, China’s largest tech companies focused on gaming, e-commerce, and other traditional ‘big internet’ businesses that saw a huge increase in users three to five years ago,” Hu told Al Jazeera, adding that the rapid growth led to a skewed focus that neglected infrastructure.

‘Market ripening’

Workers “can see the ceiling because of market maturation,” Hu said. “And government policy is not so favorable for the big internet right now. It’s just not very stable…Now government policies are more favorable to what we call ‘hard-core’ emerging tech industries like AI, cloud computing, biotech and other infrastructure.”

The importance of such an emerging industry, big data, is evident in the November 14th Five-Year Plan of the Chinese Government for the Development of the Big Data Industry, which describes the field as a “new driving force for economic development”. transformation”. and development”.

With workers suffering the consequences of ill-considered business expansion, authorities have sought to push the “big internet” industry into areas Beijing sees as more sustainable.

“Officials now seem to be saying, ‘We have a different strategy. We care about actual employment, and internet companies can’t produce that,” Gao said. “Those internet companies have worked very hard and put 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 growth engine.”

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

“The industry is young and constantly changing at Chinese speed, so we are just entering a teenage phase, where crises will inevitably arise from management and overconfident expansion,” Dudarenok told Al Jazeera.

“Tech ecosystems will continue to evolve, figuring out what their superpowers are and how best to compete and work together.”

After a few difficult years for the industry, there are some hopeful signs on the horizon.

Chinese state media have signaled in recent weeks that they will increase support for the beleaguered tech companies, raising expectations of a winding down or easing of the regulatory blitz that began in 2020.

Meituan, a food delivery platform, is one of the Chinese startups that have tried to expand 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] still pays out some of the highest salaries in China… Equity packages have taken a big hit, of course, but that’s also a global phenomenon,” said Ma. “Most of these jobs will be good jobs, but not necessarily a ticket to financial freedom like at the start of the past decade.”

Despite the recent pain, the long-term maturation of the big technology is likely to benefit skilled workers, Gao said.

“People who can code, or the key account managers who actually have clients, will always find good jobs,” he said, less optimistic about the prospects of “posh project managers, who tell stories with Powerpoint presentations.”

Hu expressed similar hopes for the future.

“The short term will be difficult,” she said. “But within a year or so there will be two types of workforce: those without the right technical background, who may need to focus on other industries. And then there will be people who have relevant digital skills… They could develop newer skills to get upgraded jobs within technology.”

For tech workers like Zhang, the industry turmoil is a wake-up call.

“Technology is updated very quickly. We have to keep learning so we don’t get knocked out,” he said. “Not just the technology industry, but every industry. I think we have to keep learning all the time.”

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