Lay-offs at China’s Big Tech mount with Kuaishou, iQiyi said to be joining ByteDance in job cuts
- Companies are reportedly laying off more employees than usual for this time of year, setting off “panic among a lot of people”
- Beijing’s regulatory tightening on the internet sector and rising competition are putting financial pressure on tech giants
A new wave of job cuts is shaking China’s Big Tech firms as 2021 comes to a close, with short video giant Kuaishou, rival ByteDance, and Baidu-owned video-streaming platform iQiyi all said to be trimming their payrolls.
While it is common practice for Chinese tech firms to lay off underperformers at year’s end, the job cuts this time appear deeper than usual after a year of harsh regulatory tightening on the sector.
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Hong Kong-listed Kuaishou has started to let go of employees who received low scores in performance reviews, according to three people familiar with the matter who declined to be named because they are not authorised to speak to the media. Laid-off employees have been offered compensation based on the number of years they had served, plus one month’s salary, the people said.
“It has set off panic among a lot of people in the company because the lay-offs appear to start with highly-paid team leaders,” one of the sources said.
Meanwhile Nasdaq-listed iQiyi also kicked off a wave of lay-offs at the start of this month, trimming more than 30 per cent of jobs at high-expense departments such as marketing and distribution, according to Chinese media Yicai and news portal Sina.
Dismissed workers at iQiyi have been reportedly offered similar compensation as their peers at Kuaishou. Lay-offs at iQiyi may continue through the Lunar New Year, which begins on February 1 next year, when private businesses in China usually hand out annual bonuses, reports said.
iQiyi and Kuaishou did not immediately respond to requests for comment.
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The job reductions extended to Guagualong, ByteDance’s flagship artificial intelligence-powered tutoring service geared towards 2 to 12-year-olds that was created last year. Teams that have not been directly affected by Beijing’s new policy, including OpenLanguage, an English learning service for adults, and Xuelang, a knowledge-sharing platform, have also seen job cuts.
The lay-offs by Chinese tech giants are seen as a sign of dimming job prospects within the country’s internet sector after Beijing’s sweeping regulatory crackdown over the past year. While the industry has a reputation for long hours and a strong bias towards younger employees, the sector is also known for frequently offering salaries several times the national average.
Besides regulatory headwinds, Kuaishou and iQiyi have also been hit hard by intensified competition and cash flow pressures.
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iQiyi’s performance was worse in the last quarter, with the net loss having widened 41.6 per cent to 1.7 billion yuan, while revenue edged up by 6 per cent to 7.6 billion yuan.
iQiyi chief executive Tim Gong Yu said during an earnings call with analysts in November that the biggest challenge for the industry has been a “supply shortage” of online videos, as the Covid-19 pandemic and “stronger censorship” delayed the launch of new web dramas.
