Chinese tech giants give up lavish spending, cut costs in the face of economic headwinds
- JD.com chief executive Xu Lei called the second quarter the ‘most challenging’ since the company was listed in 2014
- Alibaba shed 9,241 workers while Tencent dismissed more than 5,500 people in the second quarter
China’s big internet firms, once known as lavish spenders when it came to external investments and internal employee perks, have tightened their belts in recent months as economic headwinds stiffen and capital support dries up.
The second quarter of 2022 has seen a spectacular retreat by China Big Tech as companies slash costs amid weaker consumer spending, regulatory scrutiny and an increasingly tense US-China relationship – a sharp contrast to the past years of freewheeling growth driven by a buoyant economy and a supportive capital market.
Alibaba Group Holding and JD.com, the top two e-commerce platforms, reported their slowest revenue growth on record amid weakened consumer spending last quarter, while Pinduduo, known for rock-bottom online prices, reported a surprisingly good performance.
Li Chengdong, founder of Beijing-based consultancy Dolphin, said no Chinese tech firm can escape the impact of the economic slowdown, adding that the days of rapid expansion are over, even for Pinduoduo.
Alibaba, owner of the South China Morning Post, as well as Tencent Holdings, ByteDance and Kuaishou Technology, all trimmed jobs in the first half of the year.
Alibaba shed 9,241 workers while Tencent dismissed more than 5,500 people in the second quarter. Smartphone brand Xiaomi cut around 900 jobs over the same period. Baidu, parent company of iQiyi, retreated from its noncore businesses of video games and live streaming, laying off hundreds.
