Chinese tech workers face layoffs amid suppression and losses | Technology

Beijing China – Instead of getting a pink note from his boss, Zhang Wei found out through a work group chat that he was about to lose his job at Chinese video streamer iQiyi.

Zhang’s supervisors only confirmed the layoffs at the Beijing-based company after news of the layoffs leaked to the media in December.

“Although I knew 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 laid-off workers in China’s tech world Beijing cracks down on private companies The industry’s aggressive expansion over the years has overwhelmed some companies, analysts said.

Between July and mid-April alone, nearly 73,000 workers were laid off, according to research by TechNode, a media outlet covering China’s tech and entrepreneurship sector. In late April, lifestyle app Xiaohongshu, often referred to as China’s version of Instagram, laid off about 10% of its staff.

“It’s not just these layoffs, but many sectors are freezing headcount, terminating current hiring and suspending internships, the poor macroeconomic outlook, the pressure to focus on profits and cut unprofitable businesses, and in the field,” said the angel investor. , Ma Rui, founder of Tech Buzz China podcast, told Al Jazeera.

Worse situations may lie ahead.

Two Chinese internet giants, Alibaba and Tencent, are planning to cut tens of thousands of jobs this year, Reuters reported in March, citing anonymous sources close to the companies.

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

Gao “Noah” Zihao, co-founder of headhunting firm Beta, which has worked with major Chinese tech companies, said many tech companies are trying to “copy their business models” in new industries, noting that food delivery platform Meituan’s retail push and delivery Take e-commerce platform Jindong’s foray into grocery stores, for example.

“These moves are too aggressive to make money, and the company has no choice but to cut down unprofitable divisions,” Gao told Al Jazeera.

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

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

Hu Yuwan, deputy director of Daxue Consulting, said China’s technology industry is currently in a transition period after facing constraints from one-off growth engines such as e-commerce.

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

“Market Mature”

Hu said workers “can see the ceiling” as the market matures. “And government policy is not so favorable for the big internet right now. It’s just less stable… Now government policy is more favorable for what we call ‘hardcore’ emerging technology industries, such as artificial intelligence, cloud computing, biotechnology and other fundamentals facility.”

The importance of the emerging industry of big data is evident in the Chinese government’s “14th Five-Year Plan for the Development of the Big Data Industry” released in November, which describes the field as a “new impetus for economic transformation and development” .

As workers suffer consequences for misjudging business expansion, authorities have sought to push the “big internet” industry into what Beijing considers more sustainable.

“Officials seem to be saying now: ‘We have different strategies. We care about actual employment, which Internet companies can’t do,'” Gao said. “Those internet companies worked very hard and poured a lot of money into the U.S. stock market. The pandemic has shown everyone that the virtual economy is not and cannot be the only growth driver.”

This growth would not have been possible without the growing pains, said Ashley Dudarenok, co-author of “New Retail: Born in China, Going Global.”

“The industry is young and changing at the speed of China, so we’re just entering the teenage years and the expansion of management and overconfidence inevitably creates a crisis,” Dudarrenok told Al Jazeera.

“Tech ecosystems will continue to evolve, better figuring out what their superpowers are and how to best compete and cooperate with each other.”

After a rough few years for the industry, there are still some hopeful signs.

Chinese state media has hinted in recent weeks that it will provide greater support for struggling tech companies, raising expectations that the regulatory blitz that began in 2020 will gradually end or ease.

Food delivery platform Meituan is one of Chinese startups trying to expand into other areas of business [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 paying some of the highest salaries in China…the inventory package has of course been a big hit, but it’s also a global phenomenon,” Ma said. “Most of these jobs are going to be good jobs, but not necessarily like they used to be. At the beginning of the decade that was the ticket to financial freedom. “

Despite the recent pain, the maturation of big tech companies could benefit skilled workers in the long run, Gao said.

“People who can code, or key account managers who actually have clients, always get a good job,” he said, noting the prospect of a “fancy project manager with a Powerpoint presentation telling a story.”

Hu expressed the same hope for the future.

“It’s going to be tough in the short term,” she said. “But in a year or so, there will be two types of people: those who don’t have the right technical background, and they may need to specialize in other industries. Then, there will be people who have the relevant digital skills … they can develop new skills to upgrade jobs in the tech industry.”

For tech workers like Zhang, the upheaval in the industry has sounded alarm bells.

“Technology is changing very fast. We need to keep learning so as not to be obsolete,” he said. “Not just in tech, but in any industry. I think we need to keep learning all the time.”

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