JD.com to Lay Off 10% of Senior Executives
Along with many of its tech peers, e-commerce firm JD.com Inc. is laying off staff to cut costs — but unlike other firms, it is starting with its senior management.
The company is going to lay off executives at the vice-president level or above, JD.com confirmed with Caixin earlier this week.
Sources who formerly worked at the company told Caixin that there are less than 100 people above that level at JD.com and their annual compensation packages cost on average more than 1 million yuan ($148,635) each.
The decision to shrink the executive team was announced at a recent internal company meeting, Caixin has learned. According to the company’s annual report for fiscal year 2017, it has a total of 157,800 full-time employees.
One member of another tech company’s human resources department told Caixin it is not a common practice in the industry to start layoffs with senior executives.
The company reportedly began firing staff in November, while its founder Richard Liu — who still holds most of the decision-making power at the company — was facing potential rape charges in the U.S. Prosecutors in Minnesota decided not to file charges at the end of December, but the scandal shook confidence in the company and sent its stock price tumbling.
At the end of last year, China’s second largest e-commerce company kicked off a $1 billion stock buyback to prop up its stock — though it is still trading below where it was when news broke that Liu has been detained in the U.S.
Also in December, JD.com announced it would overhaul its internal structure, creating three segments. One will focus on marketing and customer services, another will specialize in business support and platform management and the third will engage in infrastructure-building and risk management. It said the restructuring will help it better cope with business challenges and market changes as the industry shifts away from a decade of high-speed growth.
The e-commerce player is only one of many technology companies that have been firing people to cut costs since last year, as dwindling capital, volatile markets and tightening regulations hurt the company’s tech sector.
Last week, the country's ride-hailing leader Didi Chuxing announced mass layoffs that are expected to affect about 2,000 people, about 15% of the company’s total corporate workforce.
Zhihu, China’s equivalent to the Quora question-and-answer site in the U.S., let go 100 workers in December. Zhihu said the layoffs were a routine personnel adjustment carried out at the end of each year. Caixin learned that Netease also downsized its artificial intelligence team to about 140 from 400 in mid-October.
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