Snapshots of China’s Internet Sector in 2021
For those who work in China’s internet sector, 2021 has been a bumpy year. People laugh, and people cry. In December, their social media was flooded with two explosive pieces of news: the massive layoffs within China’s Big Tech and the improvement of employees’ welfare, which can be interpreted as the two snapshots of China’s internet sector.
As 2021 comes to a close, a new round of layoffs is shaking Chinese Big Tech companies. On December 14, a leaked memo of ByteDance, a Chinese technology giant and the parent company of social media platform TikTok, was circulated on Weibo, ‘Chinese Twitter’. According to the memo, the company will dismiss its talent training team and further streamline the HR department, citing that the team failed to train skillful employees. As of press time, ByteDance did not respond to a request to comment.
This is not the company’s first cut. A few months earlier, the company launched a massive layoff that saw underperforming employees in the commercialization, gaming and education teams dropped. ByteDance’s several rounds of work cuts mark a sharp contrast to a year ago, when it expanded its business and its thirst for fresh talent seemed insatiable.
In the same month, iQiyi, a Baidu-owned video-streaming platform, was reported to trim as much as 40 percent of its workforce at high-expense departments, including those working with games, products and video community, and its layoffs may continue through the Chinese Lunar New Year, which falls on February 1, 2022. Short video giant Kuaishou has also started to let go of underperformers in its commercialization and overseas business team. Some Kuaishou employees broke the news on social media that the company’s layoff rate is expected to reach 30 percent.
While it is common practice for the tech firm to fire underperformers at year’s end, the job cuts this time appear deeper than usual. The mass layoffs by Chinese tech giants is viewed as a sign of dimming job prospects in the country’s internet sector which now faces the sweeping regulations.
“This really set off panic among us. First, they cut the education teams, and now it turns to the HR teams. No one knows who will be the next,” said a source in the internet industry who declined to be named as they are not authorized to speak to the media.
According to an individual familiar with the matter, rounds of job reductions within Chinese tech companies reflect the slowdown in China’s internet industry. Tech companies have been hit hard by regulatory headwinds, intensified competition and cash flow pressures, with most tech giants facing slow growth in their core business and losing ground in the stock market. As of July this year, China’s internet giants have wiped out a combined $823 billion since their February peaks.
“Tech giants were a scramble to expand their business scope in the past few years. In the near future, most of their new business lines are not just unprofitable but also high-cost. When the companies face the downturn, they would spontaneously cut costs to survive, which means they have to cancel these superfluous business lines,” said the source, asserting that it is an inevitable trend that China’s internet firms have been and will keep downsizing amid a sluggish economy.
While some are packing themselves off, others are cheering for their improved employee welfare. On December 14, when ByteDance announced its latest wave of layoffs, Chinese e-commerce giant Alibaba launched an employee welfare program offering a range of benefits, including an extra one-week paid leave for family visits, 10-day parental leave for employees whose child is under three years old, and subsidies for transportation and team outings. The company also adopted a more flexible work schedule whereby employees can choose to work from home one day per week. Once the program was announced, Alibaba received a slew of positive comments, with many netizens calling for their own companies to follow suit. Chinese state media China Daily said that Alibaba’s latest program reflects the company’s “advanced and up-to-date human-resource strategy in the digital era.”
Alibaba’s latest employee program is the latest epitome of the tech giant’s response to the country’s call on improving the working environment. Following a spate of employee deaths at Chinese tech companies, the supreme court declared the country’s infamous “996 work culture,” in which people work from 9 a.m. to 9 p.m., six days a week, illegal in late August. The announcement was welcomed by tech workers who have complained about the grueling hours for years, and many asked for a stricter policy to ensure the tech companies obey labor laws.
The stern reminder from China’s authorities did, to some extent, discourage the notorious “996 culture” – tech giants, willingly or not, have started to shorten their work hours. In recent months, a unit of food-delivery platform Meituan and Kuaishou were among several companies that canceled a system known as “big week, little week,” whereby staff are allowed an entire weekend only every other week.
SEE ALSO: 2021 Q2 Advertising Revenue of Major Chinese Internet Companies Shows Market Picking Up
ByteDance canceled mandatory work every other Sunday in August. Three months later, the company implemented new rules that officially discourage employees from working more than nine hours per day or going to the office on weekends.
According to a source familiar with the matter, more and more tech companies will continue to counter the notorious working system targeted by the country’s policy, “Companies have to show that they are taking action on this, and if they don’t, they risk being made an example of by authorities,” said the source.
Despite the public and government backlash over the grueling work culture in the tech sector and calls for work-life balance, the change is clearly slow to come. According to the open-access spreadsheet created by the “Worker Lives Matter” campaign, employees at Tencent, Alibaba, ByteDance, and Meituan still generally work from 10 a.m. to 9 p.m. At the same time, their counterparts at JD.com and Huawei toil even longer, from 9 a.m. to 9 p.m. Another pointed out that even with companies modifying their policies, the reality was still bleak: “After 996 changed to normal working hours, work is forced to be done at home and with no pay.”
“It is positive to see the tech giants tried to improve their employees’ working lives. However, they still have a long way to go to achieve work life balance,” said the source.
