Xiaomi Rumored to Conduct Layoffs and Concentrate Effort in Automotive Sector

Several Xiaomi employees recently wrote on Chinese career and social networking platform Maimai that during a product launch conference on December 11, roughly 6,000 employees received notices of being laid off. Meanwhile, more than 9,000 people participated in an online survey, showing that the mobile phone department has been the hardest hit part of the company.

According to Xinzhi Business Insight, a Xiaomi employee revealed that the number of 6,000 was exaggerated, claiming that more than 1,000 people were fired, and that the mobile phone department was indeed the hardest hit area.

Some Xiaomi employees said on Maimai that an e-commerce platform under Xiaomi was cut and the layoff rate of the whole company was 20%. The focus of these layoffs is fresh graduates, one-year employees, and some old employees, covering the firm’s Beijing headquarters and branches in Nanjing and Shenzhen. An employee of visual design post recruited by Xiaomi this year said that he was laid off in less than half a year, and the reason for the notice was profit declines.

A Xiaomi spokesperson responded that year-end layoffs had indeed occurred, carried out in a legal manner and covering about 10% of all employees. The spokesperson added that exaggerated layoff rates circulating online originated from an anonymous post on Maimai, and the firm has started obtaining evidence to file with the police.

Xiaomi‘s Q1 financial report this year showed that the group’s total revenue was 73.4 billion yuan ($10 billion), and its adjusted net profit was 2.9 billion yuan. The Q2 financial report showed revenue of 70.7 billion yuan and adjusted net profits of 2.08 billion yuan. The Q3 financial report showed revenue of 70.474 billion yuan and adjusted net profits of 2.117 billion yuan. Since the beginning of this year, Xiaomi‘s mobile phone business has been under pressure. In the third quarter, total revenue from smartphones was 42.5 billion yuan, down 11.1% year-on-year, while global shipments were 40.2 million units, down 8.4% year-on-year.

“How many products does Xiaomi have? I am afraid the firm founder Lei Jun may not be clear either,” one employee said. “As a technology company, innovation means investment, and there must be something to give up. In addition to the environmental factors, R&D investment has risen sharply, especially the increase in new business investment.” The so-called new business naturally refers to Xiaomi‘s car-building plan.

SEE ALSO: Xiaomi Sees Annual Decline in Q3 Net Profits and Revenue, Car Production Ran Smoothly

In March 2021, Xiaomi promised to invest 100 billion yuan over 10 years in vehicle development, with an initial investment of 10 billion yuan. However, in a conference call after the release of Q3 financial report on November 24, Wang Xiang, the president of Xiaomi, revealed in an interview that the total investment in building cars in the first three quarters was 1.86 billion yuan. Lin Shiwei, the vice president and CFO of Xiaomi, said that the firm still plans to launch its first electric vehicle in the first half of 2024, and will continue to increase capital expenditure and employee investment. At present, Xiaomi‘s automobile R&D team has more than 1,800 people.

However, at the end of November, Jiemian News reported that the development progress for automobiles was not as smooth as expected, which may eventually lead to a decline in product competitiveness. Media outlets quoted individuals familiar with the matter as saying, “It seems to be progressing smoothly, but the actual progress is much slower due to many factors. For example, some things to be delivered are delayed.”