Meanwhile, the internet sector, which is traditionally a significant source of jobs, has experienced a similar trend amid cost-cutting efforts.
E-commerce giant Alibaba downsized by 12.8 per cent, or 20,000 jobs, in the 2023 fiscal year, following a 7 per cent cut in the previous year.
Last year saw the biggest workforce culling by the company in a decade, according to its annual reports. Alibaba is the owner of the South China Morning Post.
The number of employees in Tencent declined by 2.8 per cent, or about 3,000 in the past year, and the company hasn’t stopped its layoff pace. In the first quarter of 2024, the company further reduced its headcount by 630.
Gone are the days when internet firms set ambitious business targets and rapidly expanded.
Just three years ago, about 27 per cent of China’s working-age population was said to be employed by internet platform companies – from the operators of online services from social media to video gaming, e-commerce and food delivery – according to a report by the China Information Economics Society, a think tank.
But today, many are paying the price for such aggressive expansions. A recent example was video game developer Perfect World, which kicked a new round of staff cuts at the end of June, according to local media reports.
The layoffs came after a 112 per cent plunge in the company’s net profits in the first quarter of 2024.
Perfect World joined bigger industry peers in cutting costs. Earlier this year, ByteDance, Xiaomi, JD.com, Kuaishou Technology, Didi Chuxing, Bilibili and Weibo all announced layoff plans.
In the financial industry, where most of the leading players are owned by the state, brokers and funds have largely been cutting compensations and benefits, rather than resorting to large-scale layoffs.
Such decisions underpin the “iron rice bowl” mentality that draws young people to state jobs. And such positions have grown so attractive that in some parts of China getting a government job is said to be like “getting a passport to love and marriage”.
China International Capital Corporation (CIIC) said it cut staff-related costs by 43.4 per cent more in the first quarter of 2024, compared with the year prior.
