SCMP: Chinese smartphone giant Xiaomi’s ‘personnel optimisation’ to affect 10 per cent of its workforce amid weak consumer spending

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https://www.scmp.com/tech/big-tech/article/3203870/chinese-smartphone-giant-xiaomi-said-cut-15-cent-its-workforce-amid-weak-consumer-spending

• In China, lay-offs are often conducted in the name of ‘business optimisation’ to avoid scrutiny by labour authorities
• Xiaomi had 35,314 employees as of September 30, with more than 32,000 in mainland China, according to its third-quarter financial results

Chinese smartphone giant Xiaomi, which has an ambitious goal of unseating iPhone maker Apple from the No 1 spot globally by 2024, has started laying off workers in multiple departments, according to social media posts by affected employees and local Chinese media reports.

In China, lay-offs are often conducted in the name of “business optimisation” to avoid scrutiny by labour authorities. Lay-offs affecting more than 20 jobs must be referred to the government under China’s labour law.

A Xiaomi representative said in a statement on Tuesday that the company has implemented “routine personnel optimisation and organisational streamlining” with “less than 10 per cent of the total workforce” affected.

Xiaomi had 35,314 employees as of September 30, with more than 32,000 in mainland China, according to its third-quarter financial results.

Xiaomi will cut jobs in several units of its smartphone and internet services business, according to a report by Chinese media outlet Jiemian, an online publication affiliated with Shanghai United Media Group. The report said laid-off workers were given redundancy packages, adding that the move may reduce Xiaomi’s payroll by about 15 per cent.

The Beijing-based company began trimming workers this year amid weaker sales due to China’s Covid-19 lockdowns and slower consumer spending. The latest move could affect thousands of workers, many of whom have just joined the company during a hiring spree that began in December last year.

China’s social media platforms, including Weibo, Xiaohongshu and Maimai, have been flooded with posts about the reported Xiaomi job cuts, injecting a fresh sense of anxiety over the future of China’s tech sector

The new flagship 13-series phones introduced by Xiaomi earlier this month. Photo: Handout

The news comes just days after Xiaomi founder Lei Jun unveiled the company’s new flagship 13-series smartphones, powered by the Qualcomm Snapdragon chipset, despite weakness in the consumer electronics market due to a sluggish Chinese economy. In the third quarter, global smartphone shipments fell 9 per cent year on year to 297.8 million units, with shipments in China down 11 per cent to 70 million units in the same period, according to market research firm Canalys.

China’s closely-monitored retails sales, a broader gauge of consumption, were down 5.9 per cent year on year in November. Consumer goods excluding cars declined by 6.1 per cent, an indicator of widespread consumption weakness in the world’s second-largest economy which ended draconian Covid-19 controls and lockdowns after angry protests across the country.

Xiaomi, the fifth-largest smartphone vendor in the Chinese market with a 13 per cent market share in the September quarter, saw its revenue decline by 9.7 per cent year on year to 70.47 billion yuan (US$10.1 billion) in the three months ended September 30, while net profits dropped by 59.1 per cent to 2.21 billion yuan.