Following Tencent, mass layoffs at JD.com
JD.com is trimming 10-15% of the staff at a group-buying division, adding to the list of Big Tech firms that are slashing jobs to survive Beijing’s regulatory storm.
In yet another sign of the fallout from China’s sweeping regulatory crackdowns, JD.com is reportedly cutting 10-15% of its staff (roughly 4,000 employees) in its community-buying division.
- JD’s layoffs are occurring in Jingxi Pinpin, the community group-buying arm of the Chinese ecommerce group. The branch was founded in 2019 to help bring the convenience of ecommerce to small towns and rural markets, a direct competitor to community group-buying giant Pinduoduo.
- Jingxi expanded rapidly to 80 prefecture-level cities within four months of its launch. But faced with enormous losses, it was forced to shutter operations in a number of provinces last summer, including Fujian, Gansu, Guizhou, Jilin, Ningxia, Qinghai, and Shanxi.
- This round of layoffs is also reportedly focused on select regions as Jingxi focuses on building up its supply chain in smaller, rural markets.
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The context: Chinese tech companies are preparing to cut tens of thousands of jobs this year in one of their biggest layoff rounds to date. They include Tencent — which announced layoffs of approximately 10% to 20% in its cloud and internet services division last week — along with search giant Baidu, Alibaba, and video-sharing platform Kuaishou.
- JD.com was about a year and a half late to the group-buying frenzy, relative to its competitors such as Meituan, Pinduoduo, and Alibaba.
- Consequently, its sales volumes are comparatively weak. According to 36Kr, JD.com’s gross merchandise value (GMV) last quarter totaled 9 billion yuan ($1.42 billion), significantly less than its competitors Pinduoduo (43 billion yuan), Meituan (38 billion yuan), and Alibaba (13 billion yuan).
The takeaway: While stock markets can sometimes be unreliable indicators of industry health, employment numbers provide a better bellwether of China’s structural reforms. As tutors, software engineers, and building contractors get cut, new jobs in climate tech, rural revitalization, semiconductors, and batteries are opening up.
