Two tech giants are forced to lay off potentially 15% of their workforces.
Two of China's biggest tech companies, Alibaba Group and Tencent Holdings, are preparing to lay off tens of thousands of employees combined this year as the country continues its regulatory crackdown, sources told Reuters.
China's biggest e-commerce company Alibaba could ultimately axe more than 15% of its total workforce, or about 39,000 staff.
For Tencent, which owns WeChat, the cuts could amount to 10% to 15% of its 94,000 workers, specifically within the video-streaming and search unit.
The job cuts at the two companies would be their first major layoffs since Chinese regulators launched an unprecedented campaign a year-and-a-half ago to rein in its internet giants after years of laissez-faire approach that drove growth at breakneck speed.
Pressure from antitrust authorities in China and a slowdown in economic growth due to the COVID-19 pandemic have slowed sales growth at many Internet companies, caused their stock prices to plummet and made raising capital and expanding business in China much more tougher, forcing Alibaba and Tencent to look for ways to cut costs.
Alibaba reported in February its slowest quarterly revenue growth since going public in 2014, hit by a fall in sales at its core business segment and intensifying competition. Its stock has tumbled more than 60% since the beginning of last year.
The company has been under pressure since late 2020 when its billionaire founder Jack Ma publicly criticized China's regulatory system, saying it is "stifling innovation" and state banks operating with a "pawnshop mentality” triggering a chain of events that saw Beijing slapping the firm with a record $2.8 billion fine and introducing a series of new rules for its internet sector.