(Bloomberg)—JD.com Inc., No. 4 in the ranking of Internet Retailer Online Marketplaces, is preparing deep cuts to its workforce and rescinding some job offers as the Chinese ecommerce giant struggles to revive dwindling morale and rein in losses, people familiar with the matter said.
Alibaba Group Holding Ltd.’s closest rival told managers that it’s looking to reduce headcount across the company, cutting some teams by as much as half, one of the people said, citing an internal email. JD is reneging on some work contracts and offering impacted college graduates token compensation of 5,000 yuan ($745), the people said, asking not to be identified discussing a private matter. The Information earlier reported that, all told, JD could be slashing its workforce by as much as 8%.
The threat of firings has walloped morale and prompted many to explore employment elsewhere, according to the people. JD has come under increasing pressure from a more-diversified Alibaba as Chinese consumption succumbs to a decelerating economy, while upstart rivals such as Pinduoduo Inc. draw customers away. JD’s latest move mirrors internal overhauls by Tencent Holdings Ltd. and Didi Chuxing, which’re coming off their once-breakneck pace of growth.
But JD, which hasn’t posted annual net income since its 2014 listing, has had three of its most senior executives announce departures within the past two months, including its chief technology officer. It’s reportedly come under fire publicly for also effectively trying to lower the salaries of its couriers—once a source of company pride.
JD spokesman Brad Burgess declined to comment on the job cuts, saying only that the company was getting back to its entrepreneurial roots. JD Logistics said in a social media post that changing courier pay structures were necessary with wages being protected for 4-6 months during the transition.
Chinese tech companies are shaking up their ranks to tide them over during tougher times. Funding has shrunk alongside a cooling in the nation’s economy, the world’s second largest. That’s exacerbated by trade tensions with the U.S. and regulatory clampdowns that fomented uncertainty and spooked would-be investors. Chinese venture capital deals dived more than 9% to $9.7 billion in the first quarter, according to PwC and CB Insights.
JD is now threatening to fire people that exhibit four kinds of behavior: arrogance, complacency, over-spending on expenses and failing to deliver on initiatives, said one of the people who saw the internal notice. The reductions come in part because the company hasn’t been regularly weeding out under-performers and a culling is now overdue, the person said. Earlier this year, JD said it intended to let go of 10% of executives ranked vice president or above.
The departures, and fears of job cuts both internally and through local media reports, have sapped morale among staff. Many use impromptu gatherings in staff eating halls and outdoor smoking areas to discuss redundancies and potential employers, according to employees who asked to not be named.
“With such ambiguity in the way JD is defining what constitutes a firing offence, it can be really disturbing for staff internally,” said Lion Niu, a Beijing-based senior consultant at CGL Consulting. Niu said his recruitment company had already received several inquiries from JD employees.
Between March 15 and April 5, JD announced that CTO Chen Zhang, General Counsel and Chief Human Resources Officer Rain Yu Long and Chief Public Affairs Officer Ye Lan were departing, all citing personal reasons.
All this has marred what should’ve been a positive start to 2019 for the ecommerce giant. In December, U.S. authorities decided not to press charges against billionaire founder Richard Liu over rape allegations, and its December-quarter revenue surpassed estimates. Shares of the company have risen almost 50% since December.Favorite