China’s Tencent revises wage increase policy in memo amid cost-saving pressures

HONG KONG: China’s Tencent has told staff it will no longer guarantee them a pay rise on promotion, according to an internal letter seen by Reuters, as it reviews its pay policy as part of a broader cost-cutting campaign.

The Chinese social media and gaming giant informed its employees of the policy change on Tuesday (May 31st), saying the decision was made as part of an annual review taking into account the “company’s operating plan and of the external environment”.

But he said the company would still conduct an annual salary review to take into account an individual’s contribution and performance.

Tencent, which declined to comment on Wednesday, told staff in 2020 that it would no longer guarantee an annual salary increase.

His latest policy shift reflects the changing plight of Chinese tech giants, once among China’s fastest growing companies and sought-after employers, but now hard hit by a deadly regulatory crackdown and slowing economic growth. economy.

Tencent, China’s most valuable company, released quarterly results last month showing profit halving from a year earlier and revenue stagnating, its worst performance since its IPO in 2004.

Founder and chief executive Pony Ma told analysts the company implemented cost control measures and reduced non-core activities in the first quarter. He said he was looking to “achieve a more optimized cost structure in the future.”

He shut down his Penguin Esports unit. Reuters reported earlier this year that Tencent and its counterpart Alibaba Group planned to carry out extensive job cuts.

Tencent’s latest salary policy change, first reported by local media on Wednesday, was one of the most discussed topics on career portal Maimai, the Chinese equivalent of Linkedin.

“Quality candidates will now rate the stability of a Tencent job,” said a Maimai user, who used a pseudonym and said he was a Tencent employee.

Ma caused a stir on Chinese social media recently after reposting an article on the Chinese economy, breaking his usual silence on an increasingly sensitive topic.

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