Tencent and other Chinese companies are following their Western counterparts in laying off staff as the economic slowdown weighs

  • Chinese tech giants like Tencent Holding Ltd. TCEHY and ICT Tac Parent company ByteDance Ltd has made further layoffs affecting thousands of staff in its latest round of cost cuts, the Wall Street Journal reports.
  • The job cuts added to the tens of thousands of employees already laid off by Chinese internet companies since late 2021 after a nationwide regulatory crackdown crushed the sector.
  • The latest layoffs extended to core business activities following China’s strict Covid lockdown, as opposed to previous ones, which focused on restructuring loss-making industries and non-core segments.
  • Tencent is looking to cut employees in different business groups through the end of this year, extending to some core businesses, and will likely affect some senior executives.
  • Tencent saw fewer title approvals from the government and chased games with big budgets.
  • ByteDance’s latest layoffs hit its video games business, once a promising growth area, and 3,000 more people from its education unit.
  • Chinese video streaming platform Bilibili Inc. BILI cut staff from some core business segments like gaming and live streaming.
  • The layoffs followed despite assurances of government support for the tech industry to revive the country’s fallen economy.
  • “Macroeconomic risk has exceeded regulatory risk,” said an analyst focused on Chinese internet companies. “As growth slows, companies will need to rethink their appropriate business structure,” he said.
  • In the United States, major technology companies, including Twitter Inc. TWTR, Microsoft Corp. MSFTand Tesla Inc. TSLAhave begun to downsize or slow down hiring due to economic uncertainties.
  • Chinese tech giants are continuing for other new business areas that see growth potential, including the metaverse.
  • Price action: TCEHY shares traded down 2.31% to $45.33 when last checked on Thursday
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