China’s tech industry is suffering the compounded challenges of a regulatory crackdown, coronavirus lockdowns at home and trade sanctions from abroad, reported The Washington Post. These woes have investors fearing the ceiling for growth might be closer to their heads than they previously thought.
Thousands of workers in China’s tech scene who have been laid off following Beijing’s stock price-hammering regulatory crackdown on private enterprise and years of aggressive expansion within the sector that analysts say left some firms overstretched.
Nearly 73,000 workers were let go between July and mid-April alone, according to research by TechNode, a media outlet that covers China’s technology and startup scene. Later in April, lifestyle app Xiaohongshu, often described as China’s version of Instagram, fired about 10 percent of its workforce.
Around a decade ago, China’s Internet sector was flush with cash as starry-eyed overseas investors jostled to get a piece of China’s mobile boom. Start-ups burned through billions of dollars, as Chinese consumers enjoyed convenient and cheap ride-hailing, food delivery and other apps heavily subsidized by venture capital.
In recent weeks, murmurings of layoffs at major Chinese Internet companies have trended on social media and been the focus of local media reports. The discussions were so widespread that the China Cyberspace Administration took the unusual step of publicly commenting on the companies’ hiring trends last month, saying it had met with Tencent, Alibaba, Baidu and others, and determined that the companies had still hired more people overall than they had let go since last summer.
Alibaba and Tencent, the two titans of the Chinese internet, are making plans to let go of tens of thousands of employees combined this year, according to a report published in March by Reuters, which cited anonymous sources close to the firms.
Chinese state media has in recent weeks signalled it will offer greater support to the beleaguered tech firms, raising expectations of a winding down or relaxation of the regulatory blitz that began in 2020
