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China’s techs to fire underperforming top executives
Published on: 2019-02-22
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031Richard Liu Qiangdong, the founder and chief executive of Chinese e-commerce company JD.com. 

China’s winter chill has reached the executive suite, with the country’s second largest e-commerce player confirming reports that it will fire underperforming senior executives after several Chinese technology companies moved to cut rank and file staff in recent weeks amid the slowing economy. JD.com said it plans to lay off 10 per cent of its management at the vice-president level and above in 2019, using the “rank and yank” approach which forces department heads to identify and fire their least productive staff.

030Rumours about tighter hiring practices in China’s tech sector began to swirl at the end of 2018 amid cooling valuations for start-ups, tighter market conditions for private enterprises and a shrinking pool of venture capital funds. Chinese ride-hailing services giant Didi Chuxing last week said it will eliminate about 2,000 jobs, kicking off one of the biggest rounds of cutbacks in China’s technology sector. Chinese dockless bike rental firm Ofo, which raised a total of US$2.2 billion in nine funding rounds in less than four years, has struggled with bankruptcy rumours since late last year and in January, laid off its entire international staff, according to people familiar with the situation.

032Last December, Nasdaq-listed JD.com announced a restructuring of its main shopping site and the creation of an office of the chief executive to better serve its customer-centric strategy and allay investor concerns amid rapid changes in the country’s online shopping industry. The company reported lower-than-expected revenue in November due to increased expenditure. It also said investment costs in technology and logistics were escalating amid rising competition in China’s online retail market. At the time, JD.com also announced its first sequential fall in annual active customers since listing on the Nasdaq stock market in 2014.

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