China's largest smartphone maker Xiaomi has begun laying off many employees in its smartphone and Internet services divisions. According to the South China Morning Post, the company plans to cut 15 percent of the staff in order to optimize business.
According to the source, the reason is the overall unfavorable situation in the Chinese market of consumer electronics in the current semester, exacerbated by quarantine measures imposed due to the coronavirus pandemic. This, in turn, has affected demand for smartphones and other devices.
Chinese law requires private companies to report layoffs to the appropriate departments, especially if more than 20 people are laid off. But the company is still trying to avoid excessive publicity on the issue, calling the changes being implemented "business optimization."
The laid-off workers, who have flooded Chinese social media with news about the layoffs, are getting all the severance pay they need.
As of the end of last quarter, the company had 35,314 employees, more than 32,000 of whom work in China. The layoffs may include employees recently hired by the company, most of whom were hired last December when the company was expecting a positive trend in the market.
The job cuts came after Xiaomi said its revenue fell 9.7 percent in the third quarter due to COVID-19 restrictions and lower consumer demand in China. Revenue from smartphones, which account for about 60% of the company's total sales, fell 11% year over year.
According to Canalys, the global smartphone market shrank 9% year over year (297.8 million phones) in the latest quarter, while the Chinese market declined 11% (70 million phones). In November retail sales of smartphones in China declined by 5.9% year-on-year.
At the end of the third quarter Xiaomi accounted for 13% of the Chinese smartphone market, it was in fifth place by this indicator. The company's revenue fell by 9.7% year on year to $10.1 billion, and net income fell by 59.1%.
During a recent presentation, the company unveiled the Xiaomi 13 and Xiaomi 13 Pro smartphones, the Watch S2 smartwatch and the Buds 4 wireless headphones.