Chinese smartphone giant Xiaomi, which has an ambitious goal of dethroning iPhone maker Apple as the world’s No. 1 position by 2024, has begun laying off workers in several divisions, according to reports on social media from affected workers and Chinese media, reports South China Morning Post.
In China, layoffs are often carried out under the pretext of “business optimization” to avoid scrutiny by labor authorities. According to Chinese labor laws, layoffs affecting more than 20 jobs must be referred to the government.
A Xiaomi representative said on Tuesday that the company had implemented “routine personnel optimisation and organisational streamlining” with “less than 10 per cent of the total workforce” affected.
According to financial results for the third quarter, as of September 30, Xiaomi had 35,314 employees, more than 32,000 of them in mainland China.
Xiaomi will cut jobs in several divisions of its smartphone and internet services business, according to a report by Chinese media outlet Jiemian. The report says that the laid-off employees have been given severance pay, which could reduce Xiaomi’s payroll by about 15%.
The company began laying off workers this year amid a drop in sales due to Covid-19 and a slowdown in consumer spending. The latest move could affect thousands of workers, many of whom have just joined the company in a massive hiring spree that began last December.
Global smartphone shipments fell 9% year-over-year to 297.8 million units in the third quarter, while shipments in China fell 11% to 70 million units over the same period, according to market research firm Canalys.
Xiaomi’s revenue, the fifth-largest smartphone maker in China, fell 9.7% year-on-year to 70.47 billion yuan ($10.1 billion) in the three months ended Sept. 30, while net profit fell by 59.1% to 2.21 billion yuan.