JD.com is reportedly slashing salaries for around 2,000 executives by 10% to 20% and diverting some of the savings to a raft of employee benefits from next year.
Richard Liu, the billionaire founder of the company, has sent a letter to his staff on Tuesday about the decision and he apologised for reducing some of the managers' pay and promised to restore it if JD.com could return to fast growth in the next two years, according to The Wall Street Journal.
A report by The Straits Times said the company’s decision came days after Chinese President Xi Jinping emphasised the “common prosperity”, a concept that has pushed technology billionaires and cash-rich firms to set up programmes to reduce income inequality. The salary cut will commence next year.
Back in April this year, Liu stepped down as CEO of the company and succeeding him is current president Xu Lei. Liu would continue to remain as the chairman of the board and focus on guiding the company’s long-term strategies. Liu will donate RMB 100 million dollars personally towards staff welfare, said a report by SCMP. The amount of money will be served as subsidiaries providing for the children of the company's employees of their death or injured at work or even outside work.
MARKETING-INTERACTIVE has reached out to JD.com for a statement.
Chinese tech companies often see layoffs and salary cuts this year. Recently, Tencent is reportedly cutting employees responsible for its video streaming, gaming and cloud business, according to Reuters. The job cuts affected three out of Tencent’s six business divisions including platform and content (PCG), gaming-focused interactive entertainment department (IEG) and cloud and smart industries group (SCIG).
Furthermore, Tencent slashed its workforce alongside peers earlier this year, including Alibaba and Xiaohongshu, which the layoffs of Xiaohongshu in April this year were reportedly cutting about one-tenth of its staff amid the authority's crackdown on tech companies. The job cuts were resulted from an annual performance review conducted in March that Xiaohongshu discovered that some staff's performances failed to reach expectations, according to the report.