Less than two weeks since it has appointed the new CEO for its Hong Kong operation, several Chinese and Hong Kong media outlets have reported that Beijing-based technology and entertainment company LeEco plans to lay off 10%, or about 800, of its employees in a bid to relieve its cash flow crunch.
The layoffs started from its mobile phone department and later extended to the car and sport sectors, the Guangzhou-based media Time Weekly said, adding that even the LeTV sector started to cut staff. And LeEco Hong Kong is planning to lay off staff by year end, local media reported.
However, according to the Global Times, LeEco said on Tuesday it is setting out to “optimise personnel management”, as it is struggling with a capital crunch.
Every year, the company shifts out 8-10% of employees according to their performance for the year, the company said.
“But this is not layoffs,” a LeEco public relations representative told the Global Times on Tuesday.
The comment came after media outlets reported that the company is cutting 10% of its employees.
On Sunday, Time Weekly cited unnamed sources close to the matter who said that several unlisted divisions of LeEco have started cutting jobs, with dismissed employees receiving severance pay equal to one month’s salary.
The report estimated that this round of personnel retrenchment would involve about 800 of the more than 8,000 people that LeEco employed at the end of last year.
LeEco’s organisation and performance management has lagged behind its rapid development, CEO Jia Yueting acknowledged in an internal memo on 6 November.
“We’ve added 5,000 people this year, which is rare in any industry,” Jia wrote, noting that LeEco’s growth has outpaced its capital and resources.