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Sunday, February 5, 2023

Xiaomi layoffs thousands as China’s economic struggle continues

Hong Kong — Xiaomi, one of the world’s biggest smartphone makers, has begun laying off thousands of workers in China and worldwide as the world’s second-largest economy grapples with a massive unemployment crisis.

Xiaomi’s decision to cut jobs comes shortly after tech giants around the world, including Meta and Twitter, laid off thousands of workers.

The Beijing-based company recently conducted “routine personnel optimization and organizational streamlining,” a Xiaomi spokesperson told CNN. The measure affects less than 10% of the total workforce, the person added.

While the company did not provide any further details, several state media in China reported this week that Xiaomi would cut thousands of jobs across multiple departments, including its smartphone and internet business units.

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The company already made significant cuts at the beginning of this year. Xiaomi cut its workforce by nearly 1,900 in the first nine months of 2022, according to its financial filings. As of the end of September, it had around 35,000 full-time employees, most of whom were based in China.

The company’s revenue fell nearly 10% in the third quarter of this year from a year earlier, hurt by China’s Covid restrictions and softening global demand for electronics. Smartphone sales, which account for 60% of its revenue, fell 11%.

Loss of jobs in the field of technology

The layoffs at the Chinese smartphone giant come as the country faces growing economic problems.

Nearly three years of severe pandemic restrictions have disrupted factory and consumer activity, hitting small businesses particularly hard.

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The urban unemployment rate, the broadest official measure of jobs, rose to 5.7% in November, the highest in six months, according to the latest government figures.

Employment prospects for young people are particularly bleak. The unemployment rate for 16- to 24-year-olds reached 17.1% in November, hovering near July’s record high of 19.9%.

The situation could worsen next year, as 11.6 million college graduates are expected to enter the job market, a new record, according to the Education Ministry last month.

China’s official unemployment figures do not break down figures by industry, but company results and private surveys suggest job losses are occurring across the economy, and perhaps nowhere is the crisis more visible than in the technology sector.

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The once idle industry has been hit hard by Beijing’s efforts to crack down on Internet giants, with companies such as Alibaba ( BABA ) and Tencent ( TCEHY ) reporting zero growth or even a decline in revenue for the first time in decades.

Alibaba cut its workforce by more than 15,000 in the first nine months of this year, and Tencent laid off about 4,000 workers in the same period, according to CNN calculations.

The layoffs could be a major headache for the government, which says preventing job losses will be its top policy priority for next year.

China has seen several unprecedented protests in recent months. In November, street demonstrations broke out in several cities in a rare display of public anger against the country’s strict zero-Covid policy, which was suddenly lifted in early December.

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In July, disgruntled home buyers across the country threatened to stop making mortgage payments on unfinished home projects. Violent clashes also broke out in central China earlier this year as thousands of depositors were unable to access their savings at several rural banks in the region.

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