LOGGING OUT

Two days later, several netizens claiming to be iQiyi employees posted on Maimai, a career social network platform, that iQiyi was cutting 20-40 percent of its employees, although there had been no official statement. After that, over 20 big internet companies, better known as dachang (large internet companies), including Baidu, Kuaishou, Alibaba, Tencent and more, were reportedly retrenching their staff and repositioning their business. ByteDance, parent of TikTok which had already slashed many of its staff in autumn 2021 after cutting its gaming and education business, disbanded its entire talent development center in mid-December, as revealed in an internal mail. After the Lunar New Year, other companies, including Didi Chuxing (ride-hailing app), Zhihu (China’s version of Quora), Sina Weibo (China’s version of Twitter) and consumer electronics firm Xiaomi also laid off staff. Sina Weibo responded it was streamlining for more efficiency entering 2022 and would fire employees that could not be placed in suitable positions. 　

Li Fei, who founded Liexian, a headhunter serving the internet industry, told NewsChina that the sheer scale of these layoffs is abnormal. “End-of-year appraisals are common for big companies, but such big reductions in staff numbers are too obvious to be seen as normal.” Wang Qiang, a middle manager of an internet company tasked with downsizing his department by 10 percent by the end of 2021, said he had been let go several times before. “But this time, it’s industry-wide.” 　

Several laid-off employees interviewed by NewsChina agreed that before, one usually got wind of looming job cuts, but this time it was so sudden that everyone was caught unprepared. 　

The wave of job cuts reflects the slowdown of the industry after its rapid expansion over the past two decades, accelerated by problems with profit-making models, market saturation and declining market confidence following tightened regulation. 

So was Zhao Xuanxi, who also worked for iQiyi in Beijing. She was planning a business trip in November when she was given her month’s notice. “That’s a cruel blow,” said Zhao, who had a packed work schedule in December. Zhao had worked for iQiyi for four years and her salary was raised more frequently than colleagues in the same post due to her performance. She told NewsChina that 33 percent of her department was cut this time, while in another department, 80 percent of the staff was let go. 　

As revealed by iQiyi employees on Maimai, it was the largest round of downsizing in iQiyi’s history, with across-the-board cuts of 20-40 percent in all departments. Nearly all staff in the research institute and gaming center were given notice. This information was confirmed by Zhao, who believes that iQiyi wants to cut costs because many of the laid-off staff were more experienced and with higher salaries and positions. 　

On December 1, 2021, when the scale of iQiyi’s layoffs was trending on Sina Weibo, Liu Hongtao, who worked for Baidu for over a year, read the news. He did not think it involved him, but the next day, his department held a meeting and announced job cuts. His was among the positions to go. After talking with his line manager, he took a holiday to have a good rest after this “stressful” year before leaving the company. 

　

Liu was among the first batch to go. Then three other departments, including Baidu’s app, Baijiahao, a document database, and Baidu’s livestreaming platform, all laid off staff. His colleagues told him that people cried in the office. Most of the staff let go were like Liu: around 35 years old with mortgages and mouths to feed. 　

This wave of layoffs has aggravated the employment crisis of people over 35 in the tech sector. There has been implicit discrimination against people over 35 or even over 30 in internet companies that prefer to employ younger people. A survey by Maimai’s data research institute in 2021 shows that, among the 20 surveyed companies, the average age of employees is between 27 and 33. At nearly half of the new-generation internet companies like ByteDance, Didi Chuxing and Meituan, the average age was below 30. It is common knowledge that in internet companies, anyone who does not reach managerial level after 35 is likely to be “optimized” –a euphemism for being fired.　

“I could feel the obvious discrimination after I turned 30. I don’t feel right when I submit a resume, I get this feeling of inferiority,” said Zhao Jun, a programmer who could not conceal his worry about the situation. 　

Liexian has been a long-term partner for companies like ByteDance, Meituan, Alibaba and Kuaishou. Founder Li Fei told NewsChina that in the past, the number of positions to be filled was always released following year-end reviews. But in 2021, Li Fei said his colleagues were frequently told that departments had no new positions to advertise. ���Every company is crying about their difficulties,” Li said. 　

The tech sector’s rapid expansion appears to be a thing of the past as companies are squeezed by the tough new regulations. 　

Chen Jian, a software engineer for the gaming sector of a big internet company, said he got an internship in Tencent’s gaming department in March 2020 despite having no experience, because of the boom in gaming in the post-pandemic period. Five months later, when he tried to make his position permanent, Tencent had already raised the employment conditions. Li Fei said that many companies became much choosier about who they hire. “When growth slows, companies have to optimize their employment structure,” he said. 　

Chen has been paying attention to the impact of policy on the gaming industry and is considering jumping ship due to the precariousness of his position. 

In 2014, Zhou Yang, who had worked for a State-owned company for two years, quit for an internet company. Zhou swapped his stable State job for one in a tech firm he felt was full of young people and vitality, as well as an impressive salary. With an interest in journalism, he joined Netease, a leading online news portal. Zhou’s choice was typical among young people at the time. 　

It took internet giants 10 years to become the employers of choice. Between 1992 and 1995, Chinese urban workers earned 1/40 – 1/50 of that of the US. Foreign companies flocked to China offering much higher wages, thus becoming the most favored working place in the 1990s. Foreign-funded companies, including accounting firms, investment banks and management consulting companies were the first choice for graduates from Peking and Tsinghua universities, two top universities in China, until the turn of the century, when internet companies like Netease, Sohu, Sina and Tencent emerged and grew rapidly. 　

After 10 years of stable, rapid development, these companies needed skilled professionals and fought with foreign companies for staff. Li told NewsChina that today the core positions of many big internet companies remain occupied by people who once worked for Google and Microsoft. 　

In 2011, Li Fei quit his job in a recruitment company and founded Liexian to concentrate on the internet industry. The second year, demand surged. Li was often told by people in the industry that talent came above all else, and there was fierce competition among rival firms to attract the best. Companies offered to increase salaries by 50 percent, or even double rival offers. People jobhopped, which pushed wages even higher. Li Fei said he knew a software engineer who earned about 130,000 yuan (US$20,592) a year in 2011, but by 2015 his annual salary soared to 800,000 yuan (US$126,720). 　

Foreign companies that had learned to set salaries based on average local income lost appeal. A list released by Chinahr.com, a recruitment platform, shows that in 2006, half of the 10 best employers for college students were foreign companies. In 2014, Alibaba topped the list while four out of the top l0 were Chinese internet companies.

 

Alongside this boom, new platforms targeting all aspects of life emerged, from ride-hailing and bike-sharing to food delivery and group purchasing. Every time a new track proved promising, rival copycats sprung up, fighting for staff and driving up salaries. Big companies kept financing to expand and grab new businesses while smaller ones went all out to catch up. 　

Zhao Xuanyi remembers that in 2017 when she joined iQiyi, the company only had one office building in Zhongguancun. In March 2018, it listed on the Nasdaq and a year later it launched 21 products covering livestreaming, reading, cartoons and more. Its staff expanded from 3,000 to nearly 9,000. Then Zhao’s entire department moved to Sanlitun, in downtown Beijing, where iQiyi rented another building. 

A November 2018 report on Chinese social media influence released by Kantar, a global consulting company, shows that the number of users for mature social network platforms like WeChat and Sina Weibo nearly stopped growing. A few internet giants dominated every segment of the market, making it harder for smaller companies to enter. 　

More internet companies told Li Fei that they could not offer such lucrative salaries as before, and told him to lower expectations. For experienced staff poached from other firms, salary rises are limited to 20 or 30 percent. Statistics from 51job.com, a jobhunting platform, shows that the positions provided by internet companies for campus recruitment in 2022 dwindled by 15-20 percent over the previous year, without an obvious increase in salary. 　

Meanwhile, people working in the industry are vying for limited internet traffic among fierce competition. Working overtime, which was already conventional among internet companies, is more common, as are grim stories of death allegedly due to overwork, despite promises by the industry to clamp down on that culture. On February 22, a 28-year-old programmer surnamed Wu at ByteDance died suddenly after exercising in the company’s gym. In his four years at ByteDance, Wu was overworked and under tremendous pressure, his wife claimed in a post on Sina Weibo. 　

Now young people are weighing up whether the higher salary is worth the risk to their health and lifestyle. 　

Before the latest wave of downsizing, many young people had already retreated to traditional jobs, in foreign or State-owned companies and government departments they previously turned away from. Now the job cuts and uncertainties in the industry are expected to boost the trend. 　

Zhao Jun told NewsChina that his colleagues would half-joke about becoming a taxi driver, but he says it could be a serious choice for him now. But becoming a civil servant is more realistic. Those who get a government job are regarded as having gone “onshore.” 　

In 2022, some 2.12 million people signed up for the national civil service exam, which works out to one job for every 68 applicants. Competition is fiercer than in the previous two years. 　

Chen Jian, a computer science major, told NewsChina that big internet companies used to be the preferred career choice, but after the Covid-19 outbreak, they realized that job stability is equally important. In 2018, when he graduated, almost all his classmates who did not continue their studies went to internet companies. But after he graduated with his master’s in 2021, half his classmates sat the civil service exams. 　

Many of Zhao’s fired colleagues also plan to try for civil service or other public sector positions. Apart from their jobs, they have also lost trust in the industry. 

As one of the largest video platforms in China, iQiyi is reliant on TV series and variety shows for income. But streaming dramas are not that profitable, an industry insider told NewsChina on condition of anonymity. He revealed iQiyi has been burning money. “The remaining few video streaming platforms all try to squeeze others out of the market by burning money [buying TV series, movies and shows], to gain more say in pricing. They spend big on copyright royalties, but if an exclusive show they buy fails to be a blockbuster, they get nothing.” 　

Zhao Xuanyi, who worked at iQiyi for four years, added that the fundamental problem is the company increasingly pandered to the low-end mass market instead of continuing to stream quality shows, attempting to make quick money by producing low-quality soaps and brainless dramas. 　

The growth of internet users and traffic, which are core profit generators, has also slowed due to market saturation. Zhou Yang, who left Netease for a short video platform in 2020, said he felt the decline of business in video views and creators. “There isn’t enough potential for more traffic in the market,” Zhou said. His friends working for video platforms like Douyin and Kuaishou said they felt the same, indicating an overall cooling in the online video industry. 　

Baidu’s livestreaming business faces a similar situation. Baidu acquired streaming platform YY in November 2020, but just a year later all YY’s employees in Beijing were laid off. A person working for a livestreaming platform told NewsChina that Baidu’s purchase of YY was not worth it, as the industry was already in decline. The person speaking on condition of anonymity said that his company already stopped using marketing to gain new daily users, believing it has topped out. Besides, they do not have much money for marketing as the business declined a lot in 2021. 　

Updated regulations in 2021 are also a reason. A former Baidu employee revealed that almost all staff in its gaming division were laid off at the end of 2021. In July 2021, the department had just restarted its gaming business, releasing 23 products. In August, however, the government released an order that cut the time children are allowed to play online games from 10 hours to three hours a week, a move lauded by parents. A report published by the China Internet Network Information Center in July 2021 shows that in 2020 about 62.5 percent of minors played games online. Among them, 13.2 percent spent more than two hours per day on weekdays. 　

Since August 2021, the government has stopped issuing licenses for new games. While it takes a long time to develop games, the policy has more impact on new firms than big players like Tencent and Netease that already have a foothold in the market, noted a person who works in the gaming industry. Statistics from Tianyacha, an enterprise data platform, shows that in the latter half of 2021, 14,000 game companies deregistered. 　

Overall, this wave of streamlining reflects a change to the industry’s development strategies. “When the platform economy boomed, it was typical for internet companies to expand in as many fields as possible even though the prospects are not so clear. They tried out all fields, which was allowed by the relatively slack regulation back then,” said Liang Meng, an associate professor at China Agricultural University. 　

But as regulation escalated in 2021, this attitude is changing. “The strategy of trans-field trial and error basically ended. The whole industry is becoming more prudent, so more marginal businesses are cut,” Zhao Jun said. “The previous rapid growth is no longer possible.”