Xiaomi Q2 Sales Drop 20%... Workforce Reduced by About 900 Employees

[Asia Economy Reporter Seomideum] According to the Hong Kong South China Morning Post (SCMP) on the 21st, Chinese smartphone company Xiaomi has cut about 900 employees, nearly 3% of its total workforce, amid a 20% decline in sales in the second quarter.

According to Xiaomi's announcement on the 19th, sales in the second quarter of this year were 70.2 billion yuan (approximately 13.7 trillion KRW), down 20% compared to the same period last year. The decline worsened compared to the 4.6% decrease in the first quarter, which was the first sales drop since its 2018 IPO.

Net profit in the second quarter also fell 83.5% year-on-year to 1.4 billion yuan (approximately 270 billion KRW). Xiaomi's total number of employees was 33,793 at the end of March this year but decreased by 924 to 32,869 as of the end of June.

Wang Xiang, President of Xiaomi, said at the earnings conference call, "In the second quarter, our industry faced many challenges such as global inflation, exchange rate fluctuations, and a complex political environment," adding, "These challenges had a significant impact on overall market demand and our second-quarter financial results."

Since the beginning of this year, repeated lockdowns due to the spread of COVID-19 have directly hit the Chinese economy, leading to decreased consumption mainly in durable goods such as smartphones and automobiles, which are not urgently replaced. Mass layoffs continue among Chinese big tech companies like Alibaba and Tencent.

China's largest e-commerce company Alibaba cut about 9,000 employees in the second quarter alone, totaling about 13,000 layoffs in the first half of the year.

Earlier, the South China Morning Post reported, "The decrease in the number of Alibaba's payroll employees is the first since March 2016," and added, "The reduction in staff is part of efforts to cut costs and improve efficiency amid ongoing regulatory pressure and the slowdown of the Chinese economy."

China's largest big tech Tencent (Tengxun) also cut about 5,000 employees, approximately 5% of its total workforce, in the second quarter. Tencent's second-quarter sales were 134 billion yuan (approximately 26.18 trillion KRW), down 3% year-on-year. This is the first time Tencent's quarterly sales have declined since its IPO.

Bloomberg analyzed that Tencent's online advertising sales, operated through WeChat, fell to a record low, leading to the decrease in revenue.

This content was produced with the assistance of AI translation services.