China’s No. 2 short-video player Kuaishou Technology Co. Ltd. is laying off nearly a third of some departments, becoming the latest of its cohort to fire staff as the sector reels from Beijing’s crackdown on the tech sector.
The Tencent-backed company is laying off 10% to 30% of its workforce in departments involving its eponymous app’s operations, commercialization, e-commerce, internationalization, and gaming, several employees told Caixin.
Kuaishou had a total workforce of more than 21,000 people at the end of 2020, nearly 71% of whom were aged below 30, according to data provided by the company.
Caixin understands sacked employees have been told they will be offered compensation based on the number of years they have served, plus one month’s salary, in line with industry standards.
An employee familiar with Kuaishou’s e-commerce business said the affected departments had failed to yield hoped-for profits. “Kuaishou expanded its (e-commerce) team in 2019, only to find that the move increased operating costs rather than profits,” the employee said.
The layoffs come at a time when Kuaishou is grappling with widening losses. In the first three quarters of 2021, its adjusted net loss swelled by 100.3% year-on-year to 14.5 billion yuan even as revenue grew 39.3% year-on-year to 56.7 billion yuan, according to its earnings report. Kuaishou’s long-term strategy of spending big to bring in new users hasn’t borne fruit.
Kuaishou is also looking to reduce other expenses. According to an internal memo seen by Caixin, Kuaishou will offer rent subsidies to fewer employees and no longer offer free breakfasts and lunches to workers from next month onward.
The company is also looking to tie up with new partners to expand its revenue sources. Last month, Kuaishou inked a deal that would allow it to earn commissions and advertising fees from an e-commerce mini program which on-demand services and food delivery giant Meituan will launch on its platform.
The Meituan deal was sealed a few months after Kuaishou launched its own mini program on WeChat on which users can buy meals and receive restaurant coupons. That put it in direct competition with archrival Douyin, the Chinese version of TikTok, which has launched a group-buying channel for users to buy meals, book hotel rooms and receive coupons from restaurants and beauty salons.
In September last year, Hong Kong-listed Kuaishou announced a far-reaching plan to create an all-in-one department to operate its eponymous app that would be responsible for product development, operations, user growth, gaming and search functions. As part of the plan, four new units would be formed to handle commercialization, e-commerce, gaming and internationalization.
The company’s shares were up 4.12% in Thursday trading.
This story was first published on Caixin Global.