China’s largest ride-hailing company Didi Chuxing founder Cheng Wei, at a monthly staff meeting held Friday, said that the company needs to prepare for “a winter”, admitting that it will downsize its workforce by 15%.
This means about 2,000 employees will be laid off, fewer than 3,000, which was the industry prediction when its firing plan was first leaked in late January.
The layoff targets employees in divisions that are considered to be “non-core businesses” or those who were rated as under-performing in the year-end evaluation, or those made redundant due to the company’s reshuffle from full-speed expansion mode to a strategy that prioritizes safety.
Didi’s firing move, although unprecedented in its less-than-seven-year history, is not uncommon in China’s tech sector dragged by China’s slowing economy, as similar reports on Alibaba and Huawei surfaced before this.
However, the company said it will hire for a total of 2,500 new positions over time, to attract safety-related talent.
The startup racked up a deficit up to RMB 10.9 billion (US$1.6 billion) in the 2018 financial year amid safety scandals, which led to the shutdown of its carpool business and huge investments in safety-related measures.
In August, a young woman was raped and killed after a ride she hailed from Didi’s carpool platform. Shortly after, regulators including the Ministry of Transport started on-site supervision on Didi’s safety net.
In 2018, the company spent a total of RMB 11.3 billion (US$1.67 billion) on incentives to attract qualified drivers, who need at least three years’ driving experience and must have no criminal record.