SINGAPORE–Chinese e-commerce major JD.com Inc.
JD -6.37%
told staff that it will cut executive salaries to improve employee benefits and ease financial pressure, as tech companies grapple with a weaker economy.
Beijing-based JD.com will reduce the compensations of some 2,000 senior managers by 10%-20% from next year, with steeper cuts for higher-level executives, according to a letter Richard Liu, the billionaire founder of the company, sent to staff on Tuesday and seen by The Wall Street Journal. mr. Liu in the letter apologized for cutting their pay and promised to restore it if JD.com could return to fast growth in the coming two years.
A company spokesperson confirmed the authenticity of the letter.
Technology companies globally have felt the pain of slowing demand and growing economic uncertainty after a pandemic boost tapered off, prompting some to make layoffs while streamlining businesses to reduce costs and boost profits.
In China, tech companies, including JD.com’s bigger rival Alibaba Group Holding Ltd.
have reported slower revenue growth, with consumer spending hit by Beijing’s continuing zero-Covid policies.
JD.com swung to profit in the third quarter from losses, with 11% growth in revenue that executives attributed to a focus on core businesses and cost reduction. Still, they warned investors in a recent earnings call of short-term disruptions to logistics and fulfillment because of the country’s stringent Covid-containment measures, as well as lower spending by consumers.
JD.com’s decision also came a few days after Chinese President Xi Jinping reiterated a strategic focus on “common prosperity,” his signature economic policy aimed at redistributing more of China’s wealth to the poor. The campaign has underpinned many of Mr. Xi’s policy drives, including clamping down on the country’s technology majors.
In the Tuesday letter, Mr. Liu also said JD.com will add 10 billion yuan, or the equivalent of $1.4 billion, to a company program that provides interest-free loans for house buying for employees who have been with the company for at least five years. JD.com has been offering as much as 1 million yuan each to employees who applied since 2012.
JD.com will also expand social insurance coverage to more than 100,000 workers at a logistic unit that it acquired in July, according to the letter. Currently, the company has more than 540,000 employees.
“The employee benefits improvement plan is currently being promoted, with a focus on front-line staff,” a company spokesperson said.
mr. Liu stepped down in April as chief executive of JD.com to focus on the company’s longer-term strategies, joining other technology-sector billionaires to leave their posts amid Beijing’s tougher regulatory environment.
Write to Raffaele Huang at [email protected] and Yifan Wang at [email protected]
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