On Feb.18, Wang Hua, Xiaomi’s public relations manager, declared on the Twitter-like social media platform Weibo that the company does not intend to implement any mass layoffs but is focused on routine personnel adjustments aligned with annual performance evaluations. Wang’s statement followed reports that the company was considering substantial layoffs by the end of February, providing an N+1 compensation package without negotiation.
In China, N+1 compensation is a common severance compensation standard, where N represents the number of years the laid-off employee has worked for the company. For example, if an employee with five years of tenure is terminated, they would receive a severance package equivalent to six months’ salary.
Why it matters: The economic slowdown has led to decreased demand in the smartphone industry, which in turn has raised the specter of layoffs within the sector.
Details: On Feb. 18, the first working day of the Chinese Year of the Dragon, Xiaomi PR manager Wang Hua denied rumors of mass layoffs on Weibo and shared a photo of a red envelope, a traditional Chinese gift that contains cash and symbolizes good fortune.
- A Xiaomi employee anonymously claimed on Feb.6 that the tech company was planning a large-scale layoff on Feb. 29, with a compensation of N+1, according to local media outlet Jiwei. The employee criticized Xiaomi’s lack of social responsibility, claiming the move could deprive employees of their year-end bonuses, which are expected to be issued on March 5.
- “On the first day back to work,” said Wang Hua via the Weibo post, “I confirmed from multiple departments that there are no plans for any layoffs. There are only normal personnel adjustments based on annual performance evaluations.” Some employees spread rumors of layoffs to cover up their shortcomings, as they do not want to admit to their poor performance, he added in a comment under the post.
- An internal Xiaomi employee informed a Jiwei reporter that the current restructuring does not mean a large-scale layoff, but falls within the regular scope of annual personnel-optimization efforts, impacting a small number of employees.
Context: On Feb. 18, Xiaomi CEO Lei Jun announced the commencement of operations for the firm’s Beijing Changping Smart Factory, which will specialize in producing Xiaomi’s flagship smartphones. It boasts an annual production capacity exceeding tens of millions of units, making it the company’s first large-scale self-owned facility.
- Shipment in China’s smartphone market hit approximately 271 million units in 2023, a year-on-year decline of 5.0% and the lowest shipment volume in nearly 10 years, according to market intelligence firm IDC. Chinese phone brands Oppo, Vivo, and Xiaomi ranked third, fourth, and fifth, respectively.
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