It is the land where job creation is king, but now Alibaba has imposed a hiring freeze in the name of efficiency.
The edict from Jack Ma, group founder and chairman of the group with 34,000 employees, that “this year our entire group’s headcount won’t increase by one person” runs counter to Beijing’s ethos — one which partly explains the zombie steel mills and other industries running on empty across the country.
Alibaba, the Chinese ecommerce company that launched a record initial public offering in the US last September, would appear to be listening to a different constituency: shareholders who are focussed on the bottom line as revenue growth slows.
Mr Ma told employees in a speech posted online on Wednesday: “The purpose is simple: we need to get into formation. I think [over] 30,000 people is efficient.”
Alibaba’s management has come under pressure to temper costs after the company’s share price dropped from a high of $119 in November to roughly $85 today.
In January, Alibaba announced a 40 per cent year-on-year increase in revenues in the quarter to December 31 to Rmb26.2bn ($4.2bn), missing analysts’ expectations of $4.4bn. That, coupled with a regulatory battle over a report on counterfeit goods, has weighed on the group’s share price.
The hiring freeze comes two months after another austerity decision when Mr Ma said that employees would not receive the traditional spring bonuses.
The Alibaba chairman said in February that he was unsatisfied with the company’s 2014 performance, in spite of Alibaba’s $25bn IPO on the New York stock exchange.
“We must objectively and calmly see our own results, rationally regard external views and not let ourselves be lost in illusory fame,” he said at the time.
Mr Ma added on Wednesday that Alibaba would hire a new employee only when a current staff member quits.
One area where Alibaba may require expanded headcount is eradicating counterfeit goods sold on its market places.