Tencent Holdings, one of the biggest gaming companies in China, announced on Thursday, Aug. 4, that it would cancel free breakfast and dinner perks for its contract personnel.
This is because the company is cutting costs and is trying to save money.
Tencent Removes Food Perks
According to SCMP, the contract personnel of Tencent is outsourced by third-party firms to work for them for a predetermined period and sum of money.
Starting Aug. 15, contract personnel will have to pay for their own meals.
Tencent, which runs the largest video gaming business in the world by revenue and China's biggest social media platform via WeChat, did not respond to a request for comment by SCMP.
Technology companies in China normally outsource certain projects like testing software to contract personnel who are not entitled to get the same benefits as regular company employees on a payroll.
Also Read: Chinese Gaming Company Tencent Terminates Booster That Allows Users to Play Overseas Games
Since 2017, the gaming company has offered free breakfast to regular and contract employees at its office canteens.
The free dinner perk was given to the employees from October 2021, with a total headcount of 116,200 at the end of March, according to Wingo.
Tencent's Cost Cutting
On the mainland, these types of perks have helped make massive tech firms more attractive as places of employment than other companies.
Tencent's latest move shows how the gaming company is keen to slash expenses where it can, following its worrying first-quarter financial results that showed almost zero revenue growth because of regulatory uncertainty and economic problems.
Shares of the gaming company in Hong Kong gained 3.11% to $312 on Thursday, Aug. 4, as most firms in the latest quarterly earnings season are expected to post strong results or a turnaround in outlook.
Tencent, which has failed to get a license for a new video game for about 14 months, has already initiated job cuts across various business units.
The firm's recent round of downsizing is expected to be reported in the company's second-quarter results, which will be released on Aug. 17.
In June, Tencent adjusted its salary policy to slow the pace of pay rises for the employees. They are no longer entitled to an immediate salary increase after a promotion.
In March, the gaming company's president Martin Lau Chi-Ping said that Tencent would exit or streamline some noncore businesses to control headcount, a strategy that founder, chairman, and chief executive Pony Ma Huateng reiterated during the company's earnings call in May.
Tencent Drought
SCMP also reported about the continued drought of Tencent as it has been 14 months since the company had a new game approved by China's regulators.
The National Press and Publication Administration (NPPA) approves new games every month. Still, for 2022, the regulators have been approving new games from small companies instead of the big corporations, according to Bloomberg.
Tencent's shares had decreased to 37.4% in Hong Kong since July when the last list was released before the licensing freeze in the country.
NetEase, Tencent's rival, also suffered from the licensing freeze as its shares dropped 10%.
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Written by Sophie Webster
