Employees of Chinese smartphone company Xiaomi were fired over the past three months as Xioami continues to witness a decline in sales. A South China Morning Post report states that the Chinese company has already slashed close to a thousand jobs, almost three percent of its current workforce.
June Quarter Revenue Crash Triggers Xiaomi Workforce Cut
The company claimed that the employee layoff took place because of the struggles in revenue that the industry is currently facing. Second quarter sales reports reflected that the smartphone company's revenue dropped by a staggering 28.5 percent.
Xiaomi mentions that these numbers are mainly because of a decreased sale of its smartphones. In the last four months, Xiaomi also missed its net income projections by a large margin.
The Chinese smartphone company did not share its speculations or any findings about the reason behind this observed dip in sales. Nevertheless, reports tell us that this might be caused by decreased spending on smartphones from consumers because of the looming resurgence of Covid-19 in various regions in Asia. Some say that it is because of the current global inflation. Furthermore, China reported a 6.8 percent GDP drop midway through 2022.
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The Chinese tech company records a revenue of 70.2 billion yuan (USD$10.3 billion) for its June quarter report. This revenue report from Xiaomi draws a 20 percent year-to-year revenue decline, a more concerning drop compared to its first-quarter report.
Business Standard tells us that as of last June, the Beijing-based business employed 32,869 people full-time, 30,110 of them were situated in mainland China, largely in Beijing, and the remaining staff members were mainly based in India and Indonesia. In the same time period, the company employed 14,700 people in its research and development department.
It is not stated in the reports which Xiaomi headquarters received the most job terminations. The tech company is yet to release a follow-up statement regarding the said situation.
Xiaomi Exec Cites Several Factors for Struggling Smartphone Market
In a briefing with analysts after reporting on the company's quarterly earnings, Xiaomi president Wang Xiang points out factors like rising global inflation, fluctuating foreign exchange, and a complex political environment as the main grounds for the struggling smartphone industry.
"These challenges significantly impacted overall market demand and our financial results for the period," added the Xiaomi executive.
In the last few weeks, drops in sales and a struggling market have been the main buzz in the tech industry. Other big companies have previously announced the same trend in revenue, and analysts expect this phenomenon to continue as smart industries take a hit because of the current global financial conditions.
Globally, tech companies resort to massive layoffs because of the impact of inflation and slumping revenues. Earlier this month, another Chinese tech conglomerate Tencent cut off over 5,500 jobs as they too experience a June quarter revenue dip.
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