Chinese technology giants, once renowned for offering stable employment, are now laying off executives and becoming much more like…banks. But that won’t stem the flow of Hong Kong bankers moving into strategy roles at the likes of Tencent, say headhunters.
Tencent wants to cull about one in 10 of its executives – it will target underperformers – and let younger managers take their place, according to Bloomberg. JD.com is laying off 10% of its senior execs this year, while Chinese ride-hailing giant Didi Chuxing is making wider cuts as a slowdown in the Chinese tech industry begins to bite.
This all smacks of the banking sector. Global banks, in particular Goldman Sachs, are notorious for trimming 5% to 10% of their underperforming senior staff each year. And in a recent trend that’s become known as ‘juniorisation’, banks have also been handing out speedy managerial promotions to their top young rainmakers.
Chinese tech firms already have plenty of bankers within their upper ranks, mainly working in strategy, business development and in-house M&A roles in both China and Hong Kong. Many of them covered the tech sector at global banks in Hong Kong. Shirley Xue, for example, joined Tencent in late 2017 as an assistant general manager in M&A finance, following an 11-year stint at Deutsche Bank in Hong Kong, latterly as a director in China TMT. Similarly, JD.com’s head of international corporate development, Ernest Fung, was previously a Hong Kong-based director in TMT investment banking at Citi.
Will tech firms’ more brutal approach to employment – staff pruning has been uncommon until now – dissuade people like Xue and Fung from moving out of banking?
In theory, it doesn’t make sense to leave a sector renowned for job cuts for another one that’s also culling senior people. In reality, however, headhunters in Hong Kong don’t expect Chinese tech firms to suddenly lose their appeal.
While the new job cuts at the Tencent and are “unusual from a Chinese company”, bankers who join tech firms would still back themselves to avoid any trimming of underperformers, says Warwick Pearmund, associate director of emerging technologies at Pure Search. “Very few bankers see themselves in the bottom 10% of anything,” he adds.
Bankers who move to the tech sector typically do so for reasons other than job security, says Matthew Caddick, managing director of recruitment agency Aptitude in Hong Kong. “The big China tech firms offer decent bonuses and the ability to innovate rather than be tied down to banks’ compliance programmes, budget scrutiny, and red tape from head offices overseas,” he adds. “And bankers are used to these spring-clean culls, so it’s business as usual for them at tech firms, but with more job satisfaction.”
Not all mainland tech giants are following the lead of Tencent and JD.com. Alibaba’s CEO Daniel Zhang has said he won’t make redundancies this year. “When the economy is bad, the biggest advantage for online platforms is to create jobs,” he wrote on Weibo.
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