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Rumor: Layoffs Hit 7 of China's Top 10 Group Buy Sites

Tencent Tech, 10/14/11

Seven of China's top 10 group buy sites are now laying off employees in an attempt to survive a slow winter retail season, according to an industry source.

An employee of Chinese group buy site Lashou has revealed that the company has been undergoing corporate restructuring recently and that large-scale layoffs have already begun, from 50% of the staff in the company's Beijing and Shanghai offices to even higher numbers in Suzhou, Shenzhen and elsewhere. The Lashou employee said that this round of layoffs began following China's National Day holiday (October 1-7), and has included a total of 2,400 people. This follows an earlier round of layoffs in July and August this year. Both Lashou CEO Wu Bo and the company have declined to comment on the situation.

According to another industry source, 55Tuan.com is also in the midst of a new round of layoffs, affecting 35 of the company's local branches throughout 10 sales districts. 55Tuan spokesperson Yang Guoqiang said that the layoffs consist merely of temporary shutdowns of teams at local branches, service for all of which is overseen by management at the company's regional branches. Poorly performing local branches face the risk of being shut down, Yang added, but layoffs won't affect more than 10% of staff, or approximately just over 500 employees.

Meituan vice president Wang Huiwen said in July this year that "marketing costs rose tenfold over the first half of the year, as did our number of employees, our operating costs, and the amount now invested in the company."

Editor's Note: For more information on this topic, please see "Rumor: Group Buy Site 55Tuan Sheds 1,500 Employees," MD 10/13/11 and "Rumor: Group Buy Site Lashou Slashes Workforce," MD 10/13/11 issues.

Keywords: B2C Yang Guoqiang corporate restructuring Internet Meituan Lashou Wu Bo 55Tuan Wang Huiwen e-commerce HR group buying

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