Southern Daily, 10/19/11
A woman claiming to be an employee of Chinese location-based service (LBS) mobile SNS Digu said yesterday that Digu recently announced layoffs that reduced the workforce from 110 to just over 40. She also revealed that this follows smaller rounds of layoffs at Digu which began in July, adding that yesterday's announcement, which effectively eliminates the company's marketing, operations and branding departments, was "the final blow." A number of departmental director positions were also eliminated in the cuts, leaving only the director of Digu's operations department, recently poached from Tencent (0700.HK), who has now been downgraded to manager of Digu's product development division. The source also said that Digu's main reason for the recent wave of layoffs lies with difficulties the company has had both in securing a second round of funding and finding a stable business model.
Digu had no other means of lowering operating costs aside from reducing the number of staff, the woman said, noting that those laid off were given compensation in accordance with China's labor laws.
Digu founder Li Song, also founder of Chinese match-making website Zhenai.com, has confirmed in an interview that the company is undergoing corporate restructuring. "Aside from gaming products," Li said, "the mobile internet sector has yet to find a sustainable profit model and needs to be prepared for a long, uphill battle. However, Digu has no intention of giving up."