Chinese telecom equipment and terminal manufacturer ZTE (0763.HK; 000063.SZ) has carried out three rounds of employee recalls and layoffs in its overseas offices since Chinese New Year holidays in February this year, according to a source within the company. ZTE plans to reduce its workforce by approximately 12,000 this year, with overseas employees constituting the largest share of layoffs. ZTE has approximately 10,000 Chinese employees overseas.
ZTE sent an e-mail regarding local recruiting in overseas markets to certain European branch offices in late April. The e-mail stated that localization was a key issue for the company, as local staff could assume more responsibilities and reduce the need for deploying Chinese staff overseas. The reduction in overseas personnel is also due to increased redundancy as overseas market share has slid and staffing costs have remained high.
The source added that cash flow has significantly tightened this year, partly because ZTE is running losses in some countries due to its low price tactics, and because many overseas offices are tasked with landing equipment tenders but many contracts are extremely demanding, resulting in long delays before receiving payment and an excess of outstanding receivables.