By CUI Peng
At Tencent, everyone is well aware of how much money they have burned. A photographer was paid 80,000 yuan to shoot a team event – hoorah! A team spent 7 million yuan (US$1.1 million) promoting a new WeChat mini program function – wow! Managers fly business class and stay in luxury hotels around the world – applause! In order to “be more sustainable,” the packaging on thousands of holiday gift boxes - ordered, unused and diligently thrown away - is now fully biodegradable and very expensive – standing ovation! Crowd surfing! Feverish fans storm the stage!
Rarely has more joy (or conceit) been devoted to such wanton waste. A whole new moon could be made from the mooncake that Tencent methodically dispatches to trash cans all over China each mid-autumn festival.
Pony Ma’s winter wonderland is here
Yup, Tencent has behaved like it had all the money in the world and could toss it into any dumpster fire that caught the eye. Revenue has grown by more than 20 percent for 16 straight years. The workforce has doubled in the past three years.
But the party is most definitely over. Costs are growing today as fast as profits previously did in the fattest of years. And profits are hardly growing at all. Founder Pony Ma poured cold water all over last year’s typically extravagant holiday party with his mutterings about “cuts” to come.
Winter is coming, he said, but Tencent is more like a bunch of revelers at a tropical beach party than a hoard of battle-hardened warriors. The organization has all the hallmarks of a dinosaur. It’s very big, slow, inefficient, and ponderous. According to Pony Ma, 2022 will be a year of slowing down and cutting costs, with a focus firmly on the essential. Every department must downsize. Vanity projects are out the window, lazy laggards out the door. Entire teams dissolve overnight, leaving nothing behind but the shadows of forgotten promotional giveaways.
Freebies, parties, and perks have gone. Semiannual budget reviews have become quarterly or even monthly. Approved projects need to be re-budgeted and re-approved. Previously, just about any project would do, as long as it sounded vaguely appropriate, not anymore.
Cloud computing and content expanded most in the past three years and are thus the first to feel the knife. A senior person at Tencent Cloud told Jiemian News that in the scramble for market share, many bad deals were made. Headcounts and expenses went ballistic. The market got more competitive but didn’t get any bigger. Previously thriving businesses such as education, fintech, and retail have been hacked back by regulators.
Employees are repeatedly told to cut costs, prioritize sustainability over speed and focus on profitability. More layoffs are inevitable.
It’s the same story over at content. Content is no longer king. Content can sleep in the corridor. Wild investments were made in unprofitable projects that were rarely killed in time. Now, any ongoing projects that fall behind the clock are for the chop. Most of the 300-person content squad that created Tencent's NFT project last year have left the company or been herded off to greener pastures.
No more consolation prizes
No one is happy. Even all-star teams have to sort the wheat from the chaff. Before this year, underperformers were given second-last chances or put on probation. Now, it’s shape up or ship out. Even Pony Ma has acknowledged that furious employees deserved a better ending, and promises a more humane execution, should the time ever come again, as winter frequently does.
From the outside, it’s easy to feel sorry for those given their marching orders, but there are still plenty of non-specific employees with nowhere to go clogging up the internal transfer system. The word on the street is that Tencent will lay off 10 percent of its workforce in the next few months, a number close to the company's annual separation rate. Jiemian News cannot verify the rumor, but considering the cost control and project cut, it could easily be far more.
