Chinadotcom Lays Off 48 Employees in China

Hong Kong-based Internet portal Chinadotcom Corp. has laid off 48 staff from its operations in China, the company announced Friday.

Chinadotcom is an Internet portal, system integration and advertising sales company that operates the China.com and cww.com Web sites in China and the U.S. and also owns the Hongkong.com and Taiwan.com portals.

The company laid off editorial, marketing and administrative employees from its operations in Beijing, Shanghai and Guangzhou, the company said in a statement.

The cuts, which came out of a total work force of approximately 2,000, were necessary to "streamline and consolidate" Chinadotcom's operations, said Susan Chan, a Chinadotcom spokeswoman.

The layoffs hit a company that has billed itself as more seaworthy than many other companies sailing the stormy seas of the Asian Internet industry. With approximately US$560 million in cash reserves, its average monthly losses of about US$4 million are not in danger of sinking the company in the near future, Chan said. The company expects to turn a profit by the end of 2001.

Amid steep losses and layoffs at other Internet companies in Hong Kong and China, including portal operator Tom.com Ltd. and community and entertainment site RenRen.com Holdings Inc., Chinadotcom last month created an investment unit, Chinadotcom Ventures, to buy interests in Asian Internet companies, many of which have been pummeled in stock-market declines originally triggered by April's U.S. Nasdaq correction. [See "Chinadotcom Ventures Unit Eyes Net Wreckage," July 7.] Yet, like other Internet companies, Chinadotcom faces a tough competitive environment and high expectations from shareholders, she said.

"We're under great pressure to become profitable very quickly," Chan said. "If we were not to do what we have done, it would be irresponsible and would place us at great risk in a short period of time," she said.

Despite the retrenchment, Chinadotcom plans to expand its work force overall by 20 percent by year's end. Chan would not comment on which facilities or departments will add staff, but said China continues to be a major focus for the company. The employees who were laid off could not be transferred to other cities or departments, she said.

The Asian Internet hype of late last year and early this year made the current cutbacks at Chinadotcom and other companies inevitable, according to Joe Sweeney, an analyst at Gartner Group Inc. Asia-Pacific, in Hong Kong.

"The problem with Chinadotcom is not that it's getting rid of people, it's that the expectations were too high to start with," Sweeney said. Though its diverse businesses put Chinadotcom in a better position than some Internet companies to make money, the company is not focused enough, he added.

The layoffs are a move in the right direction, he said.

"The companies that are recognizing the problem now and taking some action are going to be in better shape," Sweeney said.

Chinadotcom, in Hong Kong, can be reached at +852-2893-8200 or via the Web at http://www.corp.china.com.

Join the newsletter!

Error: Please check your email address.

More about chinadotcomGartnerGartner

Show Comments