Zhang Yiming, founder and CEO of Bytedance (Image credit: Bytedance)

Jinri Toutiao parent company Bytedance has slashed its employees’ Chinese New Year bonuses, as it faces challenges including increased competition and an economic downturn.

Apart from awarding annual bonuses in April, Bytedance typically distributes special “red packets,” also known as hongbao, before Spring Festival as an additional benefit to its employees. Red packets are cash gifts given out around the holiday season in China as a gesture of good fortune.

Employees who have worked at the company for more than three years were this year given RMB 3,600 (around $540) red packets, down from last year’s RMB 16,000, according to Chinese media. Staff members who had worked at Bytedance for between one and three years were last year given RMB 6,000, while they receive RMB 2,600 this year.

A Bytedance spokesperson confirmed the cuts to TechNode.

Bytedance founder and CEO Zhang Yiming sent an internal memo on Tuesday, the same day the red packets were distributed, calling for staff to not be disappointed by the cuts. He said the company had seen success as well as fair losses, referring to the economic slowdown, competition from rivals, and mistakes the company made.

He also said that the company would adjust its appraisal system after the Chinese New Year to include more incentives for employees who work hard and innovate.

Chinese tech giants have been reported to cut annual bonuses and lay off staff as China’s economy cools. Ride-hailing firm Didi in December slashed its employees year-end bonuses by 50% due to less-than-satisfactory performance over the course of 2018. Its executives received nothing.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen

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