According to foreign media reports, according to informed sources, China Telecom (microblogging) equipment manufacturer ZTE intends to lay off about 3,000 employees, of which the development of the domestic mobile phone business sector will cut nearly one-fifth of the employees. ZTE is currently facing US trade sanctions, and its supply chain may be seriously damaged.
According to people familiar with the matter, ZTE is one of the world's largest telecommunications equipment manufacturers. The total number of employees worldwide is about 60,000. The number of layoffs is about 3,000, accounting for 5% of the total number of employees.
ZTE’s global mobile phone business unit will cut 600 people, accounting for 10% of the total number of employees in the department. The layoffs of ZTE’s mobile phone business unit are mainly concentrated in China, as the company’s share in the domestic market has been declining.
An executive at ZTE said: "The proportion of layoffs in the mobile phone business in China will exceed 20%." He also said that the layoff plan will be completed in the first quarter.
A regional manager of an overseas branch of ZTE said that the percentage of layoffs issued by the head office to the business unit he led was 10% and was required to be completed by the end of January.
The regional manager who did not want to be named said: "I also received a list of layoffs from the superiors, clearly requiring some employees to be laid off, because these employees tried to go to our competitor Huawei to seek employment, so The company sees them as 'unstable factors'."
ZTE did not comment on this.
ZTE is currently the only Chinese manufacturer to operate a mobile phone business in the United States. Its share of the US smartphone market is 10%, ranking fourth.
The US Commerce Department announced in March last year that due to ZTE’s alleged sale of illegal US computer equipment to Iran, the United States will impose export restrictions on ZTE and prohibit US companies from exporting goods to ZTE.
However, the ban did not take effect, but after several suspensions, the most recent suspension will expire on February 27. If the US Department of Commerce really imposes export restrictions on ZTE, the latter's supply chain will be seriously damaged. One-third of ZTE's components depend on imports from US companies such as Qualcomm, Microsoft and Intel.
This uncertainty has greatly affected ZTE's business last year. According to market research firm IDC, ZTE's global smartphone shipments last year dropped by 36.5% compared with 2015.
Zhao Xianming, chairman of ZTE, said in his new year speech that the company's annual turnover exceeded 15 billion US dollars, and now the company faces the biggest crisis in the company's 31-year history.
He vowed to strengthen internal audit and said the company is adjusting its management structure.
Zhao Xianming said: "In 2017, businesses that do not meet our strategic direction or low output performance will be shut down and transferred to enhance the company's core competitiveness."
According to an internal memo obtained by Reuters, ZTE has also set up four new senior vice president positions, responsible for investment, internal audit, compliance and taxation.
Revenue from the infrastructure business has also been squeezed, as the construction of 4G networks for domestic telecom operators is nearing completion, and the 5G network construction business will have to wait a few more years to generate considerable revenue.
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