Meizu Technology Corp (魅族), a Chinese smartphone maker backed by Alibaba Group Holding Ltd (阿里巴巴), is planning to cut as much as 5 percent of its roughly 4,000 employees to improve its performance as industry growth cools.
Meizu plans to trim as many as 200 people from its workforce by the middle of next month and is to cap headcount growth to less than 10 percent this year, company spokesman Li Nan (李楠) said yesterday.
Meizu CEO Bai Yongxiang (白永祥) told employees he drew inspiration from a “20-70-10” vitality model espoused by former General Electric Co chairman Jack Welch, intended to root out the bottom 10 percent of performers, Li said.
China’s smartphone market growth is expected to have slowed to the “low single-digits” last year, research firm International Data Corp estimates. That deceleration is affecting a domestic industry crowded with lower-end brands such as OnePlus (一加), Oppo Electronics Corp (歐珀) and Meizu, in which Alibaba bought a minority stake last year for US$590 million to promote its “YunOS” operating system.
Xiaomi Corp (小米), the country’s second-largest vendor, was in danger of missing its target of selling 80 million smartphones last year, people with knowledge of its production plans said in November.
“The mid to low segment of the smartphone market is shrinking,” Yuanta Securities Co (元大證券) Taipei-based analyst Jeff Pu (蒲得宇) said. “Even though Alibaba’s support helps Meizu price itself very competitively, it faces a challenge in hardware profitability.”
Meizu is expected to grow shipments by 25 percent to 25 million smartphones this year, according to estimates by Bloomberg Intelligence, reflecting intensified competition in the low-end smartphone market, where the company mostly competes. That compares with 350 percent growth in unit sales last year, Bai said in a message to employees that Li confirmed.
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