Exclusive: China's ZTE to slash about 3,000 jobs - sources
Chinese telecom equipment maker ZTE (000063.SZ), which is facing U.S. trade
sanctions that could severely disrupt its supply chain, is slashing about 3,000
jobs, including a fifth of positions in its struggling handset business in
China, company sources said.The sources said the Shenzhen-based company, one
of the world's biggest telecoms gear makers, is axing about 5 percent of its
60,000 global workforce.Its global handset operations will shed 600 jobs, or 10 percent
of the total, with the cuts concentrated in China, where it has been losing
market share."Cuts in the handset business in China will be beyond 20
percent," said a senior executive who has been briefed on the lay-offs,
which are scheduled to be completed within the first quarter.A local manager in one of the company's overseas branches
said a 10 percent quota was given to shed staff in his department by the end of
January."I was also given names that must go because they had
tried to apply for jobs at (rival) Huawei [HWT.UL] and are therefore branded as
'unstable factors'," said the manager, who is not in the handset unit and
asked not to be identified.The company declined to comment.ZTE is the only Chinese smartphone vendor with a meaningful
presence in the United States, where its 10 percent market share makes it the
fourth-largest vendor.The U.S. Commerce Department first announced in March that it
would impose a ban on exports by U.S. companies to ZTE for allegedly breaking
Washington's sanctions on sales to Iran.The ban has not yet come into effect following a series of
reprieves, the last of which expires on Feb. 27, but if it does go ahead, the
company's supply chain could be severely handicapped. It relies on U.S.
companies including Qualcomm (QCOM.O), Microsoft (MSFT.O) and Intel (INTC.O) for about a third of its
components.The uncertainty hanging over the company weighed heavily on
its business last year, with its worldwide smartphone shipments tumbling 36.5
percent compared with 2015, according to industry database IDC.ZTE chairman Zhao Xianming said in his New Year speech to staff
that the company, which has annual sales of more than $15 billion, had
"encountered its biggest crisis in its 31 year history", according to
a transcript on the company’s official WeChat account.He vowed to enhance internal auditing and said the company was
streamlining its management structure.“In 2017 ... businesses that don't fit our strategic
direction or with low output performance will be shut, suspended, merged or
reconfigured, improving the company’s core competitiveness,” Zhao said.Internal memos seen by Reuters show the company also created
four new senior vice president positions in charge of investment, internal
audit, compliance, and tax, respectively.Revenues for infrastructure vendors like ZTE are also being
squeezed as Chinese telecom operators' 4G networks near completion and revenues
from 5G development remain some years off.(Reporting by Sijia Jiang; Editing by Will Waterman)
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