ZTE Responds to Rumor that Big Layoffs Coming in 2013, Kind of Denies It

In response to a report quoting anonymous sources in Investment Bulletin suggesting that ZTE would lay off as much as twenty percent of its work force in the coming year, an anonymous ZTE representative told Beijing’s Capital Week (via the Global Times):

The company is undergoing a labor optimization. Currently, there has been no mass layoff and the peak time to cut the labor has passed.

On the face of it, that seems like a denial, but it’s hard to be sure. The fact that there hasn’t yet been a mass layoff doesn’t mean there won’t be, and the Investment Bulletin report seems to suggest the layoffs are being staggered, with a certain percentage of contracts not being extended as they come up for renewal each month. Moreover, it is strange that an anonymous ZTE representative would be making this statement rather than an official company representative.

Rather than speculate further, we have contacted ZTE about the layoff rumors and will update this post with the company’s clarifications if we hear back.

Rumors about big layoffs at ZTE have been bubbling for some time now, and here at Tech in Asia we have heard from some former ZTE employees over the past year who claim they were laid off, but we have never been able to corroborate their claims. However, the company’s half-year financial reports reveal that between the end of 2011 and June 2012, ZTE cut 2,806 employees from the payroll. The company has not yet released its report for the second half of 2012, and its not clear whether those cuts continued through the second half of the year or whether they’ll continue in 2013.

What is clear, though, is that ZTE’s “labor optimization” will probably have to involve some form of cutbacks. The company had an absolutely abysmal 2012, posting $400 million in losses, and no company can bleed like that for long without making some serious changes. Whether that means layoffs or some other adjustments remains to be seen, but the company will have to make major changes in 2013 if it wants to keep its place among the world’s top smartphone makers.