Alibaba-backed phone maker laying off workers despite hitting 2015 sales targets

2015 wasn’t a great year for some of China’s home-grown smartphone startups: after an ascendant 2014, companies like Xiaomi saw themselves losing ground to big players like Huawei in 2015. But Xiaomi’s loss may have been Meizu’s gain, as the company shipped more than 20 million phones in 2015, growing its year-on-year sales by 350 percent. Impressive, right?

Not impressive enough, apparently. Meizu CEO Bai Yongxiang announced to employees on Monday that in order to further optimize the team (which has grown to nearly 4,000 people), the company will institute a policy inspired by Jack Welch’s 20-70-10 vitality curve system.

Welch advocated firing the bottom 10 percent of workers at any company, citing underperformance. Meizu will adopt that system. Bai says that this year the “personnel adjustment” won’t go beyond five percent (or around 200 people), but he specifically mentioned Welch’s 10 percent figure in his message to employees, so future layoffs might be even more significant.

In a post on the company’s internal message boards, Bai wrote that he knows “this isn’t a complete solution,” but that he feels it will help Meizu deliver better products to customers. An internal letter to employees also detailed compensation plans for those to be laid off; employees will continue to receive their monthly salary for 2N+1 months, where N is the number of years they’ve worked at Meizu.

Given Meizu’s impressive 2015 sales figures, it’s not clear whether this is a genuine push for optimization. Often, layoffs (which companies always call “optimization” or “personnel adjustment”) happen to help companies stem financial bleeding, but Meizu got US$590 million from Alibaba this year and beat its sales targets, so it’s hard to imagine the company’s in financial trouble. This might be one of those rare occasions where “optimization” genuinely means optimization when it comes to layoffs.