Jack Ma imposes Alibaba hiring freeze

Charles Clover

It is the land where job creation is king, but now Alibaba has imposed a hiring freeze in the name of efficiency.

The edict from Jack Ma, group founder and chairman of the group with 30,000 employees, that "this year our entire group's headcount won't increase by one person" runs counter to Beijing's ethos — one which partly explains the zombie steel mills and other industries running on empty across the country.

Since at least 1989, Beijing's top priority has been to create enough jobs to maintain social stability and head off popular uprisings that could overthrow the authoritarian state.

Alibaba, the Chinese ecommerce company that launched a record initial public offering in the US last September, would appear to be listening to a different constituency: shareholders who are focussed on the bottom line as revenue growth slows.

Alibaba founder and chairman Jack Ma makes a speech during the official opening of the CeBIT trade fair in Hanover March 15, 2015.
Fabian Bimmer | Reuters

Mr Ma told employees in a speech posted online on Wednesday: "The purpose is simple: we need to get into formation. I think 30,000 people is efficient."

Alibaba's management has come under pressure to temper costs after the company's share price dropped from a high of $119 in November to roughly $85 today.

In January, Alibaba announced a 40 per cent year-on-year increase in revenues in the quarter to December 31 to Rmb26.2bn ($4.2bn), missing analysts' expectations of $4.4bn. That, coupled with a regulatory battle over a report on counterfeit goods, has weighed on the group's share price.

The hiring freeze comes two months after another austerity decision when Mr Ma said that employees would not receive the traditional spring bonuses.

The Alibaba chairman said in February that he was unsatisfied with the company's 2014 performance, in spite of Alibaba's $25bn IPO on the New York stock exchange.

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"We must objectively and calmly see our own results, rationally regard external views and not let ourselves be lost in illusory fame," he said at the time.

Mr Ma added on Wednesday that Alibaba would hire a new employee only when a current staff member quits.

One area where Alibaba may require expanded headcount is eradicating counterfeit goods sold on its market places.

Last December, the company said that it had spent $160m since the start of 2013 trying to delete counterfeit products from its sales websites, such as Taobao. It said that it employed a 2,000-strong task force and 5,400 "volunteers" to police the sites for suspicious items.

Earlier this month, the ecommerce company pledged to step up efforts to cull knock-offs from its sites, bowing to criticism from the American Apparel & Footwear Association, a US clothing industry lobbying group.

The AAFA had complained that it was "frustrated" by Alibaba's lack of progress in addressing what it called rampant selling of fake goods. It added that the prevalence of counterfeit apparel had worsened since Alibaba was removed from a "notorious markets" blacklist in 2012.