Exclusive: China's ZTE to slash about
3,000 jobs - sources
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[January 06, 2017]
By Sijia Jiang
HONG KONG (Reuters) - 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
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
"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
"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
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.
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The company name of ZTE is seen outside the ZTE R&D building in
Shenzhen, China April 27, 2016. REUTERS/Bobby Yip/File Photo
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
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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