China’s JD.com said on Tuesday it will cut the pay of more than 2,000 senior executives by 10 to 20 percent next year to help pay for improved benefits for other employees amid the government’s drive for “shared prosperity” to reduce income inequality.
The e-commerce giant plans to allocate 10 billion yuan ($1.40 billion) to a fund to help employees of JD and recently acquired courier firm Deppon Logistics buy homes, according to an email to employees signed by JD founder and chairman Richard Liu.
Liu also plans to personally donate 100 million yuan to a relief fund for the children of JD employees should anything happen to their parents, according to the letter, which was circulated online and later confirmed by JD.com as authentic.
“We are currently refining our employee benefits plan with a focus on front-line staff,” a JD spokesman told Reuters. The company employs 540,000 people.
Liu said the move would put short-term financial pressure on JD, leading to the decision to cut the salaries of more than 2,000 senior executives.
“I apologize to all of you,” he said in the letter. “If JD.com’s performance returns to a high level of growth over the next two years, the group will restore everyone’s remuneration.”
Chinese President Xi Jinping last year launched a renewed drive toward “shared prosperity” as a bid to reduce income inequality that threatens long-term economic growth and even the legitimacy of the Communist Party’s rule.
Alibaba Group and Tencent Holdings last year pledged to spend billions to support the effort, while state-owned investment banks have cut pay and delayed bonus payments this year.
JD has been hit by a slowing economy and lower consumer spending this year, although last week it posted an 11.4 percent rise in third-quarter revenue and said it was seeing signs of recovery in demand as China adjusted its zero-Covid policy.
Sophie Yu and Brenda Guo; Editors: Kim Coghill and Jamie Freed
E-commerce company JD.com Inc posted an 11.4 percent rise in third-quarter revenue on Friday, beating analysts’ estimates as China’s Covid-19 lockdown pushed more consumers to shop online.
https://www.businessoffashion.com/news/china/jdcom-to-slash-top-exec-salaries-amid-chinas-common-prosperity-push/ JD.com to cut top management salaries amid China’s push for “shared prosperity”.