From both informal and formal channels, we might hear of some rumours or competitor intelligence about the redundancy plan, which refered to Microsoft, IBM, Lenovo, Dell, and so forth. Every spokesperson of that company said either we knew nothing about the redundancy plan or we won't have such plan in China. Nevertheless, we know quite clearly in our own mind, what's ahead of us, the real bitter cold winter is coming to IT industry.
Here comes a piece of news published on Jan 9 by 2009 Interfax Information Services
IBM, Lenovo to restructure, Chinese workforce spared from job cuts
Shanghai. January 9. INTERFAX-CHINA - IBM is to restructure its global business, according to an internal company memo acquired by Interfax on Jan. 8, in a move that an IBM insider said would increase the company's efficiency in emerging markets, including China, without leading to any job cuts in its Chinese workforce.
The move follows an announcement by Chinese PC manufacturer Lenovo Group on Jan. 8 that it intends to restructure its business divisions in the China and Asia-Pacific regions in order to cut costs.
Lenovo, which bought IBM's global PC manufacturing and sales business for $1.25 billion in 2005, also denied that it will cut jobs in China, China Computer World reported on Jan. 8.
Under IBM's restructure, it will merge three of its regional operation teams and 15 of its regional marketing teams in emerging markets in South America, Central and Eastern Europe and Asia, including Greater China, to form a single growth markets unit.
Furthermore, IBM will recruit more staff in China to strengthen its business in the country, which was less affected by the global economic downturn than IBM's operations in the United States, according to the source. This month, IBM started to cut thousands of jobs in other markets.
"Although the new economic environment has affected markets around the world, the outlook for emerging markets, especially China, is positive," the IBM source said.
Meanwhile, Lenovo is to cut 2,500 jobs worldwide in the first quarter of this year and expects to save approximately $300 million in the fiscal year ending March 31, 2010.
To do so, Lenovo will also restructure its business divisions in the China and other Asia-Pacific regions into a single division covering Asia-Pacific and Russia. The new division will be run by Chen Shaopeng, Lenovo's global vice president and president of the Greater China business.
"Although the integration of IBM's PC business with Lenovo over the past three years has been a success, our performance for the last quarter did not meet our expectations, Yang Yuanqing, chairman of the board of Lenovo, said in a company announcement.
Wow! Lot of information or we could call it market intelligence inside the above news. First of all, we don't need to guess which company is doing redundancy because it's all pervading rather than individual case-by-case. For those IT MNCs, lay off employees in other region or countries and pin their last hope on China is the only strategy they could do. Therefore, China market is becoming the most critical for driving revenue growth in their global strategy. Some few strategies IT companies might choose to do in China: 1. restructure their current organization to boost efficiency, get rid of the units or people with bad performance 2. keep grow their strongest business areas to win more market shares and revenue, which go along with extra investment or H/C increase or remote location expansion strategy, etc. In terms of staffing perspective, we need to lay-off on the one hand, we have to recruit more on the other hand. The objective is to support business growth and achieve quota in China through workforce restructuring and optimization. Therefore, we won't stop hiring, instead, we will conduct more batch hiring focusing on niche skills on target market. Meanwhile, more strategic hiring will be utilized to win competitive edge against competitors. Accroding to Hewitt report, during such economic downturn, 50% of companies in China are considering to conduct strategic hiring toward their competitors, which bring another HR issue: retention onto the table accordingly.
Here comes another piece of news which echo the reasons why Lenovo has to take restructuring (source: China Business News, 2009-1-8)
News address: http://money.163.com/09/0108/03/4V3TS8UC002524SC.html
