Sources have told Reuters that tech giant Alibaba is cutting one-third of its internal investment team as Beijing’s regulatory crackdown slows down deal-making.
Alibaba said they are letting go of up to 110 employees, most of whom have already been informed of their dismissal. They are mainly mid-level and senior employees based in mainland China with some from Hong Kong.
The internet industry in China was fast flourishing before Beijing caught its attention and began to intervene with monopolistic practice regulations in 2020. The regime earlier this year hinted that it would loosen the crackdown to alleviate pressure on the ailing economy.
Yet, unexpectedly on July 10, a handful of tech giants in China were slammed with fines over violating anti-monopoly rules on the disclosure of transactions. Five out of 28 deals the government’s watchdog highlighted were Alibaba’s. The highest possible penalty in each case could amount to over $74,500.
The economic downturn in China and the regulatory crackdown have taken a toll on tech companies’ sales growth and stock values. As a result, they are under pressure to tame operating expenses.
Citing Dealogic, Reuters reported that Alibaba made an average of 44 investments each year between 2015 and 2021, with a peak of 70 agreements for $54 billion in 2018. In addition, it cut 38 deals worth a combined $6.2 billion even during the regulatory crackdown of 2021. However, this year, Alibaba has only made nine investments totaling $5.2 billion thus far.