Central China Real Estate (CCRE), the largest real estate firm in the country’s central Henan province, has recently let 7,000 employees go and sliced salaries by 40% without any prior warning.

According to a recent Times Finance report, staff will receive “N+1” economic compensation after being laid off. This means that CCRE will pay its employees an extra month’s wages plus N times of the severance pay rates to compensate for the 30 days’ prior notice.

CCRE announced that those who sign agreements to leave the firm before November 15 would receive compensation in installments over the next 12 months and 18 months otherwise.

The outlet noted that the terminations this time came after rumors of mass layoffs for organization restructuring within the company in early February.

A company employee named Xia Li (pseudonym) said that everything happened so suddenly. 

On November 14, Li went to work as usual. Then out of the blue, she received a verbal notice from her manager saying that she and her colleagues were fired and must sign a letter of resignation. The supervisor just said the company is facing a hard time without further explanation.

Li claimed that she had worked for CCRE for more than a year as a customer service representative with a monthly salary of about $420 (3,000 yuan). After the layoff, she would receive nearly $840 (6,000 yuan) in compensation starting this December over the next 12 months.

Li also revealed that her company’s monthly sales fell sharply in the last few months, with only 6 or 7 houses sold. This compared with 20 houses per month before that.

CCRE’s sales data released on November 4 shows that the company’s total contracted sales in the year’s first ten months reached nearly $2.9 billion, down 56% from a year ago. Meanwhile, total contracted sales area was 31.6 million square feet (2.9 million square meters), a decline of 53.4% year on year. 

On November 7, CCRE failed to pay interest on its $200 million, 7.9% bond, due November 2023, citing stringent “zero-COVID” policy in Zhengzhou. The company has a 30-day grace period to pay the interest before triggering an “event of default.”In addition, regarding offshore bonds maturing next year, CCRE will have a $300 million bond maturing in April, $400 million in August, and $200 million in November.

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