JD.com Inc. is slashing salaries for about 2,000 managers by 10% to 20% and diverting some of those savings toward a $1.4 billion employee benefits fund, aligning China’s No. 2 online retailer with Xi Jinping’s “common prosperity” campaign to share the wealth.
Billionaire JD.com founder Richard Liu will donate 100 million yuan ($14 million) of his own money toward staff welfare, a person familiar with the matter said. China’s largest online retailer after Alibaba Group Holding Ltd. will also set up a 10 billion yuan fund to provide staff with interest-free home loans, the person added, asking not to be identified because it hasn’t been publicized.
The moves emerged weeks after Xi reiterated a drive toward common prosperity, a concept that roiled markets in 2021 by pushing business leaders and cash-rich companies to explore ways to re-distribute wealth. That effort receded from public view as Beijing sought stability in the run-up to the October Party Congress, where Xi secured a precedent-busting third term.
“I hope this move can realize the dream of securing a house for all employees who have worked for more than five years, including for our courier and customer service brothers,” Liu announced in an internal memo seen by Bloomberg News.
Xi is now expected to revitalize one of his signature policies, with uncertain outcomes for investors and China’s largest corporations.
Beyond JD, senior executives across China’s $58 trillion financial system are also facing additional pay cuts as firms from investment banks to mutual funds weigh options to comply with Xi’s mantra.
JD’s shares fell more than 4% while rivals from Alibaba to Tencent Holdings Ltd. extended losses to slide more than 2% in Hong Kong.
“This corresponds with the common prosperity campaign and provides justification for management’s salary cut, as Chinese tech companies continue to cut cost to improve financials this year,” said Willer Chen, an analyst at Forsyth Barr Asia Ltd.
A JD.com spokesperson confirmed the contents of the memo, which was first reported by Chinese online media.
Under the common prosperity campaign, Xi’s administration sought to rein in “disorderly expansion of capital.” In response, wealthy tech entrepreneurs like Liu began giving back.
Pinduoduo Inc., the fast-rising online commerce giant challenging Alibaba in the countryside, last year pledged its next $1.5 billion in profit to farmers’ welfare. Tencent said it will double the amount of money allocated toward social responsibility programs to about $15 billion.
And Alibaba promised to commit 100 billion yuan over five years to support small companies. Meanwhile, tech billionaires from PDD’s Colin Huang to ByteDance Ltd.’s Zhang Yiming and Xiaomi Corp.’s Lei Jun donated vast sums to a plethora of causes.
JD’s salary cuts follow a wave of job and cost reductions worldwide by companies struggling with a potential recession.