The economic recession that started in the United States earlier this year is gradually spreading to the Asian market. E-commerce giant Shopee, also known as Amazon of Asia, is the latest tech company to announce a fresh round of layoffs.
According to a report by Bloomberg, Shopee has shed nearly 7,000 jobs in the last six months alone after laying off around 100 employees in the latest cuts. Yesterday, Shopee emailed a number of employees in Singapore and China that they had been fired from the company, Bloomberg reported. Four teams including human resources, training, recruitment and employee relationship management were affected.
In a memo to employees, Shopee CEO Forrest Li said the company’s top goal for the next 12 to 18 months is to achieve self-sufficiency.
“Our primary goal for the next 12 to 18 months is self-sufficiency. That means achieving positive cash flow as quickly as possible. Thanks to years of prudent action and hard work, we currently have a solid cash base that puts us in a more secure position than many of our peers in the technology sector. However, we can easily use up this liquidity base if we’re not careful, and with investors fleeing to ‘safe havens’ we don’t expect to be able to raise funds in the market.”
“Now that global conditions have changed, we too must adapt. Containing costs will be an important priority, not only for us but for the entire industry,” Li added in the memo.
According to Bloomberg, Shopee had more than 67,000 employees at the end of 2021. The reduction of 7,000 jobs corresponds to around 10% of the total workforce. The company was founded in 2015 and currently operates in seven markets in Southeast Asia.
The global economic downturn that began in the second quarter of this year is beginning to have a major impact on technology companies. As we reported last month, over 32,000 technicians lost their jobs in July. That number has risen to about 45,000 since October, according to the latest tally from CrunchBase, a platform for finding business information about private and public companies.
Tech giants like Amazon, Google’s Alphabet and Facebook’s Meta have all taken action to rein in spending. Other companies such as Coinbase, Shopify, Netflix and Twilio have also announced layoffs.
Below is the full text of the memo Li sent to all Shopee employees.
We’ve made some difficult announcements lately. I know many of you have seen negative reports about us in the media and you may have been shocked by the news that we have ceased operations in some markets. I am writing to you today to explain what is happening and also to talk about what we need to do over the next 12 to 18 months.
As you know, this is a turbulent time for our industry. As countries reopened, we lost the strong tailwind we had during the pandemic. And then the world was hit by a succession of macroeconomic blows: war in Europe, massive supply chain disruptions, rising inflation and slowing economic growth. It’s been a brutal year for everyone and capital markets have been in turmoil. Some economists are forecasting a global recession.
Unfortunately, we are not immune to these shocks. Every team has done their best so far to weather this storm. We took every new restriction calmly and tried to adapt – even if this required painful measures. I know a lot of you worked overtime, got by with less and tried to stay positive while we were taking those hard corners. Thanks for that.
We can now see that this is not a fast-moving storm: these negative conditions are likely to persist in the mid-term. Looking ahead, the leadership team and I are making some decisions that should help us not only survive this storm, but emerge from it in as strong a position as possible. I am writing to ask for your support as we implement these plans.
Our ultimate goal for the next 12-18 months is self-sufficiency. That means achieving positive cash flow as quickly as possible. Thanks to years of prudent action and hard work, we currently have a solid cash base that puts us in a more secure position than many of our peers in the technology sector. However, we can easily use up this liquidity base if we’re not careful, and with investors fleeing to ‘safe havens’ we don’t expect to be able to raise funds in the market.
The only way for us to free ourselves from dependence on external capital is to become self-sufficient and generate enough money for all our own needs and projects. If we can do that, it will have a huge impact on our future. We will have peace of mind and be less affected by the outer ups and downs that harm us today. We will be more sure-footed, less distracted and able to focus on our own goals again.
This is how I want Sea to emerge from this storm: in a position of certainty and independence, fully empowered to choose our own path.
To achieve this we need to do two things:
- In the short term, we must find every opportunity to reduce our operating costs. The more money we save each day, the more time we can buy to weather this storm. Every little counts.
- Now and in the long term, we need to establish a cost-sensitive culture across our organization. In the past, we’ve focused on growth first, and sometimes growth at any cost. This was not a wrong approach as global conditions at the time were ripe for opportunity. But now that global conditions have changed, we too must adapt. Containing costs will be an important priority, not just for us, but throughout our industry. Whoever does this best will emerge the strongest from this period of uncertainty.
This will not be easy for us. But if we’re all willing to help tighten our belts and work together, I know we can do it.
Similar to what has been announced by many others in our industry, we will be tightening our expense policy effective October 1st (although I strongly encourage everyone to comply with it immediately). The full details are in the attached document, but these are the key points:
- Business travel reimbursements are limited to economy class airfare and $150 per night for hotel stays.
- We will cap international business travel meals at $30 per day.
- We no longer reimburse internal or external meals or entertainment.
- For local car transport, we use the most economical service option offered by local ride booking or taxi services.
These new rules apply to every sailor, including myself and the entire management team.
In addition, the leadership team has decided that we will not accept any cash compensation until the company has achieved self-sufficiency.
I know that messages like this are difficult to accept. We are closely monitoring the world situation and must continue to adapt as best we can. I hope to have your support and understanding as we try to get through this.
You will be hearing more from me over the next few months. I will do my best to update you on our situation and what we see happening in the world. If you have any feedback or ideas, I would be happy if you write to me. I may not be able to reply, but I will read and review every message.
Thank you Sailors for all the effort you have put into building our company. We could not have touched millions of lives without your hard work. Now we must go through a transition again, which I know can be painful and stressful, both individually and collectively. But if we can make that next big adjustment, our company will enter a new frontier. Self-sufficiency is the key to our future success.
The next 12-18 months are critical to the long-term health and longevity of our business. Let’s do what we need to do together to get through this.