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US computing giant IBM has laid-off more than 1,000 employees in China.
On August 26, IBM announced in an online meeting, which lasted less than three minutes, that it would completely shut down its research and development facilities in China, lay-off the employees working in those facilities in Beijing, Shanghai, and Dalian, and transfer operations to other countries in Asia.
News of the meeting came in the afternoon of the previous work day, according to interviews with employees:
"In the afternoon, some colleagues noticed that their permissions had been revoked and worried that it might affect their work, so they were working closely with the IT department for a solution," Li Yan recalled.
"In the early hours of the morning, the department head received the layoff notice and informed the employees, who were still anxiously waiting for their access to be restored. We had all anticipated that this day would come, but we didn’t expect it to happen so suddenly."
有同事下午就发现权限被关闭，担心影响工作还一直与IT部门咨询解决方案。”李颜回忆道，凌晨时分，部门领导接到裁员消息后，传达给了还在苦苦等待权限解锁的员工们，“我们都预感到会有这么一天，只是没想到来得如此突然。” [3]
The reason for the sudden closure is increasingly fierce competition in the Chinese market, which is one main theme running through the Chinese media coverage.
IBM dominated the IT systems in China's finance, telecommunications, and energy sectors for many years. But in 2012, the Chinese government began the "De-IOE" initiative (去IOE), which was aimed specifically at reducing China's reliance on the three big global computing companies (IBM, Oracle, and EMC) by supporting the growth of homegrown IT providers.
Since then, IBM's China revenues have steadily declined. But last year, its revenues fell by 19.6% year-on-year. This is in contrast to a 1.6% rise in its revenue across Asia-Pacific, according to the company’s annual report. This year, the trend has continued, with sales in China in the first half of 2024 falling 5%, while Asia-Pacific increased by 4.4% over the same period.
So the layoffs in China, although sudden, do not come as a surprise as they are part of a wider global adjustment across the business:
In 2023, IBM began to take a drastic approach, announcing layoffs of about 1.5% of its global workforce, affecting approximately 3,900 employees.
2023年，IBM便已经开始“断臂求生”，宣布裁减其全球约1.5%的员工，裁员数量约3900人。
Another theme in media coverage in China is how IBM's downsizing in the country reflects a wider trend of falling foreign investment into China, which has been slowing for a number of years.
Before 2000, foreign investment in China grew rapidly at an average annual rate of over 20%.
From 2000 to 2010, the growth began to slow to around 10%. In the last decade, it further slowed to single digits, with an average annual rate of less than 5%.
By 2023, foreign investment had started to decline.
2000年之前，中国外商投资规模以年均20%多的速度高速增长，2000年至2010年，外商投资规模的增速开始放缓到10%左右，最近10几年，外商投资规模开始继续放缓到个位数，年均增速不到5%。而直到2023年，外商投资开始负增长。[2]
Setting aside the geopolitical and economic trends, there is much discussion online discussions about IBM’s severance package, and a specific phrase is in news reports: “N+3” (pronounced "ēn jiā sān").
While the term comes from English, it's widely used in China to describe a severance compensation formula for layoffs. "N" refers to the number of years an employee has worked at the company, and “+3” means an additional three months’ salary on top of the standard severance. For instance, if an employee worked at IBM China for 10 years, an "N+3" package would give them 13 months’ worth of salary.
Rumor has it that IBM is offering "N+3" to its laid-off employees, a compensation package that has reportedly become standard among some multinationals in China in recent years.
However, according to interviews with laid-off staff, many feel this isn't enough, with some expecting severance packages as high as N+6.
So, what's going to happen next? That's what we're exploring this week!
🎧Podcast Preview: We learn much more about the words and phrases below, and explain the subtle and confusing differences between some of them, in this week’s Member Podcast at 7’ 50”!
Favourite Five
1. N+3 ēn jiā sān
compensation of N+3
根据网友透露，IBM的赔偿方案大概率是N+3 - According to netizens, IBM's compensation plan is likely to be N+3. [1]
2. 国产化 guó chǎn huà
localisation, produced by domestic brands
实现IT信息系统的国产化替代 - To replace foreign providers of IT systems with domestic ones. [2]
Note: 本土化 also means “localisation” but that is more in terms of how a company localises in a market; whereas 国产化 is more about how an entire industry localises and reduced reliance on foreign companies.
3. 断臂求生 duàn bì qiú shēng
taking a drastic approach
2023年，IBM便已经开始“断臂求生”，宣布裁减其全球约1.5%的员工，裁员数量约3900人 - In 2023, IBM began to take a drastic approach, announcing the layoff of about 1.5% of its global workforce, which amounts to around 3,900 employees. [3]
More: A modern variation of another idiom, "a hero cuts off his wrist to save himself" (壮士断腕), which we discuss in tomorrow's Sinica Phrase of the Week.
4. 靴子落地 xuē zi luò dì
the other shoe drops, the moment of truth
千人访问权限被收回后，另一只靴子的声音终于落地了 - As the permissions of thousands were revoked, the other shoe finally dropped. [1]
More: Originally from American English, which we learned last July when Ant Financial's fine was finally announced by the authorities.
5. 起了大早，赶了晚集 qǐ le dà zǎo, gǎn le wǎn jí
early to rise, late to arrive; a day late and a dollar short
一边创新又一边保守，导致IBM在很多事情上起了大早、赶了晚集 - IBM tried to innovate but on some matters still remained conservative, which means it failed to capitalise on the early innovation it made and lost out to others. [4]
Consuming the Conversation
Useful words
6. 瘦身 shòu shēn
downsize
美国科技公司在中国纷纷瘦身值得关注 - It's worth noting that many American tech companies are downsizing in China. [2]
7. 幸免 xìng miǎn
be spared
自己汇报的多位领导也未能从此次裁员中幸免 - Several of my supervisors were not spared from this round of layoffs. [3]
8. 决绝 jué jué
determined
曾经的蓝色巨人，为何如此决绝地裁员 - Why did the once-mighty Big Blue lay off its employees in such cold-blooded manner? [3]
More: We explain more about “Blue Giant” (蓝色巨人) in the Member Podcast. Sign up now to unlock and learn more!
9. 腰斩 yāo zhǎn
cut in half
2023年财报显示，营业收入为618.60亿美元，几乎腰斩 - The 2023 financial report shows that revenue was $61.86 billion, nearly halved. [3]
10. 萎缩 wěi suō
shrink
IBM大型机业务在国内市场占有率萎缩明显，危机在不断扩大 - IBM's mainframe business saw a significant decline in its market share in China, which shows that the crisis continued to worsen. [3]
11. 骤降 zhòu jiàng
plummet
主要合作客户开始偏向国产品牌，在国内收入骤降 - Major clients of IBM began favouring domestic brands, so its revenue in China plummeted. [4]
12. 没落 mò luò
decline
虽说企业没落是一件很正常的事 - Although it's quite normal for a company to decline. [4]
Related:
衰落 shuāi luò - decline, wane
13. 围剿 wéi jiǎo
encircle and annihilate, besiege
结果在微软、谷歌、亚马逊等一众大厂的围剿下，新产品还是反响平平 - Under the siege of major companies like Microsoft, Google, and Amazon, IBM's new product only received a lukewarm response. [4]
Three-character phrases
14. 一锅端 yì guō duān
wipe out, take out in one go
