February 11, 2020 / 2:58 AM / 13 days ago

Chinese media firm cuts 500 workers in bid to survive coronavirus

SHANGHAI, Feb 11 (Reuters) - Chinese firm Xinchao Media has laid off 500 people, or just over 10% of its workforce, saying it needed to resort to such measures to survive the impact of the coronavirus outbreak.

The move comes even as Chinese President Xi Jinping said the government would prevent large-scale layoffs due to the virus outbreak, which has already killed more than a 1,000 people in mainland China and infected over 40,000.

Many companies are hurting from business disruptions after local governments ordered an extension to Lunar New Year holidays and urged would-be customers to stay home to prevent the virus from spreading.

Xinchao Media, which places advertisements in elevators, announced its job cuts in a post on its official WeChat account on Monday, which carried the transcript of an internal speech given by its chief executive, Zhang Jixue.

He said the company still had nearly 1 billion yuan ($143 million) in its coffers, but forecast that it would likely only be able to tide over for 6-7 months if they had no income.

“I brought in a team to defeat the SARS outbreak (Severe Acute Respiratory Syndrome) in 2003, and overcome the 2008 (Sichuan) earthquake but I’m afraid of losing to 2020’s new coronavirus, because the streets are deserted and thus there are no consumers,” he said, referring to two other national crises faced by China in the past.

“To overcome the epidemic, you have to step on the brakes, jam the cash flow, reduce costs, to ensure survival ... China’s bosses, they have at this time become a helpless and disadvantaged group. While usually strong, they also hope they can gain understanding and care.”

He said the company would be left with around 4,000 employees, adding that about half of the workers being laid off were being asked to leave also because of poor performance.

The senior management will take a 20% pay cut over the period, forgo performance bonuses, and have pledged to keep their monthly living expenses below 50,000 yuan, the CEO added. ($1 = 6.9800 Chinese yuan) (Reporting by Brenda Goh; Editing by Himani Sarkar)

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