"Tomorrow I will propose to leave my job, and I ask all parties not to approve me, so as not to hinder me from having a good year." A few days ago, an IT employee of the WeChat department of Tencent's company issued this wayward resignation declaration after the company's internal work group denounced the overtime culture.
Image source: Network
"Fired company squid" is so rare among Internet workers that the above declaration once appeared on Weibo's hot search list. Especially in the past 2021, "being optimized" is the new normal for employees of Internet companies.
According to incomplete media statistics, there will be more than 35 Internet companies with large-scale layoffs in 2021, including ByteDance, Kuaishou, iQiyi, Baidu, etc. For example, almost the entire department of Baidu Games has been optimized, and the overall layoff ratio of iQiyi has reached 20-40%, the four major business units of Kuaishou have laid off employees, and the proportion of layoffs in individual departments has reached 30%. The layoffs of ByteDance continued from the middle of the year to the end of the year, and the education, commercialization, games, real estate, and investment lines have successively appeared "optimization" or "organizational decentralization".
The layoffs have been wave after wave, but they have not interrupted the pace of Internet companies expanding their leases. In the fourth quarter of 2021 alone, Tencent leased 107,000 square meters in the Asia Finance Tower in Beijing, and Meituan and ByteDance had a total leasing transaction area of nearly 200,000 square meters in major cities across the country.
According to JLL data, the leasing transaction area in Beijing in 2021 will be 3.5 million square meters, and the contribution ratio of technology companies will be 43%. The data provided by Colliers International also shows that Internet-based technology companies have supported half of the office market in major cities across the country, such as Beijing, Shanghai, Hangzhou and Chengdu.
Image source: Colliers International
While laying off employees and expanding rents, is the Internet industry shrinking or expanding? And who are those high-priced rented workstations left for?
01 Disappearing people at a workstation
"Either you are optimized yourself, or you have heard that your friends have been laid off, which is the current situation of Internet people." Li Meng (pseudonym), a former employee of ByteDance, told the author of 36Kr Future Real Estate that on the day of the company's layoffs, he was not eager to talk to HR about compensation, but was busy promoting the interview of another position by Byte. Li Meng said it was his most magical day last year.
In mid-2021, Li Meng joined ByteDance's online education business line. After the release of the double reduction policy in the education industry, his line tried to transform quality education. "The department leaders were confident at one point, but judging from the final result, they were abandoned as a whole."
Signs of "abandonment" have long been apparent. Around August, other lines of the department "disappeared" one after another, and two months later, the head of the department was dismissed. "The efficiency of layoffs in big factories is very fast. The day before, I was still in demand with other departments, and the next day I found that there was no such person on the flying book. Some people have taken compensation and left, and some people have successfully transferred their jobs."
The vacated workstations soon took in other colleagues in the "more profitable" business unit. Li Meng, who finally left byte, heard his colleagues say that the people in the "core departments" such as Douyin e-commerce and payment sat on the workstations that once belonged to them.
There are not a few young people like Li Meng who have suffered the "cold winter" of Internet layoffs. According to the "2021 Internet Industry Personnel Flow Survey Report" released by Zhaopin, 58.6% of the respondents of more than 10,000 enterprises said that their enterprises have laid off employees.
In fact, the "prelude" to layoffs is a massive expansion. Mi Yang, head of the research department of JLL North China, told 36Kr Future Real Estate that 2021 is a year of substantial expansion of the domestic Internet industry, especially the head of the big factory fully grasped the positive advantages after the epidemic, and the business, department and personnel growth rate is huge.
It can be seen from the annual report data that as of the third quarter of 2021, the number of alibaba's regular employees doubled year-on-year, with an increase of 120,000; Tencent's personnel scale expanded by more than 40,000 in the first half of 2021, an increase of 83% over the end of 2020.
Image source: JLL
According to data from JLL, the total number of new employees in the first half of 2021 reached nearly 400,000 in the 10 leading technology companies in China, an increase of 22% over the end of 2020, which is equivalent to about 4 million square meters of office space.
In order to seize the wind in the short term, Internet companies often invest heavily in incubating new businesses in order to quickly occupy the market, and large-scale recruitment is a form of expression.
Lu Ming, director of the North China Research Department of Colliers International, believes that when policies such as "double reduction" restrict the new business laid out by Internet companies, the situation of rapid adjustment and contraction of the front line and the layoff of personnel will occur, and the energy and cost will generally be concentrated on the core business.
"Most of the layoff reports are more about structural adjustments by business unit and business line segments, rather than group-level and holistic optimization." Miyang said most of the layoffs occurred in the marginal sector, not the core business line.
02 Internet companies support the "half of the country"
The trend of Beijing's office market in the past year exceeded the expectations of many people in the industry, which is also inseparable from the rapid expansion of Internet companies.
According to the data provided by Colliers International, the net absorption of the office market in Beijing in 2021 was nearly 1.14 million square meters, which is the best performance in history. As of December last year, the vacancy rate in Beijing's office market has dropped to 15.1%, an annual decline of 4.4 percentage points.
Lu Ming said that according to incomplete statistics, within the scope of the office market, Internet technology companies have approached 1.4 million square meters in the bulk lease transactions of more than 5,000 square meters (including new leases and lease expansions alone). Most of it comes from the expansion of the Internet's leading manufacturers. If you add leasing transactions of less than 5,000 square meters, it is conservatively estimated that the new office space in the industry this year will be between 1.6 million and 2 million square meters.
The more direct figure comes from the popularity of Beijing Industrial Park, which recorded more than 1.39 million square meters of market dematerialization in 2021, and the vacancy rate fell sharply by 7.6 percentage points to 14.1%. In the Shangdi and Beiqing Road sectors where Internet companies are concentrated, the net absorption is about 300,000 square meters.
Some Internet companies lease office branches Source: CRESA
According to the statistics of the top ten leasing transactions of beijing office buildings released by CRESA in 2021, tenants Tencent, Kuaishou, Meituan and Byte won the top five in the annual transaction area list, of which Byte won two projects.
According to the incomplete statistics of 36Kr Future Real Estate, in 2021, Kuaishou will rent 28,000 square meters of Capital Tianyue Xishan, 80,000 square meters of Wanjia Lighting Building, 18,000 square meters of Heying Center, and 90,000 square meters of Shangdiyuan Center; Meituan will rent 80,000 square meters of Dingcheng Times Building, ByteDance will rent 70,000 square meters of Fashion Vanke, 80,000 square meters of International Innovation and Financing Center, and Baidu leasing Ark Building of 19,000 square meters.
Tencent leased 30,000 square meters of Samsung Tower, which is adjacent to China Zun in the core area of the CBD last year, and won another 107,000 square meters of space in the Asia Finance Tower. There is news in the market that Tencent will also win the 32,000 square meters of Dinghao Building, a reconstruction project in the core area of Zhongguancun, but industry insiders told the author that the transaction is still uncertain.
People in the commercial real estate leasing agency industry said that the head Internet company has a large demand for leasing and has a sufficient budget, but when renting office buildings, it will also consider amortizing the cost-effectiveness ratio of individual employees. "Tencent won the Asia Finance Tower project at almost half price, and the rent of the building was more than 400 yuan / square meter in the past."
"The per capita office area of Internet companies is 7-8 square meters, which is much higher than that of financial and foreign companies." According to Lu Ming's observation, the high bargaining power of Internet companies provides strong demand support for the continuous de-industrialization of the market.
03 What will be the trend next year?
Will Internet companies slow down their expansion after the strengthening of supervision to prevent disorderly capital expansion and protect the basic labor rights and interests of employees?
In the third quarter conference call, Kuaishou and iQiyi respectively mentioned cost reduction and efficiency increase and open source cost reduction. Alibaba also said in the third quarterly report that speed in the new situation is no longer Alibaba's only goal.
For next year's market situation, Miyang expects the Internet giant to expand, but perhaps not as "vigorously" as in 2021. In the fourth quarter of last year, the leasing ratio of technology enterprises in major cities in the country reached 34%, higher than the overall level of the whole year, which Miyang believes means that technology enterprises have expectations for their future development and growth.
"Finding new tracks and new growth points is an inevitable move of the giants. It will also bring a lot of recruitment, investment of resources, and expansion of the business cycle. However, combined with relevant policies, we may see more prosperity brought by start-up companies in the future."
Lu Ming also holds this view, "As far as the demand side of the office market is concerned, Internet companies are still the main support. While continuing to pay attention to the top manufacturers, we will focus on more growth enterprises."
According to the data of the third quarterly report, Tencent's revenue was 142.368 billion yuan, an increase of 13% year-on-year, but the net profit under non-IFRS was 31.751 billion yuan, down 2% year-on-year. This is the first time in nearly 10 years that Tencent's net profit has declined year-on-year. Alibaba's third-quarter report also showed that adjusted net profit fell 39% year-on-year, and the performance fell short of expectations.
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