Popular Chinese beverage chain HeyTea has denied a report by Sina Finance on Wednesday that it has been carrying out major internal layoffs, claiming that its adjustment of a small number of employees is part of its normal business operations. In addition, the firm asserts that year-end awards for its employees were distributed as usual before the Spring Festival holiday, according to their individual merit.
Employees hold differing opinions regarding the reasons underpinning this round of layoffs. A common view is that they are due to HeyTea having shown a poor performance in recent years, with a negative growth in net profit. Some insiders close to senior executives of HeyTea assess that the layoffs may be to prepare for financial data reporting before listing publicly.
Sina Finance managed to confirm some details regarding the layoffs with many HeyTea employees. Internal layoffs have been occurring before and after the Spring Festival, accounting for 30% of employees overall. Some employees either didn’t receive their year-end awards or were told that the awards would be delayed.
HeyTea’s information security department was cut, while the store development department was laid off at a rate of 50%. According to internal analysis, the development of HeyTea has reached a bottleneck stage, and the store department is no longer important.
The laid-off employees will receive compensation, and they may also choose to transfer to other departments within HeyTea, such as by shifting from technical posts to business posts.
The firm’s annual meeting became the last straw overwhelming the hopes of many employees. During the meeting, attendees did not share their typical meal together and were forced to stay until midnight. The comment area for the annual meeting’s livestream was covered with messages concerning salary increases and year-end awards. HeyTea’s founder Neo Nie publicly attacked the drawbacks of its competitors, which was regarded by employees as exhibiting a “lack of perspective on the overall situation.”
In fact, like many young companies in the consumption field, HeyTea has also been exposed by employees to problems such as chaotic internal management, obvious management contradictions and having an unclear system.
“The layoffs are partly due to an internal political struggle. Senior executives have rarely stayed at the company for two years. The gangs between executives are very obvious,” one former HeyTea employee said.
There are also some employees who have left voluntarily under pressure. In 2021, several food safety problems broke out in HeyTea. In June, five batches of HeyTea products were found to have exceeded the standard of flora. In September, its employees’ mistake caused major health problems for customers. After this string of incidents, the hygiene inspection within HeyTea became more and more strict.
According to a report released by the China Chain Store & Franchise Association, the growth rate of the country’s new-style beverage market was 26.1% in 2020, then dropped to about 19% in 2021.