Announces Increase of Employee Pay Amid Economic Uncertainty

In an unexpected move by the Chinese e-commerce conglomerate JD.com, the Beijing-based company announced that salaries are being increased for employees by an average of 14 percent. The company has over 370,000 employees. And the news by the company was announced as many of its rivals are struggling with continued regulatory scrutiny. The 14 percent increase will take place over the next two years, according to the recent information published on social media WeChat.

It also comes after the company has already added 100,000 employees before the end of last year. While the news came to a shock by everyone, two unknown sources stated that the notification is still forthcoming and has not reached their department, according to the South China Morning Post.

Effects of COVID-19 Dominance

The move by the company has a striking resemblance of morale-boosting for its employees. And it has attracted an enormous amount of attention on Chinese social media, mainly because broad-based pay raises have been rare in a highly competitive e-commerce sector. According to the latest statistics, confirmed by China’s National Bureau of Statistics, the average wage remained at 4.3 percent in 2020 while growth for the company increased to 12.4 percent within the first quarter of 2021. That is partly due to the relatively marginal base at the height of the coronavirus hitting the region.

China was ground-zero for COVID-19, and the effects of the virus haven’t been determined yet on its economy. Still, the bold move by the company comes when other companies are seeking ways to recover economically.

Rebounding and Moving Forward

Nearly two years ago, founder and CEO Richard Liu Qiangdong stated base salaries for company delivery drivers would only be determined by how many deliveries received execution and completion. Base salaries did not move forward, and the company replaced them with the new incentive-based pay system. That is in contrast to the recent move made by the company. The decision came when Qiangdong became detained in the United States for allegations of an unwanted sexual encounter, which has since received dismissal by Michigan authorities.

However, the impact of the allegations has remained and has continued to affect business practices by JD.com. The company has made strides towards a comeback, even during the pandemic, and reported double-digit sales growth. While customers flocked to online retail websites during the pandemic to buy things in bulk, such as groceries and essential items, net revenue for the company rose 39 percent, resulting in 203.2 billion yuan. In U.S. dollars, that is 31.57 billion. By March 2021, net income rose to 3.6 billion yuan. That was an increase from 1.1 billion the previous year.

Doing the Right Thing

According to a public letter written by Qiangdong, addressed to investors, the pay increase is the right thing to do and in the right way. The CEO pointed out that the achievements of the company are the result of its employees. The letter further stated the responsibility of the company is to ensure there is a culture based on a foundation of contentment and happiness for its nearly half-million employees.

Qiangdong believes that the achievements of the company depend on its teams and employees. Therefore, the company is adhering to basic business logic. According to Qiangdong, only when the company is good to the employees can the employees serve customers with sincerity, and the customers can trust the company. JD.com has been relatively unaffected by the crackdown on the Big Tech industry throughout Hong Kong, and that was even before the news of the pay increase.

The growth of China’s export grew about 32.2 percent last month over last year, and that’s an increase above the 27.9 percent growth in May. And according to some China economists, headline trade growth continues to grow at a steady pace. And the outcome is far beyond expectancy. There is a consensus that it is the result of easing shortages of semiconductors. With exports remaining below peak recently, predictions are that shipments will soften with future quarters.

Leave a Reply

Your email address will not be published. Required fields are marked *