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Motorola staff facing layoffs

By Wang Xing (China Daily)
Updated: 2008-11-04 10:41

Telecommunications company Motorola Inc yesterday said it will cut the number of its employees in China as part of a global layoff plan amid financial turbulence.

The company is currently under an internal evaluation of its Chinese operations, which is aimed at reducing costs and streamlining its products, Chen Lei, spokesman for Motorola China, told China Daily. Details of the layoff may be disclosed in the next few months, he said.

Motorola last week announced a plan to cut 3,000 workers worldwide, with nearly 2,000 from its handset division. The announcement came after the firm disclosed a disappointing third quarter result, in which net losses amounted to $397 million, compared with a profit of $60 million one year ago.

Chen said Motorola's arm in China will get more resources from its headquarters in the United States after a planned restructuring is completed. He said China's strategic position in the company will be intensified.

Foiled by its inability to extend the success of its Razr mobile phone, Motorola's share in the global handset market shrank to 8.4 percent in the third quarter of this year, down from 9.5 percent in the second quarter and 22.4 percent in 2006, according to research firm Strategy Analytics.

The company has also been struggling in the country from fierce competition by market leader Nokia, as well as the rising number of domestic venders and hundreds of pirated handset makers. According to research firm GFK China, Motorola's market share in China dropped from nearly 20 percent in 2006 to less than 10 percent this year.

Such sluggish performance was said to have led to the unexpected resignation of Ren Weiguang, head of Motorola's mobile business in China, at the end of last month.

Earlier this year, Motorola announced its decision to spin off its mobile division to turn around its handset business. But the reduced growth rate of global handset shipments in the third quarter, driven by the financial crisis, has clouded the company's revival plan.

Pang Jun, analyst from GFK China, said the long-term effects of Motorola's layoff plan are still unclear, but the move will at least help the company stem its bleeding in the short term. "The financial crisis will have a significant impact on all the mobile phone makers," he said.

Pang said the growth of the mobile phone market in China, the world's largest handset market, may drop to 15 percent this year, down from 30 percent last year. "The growth rate might be even lower in 2009," he added.