February 3, 2023

Chinese vehicle manufacturer Evergrande Auto is now in the midst of wage arrears and layoffs after plans were revealed to cut 60% of workers at its Tianjin plant. On December 1, a number of showroom sales staff in many locations across the country stated to the Jiemian News that they were recently told to suspend work without pay.

According to the notice, due to recent serious difficulties in its operations, the company will “optimize” staff and suspend them for up to three months from December 1. The notice also showed that anyone who wants to work for another company during the suspension must submit a written resignation at least three working days in advance, otherwise it will be considered to be an automatic departure.

Although the notice did not specify how salary would be paid during the suspension period, some salespeople said they had been clearly told that all wage payments would be stopped, accumulation funds would not be paid, and only basic social security would be kept.

Sales staff at a Tianjin showroom said that those who have not yet been transferred to the regular employees have received a suspension notice, and a few days ago, three formal employees were notified to stop work. Two salesperson in Xi’an also obtained such notices. In contrast, the firm’s Beijing exhibition hall is in better condition. Only one member of the entire sales team has received a work stoppage notice due to failure to pass a performance assessment.

According to sources close to Evergrande Auto, the layoff proportion reached 10% or higher, and 25% of employees suspended work. Previously, Evergrande Auto’s personnel structure was for the synchronous research and development of 9 EV models, but now the company needs to concentrate resources to ensure the production and delivery of the Hengchi 5, 6 and 7.

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In addition, exhibition halls in most areas have stopped paying salaries for October and November. In some southern areas, salaries have not been paid since September, and reimbursement has also stopped.

A number of employees have started asking for compensation in internal group chats and Evergrande Auto’s Douyin livestreaming rooms. The company disbanded a large group chat of more than 400 employees.

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In Evergrande Auto’s reply, China’s Spring Festival seems to have become the deadline for payments. Team leaders in Beijing, Xi’an and other places have said that if the payment of wages can’t be finished before the Spring Festival, Evergrande Auto will fail.

According to a report by the real estate channel of iFeng Weekly, reliable sources close to Evergrande Auto disclosed that the company’s Guangzhou factory has been sold to a Chinese state-owned auto company in the city, and that all employees will be required to move to Tianjin by the end of December this year.

Evergrande’s drawn-out financial crisis is well known. In order to dispel user concerns about buying cars, Evergrande Auto introduced an innovative payment method whereby pre-sale deposits and final payments will all be delivered to a special account of local regulators in Tianjin. In the face of current large-scale work suspensions, there have been a number of consumers requesting to return the deposit.

Meanwhile, Hui Ka Yan, the founder of Evergrande Group, was rumored to have committed suicide by jumping off a building, with related news circulated widely on Chinese social media. At noon on December 2, Evergrande insiders denied the reports. One source said that on the morning of December 2, some Evergrande employees reported to Hui Ka Yan, and that at around 1 p.m., the billionaire sent a voice message about strengthening the resumption of work and production in a senior management WeChat group.

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