Say goodbye to the in-depth adjustment of high-growth Internet companies and return to rationality

　　In-depth adjustment of Internet giants returns to rationality

　　Our reporter Yuan Lu

　　After nearly 20 years of triumphant advancement, the fast-moving Internet is stepping on the brakes and slowing down and shifting gears: Tencent’s net profit is declining, and giants such as Ali and Byte have stalled. While large companies intensively adjusted their organizational structures, they are also squeezing out the rapid expansion. "Bubble".

But the depth adjustment does not mean entering winter.

Industry insiders believe that the return to rational development of Internet giants from blind expansion to shrinking business lines will become the main tone for the next period of time.

　　Internet giants bid farewell to high growth

　　Gone are the good days of Internet giants "making money while lying down".

The financial report shows that Tencent’s third-quarter revenue was 142.4 billion yuan, a year-on-year increase of 13%; net profit was 31.75 billion yuan, a year-on-year decline of 2%, which was Tencent’s first decline in net profit in 10 years.

　　Under regulatory requirements, in September this year, Tencent’s proportion of minors’ game turnover dropped to 1.1%, and the proportion of minor’s game duration dropped to 0.7%, both at historical lows.

As Tencent's "money printing machine", Tencent's mobile game business revenue in the third quarter increased by 9% year-on-year, and the growth rate has slowed for three consecutive quarters since the beginning of this year.

The growth rate of online advertising business also showed weakness, with revenue in the third quarter increasing by 5% year-on-year to 22.5 billion yuan.

　　In mid-November, Alibaba released the second fiscal quarter performance report for the 2022 fiscal year, showing that the second fiscal quarter revenue was 200.69 billion yuan, and the market was estimated to be 206.17 billion yuan.

It is worth noting that the revenue of "customer management" under Ali's "China Retail Business" segment increased by 3% year-on-year, compared with the 14% growth rate in the previous quarter.

Alibaba said that the main reason was the slowdown in the growth of the e-commerce market and the increase in participants.

　　The transcripts handed over by big manufacturers such as Baidu, JD.com, and ByteDance also reflect the end of the Internet’s overall high-growth era: Baidu’s third-quarter operating profit was 2.308 billion yuan, a year-on-year decrease of 63%; JD’s third-quarter net profit loss was 28.07 100 million yuan, from profit to loss; Bytedance's commercial products department disclosed that its domestic advertising revenue has stopped growing in the past six months, which is the first time this has happened since the commercialization started in 2013.

　　Big factory shrinks and adjusts "squeezing bubbles"

　　Behind the slowdown in growth, Internet companies are also intensively adjusting their organizational structures.

On December 6, Zhang Yong issued an internal letter announcing Ali’s latest round of organizational restructuring, and the establishment of a large section of "Chinese Digital Business" to be in charge of Ali veteran Dai Shan.

Jiang Fan, who was in charge of Taobao and Tmall, was transferred to be in charge of the "overseas digital business sector" and gave up the management power of the core business of e-commerce.

　　Similar inter-departmental business splitting and integration also appeared in the recent one-month organizational restructuring of JD.com, Xiaomi, and Meituan.

An insider close to Jingdong revealed to reporters that, recently, Jingxi, which focuses on the sinking market, has been directly upgraded from a business unit under the original retail group to a Jingxi business group, and the new person in charge directly reports to Liu Qiangdong himself.

Liu Qiangdong said internally that next year he will aim to win the sinking market and find new stable growth points.

　　Does this mean that the Internet has entered a new round of winter?

Pan Helin, Executive Dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, said: “The optimization of internal structure has become a foregone conclusion. Although there are pains, it can make the entire industry go far. From the perspective of the capital market, Internet companies are still relatively strong. Profitability. There is a world of difference between optimized layoffs and passive layoffs in business, so don’t worry too much.”

　　Rational development becomes the main tone of the future

　　The reporter noticed that all major Internet companies have recruited large-scale and high-paying recruits.

According to Alibaba Group, as of March 31, 2019, 2020 and 2021, the total number of full-time employees of Alibaba Group was 101,900, 117,600 and 251,400, respectively.

As of September 30, 2021, Tencent had a total of 107,300 employees, compared with 77,500 in the same period last year.

In June 2021, Meituan also announced plans to recruit 60,000 new employees during the year, expanding the total number of employees to the level of 100,000, but this number was only 46,000 before Meituan went public in 2018.

　　The direct impact of the surge in employees is the rising salary costs.

“When companies are expanding rapidly, they will always think of “grabbing” people as soon as possible to drive business growth. Often, “the carrots are fast and don’t wash the mud”. It neither considers the long-term labor costs, nor can it adequately evaluate employees.” Wen Wang Chao, the founder of Yuan Think Tank, said that as the overall development of the Internet has returned from enthusiasm to calmness, Internet companies have also begun to cut off certain business sectors to reduce costs and increase efficiency.

　　In Pan Helin's view, with the tightening of data information legislation and anti-monopoly regulations, Internet companies have abolished some business lines, but they are also adding new departments in terms of data security and sustainable development.

"As the Internet enters the mature stage of the industry, the previous profit model of traffic expansion is unsustainable. Returning to the main business and rational development has become the main tone of the industry's development."

　　“There are opinions that the Internet will enter the winter overnight, but this is actually an adjustment that the industry must make on the way to strengthen effective supervision in accordance with the law to prevent the brutal growth of capital. We must treat it objectively and have basic confidence.” Wang Chao said that the future of the Internet is big. The factory will no longer blindly keep the net profit at a high level, but pay more attention to the third distribution and common prosperity, and build a fairer business competition environment with SMEs.