The competition in today’s business world is pretty much about talents.
To attract, retain and motive high-caliber talents, China’s leading tech firms have all granted generous incentives for their employees, primarily in the form of stock options.
E-commerce giant Alibaba reported last week that its June quarter revenue was up 61 percent to 80.9 billion yuan from the previous year. But net profit slumped 41 percent to 8.7 billion yuan.
Part of the reason is a jump in non-cash expenses related to revaluation of stock options program in its fintech arm Ant Financial, following a fund-raising round this year that valued the unit at US$150 billion.
The group posted up to 16.4 billion yuan in stock options cost in the three months to June, setting a new quarterly record for Chinese firms on that front.
In another case, smartphone maker Xiaomi reported an operating loss of 7.6 billion yuan for the second quarter. That was a result of lavish employee awards, including 9.9 billion yuan worth of stock given to the founder Lei Jun. The company set a world record for largest stock option award to a company executive in a single quarter.
Other staff are also benefiting as the firm has long expanded its stock option program to middle-level and front employees.
It’s estimated that over 5,500 employees have unexecuted stock options, accounting for over one third of Xiaomi’s total of 14,500 full-time workers.
Firms such as Alibaba and Xiaomi are very generous to their employees, given that the tech industry is far more talent-intensive than traditional sectors, and they badly need employees who are creative and self-motivated.
Talking of another company, Gree Electric Appliances chooses to motivate its staff in a different way.
Led by the outspoken chairwoman Dong Mingzhu, Gree has vowed to hand out houses to thousands of employees.
Construction of the first batch of 3,000 such apartments started last weekend. Eligible employees can live in the apartments for free, and they will be granted ownership if they work until retirement.
This article appeared in the Hong Kong Economic Journal on Aug 27
Translation by Julie Zhu
– Contact us at [email protected]