Renren Inc, a
leading Chinese operator of social
networking services, on Monday denied
rumors of layoffs at the firm,
saying that it is merely adjusting
its wireless business
division.
"We are carrying out
an internal adjustment, mainly at our
wireless business, which means some
employees have been asked to change
their positions to other businesses,
such as our Game Center or
group-buying site Nuomi," Wang Yi,
director of Renren's public relations,
told the Global Times Monday, without
providing the exact number of people
impacted.
But Wang said that
the decision was made to meet
the company's push to develop
mobile Internet services, and some
employees were found unable to create
sufficiently innovative products, which led
to their being moved.
Internet
rumor mills started churning over the
weekend, claiming that Renren was
conducting massive layoffs in its
social networking, gaming and group-buying
sections among others and affecting up
to 75 percent of the 3G business
employees at its wireless
division.
Wang denied the
claims and said an internal
re-positioning of employees is not a
layoff.
However, one insider
familiar with the matter told the
Global Times that it will be
impossible for all the affected
employees to accept the company's
decision, because mobile application
development is quite different from
group-buying or gaming
services.
Earlier this year,
Renren launched an independent wireless
business division, vowing to focus its
efforts and resources on the
development of its mobile
business.
CEO Chen Yizhou
announced that the company would do
everything possible to produce a
series of innovative products in the
"revolutionary" mobile Internet
sector.
"But after half a
year of trying, Renren's mobile
business has not developed along the
ideal track, as evidenced by the
fact that some apps launched by
Renren are not that popular," Dong
Xu, an Internet analyst from
Beijing-based Internet consulting firm
Analysys International, told the Global
Times Monday.
Dong said the
country's IT companies are still
at the stage of fighting for
market share in the mobile Internet
sector, which requires a large amount
of investment with small
returns.
"Giants like Tencent
Holdings have the continuous capital
flows to support mobile business for
years to come, while Renren has
to consider making money as soon
as it can to keep running its
business, which makes the mobile
business less appealing," said
Dong.
According to Renren's
financial report, its net loss last
year reached $75 million, compared to
a net income of $41.3 million in 2011.
But gaming and group-buying services
contributed nearly 87 percent of the
New York-listed company's
revenue.
Dong said that for
the social networking business, major
apps like Tencent's mobile social
messaging app WeChat are already
occupying most of the market. "It
is difficult for other players to
acquire big shares now, as the
remaining market share is quite
small."
Tencent disclosed in
January that WeChat saw its users
reach 300 million. In comparison, the
China Internet Network Information Center
said by the end of 2012 the
total number of people accessing the
Internet via mobile device surged by
18 percent to 420 million.
