Tencent says layoff rumor is unfounded

China's largest Internet company by revenue denied a rumor Sunday that it would cut 20 percent of its employees next year to meet the challenge of waning business.

"We currently have no layoff plan," Zhang Jun, spokesman of Tencent Holdings Ltd, told the Global Times Sunday, refuting a rumor that had spread online Saturday night saying the company would cut one fifth of its employees next year as a result of a slowdown in growth.

Rumors began circulating when Weijian, a Weibo user who claimed to be CEO of a Shenzhen-based Internet company, said on his Sina Weibo account that Ma Huateng, CEO of Tencent, has already talked other senior managerial staff into a layoff plan and aims to cut a total of around a thousand employees outside the company's WeChat sector, according to news portal itxinwen.com.

Tencent's growth would drop to some 20 percent for this year from 40 percent growth year-on-year in 2011, Weijian claimed.

This is not the first rumor Tencent has refuted this year. In April, Wu Jun, vice president of the company, denied speculation about staff cuts at its six-year-old search engine Soso.

Tencent, the largest provider of instant messaging and online games in China, is experiencing slowed growth, recording 45 percent year-on-year revenue growth in 2011, down from 57.9 percent in 2010, according to its financial reports.

However, some industry observers said Tencent's slowdown is normal against the backdrop of the Internet sector's overall slackness.

"Tencent has reacted quickly to market demand by investing heavily in mobile Internet service WeChat, as well as in e-commerce," Li Chengdong, an analyst at Beijing-based e-commerce industry portal pai-dai.com, told the Global Times Sunday, noting that though Tencent is still searching for a profit mode for WeChat, the service will prove to be a new engine for its growth.

Tencent launched its mobile-based Internet product WeChat in January 2011, and reported it had 200 million registered users by September.