Acer to axe 10% of its workforce in China

Source: Want China Times Lu Jun-yi/Chen Man-non and Staff Reporter

Acer plans to lay off nearly 100 employees, or 10 percent of its workforce in China, according to Chinese media reports.

The move comes more than six months after Acer merged with Chinese PC maker Founder, where most of the employment cuts will be made.

Acer confirmed the layoff plan on March 23, saying that the company is making the adjustment to avoid a waste of manpower caused by overlapping businesses.

Acer Chairman J.T. Wang said that he had consulted with 80 percent of the employees being laid off, adding that the move was to support the optimum use of the organization's resources and avoid waste.

Acer acquired Founder's PC-related business for 120 million Chinese yuan (US$18.27 million) to boost its presence in China in August last year. It also paid US$67.5 million for the right to use Founder's PC-related trademarks, intellectual property rights and other intangible assets for seven years.

Under the deal, nearly 700 Founder employees joined Acer China. If the original 200 Acer China employees are added, the total number of the company's employees in China, the total number of staff before the cuts numbered in the region of 1,000.

Most of the employees being laid off belong to the customer support, purchasing, logistics, planning and marketing departments.

Acer said that the company had devised a favorable severance package that would offer laid-off employees a severance pay higher than what! is lega lly required and give them support to find other jobs.

Sources familiar with the matter said that the employee cutbacks are aimed at increasing business efficiency.

Acer has been aggressively developing its Chinese market: it has set a goal of earning US$2.5 billion in annual revenue from China this year, up from last year's US$1.5 billion. If that goal is met, China would become the company's fastest-growing business market.

Acer CEO Gianfranco Lanci said that last year, the Chinese market accounted for merely 7 percent of Acer's overall revenue. He said that the company aimed to increase the Chinese market's share to 20 percent of total revenue by 2013.

According to American technology market research institute Gartner, after Acer's acquisition of Founder's PC-related business, Acer's market share in China in the fourth quarter of last year hit a record high of 8.6 percent, making it the second-largest PC supplier in the country. In addition, the market share of its mobile PCs and notebooks reached 10.2 percent.