Oracle Lays Off 900 Employees in China in Plan to Shut R&D Centers

May 9, 2019 Updated: May 9, 2019

Oracle, the world’s largest database software and technology company, has begun laying off about 900 employees at its research and development (R&D) centers in China, according to a recently leaked internal company memo.

The layoffs is the latest bout of bad news amid China’s economic downturn, after former employees at some of China’s biggest tech companies complained of widespread layoffs earlier this year.

Chinese media who spoke to some newly unemployed Oracle staffers reported that the U.S. tech giant plans to close all of its five R&D centers in China and lay off all 1,600 employees working there.

Massive Layoffs

In the memo leaked on May 7, Oracle stated that the layoffs were part of adjustments to its global engineering team, as it seeks to supply more cloud services rather than old-fashioned software.

The first Oracle R&D facility was founded in the southern Chinese city of Shenzhen in 2002. Then it founded others in Beijing, Shanghai, Suzhou, and Nanjing.

Chinese media 21st Century Business Herald quoted several Oracle engineers who worked at the Beijing R&D Center. On May 7, the center held a town-hall meeting in the morning and announced the first round of layoffs.

“I had my one-on-one meeting at 9:55 a.m., and the severance package is N+6,” an anonymous Oracle Beijing employee told 21st Century Business Herald.

“N+6” means the number of service years in monthly salary plus six months. For example, a laid-off employee will receive 11-months’ salary as compensation if he has worked for five years.

“All the laid-off employees [in this round] have to sign the resignation contract before May 22, and leave the company before May 31,” another anonymous employee told 21st Century Business Herald.

The second Oracle employee said he was initially told by co-workers that his team would not get laid off, so he did not make any preparations in advance. He said it would be difficult find a new job within 20 days. Although he will get the N+6 severance package, he does not wish to take a break from work.

Chinese internet portal Sohu interviewed several Oracle employees and reported on May 8 that the company plans to lay off 900 of its China staff in May, about 500 of which work at the Beijing R&D center. In July, Oracle will close all five China R&D facilities and lay off the remaining 700 engineers.

Oracle will keep its sales and marketing, technical support, training, and other administrative teams in China.

According to Qi Chacha, a database of Chinese companies, the average monthly salary at Oracle China is 48,959 yuan ($7,218). According to figures published by the Beijing government, the average salary in Beijing in 2017 was 8,467 yuan ($1,248).

Chinese law stipulates that companies offer a minimum of “N+1” severance packages. Still, some of Oracle’s laid-off employees expressed online that they were not satisfied with their N+6 packages and protested in front of the Beijing company headquarters.

China Exodus

Oracle entered the China market in 1989, and founded its subsidiary Oracle China in 1991.

R&D costs in China have increased dramatically in recent years.

Since 2012, more and more foreign software developers have shrunk their R&D scales in China. Adobe closed its China R&D center in 2014. Then, CA Technologies closed its R&D center in 2017.

Caijing magazine, quoting an unnamed CEO from Oracle’s competitor company, said the company’s China staff were more or less dispensable.“Oracle develops products by using a globalization model, which means projects are co-developed by the teams in U.S., India, and China. The tasks that China team did can be transferred to Indian team,” he told Caijing.

Qin Peng, a U.S.-based economics commentator, noted that “a high tech company closing all of its China R&D centers at the same time is very unusual,” in a May 8 interview with the Chinese-language Epoch Times.

“I think it is related to the constantly exposed cases of the Chinese regime stealing technology from other countries and foreign companies, as well as Chinese cyber espionage cases,” Qin said. “Oracle may be worried that their newly developed products could end up in a Chinese competitor or the Chinese government’s hands.”

U.S. authorities have indicted several cases of Chinese economic espionage, most recently two Chinese men for allegedly stealing trade secrets from General Electric.