One of China's biggest retailers is cutting executive pay to create a fund to help lower-level employees buy homes
- China's JD.com will cut the salaries of more than 2,000 senior leaders by up to 20%.
- The e-commerce titan will allocate $1.4 billion to help rank-and-file employees buy homes.
Chinese e-commerce titan JD.com said Tuesday that it will be slashing the salaries of more than 2,000 executives and senior managers by 10% to 20% to improve benefits for the rest of the company's staff, Reuters reported on Tuesday.
JD is expected to put aside 10 billion yuan, or $1.4 billion, toward a fund that will help its 540,000 employees, including those from recently acquired shipping firm Deppon Logistics, buy new homes, according an email signed by JD founder Richard Qiangdong Liu that was reviewed by Reuters.
The chairman — who is worth $11.2 billion, according to Forbes — will also donate 100 million yuan, or roughly $14 million, to an additional fund that will be distributed to the children of JD's employees should anything happen to their parents, per Reuters.
Eventually, JD will introduce medical insurance to its workers, including contractors that will become full-time employees, according to a report from Nikkei.
The benefits will focus on front-line staff, which includes delivery drivers and other workers in JD's supply chain, a company representative told Reuters.
While JD's revenue has started to rise again amid China's economic slump, Liu said in the email that executives will not see their pay bounce back to their original salaries until the firm financially recovers.
"I apologise to you all," he wrote. "If JD.com's performance returns to a high level of growth in the next two years the group will restore everyone's remuneration."
China's 'common prosperity' campaign is cracking down on tech billionaires to bolster the economy
Earlier this year, Liu announced he was donating $2.3 billion worth of shares to charity, Insider previously reported.
The billionaire's philanthropy is part of China's "common prosperity" campaign to close the income gap and bolster social equality in the country. The push reflects how the Chinese government is tightening its regulatory grip on the tech industry's richest people, Insider's Linette Lopez reported.
"We will protect lawful income, adjust excessive income, and prohibit illicit income," President Xi Jinping said during the Communist Party Congress in October.
He brought up the slogan "common prosperity" multiple times in his opening speech, Insider reported.
JD isn't the only Chinese company redistributing its wealth.
In 2021, public e-commerce firm Pinduoduo pledged to donate up to 10 billion yuan, or $1.5 billion, to China's farmers to improve their livelihoods and strengthen the country's agriculture sector, Bloomberg reported.
That same year, investment company Tencent Holdings promised to pour $15 billion into its social responsibility programs, doubling its initial pledge, per Bloomberg.
Some of China's wealthiest business leaders have also granted their wealth to social causes. ByteDance founder Zhang Yiming donated 500 million yuan, or $77.3 million, in June of 2021 to Fangmei Education Development Fund, named after Zhang's grandmothers in his hometown of southeastern Longyan city.
That same month, Wang Xing, the founder of Chinese food delivery giant Meituan, gifted $2.3 billion to his foundation that will support scientific research and educational institutions.
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