With wage arrears and layoffs, is Zhidou going to be in trouble?

According to online reports, more than 80 employees of Zhidou Zhixin have not received their wages for three months. In early August, they were notified that their Beijing office would be closed. Employees were required to either report to the headquarters in Ninghai, Zhejiang, or resign voluntarily. Only employees who voluntarily resigned could receive the three months' unpaid wages, and the company would not provide any additional compensation.

Public information shows that Zhidou Zhixin was registered on December 29, 2014. It is a wholly-owned subsidiary of Zhidou Electric Vehicle Co., Ltd., a new energy vehicle company. It is mainly responsible for Zhidou's research and development work in technical fields such as vehicle networking.

Zhidou’s wage arrears are not unique to this case. They also exist in other factories outside the province. Employees at Zhidou Automobile’s Ningbo and Lanzhou production bases have also been asking for wages. Employees at Zhidou Automobile’s Ningbo base said they had not received wages for four months. At the same time, the factory had a large-scale layoff without compensation. Employees at Zhidou Automobile’s Lanzhou base also said in a message that the company was in arrears with wages.

Sales data show that Zhidou Auto sold 25,300 vehicles in 2015, about 24,000 vehicles in 2016, and 43,000 vehicles in 2017. Even though sales have maintained an upward trend, Zhidou Auto is still in a loss-making state.

In 2017, Bao Wenguang, then president of Zhidou Automobile, revealed in an interview with the media that Zhidou had been making losses for 12 consecutive years since its establishment, and the company could only reach the break-even point when its annual sales volume reached 50,000 to 60,000 vehicles.

This year, Zhidou Automobile's problems have exploded. With BAIC New Energy, Chery, SAIC-GM-Wuling, BYD and others launching micro and small pure electric vehicles, Zhidou's market space has been continuously compressed. The latest data from the China Passenger Car Association shows that Zhidou Automobile's cumulative sales from January to July 2018 were 13,100 units, a year-on-year decline of 42%. Among them, sales in July were only 345 units, a year-on-year decline of 91%.

Zhidou focuses on the mini-car market, which was affected by the sharp decline in new energy subsidies in 2018. In addition, the entire society is currently in a state of consumption upgrading, and the prospects of the mini-car market in the fields of travel and private consumption are not optimistic, and it faces the pressure of transformation in the future.

It is reported that Geely Auto or Geely Holding is likely to increase its investment in Zhidou Auto again, become the major shareholder of Zhidou Auto, and incorporate Zhidou Auto into the Geely system.

According to internal employees, Zhidou is currently negotiating the details of "remarriage" with Geely, and the condition given by Geely is to cut costs and lay off thousands of people.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.