Executives at Chinese telecoms kit maker ZTE have agreed to take a whopping 50 per cent pay cut until the beleaguered firm claws its way back into the black.
The Shenzhen-based tech giant, which is the world’s fifth largest smartphone maker by shipments, earlier this week predicted a 260 per cent, or 1.75bn yuan (£174m), drop in profits for the first three quarters compared to 2011.
The firm blamed the sluggish global economy, lower-margin contracts in regions such as Europe and Africa.
ZTE has also agreed to wind down its business in Iran, after media reports it sold surveillance technology to state-run Telecommunication Co. of Iran (TCI) and broke Washington sanctions by selling the telco US-made products on a 900-page ‘packing list’.
True to its word, ZTE recently announced plans to sell off ZTEsec, a subsidiary dealing in surveillance equipment, although US investigators are still probing whether it broke the strict sanctions in place with Iran.
A ZTE spokesman confirmed to The Reg that the 50 per cent pay cut will apply to the “top executives” as announced to local media by president Shi Lirong, although exactly how many employees this will apply to remains unclear.
The firm has already backed down on plans to cut the pay of senior execs and ex-pat Chinese employees at ZTE India by up to 20 per cent, according to the Economic Times.
The proposed cuts, suggested back in August, were apparently only to take effect with full consent of all those involved.
“A majority of the ZTE India employees who would have been impacted by the August 20 board decisions have not given their consent to the proposed salary reductions since the company has not even paid performance bonus this year,” an exec told the paper.
As for how long the “top executives” will have to work for half their normal salary, it may take some time for the firm to return to profitability.
Although ZTE was recently awarded a lucrative contract to provide 20,000 4G base stations for China Mobile, the global economy is showing few signs of springing into life and its chances of flogging kit to the US suffered a big blow after the House of Representatives committee report labelled it and Huawei a national security risk. ®