Renren denies layoff rumors

Renren Inc, a leading Chinese operator of social networking services, on Monday denied rumors of layoffs at the firm, saying that it is merely adjusting its wireless business division.

"We are carrying out an internal adjustment, mainly at our wireless business, which means some employees have been asked to change their positions to other businesses, such as our Game Center or group-buying site Nuomi," Wang Yi, director of Renren's public relations, told the Global Times Monday, without providing the exact number of people impacted.

But Wang said that the decision was made to meet the company's push to develop mobile Internet services, and some employees were found unable to create sufficiently innovative products, which led to their being moved.

Internet rumor mills started churning over the weekend, claiming that Renren was conducting massive layoffs in its social networking, gaming and group-buying sections among others and affecting up to 75 percent of the 3G business employees at its wireless division.

Wang denied the claims and said an internal re-positioning of employees is not a layoff.

However, one insider familiar with the matter told the Global Times that it will be impossible for all the affected employees to accept the company's decision, because mobile application development is quite different from group-buying or gaming services.

Earlier this year, Renren launched an independent wireless business division, vowing to focus its efforts and resources on the development of its mobile business.

CEO Chen Yizhou announced that the company would do everything possible to produce a series of innovative products in the "revolutionary" mobile Internet sector.

"But after half a year of trying, Renren's mobile business has not developed along the ideal track, as evidenced by the fact that some apps launched by Renren are not that popular," Dong Xu, an Internet analyst from Beijing-based Internet consulting firm Analysys International, told the Global Times Monday.

Dong said the country's IT companies are still at the stage of fighting for market share in the mobile Internet sector, which requires a large amount of investment with small returns.

"Giants like Tencent Holdings have the continuous capital flows to support mobile business for years to come, while Renren has to consider making money as soon as it can to keep running its business, which makes the mobile business less appealing," said Dong.

According to Renren's financial report, its net loss last year reached $75 million, compared to a net income of $41.3 million in 2011. But gaming and group-buying services contributed nearly 87 percent of the New York-listed company's revenue.

Dong said that for the social networking business, major apps like Tencent's mobile social messaging app WeChat are already occupying most of the market. "It is difficult for other players to acquire big shares now, as the remaining market share is quite small."

Tencent disclosed in January that WeChat saw its users reach 300 million. In comparison, the China Internet Network Information Center said by the end of 2012 the total number of people accessing the Internet via mobile device surged by 18 percent to 420 million.