Rumours are circulating that Chinese OTA Mafengwo may be laying off 40% of its employees following several scandals involving the company.
China’s online travel market was worth USD 44.7 billion in 2018, the world’s second-biggest after the US. Tencent-backed Mafengwo once sits on top known for its user-generated reviews and other travel-based content. Mafengwo raised USD 503 million in five financing rounds, according to start-up database Crunchbase.
The company’s image was tarnished by numerous scandals. In October 2018, Mafengwo was accused of faking 85% of all user-generated content. In March 2019, the company was summoned authorities in March for failing to comply with content regulations. Another blow hit Mafengwo in August 2019, the firm was accused of allowing sellers to fake orders and post fictional reviews to drive traffic.
Due to its battered reputation, Mafengwo is losing out to larger rivals like Alibaba’s Fliggy and Ctrip for its travel booking services.
This triggered the company to fire around 40% of its employees, said a verified Mafengwo employee in a Maimai post. The cuts will affect departments throughout the company, the person said, but the deal-making division will suffer the most. The fired employees will be compensated based on the “N+2” model, meaning monthly salary equivalent to the number of years at the company plus two additional months.
Another Maimai user who identified himself as a Mafengwo employee confirmed the layoffs on Wednesday, with a number of other users who said they were employees confirming the job cuts in comments below his post.
The company in May received a USD 250 million investment led by Chinese tech giant Tencent with participation from a consortium consisting of General Atlantic, Qiming Ventures, and others.