(Yicai Global) March 22 -- Chinese e-commerce giant JD.Com’s community group-buying platform Jingxi, launched in 2019 to compete with Pinduoduo, reportedly plans to lay off up to 15 percent of its workforce.

Jingxi will let go from 10 percent to 15 percent of its staff to focus on building supply chain capacity in lower-tier markets, Sina Tech reported yesterday, citing an insider at the parent company. The cuts will fall mainly in its Jingxi Pinpin business, and some workers will be moved to other businesses, the report said.

Jingxi Pinpin, a platform under Jingxi, has expanded to 80 cities across China since it started in January last year, but gradually withdrew from the provinces of Fujian, Gansu, Guizhou, and Jilin in the second half of 2021 because of intense competition.

Revenue at JD.Com’s new businesses, such as Jingxi, jumped 48 percent to CNY26 billion last year, according to the Beijing-based parent company’s earnings report released on March 10. JD.Com’s total income was CNY951.6 billion (USD150 billion) in the 12 months, up 27.6 percent.

Although Jingxi continued to lose money, it brought about 70 million new users to JD.Com in lower-tier cities, making up about 70 percent of the firm’s new users last year.

“We believe this is a sector that requires a long-term commitment over the next five to 10 years in order to build up supply chain infrastructure and gain consumer mind share,” JD.Com President Xu Lei said on the firm’s earnings conference call, adding that the “inflated scale expansion driven by short-term marketing expenses are not sustainable.”

He also said that the “traffic-driven growth model driven by subsidies” of China’s internet sector “is being replaced by the use of quality and operating efficiency-oriented model.”

JD.Com had a net loss of CNY3.6 billion (USD565.6 million) in 2021, versus a net profit of CNY49.4 billion (USD7.8 billion) the year before.

Editor: Futura Costaglione