China Loses a Tech Generation as the Big Payoff Promise Fades

Terry Hu first sensed trouble at the Beijing gaming startup where he worked when his boss stopped showing up. Then the stockpile of freebies for users—gift cards, plush toys—ran out. The founder finally said funding had dried up for the company. Hu and about two-thirds of his colleagues were fired, he says. “He told us we were the best and brightest, that we might come back and work for the company someday,” Hu says, asking that the company’s name not be disclosed out of fear that it would worsen his career prospects. “It was a load of garbage.” It took him three months to land a job at an English-language center, outside the tech sector that once held so much appeal. “I’ve learned my lesson,” he says.

A generation of Chinese tech workers is confronting a new reality as the industry endures its worst slump since the 2008 financial crisis. China’s broader economic slowdown and the trade war with the U.S. have ended the boom that birthed heavyweights including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Startups in Greater China have raised $32.5 billion via venture capital deals so far in 2019, less than a third of last year’s $111.8 billion, data from research and consulting firm Preqin shows. Job losses are mounting, and hiring has slowed: Job postings in the internet and e-commerce sector dropped about 13% in the second quarter, according to recruitment platform Zhaopin. Entrepreneurs are less willing to form ventures, so the pace of startup creation has slowed.