(ECNS)-- China's internet company LeEco was reported to cut 10 percent of its workforce amid speculations of a capital shortage, but a source within the company said the move aims to maintain operational strength.
Media reports on Tuesday claimed that LeEco was planning to lay off 10 percent of its employees by the year end by offering compensation based on serving years.
It's said that the job cut has already started in non-listed businesses.
Many have taken the move as a remedy for the cash-strapped company, which has been mired by previous overexpansion and cash burning.
However, a source within the company said that it's a regular mechanism to stimulate competition among staff members.
Beijing Times was told that the company had established the annual "last to quit" mechanism to cut about 8 to 10 percent of poorly performing workers every year.
But the rules were not strictly observed in previous years due to the fast pace of business expansion, said the source, who added that the policy would be seriously adopted this year.
Founded as an online video streaming business in 2004, LeEco has expanded to also include bicycles, smart TVs and electric cars over the past decade.
According to the latest media report, the company has announced a strategic partnership with U.S. telecoms giant AT&T on content and terminal cooperation.