Seek has significantly reduced the valuation of its investment in Zhaopin, a Chinese jobs platform, by over $350 million. The write-down reflects the impact of sluggish economic growth and intensifying competition within China’s employment market. Seek, an Australian company and the nation’s largest employment portal, first invested in Zhaopin in 2006, acquiring a 25 per cent stake for approximately $27 million.
As of June last year, Seek valued its Zhaopin investment at around $529 million. However, a recent review has led to a substantial revision, with the investment now valued at $182 million. In addition to broader economic challenges, Zhaopin has been working to streamline its complex ownership structure. Seek’s stake in Zhaopin will increase to 30 per cent as a result of cancelling debts.
According to Seek, the write-off is a direct consequence of “current market conditions and Zhaopin’s earnings outlook.” The company cited persistent macroeconomic weakness in China and heightened competitive pressures as factors weighing on Zhaopin’s performance. China’s economy has faced headwinds since the pandemic, with a heavily indebted property sector straining the construction industry. Despite efforts by Chinese authorities to stimulate the economy, these measures have had limited success.
While official data indicated a weakening Chinese labour market last year, the Capital Economics’ China Labor Market Indicator showed improvement towards the end of 2023, reaching a 16-month high in November. Seek is scheduled to release its first-half financial results on February 17.
