Only 48 of 600 Workers Remain... "I Won't Buy This Sauce": Boycott Calls Grow

Chinese Chili Sauce Brand Lao Gan Ma Swept Up in Mass Layoff Rumors
Rumor: "Staff Cut from 600 to 48 After AI Adoption"
Company Denies Layoffs... "AI Risks Fueling Public Anxiety"

China's "national chili sauce," Lao Gan Ma, has been swept up in rumors that it laid off hundreds of employees after adopting artificial intelligence (AI).

On October 28, Hong Kong's South China Morning Post (SCMP) reported that claims had spread on Chinese social media platform Weibo on October 26 that Lao Gan Ma, headquartered in Guizhou Province, had cut the number of workers sorting chilies from more than 600 to 48 after installing an AI quality inspection system.

Factory automation announcement turns into layoff rumors... Sales plunge

Lao Gan Ma, a Chinese chili sauce. Amazon product page.

The rumors began with the company's own account of its factory automation achievements. Li Xin, Lao Gan Ma's chief quality officer, said at the recently held 2026 Guizhou Province Quality Development Conference that the company had fully introduced an AI visual inspection system last year to automatically identify and remove defective chilies using cameras. The Guizhou Daily article that first reported the news did not mention the scale of any workforce reduction, but some media outlets later added unverified figures, turning the claims into rumors of mass layoffs.

Lao Gan Ma denied the mass layoff rumors. The company told Chinese media outlet Phoenix Net on October 26, "It is true that we use AI technology for quality inspections, but claims that there have been mass layoffs are false," adding, "We never employed that many people in the first place." SCMP reported that it had contacted Lao Gan Ma's headquarters several times for further comment but had received no response.

However, the company's statement denied only the scale of the alleged cuts and did not explain what happened to the chili-sorting workers. Shanghai Daily reported that "despite the company's denial, their employment status remains unclear." Phoenix Net cited a third-party claim that "some workers were transferred to the warehouse and packaging departments, a small number of skilled workers were assigned to final inspections, and many were seasonal workers whose contracts had ended."

Consumer backlash also affected sales. Some consumers vowed to boycott the brand, saying, "I won't buy products from a company that lays off people and replaces them with AI." According to Chinese portal Sina, data compiled by one data platform showed that Lao Gan Ma's daily sales on one e-commerce platform fell from 5,000-10,000 yuan (about 1 million-2.01 million won) to 1,000-5,000 yuan (about 200,000-1 million won) after October 22.

China, which had encouraged AI adoption, issues "cautious" guidance amid labor disputes

A photo of an AI-related conference in China, provided to help illustrate the article. Reuters-Yonhap News.

The brand's image also contributed to the backlash. For more than 30 years, Lao Gan Ma has been a chili sauce found on Chinese family tables. Its glass bottles feature a stern portrait of founder Tao Huabi. Tao was also a laid-off worker who built a chili sauce business after running a liangpi (cold rice noodle) stall. Shanghai Daily reported that "this background is closely tied to the brand's appeal among ordinary working people."

Kyle Chan, a research fellow at the John L. Thornton China Center at the Brookings Institution in the United States, told SCMP, "Lao Gan Ma is an iconic Chinese brand, yet it is far from the first company people think of when they think about AI." He added, "While official messages from the Chinese government tend to emphasize AI's positive effects, companies adopting AI risk fueling growing public anxiety."

The Chinese government has indeed encouraged the adoption of AI. An "AI Plus" action plan announced last year set targets for the adoption rate of next-generation intelligent devices and AI agents to reach more than 70% by 2027 and more than 90% by 2030. However, after labor disputes over AI-related layoffs arose one after another this year, the government began urging caution. Last week, Chinese authorities issued guidance advising companies in labor-intensive industries to carefully determine the pace and scale of AI adoption. The guidance calls on companies to notify employees in advance before introducing large-scale AI systems and to support retraining and internal job transfers.

Chan said, "There is a need to strengthen safeguards, such as providing alternative jobs to employees whose work is eliminated by AI or maintaining their employment for a certain period after new systems are introduced." An industry official in Beijing's AI sector predicted, "Conflict between companies rushing to adopt AI to improve productivity and workers worried about losing their jobs is bound to continue surfacing."

This content was produced with the assistance of AI translation services.