Lao Gan Ma faces backlash over AI automation claims, company denies mass layoffs

Lao Gan Ma, one of country's best-known chili sauce brands, has come under public scrutiny after comments about its use of artificial intelligence in quality inspection were interpreted as evidence of large-scale job cuts.

The controversy began after Li Xin, executive vice-president and chief quality officer of the Guiyang-based company, spoke at the 2026 Guizhou provincial quality development conference recently about Lao Gan Ma's adoption of an AI-powered visual inspection system. Li said the technology had significantly reduced product defect rates and helped the company achieve a record-high revenue of 5.4 billion yuan in 2025.

According to a report by China Business Herald, Li said that before the AI system was introduced, more than 600 workers were involved in sorting chili peppers on the production line, compared to just 48 after the system was deployed.

The remarks were quickly amplified on social media, where headlines claiming that Lao Gan Ma laid off more than 500 workers after adopting AI sparked widespread criticism. Some consumers threatened to boycott the brand, with comments such as, "If you replace workers with AI, we'll get your products taken off the shelves".

Jason Yu, general manager of CTR Market Research, said the controversy reflects growing public concern about the human impact of AI.

"People are not rejecting technology — they are rejecting a mindset that calculates efficiency but ignores people," Yu said. "China's AI strategy has consistently emphasized balancing technological development with employment. Companies should explain not only how AI improves productivity, but also how workers are supported through the transition."

"For consumer brands, empathy is just as important as efficiency," Yu added. "Technology should enhance a brand's value, not weaken its human touch."

Lao Gan Ma denied the reports. A staff member from the company's human resources department told local media on Oct 26 that claims of mass layoffs were false. According to Phoenix News, the company confirmed it uses AI inspection technology, but said it had "never employed that many workers" on the production line.

However, public records have added to the debate.

Jimu News reported that data from Chinese corporate information platforms Tianyancha and Qichacha showed the number of employees covered by social insurance at Guiyang Nanming Laoganma Flavor Food Co declined from 2,912 in 2022 to 1,783 in 2023, before falling to 941 in 2024 and 740 in 2025.

However changes in insured headcount do not necessarily indicate layoffs, as retirements, staff turnover, outsourcing arrangements, or changes in the legal entity responsible for social insurance can also affect the figures.

Lao Gan Ma's business performance has remained resilient.

According to the 2025 Guizhou Top 100 Enterprises ranking, the company's revenue reached 5.26 billion yuan in 2022, 5.38 billion yuan in 2023, and 5.39 billion yuan in 2024.

wangzhuoqiong@chinadaily.com.cn