HONG KONG—After years of rapid expansion in China, some Western companies are shedding jobs as the world's second-largest economy grows at its lowest rate in more than 20 years.
Hewlett-Packard Co. says it is laying off a small percentage of its workforce in China, which the company calls one of its most important markets.
Johnson & Johnson is cutting its pharmaceutical sales force by an undisclosed amount, people close to the company say.
Software-services provider Bsquare Corp. BSQR -1.21% is shutting its Beijing office, the Bellevue, Wash., company said in October, two months after telling analysts that "sales productivity was not up to our expectations."
Recruiting and consulting firms say they are feeling pinched by the pullbacks.
"We are kind of wringing our hands," says Rob Chipman, the chief executive of relocation firm Asian Tigers Mobility. "I'm concerned this is here to stay for not just a month or two, but a year or two." He attributes the slowdown to caution by Western companies and to efforts to groom Chinese talent.
ManpowerGroup Inc., one of the world's largest recruiting firms, says the positions it tracks at foreign companies in China are down 25% this year through October, a sharper drop than during the global financial crisis. The decline affects entry- through senior-level positions.
China still remains one of the top priorities for Western companies. Foreign direct investment into the country from the U.S. and the European Union was $9.4 billion in the first 10 months of this year, a 19% increase from a year earlier.
IMAX Corp., General Motors Co.GM -0.27% and Wal-Mart Stores Inc. are among the companies that have expansion plans for the country.
About half the American companies surveyed by the U.S.-China Business Council plan to commit more resources to China in the next year.
Still, that represents a drop from 67% in last year's survey. And foreign investment in fixed assets such as factories and facilities—a gauge of long-term commitment to China—has decelerated.
The Chinese government on Tuesday said that such foreign investment rose 4.7% during the first 11 months of the year, well below the 19.9% growth for overall fixed-asset investment.
A slowdown in China's economy and rising labor costs are the main reasons that foreign companies are paring back in China, according to a survey by the American Chamber of Commerce in Beijing.
International Business Machines Corp. is cutting an undisclosed number of jobs in China, according to its employees union, Alliance@IBM.
The information-technology company, which is reducing jobs globally, declined to comment on the cuts in China. But IBM told analysts in October that demand in China has slowed.
The rise of Chinese competitors and recent crackdowns by authorities on pricing, quality control and business practices of Western companies also have led some companies to rethink their expansion, analysts say.
Western companies such as France-based distiller Pernod Ricard SA and U.S. drug maker Eli Lilly LLY -1.50% & Co. cited China as a drag on growth in the latest quarter.
The American Chamber of Commerce in China said that 29% of companies surveyed said revenue was flat or declined last year, compared with 19% in 2011.
And 64% of European companies said they were profitable in China last year, down from 73% the year before, according to the European Union Chamber of Commerce.
Western business groups say they are encouraged that China's recently releasedeconomic blueprint will open more industries to the private sector and foreign companies.
But the changes won't be a "game changer" for hiring or investment, because they are likely to take several years to implement, says Frederic Neumann, co-head of Asian Economic Research at HSBC.
Chinese recruiting firm Zhaopin.com says the number of jobs listed by Western companies on its website has declined 5% this year even though overall job listings have increased about 30%.
"The aggressive expansion has stopped," says Zhaopin Chief Executive Evan Guo. "Despite the fact that China is still growing, they've become more cautious."
Executive-search firm Korn/Ferry International KFY +1.97% and consulting firm Aon Hewitt say the multinational corporations that are increasing job rolls in China this year are doing so more slowly than last.
For some companies, the China cutbacks are part of broader restructurings. Hewlett-Packard is eliminating as many as 33,000 positions globally by next October and says that some of the China employees that are cut could be moved into new roles.
And some plan further investment in the country, even as they make cuts in some China operations. Johnson & Johnson's Xian Janssen Pharmaceutical unit recently broke ground on a $200 million to $300 million manufacturing facility in the country.
—Richard Silk in Beijing contributed to this article.
Write to Kathy Chu at kathy.chu@wsj.com
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