Going by the book: a sustainable alternative to precarious work in China

09 July 2018

Online platform Meituan-Dianping is making headlines again after seeking to raise more than US$4 billion in a Hong Kong initial public offering that will further its bid to dominate the food delivery market in China. While questions on the valuation of the food delivery market leader due to the lack of a proven revenue model have been raised in the mainstream media, Meituan’s exploitative employment practices have been largely ignored.

Beneath the veneer of incredibly cheap e-commerce convenience, China’s delivery workers are being pushed to the limit. However, those workers are now beginning to push back. There has been a surge in food delivery workers’ protests and strikes across the entire country this summer, with incidents recorded in Yunnan, Jiangsu, Shandong, Zhejiang, Chongqing, Shanghai, Guangdong, Jilin, Hunan, Guangxi and Shanxi, most of them involving Meituan workers.

The Chonqing Evening News listed many of the workers’ typical grievances including: being penalized for refusing to take orders that were virtually impossible to complete within the specified time assigned; that the pay-per-delivery had been reduced, together with the expected completion time, while penalties for delays had been increased.

Delivery workers in this platform-dominated gig economy are “individual contractors” with no employment relationship with the tech companies, instead they rely solely on commissions while bearing the increasing cost of fuel and all other expenses like phone and vehicle maintenance bills and the inevitable traffic fines for always trying to complete orders within impossibly short deadlines.

Due to these extreme labour conditions, delivery workers have a reputation for reckless driving and general disregard for traffic rules. They are often seen as the cause of sometimes fatal accidents and are regularly cited as a public hazard, and in the case of Shenzhen in March 2018, served as an excuse for traffic police to extend their remit into regulating labour relations, with no reported complaint from the local federation of trade unions.

The food delivery model of labour relations is being rolled out over much of the transport and logistics industry in China, with predictable results. There have been strikes by intercity van drivers protesting “despotic” unilateral policy changes by online platform Huolala, long haul truck drivers called for a national strike over stagnant pay, increased costs and obscure pricing policy by online platform Yunmanman; and drivers with leading online car-hailing platform Didi-Chuxing  went on strike in June over pay cuts and the general deterioration of working conditions.

China’s transport and logistics sector accounted for 20 percent of all the strikes and protests recorded on CLB’s Strike Map in June, while the the average proportion over the last two years has been around ten percent. There is one transport and logistics company however that has not appeared on the Strike Map in the last 18 months, and that is JD.com.

Sometimes described as China’s version of Amazon, JD.com has defied industry trends by making sure it signs “formal labour contracts with every staff, every security guard, every cleaner, every delivery worker,” as CEO Liu Qiangdong bluntly stated in a CCTV interview in February. Liu stressed that his company does not rely on agency work because it would be “shameful” to do so, and that some cost saving measures should simply not be taken.

Liu boasted that his company had paid its 157,831 full-time staff more than six billion yuan in social insurance contributions in 2017. It may seem strange that a major corporation should brag about simply complying with labour law but sadly such is the widespread and systematic nonpayment or underpayment of social insurance contributions in China, JD’s compliance is actually worthy of note, particularly at a time when China’s increasingly elderly workers need a pension they can rely on.

JD.com’s decision to bring the entire logistics operation in-house was of course a purely business choice made to enhance market perception of higher quality through direct management of every step of the customer experience. However, it is a choice that has benefited workers as well as shareholders and consumers.

Jeffrey Towson, an “expert on Chinese consumers and digital China,” wrote in a recent blog entry about his experience of “hanging out with JD delivery guys.” He noted that “JD.com employs its own delivery people and they are not paid per package delivered,” adding that while labour issues exist in every type of employment, the atmosphere and work environment he observed at JD.com made it “a really good model for delivery.”

JD.com’s growth may have been relatively slow by China’s tech company standards but its growth has been steady and it is now one of the two largest online retailers in China, posing a serious challenge to Alibaba’s T-mall.

It is clear from JD.com’s growth that “going by the book,” as Liu Qiangdong describes it; complying with labour law in China and providing employees with decent pay and benefits, is an effective business model in China’s ultra-competitive e-commerce market. The next step is for employers like Liu to not just provide their staff with decent work but ensure they have a say in their pay and working conditions through collective bargaining.

Clearly, there is an important role here for the trade union to play as well in ensuring that the rights of JD.com employees are protected as the company moves forward and the logistics industry in general adopts more automated delivery systems. All JD.com employees need a strong union presence to represent them so that they will not have to just rely on the patronage of one benevolent employer.

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