Protocol | China

Chinese tech giants are forming unions. It’s not what you think.

These company-controlled organizations will promote the interests of the Party, not workers.

Delivery workers

Chinese unions are not funded by membership dues, but by a 2% payroll tax each company pays. Union members are almost excluded from union governance.

Photo: Yan Cong/Bloomberg via Getty Images

Grappling with intense regulatory crackdowns, a parade of Chinese tech heavyweights have done something that looks groundbreaking: They are establishing unions for their own workers, or at least considering forming internal labor rights organizations. But these unions are less than meets the eye; they're not the type that workers in the U.S. or elsewhere have strived to create, and observers say it's too early to get excited about them.

Workers' Daily, the official newspaper published by the All-China Federation of Trade Unions, reported last week that the Beijing-based ecommerce behemoth Inc. formed a groupwide union on Aug. 30. Local Beijing trade unions representative offered "special mutual aid security" packages for 10,000 "workers in new forms of employment" (新就业形态劳动者), meaning non-staff employees like gig workers and contractors. On Sept. 2, Workers' Daily reported that 12 leading Chinese "platform companies" in the businesses of car-hailing, food and package delivery and freight logistics released a joint letter calling on internet companies' unions to "play an effective role" and to protect the rights and interests of gig workers.

Car-hailing giant DiDi Chuxing has also reportedly formed a union. The Beijing-based company, which has come under heavy scrutiny over its data infrastructure since its U.S. IPO, had announced the formation of a union on its internal forum in late August, according to Bloomberg. Citing anonymous sources, Bloomberg reported that DiDi's part-time drivers are likely to join its union and that the food delivery behemoth Meituan — which is under antitrust investigation — is also considering setting one up.

These recent headline-grabbing announcements came as Beijing actively writes laws and enforces regulations aimed at curbing powerful tech giants. And those companies have had to respond to increasing demands from both government and the public for redistribution of wealth and power and adequate labor protection in the digital economy.

"[Tech companies'] motivations for establishing a union are simple," said Eli Friedman, a sociologist at Cornell University who studies labor, politics and society in China. "It is to stay in the good graces of the state and to demonstrate their willingness to go along with the 'common prosperity' agenda. In this sense, it very much parallels the charitable donations many companies have been recently making."

On Aug. 17, Party Chairman Xi Jinping yet again pushed for "common prosperity" at a finance and economic meeting, a vision of reducing economic inequality and reasserting Party socialist values, which he has repeatedly emphasized in 2021. The meeting called for "reasonable adjustment of excessive income" and encouraged high-income individuals and companies to "give more back to society." Shortly after the meeting, tech giants under intense regulatory scrutiny, including Alibaba, Tencent and Pinduoduo, pledged to pour significant amounts of money into their respective initiatives that promote social causes.

Unionization with Chinese characteristics

But unions in China are fundamentally different from labor rights organizations in most other countries. They are formally subordinate to the ACFTU, which is a pillar of the Chinese Communist Party and state power. While it represents workers' interest, it first and foremost promotes the Party's interest. And unions practically are under the control of company management. Chinese unions are not funded by membership dues, but by the 2% payroll tax each company pays, and union members are almost excluded from union governance, Friedman told Protocol. Lacking bargaining power, Chinese unions in practice are internal organizations that give out presents and organize events. They focus on alleviating problems when they arise, not communicating worker grievances.

"As one might expect, these unions rarely engage in meaningful collective bargaining, nor are they able to adequately defend the rights and interests of their members," Friedman said.

But in today's shifting regulatory environment, white-collar tech workers may see the benefits of even superficial union representation. In fact, workers at Alibaba are calling for it, according to Bloomberg. Chinese tech workers have been protesting against grueling work hours since 2018; earlier this summer, major Chinese tech companies including ByteDance ended their controversial overtime regimes. The changes arrived before the country's Supreme People's Court ruled last month in landmark cases that it's illegal for companies to subject employees to overtime policies known as "996."

"If the ACFTU set up a union in a company, theoretically it might not be in line with the interests of the company," said Mengyang Zhao, a Ph.D. candidate at the University of Pennsylvania who studies China's digital service industry. She added that while the union may not represent workers, they could potentially seek benefits for workers as part of the fraught relationship between the Chinese state and capital. "[The union] may simply be a tool for the government to crack down on tech companies. We will have to see what exactly workers get in the end."

Compared to the potential impact on white-collar tech workers, what's more uncertain is how unions might affect armies of gig workers at the bottom rung of the digital economy. Many delivery workers and part-time drivers aren't formally employed by tech giants, working instead for third-party contractors. Back in 2018, the ACFTU announced a massive campaign to recruit gig workers, to no avail.

The chorus of tech companies now forming unions are responding to new policy guidelines rolled out in July aimed at protecting gig workers' rights. Seven central government agencies again urged unions to recruit gig workers and called for tech companies and local governments to ensure labor rights for those non-staff workers, including allowing them to access social security benefits.

But labor researchers don't anticipate a big wave of reclassifications. Paying social security and benefits for gig workers is extremely costly. JD Logistics, the supply chain and logistics branch of Inc., is one of the few Chinese tech companies that formally employ delivery workers. But with labor costs comprising over 40% of its annual cost of revenue, the company has not turned a profit since its founding in 2007.

Without details about how unions are planning to engage gig workers, it's unclear how meaningful the new unions that tech companies are forming will be for gig workers. Massive employment formalization could seriously bleed into the bottom lines of those so-called platform companies. "It's potentially a good thing for gig workers, but it also has to depend on whether workers will push the unions to be representative and [the nature of] their labor relations with the company," said Aidan Chau, a researcher at China Labour Bulletin, a Hong Kong-based, non-governmental organization that supports worker movements in China.

The paradox of labor protection

Gig workers have also tried to organize themselves. But they've been stymied because Beijing does not tolerate grassroots collective action.

In 2019, a food delivery worker and activist named Chen Guojiang, better known as "Mengzhu," started organizing delivery workers via WeChat. He reached 14,000 workers through 16 WeChat groups, where fellow laborers helped one another with delivery logistics, shared safety tips and even offered legal advice. That year, Mengzhu was briefly detained after calling for a work stoppage to protest reduced delivery rates. In February, Mengzhu was detained again; he was charged with "picking quarrels and provoking trouble" and has not been released since.

The mutual-aid groups Mengzhu formed weren't traditional unions, in either the Chinese context or the Western context, but they seem to fall precisely in line with Xi's "common prosperity" agenda. Yet the state still sees individuals like him as a threat.

"This presents a real paradox because Beijing has been talking about improving workers' conditions and reducing inequality for about 20 years, with nothing to show for it," Friedman said. "The question is, can a top-down approach work while simultaneously excluding any actions on the part of workers and labor activists? The track record is not promising."

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