Good morning! Shen Lu here. I'll be hosting this week's and next week's Protocol | China newsletter while David Wertime is on vacation. David will be back in July.
Monday was the Dragon Boat Festival (端午节), a traditional Chinese holiday. In the past, fierce debates about the best filling for zongzi (glutinous rice with sweet or savory fillings, wrapped in bamboo or reed leaves) would occur on Chinese social media around this time. Yet this year, I noticed that arguments about withdrawing from the workforce, related to the now-censored topic "lie flat" (躺平), overtook mention of the traditional carb-y treats.
In this week's Protocol | China: China's burned-out tech workers are fighting back, Chinese Amazon sellers find lucrative exits and China progresses with digital yuan experiments.
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The Big Story
China's exhausted young tech workers are fighting back
Last week, both the Financial Times and Nikkei Asia published in-depth features on fed-up tech workers in China. Young employees are increasingly challenging harsh working conditions that include slavish hours, unreasonable performance-assessment programs and intrusive surveillance. Some have left "big factories" (leading tech companies) for "small factories" (upstarts), and others have fled the industry for good.
Behind China's tech boom and its breathtaking innovations over the past decade lies grindingly-hard labor. The toll of that work remained largely invisible until the past two years.
- A movement against the "996" work culture started in 2019.
- Pinduoduo saw several unexpected deaths of tech workers this year.
- Online debates about the industry's labor practices have intensified.
The tech industry epitomizes "involution." Protocol told you in March that "involution" (内卷) had become a universally recognized term in China, referring to a brutal form of business competition that stifles innovation.
- This has left many workers feeling like "small screws of a big machine."
- The younger generation of tech workers is increasingly pondering whether it's worth participating in the rat race. A product manager at Ant Group told the Financial Times that tech workers born after 1995 "want self-realization," and "are not as willing to suffer as we were."
Growing discontent voiced by those tech workers has pushed Big Tech to reassess management styles. Responding to the "immense" internal dispute of its infamous year-end evaluation program, Alibaba relaxed the scheme at the end of 2020, according to the Financial Times.
- Grueling work hours combined with intrusive software meant to enhance productivity and poor labor supervision have created a potential for abuse, pushing talent out of the industry, argued Nikkei Asia's Nikki Sun.
- One illustrative example: A former IT engineer at a gaming company quit his job after being overwhelmed by surveillance software on his computer and cameras on his floor, which were intended to push him to work longer and more efficiently.
The "lie-flat" movement (躺平主义) aims to counter "involution" and "996." Lying flat means keeping it Zen and dropping out of zero-sum competition, or even the workforce. But "lie-flat-ism" will likely not go far because of its potential to threaten productivity. The term has attracted censorship across social networks. And the Communist Party's Youth League has set the tone. On May 27, its official Weibo account claimed: "China's youngsters have never chosen to lie flat."
— Shen Lu
On Protocol | China
When China's small Amazon sellers meet Western aggregators, both win. Well-funded Amazon aggregators are buying up small, China-based, Amazon-optimized brands to bank on these sellers' supply chain and product design skills. These acquisitions give the Chinese sellers a lucrative way out of the business. Zeyi Yang looks into the growing Amazon aggregation business in China.
DiDi files to go public in the U.S. DiDi, China's car-hailing giant whose first IPO plan was conceived as early as 2016, finally filed its F-1 with the SEC last Thursday. DiDi has not disclosed its fundraising size, but according to The Wall Street Journal, the company's valuation could reach at least $70 billion after the IPO. Shen Lu and Zeyi Yang break down the company's business and financials.
No rainbows in China. Apple's App Store in China has removed 27 LGBTQ+-related apps, either to meet the demand of the Chinese government or preemptively avoid a ban, a report shows. Researchers say even though China is known for widespread censorship, it's surprising that the country bans more LGBTQ+-related apps on the App Store than countries that criminalize homosexuality. Shen Lu has more.
Join Protocol's Tomio Geron, Benjamin Pimentel and a panel of experts for a live virtual event where we'll explore what's next for financial education after the explosion of retail trading. June 22 at 9 a.m. PT/12 p.m. ET.
Big Brother Beijing
New Data Security Law passed. China's National People's Congress last Thursday passed a sweeping Data Security Law that grants the Chinese government enhanced authority to curtail tech companies and control data transfer to foreign countries. Under the new law, tech companies are not allowed to provide any data stored in China to foreign judicial and law enforcement authorities without government approval. This law introduces a new concept that was not in earlier drafts: "core state data," which will be subject to stricter oversight. Offenders will face a fine of up to $1.56 million or be forced to shut down.
Beijing is unimpressed with crypto's practical uses. Zhou Xiaochuan, former governor of the People's Bank of China, attended a high-level finance forum in Shanghai last Friday and gave a speech that directly mentioned cryptocurrency. According to Reuters, he said the government would only invest more resources into researching crypto's practical applications if this new invention could prove to be useful for the broader economy. Instead, crypto's transaction speed is too slow while it takes up too much processing capacity, Zhou said.
China Goes Global
Shein and Dr. Martens tangle in a lawsuit. Shein, the Chinese fast-fashion brand that has become a global sensation, was sued by Airwair International, the company that makes Dr. Martens boots, the Financial Times reported. The shoemaker accused Shein of having a "clear intent to sell counterfeits" and using real Dr. Martens shoes for marketing.
Boss Zhipin's parent company nearly doubles its value in IPO debut. Beijing-based Kanzhun, the company that owns China's leading job-recruitment app, Boss Zhipin, started trading on the Nasdaq Global Select Market last Friday. The Tencent-backed company's valuation almost doubled after raising $912 million in its IPO, according to Bloomberg, making it the biggest Chinese IPO in the U.S. since March. Boss Zhipin works a bit like a dating app, matching job applicants directly with recruiters, human resources staff and company executives.
One Company You Should Know
A16z is leading the #cidergang. Cider, a fast-fashion retailer, just raised $22 million in its series A round of funding, co-led by DST Global and Andreessen Horowitz. A16z also contributed to Cider's seed funding. Similar to Shein, Cider is popular with Gen Z shoppers. It has almost 2 million followers globally on its social media accounts, who use the hashtag "#cidergang" to show their allegiance to the brand and its products.
Straight From China's Web
Tencent makes headlines by … honoring weekends. Last week, Tencent was trending on Weibo because a leaked internal memo showed that one of Tencent's game studios had announced rules mandating that employees get off work at 6 p.m. every Wednesday and take weekends off, according to Shanghai-based publication The Paper. China's Big Tech is notorious for overworking tech workers; Tencent's policy is a step away from the grueling "996" schedule. But some Weibo users scorned the move: "Tencent's game studio is only honoring every worker's legal rights. How come this is framed as a gift handed by the capitalist?"
Douyin parts ways with the fandom economy. Following in the steps of Chinese streaming platform iQiyi, Douyin, the sensational short-video app, announced on Monday that it would put a stop to "fandom activities that have crossed the line." Douyin promised to take broad actions against abuses, spamming and other common activities seen in fandom groups, but the app didn't elaborate on what specific actions it would take.
On Our Radar
The first wage payouts in digital yuan. China is one step closer to a full rollout of its central bank digital currency: It debuted blockchain-enabled salary payments in digital yuan last weekend. According to Xinhua, this new digital yuan pilot was applied to pay salaries to workers on a spring afforestation project in Xiong'an. Engineering subcontractors made payments directly to the workers' digital wallets through a "blockchain payment platform" that stores their personal and salary information.
One More Thing
The making of the world's first Chinese digital font
Chinese writers often complain about the lack of variety in Chinese computer typefaces. A recent MIT Tech Review article that details the painstaking process of developing the world's first Chinese digital font may explain why: It's simply too time-consuming to digitize Chinese characters. More than 40 years ago, designers had to draw and edit tens of thousands of characters by hand to make it possible to type in Chinese. They spent years trying to style low-resolution bitmap Chinese characters. To ensure aesthetics, designers adjusted the bitmaps for each component in characters so slightly that it's almost imperceptible to the human eye. This is a reminder that we should not take for granted the intricate efforts that solved a vexing technology issue in the early 1980s.
Until next time — 再见 (zài jiàn).