Photo: Yan Cong/Bloomberg via Getty Images
October 6, 2021
Good morning. Top U.S. trade official Katherine Tai said in a Monday speech that following a monthslong review of Trump's trade policy toward China, the Biden administration would keep U.S. tariffs on Chinese goods for now, and try to get Beijing to live up to the bilateral "phase one" trade agreement rather than ripping it up. At first blush, Beijing seems to be happy, partly because Tai mentioned "durable coexistence" in her prepared remarks (not that there's an alternative). But Tai also mentioned technology seven times in her speech, vowing to defend U.S. IP and out-innovate its Pacific competitor. The "trade war" continues to look more and more like a "tech war."
In this week's Protocol | China: a legal maze for food couriers, Huobi bounces from the mainland, and Facebook inspires gallows humor on Weibo.
The Big Story
An impenetrable legal maze for China's food delivery workers.
A groundbreaking new report reveals the labyrinthine labor relationships that China's food delivery apps — particularly Meituan and Ele.me — have with their hundreds of thousands of workers. The situation is unwittingly catching those workers up in a "dark web" of shadow companies that make defending their rights and interests nearly impossible.
- As reported Monday in financial publication Caijing Magazine, the Beijing Zhicheng Migrant Workers Legal Aid and Research Center has found that as many as 1.6 million Chinese riders are operating as "small business owners" without even knowing it.
- Delivery drivers have separate contracts and complicated business relationships with various third-party contractors outsourced by major delivery platforms. As a result, no single entity is their legal employer.
- Instead, large platforms reduce labor costs and liability through multiple layers of outsourcing, and often sign agreements with crowdsourcing companies with names like "Hummingbird," even when they're actually working for a big-name app.
Delivery workers are in an utterly vulnerable position because of all this complexity.
- Take the case of Shao Xinyin, whose situation inspired Zhicheng's investigation. Shao was injured while delivering takeout for the massive E.le in 2019; after appealing in courts in both Beijing and Chongqing, he was still unable to establish a labor relationship with the company in order to get compensation for his injuries.
- Chinese courts look for a contract between workers and companies to establish a labor relationship, but Shao only remembered hurriedly signing a piece of paper by the side of the road at a morning meeting.
- Shao's lawyers repeatedly hit a wall in trying to connect him to E.le, ultimately concluding the platform was "carefully designed so that the rights and interests of workers are not protected." Shao's search for the responsible party continues.
Regulators have noticed. And you can expect action.
- On Sept. 10, the Ministry of Human Resources and Social Security, SAMR, the Ministry of Transport and other regulators met with firms including DiDi, Ele.me and Meituan to discuss the issue.
- Expect to hear about a forthcoming "crackdown" on these legal games.
Beijing will feel comfortable moving in this space, figuring that practices like this are one big reason that tech crackdowns often garner public support.
- It's not just about General Secretary Xi Jinping's larger vision for capitalism versus communism; some crackdowns are long-overdue efforts to bring genuinely shady practices to heel as China's Wild West tech economy comes to an end.
On Protocol | China
- China just held its annual World Internet Conference. The summit in Wuzhen isn't as fun as it used to be — tech bigwigs used to go there to party, now they stay away — but it remains an important window into Beijing's thinking. Shen Lu has three major policy signals from the gathering.
- An online celebrity gossip group edged into political activism and now risks being shut down. Goose Group, a hugely influential (and surprisingly exclusive) group on the film and book criticism site Douban, is currently undergoing "review" for something called "Operation Qinglang." Its members have been behind major crowdsourced activism, including bringing sexual assault charges against singer Kris Wu into the headlines. Now, Goose Group might get disbanded for making too much noise. Zeyi Yang has more on the fate of China's TMZ.
A MESSAGE FROM ASANA
The way we work has fundamentally changed. According to the International Data Corporation, the revenue for worldwide collaboration applications increased 32.9 percent from 2019 to 2020, reaching $22.6 billion; it's expected to become a $50.7 billion industry by 2025.
Big Brother Beijing
What Beijing's new rules for algorithms mean. We told you last week about China's cyberspace watchdog, CAC, releasing new rules aimed at regulating the use of algorithms by internet companies within three years. Beijing keeps pace with the EU and the U.S., which are also trying to mitigate harm to users from algorithm-driven content. But Beijing's approach has gone beyond that; new rules evince CAC's strong desire to control public opinion and keep online content in line with the Party ideology. Doing this within three years is innovative, in its way, and ambitious — maybe too ambitious. As Yale Law School's Samm Sacks told The Wall Street Journal on Tuesday, even three years might not be enough time. "I think they understand that this is kind of an impossible task that they've set up for themselves," Sacks said.
China Goes Global
- Chinese games are thriving abroad, despite crackdowns at home. Tencent's hit Honor of Kings has become the world's biggest mobile game by revenue. It has also become the world's first mobile game to collect $10 billion in total player spending, according to the latest data from Sensor Tower. Another game, Pokémon Unite, which Tencent co-developed with The Pokémon Company, also smashed records upon its launch on Sept. 22: Downloads surpassed 30 million during its first week on the market, making it the biggest release for a multiplayer online battle arena game.
- China's biggest crypto platform finally flew the coop. Bloomberg reported on Tuesday that Chinese crypto's last and biggest remaining player, Huobi, decided on Sept. 24 to quit its home market, only hours before Beijing handed down sweeping rules to ban crypto trading in China. Huobi had become one of the few crypto platforms to develop cozy relationships with Chinese authorities, according to Bloomberg, but its plight now highlights the vulnerability of any crypto company operating in China. Co-founder Du Jun told Bloomberg the company "is all about going global now." The company had seen the ban coming; in fact, it had been expanding dramatically in countries like Turkey and Brazil over the previous few months.
Straight From China's Web
- Facebook's outage → gallows humor on Weibo. On Monday, when users across the globe complained about the hours-long outage of Facebook products including Instagram and WhatsApp, Chinese web users also paid close attention — even though all three platforms are blocked in China. The hashtag "Ins is down" ranked No. 5 on Weibo's trending chart after the apps went back online. Some Weibo users asked rhetorically and sarcastically: "What's the point of discussing this? We have no access to those apps anyway." Many others turned the discussion into a heated debate about whether jumping the so-called Great Firewall is illegal.
- China's sci-fi market is blowing up. The latest 2021 China Science Fiction Industry Report, a trade conference publication, shows that in the first half of 2021, the size of China's science fiction market reached $5.63 billion, according to Xinhua News Agency. For some perspective, this nearly matches the market value of all sci-fi products and services produced in China for all of 2019.
One More Thing
Xiaomi released a special phone for women ... and it's pink. The Xiaomi phone, called Civi, is actually offered in blue, black and pink color options, and marketing language emphasizes its camera's photo beatification function. But in several Weibo posts, Xiaomi founder Lei Jun said the pink version, which "makes one's heart flutter," was "specially designed" for female users, describing it as "light, soft, romantic [and] sweet." Domestic phone makers have a long history of appealing to female users with stereotypical pink designs. But it's 2021; Xiaomi's pink design was bound to attract criticism. "Obviously, Xiaomi believes that the way to demasculinize itself is to become feminine, not gender neutral," wrote a Chinese tech blogger. "[Lei Jun] just doesn't get it."