Before online shoppers around the world were wondering how long Covid-19 could live on cardboard, China’s express delivery companies — the foundation of its booming e-commerce industry — were struggling to stay in operation. Abrupt lockdowns cut off supply chains, indefinitely delaying online orders. Inside quarantined cities, demand for online grocery delivery spiked, prompting e-commerce giants Alibaba and JD to hire thousands of temporary workers.
Now, with the virus under control, China’s economy has roared back to life — thanks, in large part, to e-commerce.
But even on the eve of Singles Day, China’s annual e-commerce holiday — named for the date, 11/11 — the margins for China’s express delivery companies are razor thin, as competition between delivery companies grows fierce. Multiple delivery workers’ strikes in the month leading up to Singles Day, denied by almost all delivery companies, points to cracks in the foundation of an industry that has long been operating under increasingly untenable conditions.
Originally an unofficial celebration for single university students, Singles Day, not unlike Amazon’s Prime Day or Black Friday in the U.S., was popularized by Alibaba, but the day of discounts outpaces American shopping holidays by most metrics: billions of packages are shipped across the country in one day, netting upward of $35 billion in sales.
This year, Singles Day promotions were extended two weeks in advance of November 11. Many customers paid for some or all of their purchases in advance. Chinese shoppers are as likely to take advantage of the deals to stock up on day-to-day products as they are to splurge on premium items at fleeting discounts, according to data from Kantar, a consulting firm in Shanghai.
But in the month prior to this year’s holiday, drivers at many of China’s top delivery companies — including YTO, ZTO, STO, and Yunda — have been striking, leaving packages piled on warehouse floors and customers waiting on delayed deliveries.
Last year, Chinese shoppers made nearly $5 trillion in e-commerce transactions. But the industry’s success depends precariously on the speed and efficiency of the country’s express delivery drivers, mostly male migrant laborers called kuaidi, to cover the last mile to get packages to 710 million online shoppers.
Hong Kong-based labor watchdog China Labour Bulletin, which tracks labor issues in China, said there have been 25 delivery worker strikes already this year, almost all triggered by pandemic-related back pay disputes. Chinese delivery companies operate on a franchise model that relies on local delivery centers to assemble their fleets of drivers. The drivers rarely have formal employment contracts, let alone access to health insurance.
Aidan Chau, a researcher at China Labour Bulletin, said the delivery drivers have little recourse when claiming back pay because they don’t have contracts with the local delivery centers. Chau said some workers have been waiting for their back pay for as long as five months. “When the pandemic started, they could possibly accept that their bosses were not paying them, because everyone knew it was a very difficult time, and they thought things would get better,” Chau told Rest of World. “But after the pandemic subsided, they’re still not getting paid.”
Chau said many workers were afraid that, if they quit, they’d lose the opportunity to claim the back pay in the first place. And because unemployment is high, employers can quickly find a replacement. “The unemployment situation is very serious in China right now,” said Chau. “Workers now are in a much more precarious and weak position than they were before 2020.”
The pandemic accelerated a fierce, long-brewing price war between express delivery companies, with drivers getting the squeeze. According to China Merchants Bank, average delivery prices dropped more than 30% just from February to July, as the country emerged from the depths of the pandemic. For years, e-commerce giants have slashed delivery prices to draw more clients, and this year’s delivery fees are half what they were in 2015. The average delivery price per package was nearly 8% lower during the first half of 2020 than during the same period last year. The delivery companies pass the cuts on to workers: local media reports some drivers make as little as $0.10 per package.
In Chinese media, tightly monitored by authorities, coverage of the workers’ strike focused on delivery companies denying problems with their operations in the lead-up to Singles’ Day. China News Weekly reported a Yunda Express center in Hunan was unable to pay its local delivery outsourcer, causing the local center to shut down and leaving thousands of yuan in wages unpaid to drivers.
The strikes — and the resulting delivery delays — have drawn attention from the Chinese public. More than 13,000 users discussed the strikes on Weibo, and the hashtag “deliveryman strike” had more than 13 million views. While many commenters complained of late orders (“I seem to be back in ancient times waiting for delivery on horseback,” one posted), they also called for support and livable working conditions for the drivers.
But despite growing public scrutiny, China’s appetite for online shopping shows no signs of abating. Xiaofeng Wang, a senior analyst with the market research firm Forrester, said the Chinese consumer’s shopping behavior has already returned to — if not outpaced — pre-pandemic levels. Wang said overseas expansion for China’s massively successful e-commerce model is next on the horizon. Wang said regional e-commerce giants in Southeast Asia, like Lazada, Shopee, and Tokopedia, will drive similar online shopping festivals to help retail recover from the impact of the pandemic.
Aidan Chau at China Labour Bulletin said the rise in e-commerce popularity will bring more public awareness to the challenges faced by delivery drivers. Even before the pandemic, said Chau, platforms were developed and widely adopted by Chinese consumers. “It is a very obvious problem,” he said, “for every citizen in China now.”