How's China's Internet Industry Looking During the Spring Festival Holiday?- Pin...

Happy Spring Festival everybody! Thanks for reading PingWest's English edition in the past year. As the lunar calendar year of rat comes to a close, here's three things about China's rapidly changing internet/tech industry we find interesting to look at during the Lunar New Year holidays. 

The nits and grits of community group buying, a dispatch by Wang Boyuan from Xi'an, Shaanxi

As you may have heard, community group buying is the latest warzone for internet giants in China. Just about every big name you know about the industry is here: Tencent, Alibaba, JD, Didi, Pinduoduo, you name it. Each platform offers no different groceries from another, even the user experience is made pretty much like there's a national association issued "user interface guideline for group buying."

Besides big names and identical-looking apps, the massive wave of new items and new purchases created little buying chaos. In recent months, I, living in a tier 2 city, have met several semi-unfulfilled orders from community group buying platforms like Meituan and Pinduoduo. For some orders, the platform just issued a refund on missing items. While the rest postponed the delivery to the next day but yielded nothing to compensate me. 

It is noteworthy that every time I had issues, Qian Yun, my local group head (团长), instead of the existing professional customer service reps from the big platform, was always the one to contact me and offer a solution. (Editor's note: Boyuan, the male equivalent of a Chinese Karen who seeks the meaning of life by giving productive customer service calls, felt sorry for Qian). 

Boyuan: I don't really use community group buying to buy that much, but whenever I buy unfulfillment tends to happen. 

I am in a WeChat group of 267 people created by Qian. She shares affiliate links of daily bargains and offers extra free services like door-to-door delivery (which is not mandated by the platforms she works with) and pre-orders inside the group.

According to Qian, people buying stuff with her affiliate links generates more commission than processing an order directly on the platform. It's about a cut of 10-15% from the former and way less from the latter. The engagement and size of her WeChat group is also a metric that impacts her total income. She has to offer more than the platforms' basic requests to keep her customers loyal so she can outperform competitors inside the community. And yes, there are competitors. At one time, she had 6. One of them was an owner of a not-so-popular canteen. Now the number of group heads has been cut down to just 2.

"I can make more profit selling ten packs of instant noodles than keeping those vegetables for the platform for one day." On why he chose to quit, Mr. Xu, who runs a grocer and is the other group head besides Qian, explained that the income was bare to cover his expenses.

"What's worse, often people forget about their purchases, what can I do about the rotten fruits?" Xu added.

What's common on the ground is that the group buying platforms has by design outsourced multiple roles to a group head with little compensation

Firstly, the platforms urge the group head to use their WeChat group to finish presale tasks. Secondly, the group heads take responsibility for tracking the order and receiving the order in time. Then they have to make sure all packages are well kept, and notify the buyers in case they forget. According to my experience, I have never received any text updates directly from any of the platforms I use. (Alas, I tend to turn off such apps' annoying notifications, which is common among Chinese users). 

Finally, the group heads need to step up when a dispute happens.

Consequently, with a salesperson, delivery guy, warehouse worker, call center and customer service in one, a group head only earns around 3000 RMB a month on average. Or at least that was roughly how much my group heads were earning, in a relatively large community. But to me their perspiration and effort felt no less than participants of any other sharing economy models, like Didi drivers, who can earn 10,000 RMB if they work equally hard.

Employees are not going back to hometown, by Du Chen in Beijing.

It's been a year since China, almost ready for the pressurized family gatherings and frantic domestic traveling, being put on a nationwide halt on nearly everything, due to the sudden lockdown in Wuhan, Hubei Province and increased disease control measures elsewhere, mere days before the Lunar New Year.

This time around, as new spots of much smaller and controlled Covid-19 outbreaks are happening, many people have decided to not take the chance to go back to their hometown, and instead stay in higher-tier cities where they work. The lucky ones among them can do so at the comfort of within their own home, without the social anxiety from being scolded by direct and/or extended family members, while also enjoying various kinds of allowances from their local governments and employers.

In Shanghai, a few district governments have asked residents to “not leave Shanghai if not necessary.” Many companies are supporting that call. Pook, an online gaming company, said that it is allowing employees who decide to stay in the city to apply for a 5,000 RMB one-time rent allowance. Shanghai Morning Post reported that 440 Pook employees applied for the money on the day the news was delivered, and the company has put in place a mechanism for those who stay in Shanghai to report their health status daily, a common practice that was recommended by governments and used by many companies around this time last year, when workers were stuck in their hometowns.

It looks like that after Pook made the announcement, many Shanghai-based game companies, including more famous ones such as XD Network (心动游戏) followed suit to offer roughly the same amount of money to their employees who stay. Lucky for those who work for these companies!

In Hangzhou, where Alibaba’s headquarters is located, the municipal government had already transferred its promised 1,000 RMB to many people who work in the city but don’t have local hukou, to convince them to stay, according to state media Guancha.com. These people used an official app called Qinqingzaixian (亲情在线) to directly apply for the free money, which came instantly after their information submitted was validated. Netizens have joked that they felt like receiving red packets from the government, a Chinese custom that generally only happens between elder and younger generations in the same family. But of course, besides making these workers feel welcomed in a time of lockdowns and alienation, having more people stay in the city can boost the local consumption and help making sure those businesses that also stay open during the holidays can achieve sales.

In Beijing’s Yizhuang Economic and Technological Development Area, otherwise known as ETown, where lots of high-tech companies are located or have manufacturing facilities in, the managing government is issuing 300 RMB worth of vouchers through its official app Shangyicheng (尚亦城). 

Even without parents (happily) doing everything from cooking and cleaning for the younger generations, those who stay in Beijing still don’t need to to do the chores themselves. Ayilaile.com, an online platform for housekeeping services, said that it is offering 400 RMB one-time reward to encourage registered housekeepers to continue using the platform and providing service during the extended Lunar New Year period, plus 300 free beds if they can’t find a place to stay. While having an ayi doing chores for them, the stay-behinds can also iQiyi and chill, as the streaming company has partnered with Beijing Federation of Trade Unions and the Bank of Beijing to offer 100,000 free subscriptions to workers across the city.

They can even enjoy e-commerce like usual. SF Express, China’s top logistics company, told local media that it estimates 90% of its Beijing-based couriers will stay put and serve their customers, many of whom are also not leaving the city. That percentage used to be at 30% to 40% in previous years. Missfresh, a popular e-commerce website for daily necessities, is also giving its Beijing-based workers three times the holiday pay and up to 5,800 RMB worth of benefits that can add up to close to 10,000 RMB in total, according to the Beijing Daily.

It's important to note, however, that not all can enjoy these cooler benefits. Quite a few of people who work for tech companies in cities like Beijing, Shanghai, Guangzhou and Shenzhen and reached out to us said that their benefits for staying put are minimal at best. One in Beijing working for an unspecified company said that he can get a couple of hundreds of RMB in company red packets, but his travel reimbursement, even for local destinations, was rescinded. Another said that his company gave them two big packs of snacks and that was it.

Chinese tech giants are vying for spotlight on Spring Festival Gala through virtual red packet battle, by Chen Han from Beijing

Hosted annually by the state broadcaster China Central Television (CCTV), spring festival gala has been a new year tradition for Chinese families to watch on Lunar New Year’s Eve since 1983. Last year it had more than 1.1 billion viewers, meaning nearly all of China's population at some point during the Chinese New Year's eve tuned into the show.

As the internet industry prospers, it is not a surprise that the gala has become an increasingly important battlefield for top companies to gain new users and improve on penetration through all kinds of sponsored partnerships.. The traditional practice of awarding cash in red paper envelopes, considered a lucky thing by the Chinese, has increasingly became cashless as it moved online in virtual form embedded into smartphone-based digital payments. Behind these billions of RMB worth of sponsorships are their ambition to dominate internet traffic and grab huge amounts of user data.

Using virtual red packets as a business tactic to boost user data began in 2015 when only Tencent’s WeChat, Alipay’s Alipay and Sina Weibo gave out 500 million yuan in cash via virtual red packets. Since then, the amount of cash poured into such campaigns has increased to close to 10 billion yuan this year. Tech companies like Alibaba, Tencent and Baidu, Kuaishou, Bytedance’s Douyin have each allocated 500 million to 1 billion yuan in all kinds of cash handouts through their respective apps or digital payment platforms. Some of them even offered over 2 billion yuan in benefits during the entire lunar new year holidays. (Du Chen jumping in here: yes, many of these companies are pouring cash to users but not giving much to their employees who are staying put.) 

After an employee's sudden death due to burnout triggering huge waves of online backlash, the spot of Shanghai-based e-commerce company Pinduoduo as the exclusive partner of CCTV's gala was replaced by Douyin, which followed the footprints of its rival Kuaishou the exclusive partner last year. A promotional slogan "splitting 2 billion yuan" is shown in bold type on Douyin's in-app front page. Users participating in the event starting from February 4 to 26 will be able to grab a small piece of the 2 billion yuan in cash via red packets, with an 800 million "red packet rain" as the main event during the gala on New Year's Eve.

The exclusive deal with CCTV not only helps ByteDance in boosting Douyin’s exposure during these festive times, but also thrusts the parent company e to break the domination of Alipay and Tencent pay in China’s lucrative mobile payment market. On Jan. 20, ByteDance launched its in-app digital payment service called Douyin pay, a strategic move that aligned with another on of its ambitions to expand into e-commerce sector.

While Douyin may already have a huge lead by being on the CCTV gala, other companies are not caving in. A screenshot shows at least four top Chinese internet companies have added badges that says "splitting billions of RMB" to their apps' icons, with each saying they're handing out more than the last company. 

Completely (un)ironically, LeTV, a streaming service formerly owned by Jia Yueting, one of China's most notorious debtors who fled to the US, also added a badge that says it owes 12.2 billion RMB (shown below). And before you ask: yes, this is not fake news. The current management of the company confirmed that below is an authentic screenshot of its app's latest version.