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Connecting some of the dots before Meituan sheds $60 bln in valuation
For the little guys, or "Delivery Workers, Trapped in the System"
On July 26 and July 27, Hong Kong-listed Meituan sheds 60 billion US dollars (Bloomberg) in market valuations. Media reports attributed the dramatic decline in the stock price of China’s leading food delivery platform to one government document (Mandarin) in particular, as well as the broad atmosphere surrounding Chinese Big Tech.
Three weeks later after the document was released on July 26, your Pekingnologist has yet to see a full translation in English of the document, so that’s in today’s newsletter, which also includes some more background.
First of all, here is this must-read long-form report published by the 人物 Renwu/People magazine entitled 外卖骑手，困在系统里 Delivery Workers, Trapped in the System.
Published on September 8th, 2020, it is very, very long. But if you are really interested - or, let’s be honest, financially motivated - to gauge the perception of food delivery platforms such as Meituan and Eleme in China’s court of public opinion, you should read it, which instantly went viral on Chinese social media at the time because it resonated - and still resonates - with the Chinese commoners.
Below is extracted from an English translation of the long-form from the 闯 Chuang blog
In 2016, the longest time limit for delivering food 3 kilometers was one hour. In 2017, it was reduced to 45 minutes. In 2018, it dropped by 7 minutes, with a new maximum delivery time of 38 minutes. According to available data, the average delivery time across the industry went down by 10 minutes from 2016 to 2019.
The system that governs delivery services has the power to continuously consume delivery time. For the system’s creators, this is a praiseworthy advancement, a real-world embodiment of the deep-learning capacity of AI. At Meituan, the real-time smart delivery management system is called “SuperBrain,” while Ele.me calls their system “The Ark.” In a November 2016 interview, Meituan founder Wang Xing stated, “Our slogan is ‘Meituan: Send anything fast.’ Usually our deliveries will arrive within 28 minutes.” He went on to state that this is a good application of technology.
But, for the delivery riders tasked with realizing this technological advancement, this can be a nerve-wracking and even deadly experience. Among the variables evaluated by the system, delivery time is the most important metric, and missing delivery targets is strictly forbidden. Exceeding the delivery time limit results in bad reviews, pay cuts, and even dismissal from the job. In a message board for delivery riders, one wrote that delivery is a race with Death, a competition with traffic cops, and a friendship with red lights.
In order to keep himself always alert, one Jiangsu-based rider changed his social media username to “Being late is for losers.” One rider living in the suburban Songjiang district of Shanghai said he drives against traffic flow on almost every order, which he estimates saves him five minutes per delivery. Another Ele.me rider in Shanghai roughly calculates that if he followed all the traffic laws, the number of orders he could deliver in a day would be cut in half.
“Riders can never rely on their individual power to fight back against the times assigned by the system. All we can do is exceed the speed limit in order to make up for lost time,” a Meituan rider told Renwu. His most ridiculous experience was a one-kilometer delivery, to be completed in 20 minutes. Even though the destination was not far away, he had only 20 minutes to wait for the order to be prepared, pick it up, and deliver it to the customer. That day, he drove so fast that he was bounced out of the seat of his scooter several times.
Speeding, running lights, and violating traffic laws––according to Sun Ping, assistant researcher at the Chinese Academy of Social Sciences, the delivery riders’ disobedience of traffic rules is a kind of “inverse algorithm.” Riders who have long been under the control and management of the algorithm have no choice but to use this labor practice. The direct result of this “inverse algorithm” is a sharp rise in the number of traffic accidents involving delivery riders.
On social media platforms, a netizen responded to a post by a Meituan rider activist, saying: Riders have helped Meituan to dramatically increase both the number of orders they handle, and their overall market value. But Meituan, a company that has relied entirely on its delivery service to become a large company, will never provide formal employment contracts to any of its delivery riders.
One year after his accident, Shi Shen’s rider account still has not been restored. Nor has he received any insurance compensation. He told Renwu, “I decided to leave this industry and not return. But for those riders who are still fighting against time on the road, all I can do is to pray quietly for them in my heart.” Wei Lai, the Meituan rider who saw his colleague die instantly, wrote in his own online journal: “I wish that all riders can come home safely.”
Following the announcement that Meituan’s market value had topped $200 billion, some commentators mentioned CEO Wang Xing’s fascination with speed and the book that had great influence on him––Finite and Infinite Games. In this book, New York University professor of religious history James Carter categorizes the world’s games into two types: finite and infinite games. The goal of finite games is to win, while the players in infinite games want to let the game go on forever.
The system is still running, the game is still continuing, but riders still have next to no knowledge about the role they play in this boundless game. They are still just flying down the road in search of the possibility of a better life.
An analyst told Bloomberg on July 26 the guidelines weren’t a surprise but the timing of their announcement was.
Well, below connects some of the dots prior to that.
A July 7 communique from the weekly executive meeting of the State Council, China’s cabinet (Mandarin) includes:
The meeting pointed out that safeguarding the rights and interests of workers in new forms of employment is conducive to promoting flexible employment, expanding job positions, and increasing people's income. The meeting decided (on five points):
First, adapt to new forms of employment and promote the establishment of various forms of labor relations that are conducive to protecting the rights and interests of workers. For employment methods such as employee leasing and outsourcing, relevant enterprises shall reasonably protect the rights and interests of workers.
Second, enterprises should pay remuneration in full and on time, and shall not set evaluation standards that harm the safety and health of workers. Supervise and urge platform companies to formulate and improve system rules and algorithms involving order distribution and revenue sharing (between the platform and workers), where opinions of workers’ representatives shall be listened to and results shall be publicized. There shall not be illegal restrictions on workers hindering them from working on multiple platforms.
Third, with an emphasis on sectors such as travel, food delivery, and instant delivery, launch a pilot program of insurance/guarantees for occupational injury for flexible workers.
Fourth, establish vocational skill training models suitable for new employment forms, and provide subsidies to those where requirements are met according to regulations.
Fifth, liberalize the household registration restrictions for flexible workers to participate in basic endowment/pension insurance and basic medical insurance in the place of employment.
By the way, the fifth point further breaks the hukou/household registration system’s linkage with social benefits such as social security.
Premier Li Keqiang is quoted in a separate report (Mandarin) on the July 7 meeting as saying
"People in flexible employment in our country have reached more than 200 million. A large number of them are rural migrant workers, and some individuals among them work several jobs, which is very hard." Premier Li Keqiang said at the State Council executive meeting on July 7, "We shall liberalize the household registration restrictions for flexibly employed people to participate in basic pension/endowment insurance and basic medical insurance in their place of employment, so that they can 'have a bottom(line) in their hearts' and can believe that their basic lives can be guaranteed in the future."
The meeting decides on a number of policy measures to strengthen the protection of the rights and interests of workers in new employment forms.
Li Keqiang pointed out that the protection of the rights and interests of labor rights of workers in new employment forms is conducive to the promotion of flexible employment, increasing employment opportunities, and income of the people.
"We shall seeks truths from facts, start from facts on the ground, effectively safeguard the labor rights and interests of this group through the development of targeted policies and measures, and promote the healthy development of new forms of employment." The Premier said.
A Xinhua report (Mandarin) on July 7 after the meeting:
Authoritative data show that China's flexible workers have reached 200 million, and the number of workers in new employment forms has increased significantly in recent years.
In 2020, the number of people providing services in the ‘sharing economy’ is about 84 million. However, as the flexible workers are in a non-stable work relationship with the employing entities, they cannot get the systemic protection such as occupational injury insurance and unemployment insurance according to the current regulations.
"Compensating the shortcomings of the system in a timely manner and improving the systems for employment, labor compensation, social insurance, skills training, and democratic management of companies will not only help safeguard the labor rights and interests of workers in new employment forms, but also help promote flexible employment and increase job opportunities and the income of the people." Zhang Chenggang, director of China Research Center for New Employment Froms at the Capital University of Economics and Trade, said.
In Pekingology, 企业民主管理, or democratic management of companies, typically refers to giving employees or the Chinese trade union more say in corporate decisions in Chinese style.
At least a week before the July 26 govt document, there is another govt document 《关于切实维护新就业形态劳动者劳动保障权益的意见》 (Mandarin) Guidance on safeguarding the labor rights of workers in new employment forms jointly issued by eight central-level bodies, which includes
(6) Improve the system for rest, promote the sector to clarify the standard of labor quotas, scientifically determine of the workload and intensity of workers. Supervise companies to reasonably determine (their) methods for (giving) rest days in accordance with regulations, and pay reasonable compensation for labor on legal holidays, which shall be higher than normal working hours.
(9) Strengthen occupational injury protection, with the emphasis on travel, take-away, instant delivery, crosstown freight and other sectors in the platform companies. Organize a pilot program for flexible workers’ occupational injury protection, and the platform companies shall participate in accordance with the provisions.
(11) Supervise enterprises to develop and revise rules and algorithms on entry and exit, order distribution, piece-rate unit price, revenue sharing (between the platform and workers), compensation composition and payment, working hours, rewards and punishments which are directly related to the rights and interests of workers; fully listen to the views and suggestions of trade unions or workers' representatives, and publicize and inform the results to workers.
The All-China Federation of Trade Unions, which heads the eight central-level bodies in the document, has a Q&A (Mandarin) of the document, also published on July 20.
Finally, the full translation of the government document (Mandarin), published on July 26.
市场监管总局 国家网信办 国家发展改革委 公安部 人力资源社会保障部 商务部 中华全国总工会 关于落实网络餐饮平台责任切实维护外卖送餐员权益的指导意见
Guiding Opinions on Fulfilling the Responsibilities of Online Catering Platforms and Effectively Maintaining the Rights and Interests of Food Delivery Workers by State Administration for Market Regulation, Cyberspace Administration of China, National Development and Reform Commission Ministry of Public Security, Ministry of Human Resources and Social Security, Ministry of Commerce, and All-China Federation of Trade Unions
Market regulation administrations (departments/commissions), cyberspace administrations, development and reform commissions, public security departments(bureaus), human resources and social security departments, commerce departments, and federation of trade unions of all provinces, autonomous regions, municipalities, and Xinjiang Production and Construction Corps,
In order to promote the healthy development of the online catering sector and safeguard the legitimate rights and interests of food delivery workers, ten opinions are hereby promulgated.
Note: This is a document jointly issued by seven central bodies. By tradition, the State Administration for Market Regulation, whose name comes first in the byline, takes a leading role in this matter.
1. Set up remuneration rules scientifically, ensure reasonable income from work
Online catering platforms should conscientiously improve the labor remuneration rules for food delivery workers, and establish an income distribution mechanism that matches their work tasks and work intensity. Formulate scientific and reasonable quotas for work and set minimum remuneration for food delivery workers to ensure that the actual income as a result of normal work is not lower than the local minimum wage. Clarify the time and method of remuneration to ensure that it is paid on time and in full. For food delivery work in such conditions as on statutory holidays, under bad weather, and at nights, appropriate subsidies shall be provided.
Note: According to a survey (Mandarin) of food delivery workers in Wuhan by some faculty members and students of Central China Normal University in July-August 2019, most of the food delivery workers work 8 to 12 hours a day, and 30 percent of them work 10 hours a day.
According to a survey (Mandarin) of food delivery workers in Beijing in July-August 2018 by Feng Xiang’nan at Capital University of Economics and Business, they work 11.4 hours a day on average, with over 84% work more than 10 hours a day. The survey also found food delivery workers work 28.7 days a month on average in Beijing at the time.
2. Improve the performance evaluation system, enable positive incentives
Online catering platforms and third-party cooperative entities shall reasonably set up a performance evaluation system for food delivery workers. When formulating and adjusting assessments, rewards, and punishments, or other major matters concerning the vital interests of food delivery workers, they should be made public before they come into effect, and the opinions of such stakeholders as food delivery workers and trade unions shall be taken into full consideration.
Optimize algorithms; the "most stringent algorithm" shall not be adopted as an evaluation requirement; reasonably determine the evaluation factors such as the number of orders, punctuality rate, online rate, etc. through methods such as "algorithm selection", and appropriately relax the delivery time limit.
Note: Your Pekingnologist isn’t sure if there is an established English translation for “最严算法”/"most stringent algorithm" or “算法取中”/"algorithm selection." Basically, the “most stringent algorithm” refers to the constantly updated algorithm that, as a result of iterative machine learning processes, pushing delivery workers to their new limits in what could otherwise be celebrated as a triumph of technology by the algorithm’s creators. “Algorithm selection” basically means human intervention to stop the “most stringent algorithm” from being applied, opting for a more “humane” algorithm.
3. Optimizing the platform’s dispatch mechanism, effectively guarantee work safety
Online catering platforms shall take advantage in data and technology, further improve the distribution mechanism of orders, optimize the food delivery routes for workers, and reduce work intensity. They shall scientifically determine the degree of saturation of orders, and fully consider safety when allocating and dispatching orders to delivery workers. Control workers’ online working hours reasonably, and for those who have continuously delivered for more than 4 hours, the platform shall give a fatigue alert and no orders shall be sent within 20 minutes. Strengthen traffic safety education, regularly carry out safety training, guide and supervise food delivery workers to strictly abide by traffic laws, wear safety helmets, and use delivery vehicles that meet national safety standards to ensure work safety.
Note: The 20-minute break per 4-hour work looks like a circuit breaker against fatigue. Consideration for safety shall also be built into any algorithm. Reduce work intensity is plain and simple.
4. Strengthen food delivery service standards, strictly adhere to the baseline in food safety
Online catering platforms shall fulfill the responsibility for the safety of food in delivery, and fulfill their obligations under food safety laws and regulations. Formulate food delivery service management standards for their platforms, strengthen food safety knowledge training, and improve food safety risk prevention and control, personal hygiene, and other knowledge levels in food delivery staff. Ensure the safety and sanitation of food containers in delivery, speed up the implementation of measures such as seals for take-out meals, ensure that the food delivery process is not contaminated, and strictly implement food safety requirements.
5. Comprehensive use of insurance tools to strengthen protection
Online catering platforms and third-party cooperative entities shall participate in social security in accordance with the law for food delivery workers with whom they have established employment relations. Encourage other food delivery workers to participate in social security. Participate in the pilot occupational injury insurance/guarantee for flexible workers on platforms in accordance with national regulations, prevent and resolve the occupational injury risk of food delivery workers. Encourage the exploration of diversified commercial insurance protection schemes based on the employment characteristics of the platforms, ensure the relevant premium is fully paid, and improve the sufficiency of multi-level protection.
6. Optimize the working environment, improve working and living conditions
Encourage and support the development of new business forms, create a good working environment, and actively enable them to play the role of stabilizing and expanding employment. Promote the establishment of temporary accomodating spots for food delivery workers in commercial buildings and residential areas, install electric vehicle charging and battery replacement facilities in public areas, provide necessary infrastructure such as drinking water, rest areas, and charging stations, and continuously improve the working environment. Strengthen communication with property management agencies, and improve the convenience of food delivery through the promotion and installation of smart meal cabinets and other forms. Encourage the development of wearable devices such as smart helmets to promote safe cycling and food distribution. Provide care and support for food delivery workers’ accomodation and their children's education.
7. Strengthen organizational construction, improve the support and guarantee system
Promote the establishment of trade union organizations that adapt to new forms of employment, actively enroll groups of food delivery workers, guide and help food delivery workers to participate in trade union affairs, and improve the level of systemic and institutionalized protection of workers’ rights and interests. Support the trade union in carrying out its work, participate in the negotiation and coordination of important matters involving food delivery workers such as remuneration rules, performance evaluation, order dispatch time, work safety and working conditions, and protect workers’ right to know in matters involving their own interests. Provide consultations on their rights protection based on law, publicity of policies and their interpretations, skill training, psychological counseling, mental care, assistance in difficulties, and other services to safeguard the legitimate rights and interests of food delivery workers.
Note: Local branches of the Chinese trade union will likely participate in some form of Chinese-style collective bargaining.
8. Give food delivery workers more care, enhance social recognition of the profession
Actively advocate online catering platforms to strengthen team building and enrich the cultural life of food delivery workers. Intensify publicity efforts, create a good atmosphere, and guide society to form respect and recognition for food delivery as a profession. Conduct all-round training including on skills, manners, and education, improve the competence of food delivery workers, improve their integration into the public arena, and create a harmonious relationship between food delivery workers and catering merchants and consumers. Formulate and improve contingency plans for support, provide timely help to food delivery workers who encounter particular difficulties in personal life, and effectively improve the sense of group belonging.
Note: Let’s be honest: there is a lot of recognition and perhaps sympathy for food delivery workers, but not enough respect. That’s where this aims to address.
9. Strengthen risk prevention and control measures, effectively resolve conflicts
Online catering platforms and third-party cooperative entities shall establish effective risk prevention and control and conflict resolution mechanisms. It is necessary to implement risk prevention and control responsibilities, carry out regular risk assessments, take full advantage of big data and other technological advantages, spot risk factors early, and promptly warn and deal with the risk factors and report them to local governments. It is necessary to unblock the channels for food delivery workers to make appeals, clarify the procedures and time limits for the handling of the appeals, strengthen democratic consultation and equal communication, and satisfy food delivery workers’ legitimate appeals. Insist on catching the risk factors when they are still minor at an early stage. For routine problems such as overtime delivery of orders caused by objective factors, they shall be generally resolved within 24 hours to prevent the escalation of conflicts and effectively handle disputes.
Note: Labor disputes shall not become a risk for social stability.
10. Adapt to the development trend of flexible employment, continuously improve the level of rights protection for food delivery workers
Supervise online catering platforms and third-party cooperative entities to protect the legitimate rights and interests of food delivery workers in accordance with the law. The work tasks of the food delivery workers originate in the platforms, and their income is obtained through the platforms. The platforms shall take on the responsibility for the protection of the rights and interests of the workers in a variety of ways. The platforms shall strengthen the supervision of third-party cooperative entities to protect the legitimate rights and interests of food delivery workers. The platforms shall strictly implement the state's laws, regulations, and policy measures on safeguarding the rights and interests of workers in flexible employment and new forms of employment, and continuously improve the protection of the rights and interests of food delivery workers.
Make full use of the important role of the inter-ministerial joint meeting for Internet supervision, give full play to the functional advantages of the departments involved, strengthen accountability, further strengthen policy linkage and coordination, and coordinate and solve problems encountered in the implementation of the guidelines in a timely manner. All regions should implement regulatory responsibilities, establish, and improve the coordination mechanism for the protection of the rights and interests of food delivery workers, strengthen organization and implementation, strengthen risk assessment, effectively resolve conflicts, make sure that online catering platforms implement their primary responsibilities and social responsibilities, protect the legitimate rights and interests of food delivery workers, and resolutely safeguard social stability.
Note: A lot of food delivery workers are NOT directly employed by Meituan or Eleme, but by some other third parties. But that shall NOT become an excuse for the platforms to exploit them and disregard their labor rights, hence The work tasks of the food delivery workers originate in the platforms, and their income is obtained through the platforms. The platforms shall take on the responsibility for the protection of the rights and interests of the workers in a variety of ways. The platforms shall strengthen the supervision of third-party cooperative entities to protect the legitimate rights and interests of food delivery workers.
In the observation of your Pekingnologist, it is a bit similar to the logic in manufacturing - the big brands have at least some responsibilities for the labor practice in their supply chain.
Last but not least, again, a recommendation to read Delivery Workers, Trapped in the System in English on the 闯 Chuang blog. If you have lost some of that 60 billion US dollars in two days, well, maybe you can spare an hour on something that actually shaped the Chinese discourse on food delivery platforms.
Your Pekingnologist was based in Brussels, Belgium for two years and seven months, during which time he got to know some diplomats in the Chinese Mission to the European Union. The Mission just sent out its first edition of the China-EU Dynamics newsletter - check it out if you are interested.
The translation is mainly done by Zhixin Wan, a Masters' student at Journalism School, Tsinghua University, and now a contributor to Pekingnology, the newsletter by Zichen Wang in his personal capacity.