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Positive signals for travel; Nio blasted; ByteDance's changing motto & challenge in TikTok monetization
Roundup of some China news today
On Friday June 24, Beijing gives some teeth to its repeated warnings that local govts mustn’t impose excessive COVID control measures in violation of national protocols, with a press conference of the State Council joint prevention and control mechanism on COVID naming and shaming some:
Lei Zhenglong, deputy director of the Disease Control Bureau of the National Health Commission, said
Four cities in Hebei Province, including Baoding, Handan, Shijiazhuang, and Zhangjiakou, have excessive epidemic prevention and control, and a one-size-fits-all approach. They had blindly put excessive measures on people who came to Hebei and returned to Hebei, especially those from Shanghai, Beijing, Tianjin, and other areas.
Second, Qinghai Province requires people returning to Qinghai from low-risk areas to fill in information 24 hours in advance, conduct PCR tests after arriving in Qinghai, return to the community where they live, and have their doors sealed for three days - only to be left after two negative PCR tests within the three days.
Third, Chaoyang City and Jinzhou City in Liaoning Province still require passengers with 48-hour proof of negative PRC test results at high-speed railway stations to have another test and charge a fee of 19 yuan per person.
The practices in the above areas do not meet the requirements of the national epidemic prevention and control policy and have now been requested to carry out rectification.
Other regions should take this as a warning and do a good job of self-inspection and verification.
The integrated group of the State Council joint prevention and control mechanism and relevant departments will continue to pay attention to the violations, and will publicize their discoveries upon confirmation.
Mi Feng, a spokesperson of the National Health Commission, repeated a nine-point principle where local governments are
Not allowed to arbitrarily expand the scope of travel restrictions imposed on medium and high-risk areas to other low-risk areas.
Not allowed to force people from low-risk areas to return, into quarantine, or other restrictive measures.
Not allowed to arbitrarily extend the control time imposed on medium and high-risk areas.
Not allowed to arbitrarily expand the scope of people with COVID risk factors for quarantine and other control measures.
Not allowed to arbitrarily extend the time of quarantine and health monitoring of people with COVID risk factors.
Not allowed to arbitrarily refuse to provide medical services for patients with acute and critical illnesses and the need for regular medical treatment on the grounds of epidemic prevention and control.
Not allowed to quarantine or impose other control measures on college students who are eligible to leave school and return home.
Not allowed to arbitrarily set up epidemic prevention checkpoints and restrict the passage of eligible passengers and truck drivers and passengers.
Not allowed to arbitrarily close places engaged in normal production and living services in low-risk areas.
[Pekingnology: Though not a cure-all, it’s a positive signal for domestic travel, as no local govt would want to be shamed in public like this. Also speaks to Beijing’s increased confidence in keeping outbreaks under control nationally.]
NYSE-listed Chinese EV maker 蔚来 NIO ended up in trending on Weibo, the Chinese equivalent to Twitter, over its statements in response to a deadly crash in Shanghai.
Chinese electric vehicle maker Nio Inc. said a test car crashed from the third floor of its headquarters in Shanghai, killing two people.
The accident occurred Wednesday afternoon, leaving a Nio employee and a person from a partner company dead, the firm said in a statement on its official Weibo account, adding that the incident was “not caused by the car itself.”
Nio said in the Thursday statement it is investigating the crash with police, and “can preliminarily confirm that it is an accident based on an analysis of the situation.”
Videos circulating on Chinese social media showed a badly damaged vehicle on its side with chunks of concrete splayed across the ground beside it. Rescuers in orange suits appear to be trying to get into the car at one point. It wasn’t immediately clear what kind of test car was involved.
That’s a tragedy for the two deceased people and their families, as well as very bad news for Nio, a leading domestic EV maker that has branded itself as a premium car producer catering to middle-class consumers.
Nio released two statements following the deadly crash. The first read
At approximately 17:20 on June 22nd, an Nio test vehicle fell from the third floor of the parking building of Shanghai Innovation Port, killing two digital cockpit testers, one a company colleague and the other an employee of a business partner.
We are deeply saddened by this accident and would like to express our deepest condolences to our colleague and the employee of our business partner who lost their lives. A dedicated team has been set up to help the families deal with the aftermath.
After the accident, Nio immediately worked with the public security departments to initiate an investigation and analysis of the cause of the incident. According to the analysis of the scene, it can be initially confirmed that this is an accident and has nothing to do with the vehicle itself.
The last sentence apparently enraged Chinese social media, with many - fairly or not -blasting Nio for being 冷血 cold-blooded, 没有人情味 having no human touch, and hastily passing the buck.
Nio then published the second statement with minor editing
At approximately 17:20 on June 22nd, a Nio test vehicle fell from the third floor of the Shanghai Innovation Port parking building, killing two digital cockpit testers, one a company colleague and the other an employee of our business partner. After the incident, the company, in cooperation with the public security department, initiated an investigation and analysis of the cause of the incident. Based on the analysis of the scene, it can be initially confirmed that this was an accident (not caused by the vehicle).
We are very saddened by the accident and would like to express our deepest condolences to our colleague and the employee of our business partner who lost their lives. The company has set up a special team to help the family deal with the aftermath.
This hasn’t done the company much better, with the hashtag #蔚来回应汽车坠楼被指冷血# #Nio’s Response to Crashing Vehicle Accused as Cold-Blooded# trending on Weibo and by now being read 70 million times.
Pundits have piled up on Nio, saying it lacked sympathy, clumsily attempted to steer clear of responsibility before a thorough investigation, and are plainly stupid in not writing the first - and the second - statement(s) well.
Chinese media outlet 晚点 LatePost reports ByteDance co-founder, Chairman and CEO Liang Rubo has, in a June 22 internal letter to employees, updated the phrases summarizing the TikTok owner’s corporate culture
They used to be, citing its English-language website
Aim for the Highest, Be Grounded & Courageous, Be Open & Humble, Be Candid & Clear, Always Day 1, Champion Diversity & Inclusion
Now they are (with my translation)
Always Day 1, Champion Diversity & Inclusion, Be Candid & Clear, Seeking Truth & Be Grounded, Be Courageous & Aim for the Highest, Grow Together
The report also helpfully gives some context
Always Day 1 has been promoted from the fifth position to the first. Today, ByteDance is a large company with nearly 160,000 people. Liang Rupo worries that ByteDance suffers from “Big Company Syndrome” - abusing resources, relying on inertia, or slowing down action - and he ponders whether ByteDance has fallen into the "resource curse" [aka paradox of plenty].
The importance of Champion Diversity & Inclusion is also increasing, from the last place to the second place. It was first added to by founder Zhang Yiming in March 2020, proposing to "understand and value differences and diversity, and build a diverse team".
At that time, ByteDance entered its third year of globalization, and TikTok already had 20,000 employees from different countries at that time. Two years later, TikTok has doubled the number of employees, its business is diverse and complex, and cross-cultural collaboration is even more challenging.
Chinese Speed, Global Company: TikTok's e-commerce conundrum
Only a smart part of the comprehensive report
Chinese and foreign employees each have their own grievances. Chinese employees complained that they had to schedule a lot of work in the early morning to fit in with the hours of their European and American colleagues; they were also unhappy that they were paid less than their overseas colleagues for doing similar work.
Non-Chinese TikTok employees, on the other hand, do not understand why they always have to meet with the Chinese team where the bosses speak poor English, and always have to work overtime.
Originally, TikTok could have bridged these inevitable cross-cultural tensions with time as a result of globalization. But the reality is that after the geopolitical crisis of 2020, TikTok had to force itself to grow strong in the shortest possible cycle to ensure that it can survive on its own if it is forced to cut itself off from its parent company, China-based ByteDance, in the future.
Sales via livestreaming represent the boundless ambitions of TikTok’s moneymaking, which faces a market with a range of cultural backgrounds, complex consumer habits, and a lack of e-commerce infrastructure.
However, LatePost has learned that the e-commerce team has set a goal of achieving 3 trillion yuan RMB in GMV within five years. By comparison, Amazon, which was founded nearly 30 years ago, had a global GMV of just 4 trillion yuan RMB last year.
Most of the key primary and secondary business leaders on TikTok's UK e-commerce team are Chinese. "Multi-team competition" and "extra-long working hours", common practices in Chinese companies, have been introduced to TikTok's overseas team.
One TikTok e-commerce employee said he increasingly felt that "management sets the strategy and the grassroots just executes." These governance methods, commonplace in Chinese companies, are alien to British employees.
Only one of the first senior British e-commerce executives TikTok poached from companies like Amazon and YouTube with high salaries remains onboard.
A similar state of stress exists not just at TikTok or ByteDance, but also at some extremely successful global giants.
The New York Times report, in 2015, Inside Amazon: Wrestling Big Ideas in a Bruising Workplace drew more than 5,800 comments. The article described a stressful environment similar to that of TikTok UK's e-commerce business - work emails arriving late at night; employees attacking each other's views; and work standards that were "unreasonably high". A former HR director summed it up as "purposeful Darwinism.” Only 15 percent of employees had been at the company for more than five years.
Amazon believes in "Always Day One", a phrase repeatedly mentioned within ByteDance. CEO Liang Rubo has even raised it into the first place in the latest version of the company's corporate culture. However, TikTok's e-commerce business is still far from an Amazon-like success, making it difficult to provide employees with a similar sense of value.
By the time Douyin’s e-commerce goes live in 2019, live streaming and live e-commerce will have been embraced by most Chinese consumers. Douyin, Kuaishou, and Taobao platforms have all given birth to superstar influencers; and brands, merchants, MCN (multi-channel network) agencies, and operators have flocked to the platforms. [Douyin is the sister of TikTok and serves only in China.]
China's private logistics system has been developed along with e-commerce for nearly 30 years, with SF Express and JD.com Logistics basically providing next-day delivery in first- and second-tier cities, while others have paved the way to rural areas with less developed transportation.
Alipay and WeChat Pay have greatly simplified the payment process for transactions. These ready-made servicesare an important guarantee for Douyin's e-commerce to take off in a short period of time.
But overseas, TikTok e-commerce does not have this infrastructure.
Merchants, influencers, users, and even many of TikTok's local employees were completely unfamiliar with the business model created from China.
Multiple TikTok Shop UK employees and service providers recalled that when the live streaming first launched in 2021, the comment sections were filled with skepticism, and the practice was even viewed by users as a "pyramid scheme".
The Indonesian market, which is closer to China and is subject to intense e-commerce competition, is better off for TikTok Shop. LatePost has learned that TikTok's e-commerce sales in Indonesia have now exceeded $100 million a month. Daily sales in the U.K. market averaged only about $300,000 in June.
If it had more time, TikTok could have grown at a relatively healthy pace, as ByteDance founder Zhang Yiming had envisioned: like Facebook and Google, which spent more than a decade building up a rich user base and becoming an important precision advertising channel; or like Amazon, which spent 20 years over e-commerce and slowly built its own global supply chain, logistics, and warehousing system.
But time is precisely the scarcest resource for TikTok, which has come under intense pressure to become more aggressive in 2019 as geopolitical risks expand and competition increases.
Read exclusive book excerpts in Pekingnology over the weekend:
Localized Bargaining: The Political Economy of China's High-Speed Railway Program, just published at Oxford and now No.1 in Government among Amazon (USA) Hot New Releases, by 马啸 Xiao Ma with PKU
Lessons from Success & Failure: Indigenous Innovation in China from China’s Drive for the Technology Frontier: Indigenous Innovation in the High-Tech Industry, due July 7, 2022, by 李寅 Yin Li with Fudan University
China's Land Finance, from Embedded Power: Chinese Government and Economic Development《置身事内：中国政府与经济发展》by 兰小欢 Lan Xiaohuan with Fudan University
How Academic Research Contributes to China's Decision-Making, from Academic Autobiography of Jiang Xiaojuan《江小涓学术自传》by 江小涓 Jiang Xiaojuan
Former Deputy Secretary-General of State Council on foreign investment, WTO, industrial policy, etc. from Academic Autobiography of Jiang Xiaojuan《江小涓学术自传》by 江小涓 Jiang Xiaojuan