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Pinduoduo faces probe after worker death, e-commerce giants fined: Retailheads

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The death of 23-year-old Pinduoduo employee reignited online discussions about the overtime work culture at Chinese tech giants. A Chinese market watchdog slapped fines on JD.com, Alibaba’s Tmall, and Tencent-backed Vipshop for “irregular pricing” practices.

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China’s e-commerce and retail market offers a fire hose of products, choices, business models, rapidly changing content, and more. Here’s what you need to know about China’s online retail market for the week of Dec. 31 – Jan. 6.

Overtime culture in the spotlight, again

The sudden death of an employee of e-commerce giant Pinduoduo renewed public discussion about the work culture at Chinese tech companies, accused of encouraging or even requiring grueling work hours.

The employee, surnamed Zhang, worked for the company in the western Chinese administrative region of Xinjiang. Zhang fainted on her way home after finishing work at midnight on Dec. 29. After six hours of first aid, Zhang, who joined Pinduoduo in July 2019, was pronounced dead. Her death didn’t get much public attention until a self-identified acquaintance of Zhang’s blamed Pinduoduo’s grueling work schedule as the cause for her death in a post (in Chinese) on professional social media platform Maimai. The post has drawn more than 3,500 shares, while the hashtag, “Pinduoduo employee sudden death” was viewed more than 270 million times as of Wednesday on microblogging site Weibo.

The e-commerce firm then responded to a thread discussing the news via its official account on Q&A platform Zhihu in defense of the illegal but commonplace practice: “Who isn’t exchanging their life for money? I’ve never thought of this as a problem with money, but rather as a problem of this society” (our translation).

Pinduoduo quickly deleted the response, and later published a lengthy post on Weibo, explaining that the comment was posted by an employee from a partner company. The employee forgot to log out from the official Pinduoduo account when sharing his opinion. Pinduoduo apologized and pledged to tighten control over their management.

The labor supervision department in Shanghai, where Pinduoduo is registered, has launched a probe into the company’s working conditions.

However, investor interest in the company appears resilient. Share prices for Nasdaq-listed Pinduoduo had more than tripled in 2020, and surged 12% on Wednesday after falling 6% on the news Tuesday.

READ MORE: INSIGHTS: 996 and China speed—Slowing growth in the face of a changing workforce

  • A Chinese netizen based in Hangzhou voiced a complaint online after her company’s human resources department used data collected from a smart cushion to track her working hours, local media reported. As the developer of the smart cushion, the company responded in a statement that it asked employees to test the product in order to collect relevant data and promised it wouldn’t use the data to evaluate employee performance. (Jiemian, in Chinese)

Regulation enforcement

Chinese market watchdog, the State Administration of Market Regulation (SAMR), has issued fines of RMB 500,000 ($76,657) each for JD.com, Alibaba’s Tmall, and Tencent-backed fashion e-commerce site Vipshop for irregular pricing strategies during this year’s Singles Day shopping festival held on Nov. 11.

SAMR offered a detailed list of more than 20 products that were affected by irregular pricing across the three platforms. For example, a gift box of pastries sold on JD.com was priced at RMB 149 on Nov. 4 for the Singles Day promotion where buyers could get an RMB 20 rebate for orders over RMB 100. However, the product was priced RMB 10 lower on Nov. 3. (Reuters)

Online consumption in 2020

  • Transaction volume in 2020 for China’s food delivery market is expected to hit RMB 835.2 billion, 14.8% higher than that in 2019, according to the state-backed media outlet Guangming Online. Growth decelerated sharply from the 30% year-on-year increase seen in 2019. The penetration rate of food delivery services in the first three city tiers reached 96.3%, according to the report. (Guangming Online, in Chinese)
  • Total box office revenue in China reached RMB 20.42 billion in 2020, making it the largest movie market in the world for the first time thanks to the country’s largely successful coronavirus pandemic response. However, the revenue still marks a significant 68.2% decrease from 2019. Alibaba-backed Taopiaopiao and Tencent-backed Maoyan dominate the online movie ticketing market in China, where around 90% of film ticket sales happen online. (Maoyan statement)