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China’s consumers are turning against the domestic big-tech giants they once worshiped

In 2014, a group of university students in Beijing founded Ofo, a bike sharing startup that allows customers to scan QR codes to rent bikes for short trips around cities and to pick up and drop off the bikes wherever they want.

The convenience and ease of dockless bike shares spawned competing startups like Mobike and Bluegogo, with each brand standing out for the bright colors of their bikes. The motorcycles were ubiquitous on the streets and sidewalks of China’s largest cities, and the startups attracted billions in investments, turning founders like Dai Wei, CEO of Ofo, into prominent entrepreneurs.

But four years later at least five Chinese bike-share startups had gone bankrupt, and a Chinese court announced in June 2019 that Ofo, the pioneer in the sector once valued at more than $ 2 billion, had done so “Basically no fortune” and was unable to pay significant debts to suppliers and customers.

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Millions of Bike Share users who were unable to recoup the deposits made through the programs posted their complaints on social media. Since they accused the companies that wasted billions of dollars, littered the city streets with clumps of unused two-wheelers and never returned their money.

A commuter rides an Ofo bicycle in Shanghai in May 2017. Ofo was part of the boom – and bankruptcy – of China’s bike-sharing industry.
Qilai Shen – Bloomberg / Getty Images

In one viral postA user in China found he wasn’t getting a refund until after posing as a foreigner. The hashtag “Pretend to be foreign and Ofo will refund you immediately” picked up 240 million views on China’s Twitter-like Weibo Platform. Users claimed the company prioritized its global image over its local customer base.

Some users have taken their complaints offline. In December 2018 Hundreds of people in thick winter coats lined up in front of Ofo’s office building in Beijing to reclaim their $ 14 deposits from the beleaguered startup. Something waited For hours only with Ofo’s promise that their deposits will be refunded within three days. Something Refunds received but others are still waiting. In February 2020, Ofo was renamed as a shopping app. offer Users receive a discount on new purchases instead of a cash refund on their deposits.

“It was visibly embarrassing for everyone involved,” says Dev Lewis, an employee at the Hong Kong-based think tank Digital Asia Hub.

By then, the Chinese public had largely glorified their national tech champions and the billionaires they made. Early tech success stories like Alibaba, the e-commerce giant that Jack Ma founded in 1999, were the subject of national pride, which was lauded for proving China’s economic and technological advancement worldwide.

But as Chinese technology blossomed, its role in everyday people’s lives blossomed too. A handful of apps owned by an even smaller number of companies now convey the most routine tasks in China, from dining to shopping to booking medical appointments, and making each abuse allegation extra personal to users. Outrage over the demise of Ofo and other unicorns who share the bike was one of the first signs that public opinion was beginning to turn against domestic tech companies.

The golden era of Chinese technology

For years, Jack Ma was the clear symbol of China’s technical success and inspired legions with his personal story of moving from high school teacher to founder of two of the most famous Chinese tech companies: Alibaba and its sister company, the fintech Titan Ant Group. He became the figurehead of the government’s campaign to drive domestic innovation. Beijing pledged 2006 to make the country an “innovative society” by 2020 and a global technology leader by 2050.

Today tech giants like it Alibaba and Tencent, which operates the billionaire user “Super app” WeChat has only increased its presence in people’s daily life. Each of them operate platforms with user metrics that dwarf most countries’ populations.

2019 Jack Ma Awards Rural Teachers and School Principals in China
Alibaba Group’s founder Jack Ma attends an award ceremony for teachers and school principals in Sanya, China on January 6, 2020. Ma was a one-time teacher herself and became a figurehead for China’s tech boom.
Wang HE – Getty Images

As China’s tech sector grew, so did people reference at the time as the “Ma Yun Era”, using Ma’s Chinese name.

The State People’s newspaper Newspaper in 2013 ran a photo gallery of Ma with pictures from his youth to middle age and the headline “Reform Era:” The Great Times “for Ma Yun”. The play proudly described his rise from a Hangzhou boy who “failed college entrance exams” to “one of the world’s billionaires”.

Six years later, the same paper released An editorial declaring that “there is no such thing as a Ma Yun era, only an era that includes Ma Yun,” underscores how some tech giants – and Ma in particular – have fallen out of favor.

The bubble starts to burst

After the Chinese bike-sharing bubble burst in 2018, more scandals followed, exacerbating the anti-tech sentiment of some consumers.

Big tech platforms like the grocery delivery service Meituan, the rider Didi and the online travel agency Ctrip are accused Compilation of purchase information and other data for consumers and then use of this data to bill certain consumers higher prices. The practice is so ubiquitous that it has deserves a name in China: “Big Data Backstabbing”.

In 2019 it became the Beijing Consumers Association found in a survey that 88% of Chinese consumers believed that online shopping platforms used user data to maximize prices for customers. Then this week the government-sponsored China Consumers Association accused Chinese tech giants using data to “harass” consumers have called for more regulation.

Use of ridesharing in Shanghai as a boom for bicycle sharing
Ofo, Xiaoming Danche, and others’ bicycles were parked on a sidewalk in Shanghai in May 2017. Clusters of unused two-wheelers became evidence of China’s oversaturated market for shared bicycles.
Qilai Shen – Bloomberg / Getty Images

Meituan who controls 90% of the Chinese food delivery market together with the delivery app Ele.me came under special fire in December allegedly Some customers charge twice the shipping costs compared to others. A hashtag about the incident received over 580 million views from Weibo, with one user commenting, “Where are the government regulations on this case?”

The public anger at technology platforms has spread beyond treating customers to the way companies manage their employees.

Videos of Liu Jin, a delivery driver for Ele.me, were posted on social media on Monday. set yourself on fire Protesting thousands of renminbi against unpaid wages and renewing public anger over the treatment of drivers by the delivery platforms whose work makes them so profitable.

In September 2020, China became Renwu Magazine published an investigation report on grocery delivery drivers showing that workers are subject to a strict algorithm that penalizes drivers for late deliveries and urges them to drive recklessly.

The article went viral, prompting Meituan and Ele.me to do so relax Delivery time targets for their drivers.

Weibo users weren’t impressed with the company’s response: the top rated comment Ele.me’s public statement said drivers would use the extra time to pick up more orders instead of driving more safely and accused the company of “treating the symptom, not the cause”.

China’s tech industry is now for white-collar workers notorious for his long working hours and high burnout rates. Tech founders like Jack Ma have approved Controversial work tactics such as “996” – 9 a.m. to 9 p.m. six days a week – say that such a schedule offers “the happiness and rewards of hard work.”

More recently, tech people have become more resolute in opposition to the executive-imposed 996 mindset. In 2019, Chinese web developers worked for e-commerce companies Youzan and JD.com created a GitHub page, 996.ICU, to protest companies’ long hours.

Meituan Delivery Drivers as a company reports results
A courier for the delivery of groceries for Meituan in Shanghai on Nov. 29, 2020. Meituan teased the consumer for delivery windows, which reportedly encouraged drivers to be reckless.
Qilai Shen – Bloomberg / Getty Images

The congestion debate flared up again in January when e-commerce company Pinduoduo – its founder Colin Huang were China’s second richest man last year –Approved that a 23-year-old Pinduoduo employee died On December 29, another Pinduoduo employee, a male engineer who joined the company in July, died of suicide after leaving work at 1:30 a.m. Pinduoduo said After these deaths, she set up psychological counseling services for all employees.

After the death of the first employee, a pinduoduo hashtag was posted on Weibo with more than 250 million views and thousands of users criticizing the tech company’s work culture and wondering whether the employee’s overtime had led to her death. After the death of the second employee, Pinduoduo, in a statement Capital, did not comment on the company’s work culture, but said it “does everything [it] can “to support the worker’s family and loved ones.

A Weibo user said worker exploitation was “the essence of 996”. Another user called it “ironic” that another popular Weibo search term was the fortune of Pinduoduo founder Colin Huang, adding, “Capitalists are bloodsuckers.”

The game

Consumer dissatisfaction with tech giants coincides with China’s growth Prosperity gap and an increasing defect social mobility. China has more now Billionaires than the US, but around 600 million people still live on less than $ 150 per month. Chinese regulators seem to be clinging to the backlash, using it as an opportunity to tighten rules on tech firms and shift the blame for China’s economic injustices away from Beijing.

“There are signs that general public opinion and sentiment is now turning against tech companies,” said Lewis. “It’s kind of a window of time where … the government can choose to drive to drive home some regulations on the platforms.”

No one can testify to Beijing’s newly won regulatory mandate more than Jack Ma.

In October, the extravagant billionaire delivered a searing speech in Shanghai, in which he criticized the Chinese financial regulation as “out of date” and accused Chinese banks of having a “pawnshop mentality”.

Days later regulators stopped the IPO of Ant Group, Ma’s fintech company, on the eve of its $ 37 billion double listing that promised to be the largest IPO in the company’s history. Officials said the company must meet new regulatory requirements before it can compile a list. Ant and Ma received little sympathy online after the IPO was suspended. Weibo users largely one-sided with regulators calling the once-revered Ma “a selfish tech villain” who “believes he is above the law”.

There’s no new date for Ant’s IPO, and Ma has not been seen in public since his speech in Shanghai.

Much of the online rage was centered on Ant’s lending service, which stood out almost 40% of its earnings in the first half of 2020. Some users of Huabei, Ant’s line of credit, told the Financial Times that the service’s pop-up actions sometimes result in them accidentally paying for items on credit without knowing it, making it easy to get into debt.

“People ran into thousands of dollars in debt [using Huabei]”Says Lewis.” People have been very skeptical of Huabei and their business practices, to pressure people to borrow more and buy more. ”

A Weibo comment With over 3,600 likes, Ant’s suspended IPO was a good thing as “loan sharks shouldn’t be listed on the stock exchange”.

Ant is facing a crowd now new regulations about the lending business it must adhere to before it can complete its IPO. Last month, China’s central bank made public criticized Ant and advised the company to focus on its original business, online payments, and fix issues in other areas of the business such as credit service.

The Ant saga is not the end of China’s regulatory turmoil, much of which is centered about the weakening of the market monopolies that Chinese technology companies have created for themselves.

China’s market regulator in mid-December Fine Alibaba Group and a Tencent-backed online literature platform under an antimonopoly law began an investigation into a merger between two Tencent-backed live streaming game companies. The market watcher warned that “the Internet industry is not outside the control of the antimonopoly law”.

On December 30th, the regulator again asserted itself against technology giants, convicting three e-commerce companies of price irregularities and say explicitly The fines were in response to consumer complaints about unfair price increases and fraudulent promotions.

This week the regulator repeated This antimonopoly regulation has priority in 2021.

According to Jeffrey Towson, a private equity investor and former management professor at Peking University in Beijing, China’s tech giants and their founders are seeing “more oversight and questions about their practices” than in previous years. “The big Chinese tech companies are very influential, but they are also very accountable to consumers through the government.”

According to Lewis, China has not seen a technological controversy on the scale of the Facebook-Cambridge-Analytica scandal of 2018, which was harsh Wake up call US and European consumers on how their online data could be misused.

However, concerns about Huabei, big data backstabbing, 996 culture, and the online defense of regulators’ action against Jack Ma and Ant are signs that Chinese consumers are increasingly suspicious of big tech.

“I think all of these things lead to a much more regulated Chinese internet ecosystem,” says Lewis. “This could be a point where we look back and say that there is little shift in consumer demand and expectations of tech operations.”

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