Wednesday , December 1 2021

The future of China’s work culture

In a late-August ruling, China’s supreme court declared one of the country’s most infamous work practices illegal.

Known as “996,” the term is shorthand for a work schedule spanning from 9 a.m. to 9 p.m., six days per week. Though popularized by the country’s soaring tech firms, often evoking images of hip urban startup employees with stock option plans hustling before being made millionaires by an IPO or funding round, “996” has evolved in how it is understood and applied by employers and employees, as well as how it is viewed by regulators.

Indeed, while the August 26 Supreme Court decision and issuance of guidelines from the Ministry of Human Resources will impact tech firms and their well-educated, well-compensated employees, the case itself dealt with a worker much farther down the digital economy hierarchy: a logistics worker making a salary of 8,000RMB (roughly $1,240) per month, which is just slightly below the average of the country’s 37 largest cities.

China’s regulators appear to be sending a message to employers and employees alike that the rules that define their relationship must change. As is the case with many things in China these days, what the country’s leaders are asking for will require a change not just in action, but also in the philosophies, psychologies and incentive structures at the core of Chinese society. What this change will look like is only starting to come into form.

Hungry like the wolf (culture)

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Whether as a result of the intense work culture that has defined many Chinese companies or as the pacesetting example that many have emulated, there is perhaps no better case study of the spirit, the benefits and the potential toxicity of a 996 work culture than that of Huawei.

Known for its “wolf culture,” the Shenzhen-based telecoms behemoth became defined by its intensity. Depending on who you ask, the description can be interpreted in multiple ways. In a more generous interpretation, it is seen as a sort of kinship, of team members moving in coordinated packs in pursuit of a shared goal. For others, it can mean something far more brutal. “In Huawei, ‘wolf culture’ means you kill or be killed,” explained a former Huawei employee who I interviewed for an article on the company in 2017. “I think the idea is that if you have everyone in the company competing fiercely with one another, the company will be better at fighting and competing with external threats.”

Regardless of how its employees came to characterize it, the intensity central to Huawei’s culture also helped shape its success. In contrast to its European competitors Ericsson and Nokia who have been criticized for their cumbersome bureaucracy and perceived complacency, Huawei’s willingness to win and deliver projects regardless of seemingly any obstacle made them favorites of telecommunications network providers across the world.

Though juiced by cheap financing from the Chinese state and lucrative contracts in its domestic market that allowed it to subsidize its overseas business, there is also a competitive logic to the extreme zeal that has characterized the firm’s culture, and which also helps to explain why other Chinese firms adopted such spirit in the form of “996.”

While now considered cutting-edge innovators in some areas, Huawei and other Chinese firms experienced a constant struggle to overcome deficits in technological sophistication in comparison to their foreign peers in their early days. Without holding an advantage through unique or advanced tech, they achieved an edge through cost, speed and a flexibility in circumventing the obstacles to doing business that can be particularly tricky in the developing world.

“What Chinese tech companies seem to really understand is the value that execution can have over product,” explains Skander Garroum, a German entrepreneur who has founded startups both in China and Silicon Valley. “The U.S.-centric tech narrative is so often one of a genius who creates a great product, and due to an open internet and open economy, it scales simply due to its obvious superiority. But in China and other developing markets, [there] are more obstacles, less openness, and scaling is a question not simply of how good a product is, but how well a team executes, and how hard they work.”

While such narratives are often hyperbolic renditions of the truth, the willingness to outwork rivals is a badge of honor many Chinese companies carry. For ride-hailing company Didi Chuxing, its famed victory over Uber in their mid-2010s battle for the Chinese market was a result of a myriad factors. Yet to ask many who were involved, the answer is often that they simply executed better on a local level and were willing to fight harder until Uber deemed it to be simply not worth continuing the fight.

Self-defined by their work ethic and hunger, many firms have actively sought out individuals without a privileged background but who aspire to move above their station in life. Huawei, for example, is known to target its recruiting efforts on young, skilled people from fourth- or fifth-tier cities looking for their “first pot of gold” (第一桶金 dìyī tǒng jīn), using a phrase meaning the first opportunity that a person receives to make a lot of money or to move into the middle class.

As China grew and its firms rose to global prominence, the dream of the first pot of gold was indeed achievable for many and generous compensation often accompanied the demanding work hours. For longtime Huawei employees enrolled in the company’s share scheme, annual dividends have been known to surpass hundreds of thousands and even millions of dollars for individual employees, in many cases eclipsing employees’ salaries. It was hard work, but hard work that paid off.

A system set up for employer exploitation

Known for its infamously hard-driving work culture, it can be counterintuitive to learn that the laws on the books in China are quite protective of the rights of workers. In practice, however, these rules have rarely been enforced.

Though technically mandating overtime pay for anything surpassing a standard five-day/40-hour work week, employers are known to avail themselves of a plethora of formal and informal methods for evading their legal obligations.

In the case of Huawei, this is known to come in the form of a “striver pledge,” a supposedly “voluntary” agreement signed by new employees in which they forego their rights to overtime pay and paid time off. Though Huawei has gained attention for such an approach, similar methods seem to be commonplace and often for companies who do not offer Huawei’s perks and paths for advancement.

“For our [blue-collar staff], our contracts stipulate that all overtime pay is already included in their monthly salaries,” explained one career-long HR manager who has worked for both domestic and foreign firms in China. “It’s not a good thing, but it is pretty standard throughout China as far as I know.”

Another method for circumventing labor law is through crafting performance metrics that give overwhelming power to management. “It is common for companies in China to take the Western performance-management concept of ‘deliverables,’ but to extend it to extremes,” said a female executive who formerly headed human resources for two large Sino-European joint ventures and who like many interviewees for this piece, requested anonymity to speak freely about a sensitive policy issue. “The ‘deliverables,’ however, will often be impossible to reach. This puts more power in the hands of the manager to determine if they deem the ‘effort’ of the employee to be satisfactory.” The executive added that she has discouraged such practices throughout her career and that they were more common with local Chinese firms than with multinationals. With such a dynamic in place, it is not difficult to imagine the myriad forms of exploitation that could potentially occur.

For those who have chosen to take on the system, they have often found themselves not only to be at odds with their employer, but with the state as well. Independent labor unions are functionally illegal in China, and the state-run All-China Federation of Trade Unions has historically been inconsistent in aiding workers in labor disputes.

In 2019, former 13-year Huawei employee Li Hongyuan was jailed for 241 days over charges that he had blackmailed the company while negotiating an exit package. Though eventually freed, as prosecutors failed to find sufficient evidence of wrongdoing on his part, news of his lengthy detention was a source of considerable online outrage.

Popular frustration over labor issues in nominally socialist China seems to have been on the rise in recent years. In 2018, security at the elite Peking University cracked down on protests by the school’s Marxist Society, which itself had been protesting the crackdown on labor activists in southern China. The GitHub repository “996.ICU” became a popular online forum for tech workers frustrated with their companies’ brutal workplace practices to vent and bring attention to the worst-behaving companies. For burnt-out young people across China, the trend of “lying flat” (tǎngpíng 躺平), which rejects the pressure and ambition that so defined earlier generations, has gained sufficient popularity that the government has lambasted the movement in major newspapers.

Schrödinger’s working hours: Written laws and unwritten norms

Compounded by a need to reduce pressure on families and boost a dwindling birth rate, authorities are now looking to change the unwritten rules of the game that have long dictated labor relations in China.

In response to the August 26 ruling, many companies acted quickly to change official policies. Yet for many firms and industries, the question that looms larger is one of culture and expectations.

TikTok parent company ByteDance, which previously was known to officially conduct a six-day work week, brought an end to the policy. However, this was not entirely welcomed by employees, who in exchange for reduced work days saw commensurate reductions in their pay.

“For many of us, we know what we’re agreeing to when we work for internet companies,” explained a woman surnamed Zhou who has worked for several such firms in China. “We know we might have to work hard, but we also get a chance to make more money,” she said. “If we wanted something different, we would have decided to work for other companies,” adding that she can understand why some ByteDance employees would be upset at the reduced hours and pay.

In the eyes of some China tech workers, increased pressure on companies to comply with government’s stricter expectations around working hours may just mean more informal working hours, for which they are not directly compensated. “Nothing has changed for me or my team as far as I know,” shared one employee of a popular U.S.-listed Chinese internet company. “I work on the weekends and will work over my holiday [the National Day holiday of October 1]. Just because it’s officially a day off doesn’t mean that business stops,” adding that they “of course” do not receive overtime pay for their extra working hours.

The idea that “business doesn’t stop” is what leaves some in doubt about whether any government regulation will have any positive impact on the condition of tech workers. “ByteDance is cutting back official hours and pay, but if nothing else changes, it doesn’t really matter,” shared Zhou bluntly. “People still want to keep their jobs and get promoted, so of course they will work as much as they can … or move to a company that will pay them more to do it.”

Yet for those who are higher up the management ladder, there is a much stronger inclination to take recent government mandates seriously, both in the letter and spirit of the law. “Companies have to show that they are taking action on this, and if they don’t, they risk being made an example of by authorities,” said the Sino-European corporate HR executive. “HR departments should be conducting companywide audits and getting a clear picture of what kind of hours people are working,” adding that, “the most likely outcome will probably be to hire more people, who will each work shorter hours, at least in the short term.”

What most do seem to agree on is the broader trend: As Xi Jinping speaks of “common prosperity” and puts the country’s corporate titans on notice, it appears as though the go-go years of China’s gilded age are coming to a close. How far the government will go in enforcing its desired changes is yet to be determined, however. For the first time in a long time, Beijing is signaling to the country’s corporate community that it will no longer tip the scales overwhelmingly in favor of business over labor. The question now is to what degree the balance of those scales will be adjusted.

This Article was first published on https://techcrunch.com/

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