Page 356 - 2022 White Paper on the Business Environment in China
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2 White Paper on the Business Environment in China
labor safeguards and could signal more regulation Catering
when it comes to gig economy employment rights.
SAMR made its announcement just days after the Digital technologies are reshaping China's
Ministry of Human Resources and Social Security, traditional catering industry, as large catering
along with seven other government agencies, enterprises are increasingly investing in digitalization
published separate guidelines on guaranteeing and small and medium-sized companies ramp up
the basic rights of workers in “new employment efforts in digital transformation, a recent report
forms”. This goes beyond food deliverymen to said. The report, issued by Beijing-based research
include drivers on ride hailing platforms and other consultancy Acewill, said digitalization is the current
delivery riders. On-demand local services platforms main trend in China's catering industry. Data from
must ensure that riders earn above the minimum the National Bureau of Statistics showed that in
wage in the area where they operate, according to 2020, despite challenges brought by COVID-19,
the guidelines. They also prohibit platforms from China's catering industry totaled nearly 4 trillion
using the most stringent algorithm to benchmark RMB (US$616.8 billion) in business, and digital
a rider’s performance. Instead, platforms have to catering took up an increasing share. In recent
use a moderate algorithm that can appropriately years, a great number of catering chain stores
allow more time for riders to finish their deliveries. have been embracing digitalization. Hotpot chain
The guidelines also require platforms to help riders Haidilao launched a smart restaurant in Shanghai in
gain access to social security as well as commercial April 2021. Apart from dish-serving robots, robotic
insurance, including coverage for accidents and arms are equipped in warehouses to arrange raw
sickness. Platforms have also been directed to materials. The restaurant also adopts a system,
build “union organizations” and play an active namely Insight Knowledge Management System,
role in recruiting riders into these unions, so that to conduct real-time monitoring, management, and
they can participate in negotiating labor rights. maintenance of the entire unmanned back-stage
Regulators also urged the industry to improve the operations. From ordering to serving, the dishes are
general working conditions of riders, including produced automatically. Haidilao said the system can
such things as rest stations for riders, smart meal- save nearly 37% of back kitchen labor costs. Heytea
retrieval cabinets, and smart helmets for riders to Go, an ordering app developed by China's leading
boost safety. Labor issues at big services platforms milk tea chains Heytea, acquired 6 million registered
such as Meituan and Ele.me, owned by Alibaba users in seven months after it was launched, and
Group Holding, have come under scrutiny in recent raised the repurchase rate of milk tea by 300%.
years. In April 2021, a government video showing A report issued by on-demand service platform
a local labor official working an arduous 12-hour Meituan said China's digital catering industry
shift as a Meituan employee went viral on Chinese experienced rapid growth despite the challenges
social media. The two-minute clip, shared by the of COVID-19. Last year, online food orders surged
Beijing Municipal Human Resources and Social 107.9% on a yearly basis. The report shows that
Security Bureau, featured the deputy director of China's 14th Five-Year Plan (2021-25) clearly points
the bureau’s labor relations division spending a out that digital transformation of the service industry
day working as a Meituan delivery driver in the will be further promoted. At present, the online
Chinese capital. The director was filmed rushing and offline integrated development of the catering
around Beijing on a motorbike to pick up food industry has become a general trend, and the trend
orders while struggling with the city’s infamous has reshaped both the supply and demand sides.
congested traffic. At one point he was 20 minutes The report added that although COVID-19 struck
late, resulting in a 60% penalty cut in his delivery fee. China's catering industry in 2020, online ordering
He earned a meagre 41 RMB (US$6.3) at the end of in the catering industry quickly recovered to 2019
his first day. The company also recently found itself levels, and experienced explosive growth in the next
under scrutiny by the SAMR over whether it forced seven months. In December 2020, online orders
merchants to sell exclusively on its platform. The surged 107.9% year-on-year (Yiran).
regulator announced an investigation into Meituan
on April 26, 2021 after receiving complaints from The sales revenue of China's catering sector
the public (Ye). during the weeklong Spring Festival holiday was
356
labor safeguards and could signal more regulation Catering
when it comes to gig economy employment rights.
SAMR made its announcement just days after the Digital technologies are reshaping China's
Ministry of Human Resources and Social Security, traditional catering industry, as large catering
along with seven other government agencies, enterprises are increasingly investing in digitalization
published separate guidelines on guaranteeing and small and medium-sized companies ramp up
the basic rights of workers in “new employment efforts in digital transformation, a recent report
forms”. This goes beyond food deliverymen to said. The report, issued by Beijing-based research
include drivers on ride hailing platforms and other consultancy Acewill, said digitalization is the current
delivery riders. On-demand local services platforms main trend in China's catering industry. Data from
must ensure that riders earn above the minimum the National Bureau of Statistics showed that in
wage in the area where they operate, according to 2020, despite challenges brought by COVID-19,
the guidelines. They also prohibit platforms from China's catering industry totaled nearly 4 trillion
using the most stringent algorithm to benchmark RMB (US$616.8 billion) in business, and digital
a rider’s performance. Instead, platforms have to catering took up an increasing share. In recent
use a moderate algorithm that can appropriately years, a great number of catering chain stores
allow more time for riders to finish their deliveries. have been embracing digitalization. Hotpot chain
The guidelines also require platforms to help riders Haidilao launched a smart restaurant in Shanghai in
gain access to social security as well as commercial April 2021. Apart from dish-serving robots, robotic
insurance, including coverage for accidents and arms are equipped in warehouses to arrange raw
sickness. Platforms have also been directed to materials. The restaurant also adopts a system,
build “union organizations” and play an active namely Insight Knowledge Management System,
role in recruiting riders into these unions, so that to conduct real-time monitoring, management, and
they can participate in negotiating labor rights. maintenance of the entire unmanned back-stage
Regulators also urged the industry to improve the operations. From ordering to serving, the dishes are
general working conditions of riders, including produced automatically. Haidilao said the system can
such things as rest stations for riders, smart meal- save nearly 37% of back kitchen labor costs. Heytea
retrieval cabinets, and smart helmets for riders to Go, an ordering app developed by China's leading
boost safety. Labor issues at big services platforms milk tea chains Heytea, acquired 6 million registered
such as Meituan and Ele.me, owned by Alibaba users in seven months after it was launched, and
Group Holding, have come under scrutiny in recent raised the repurchase rate of milk tea by 300%.
years. In April 2021, a government video showing A report issued by on-demand service platform
a local labor official working an arduous 12-hour Meituan said China's digital catering industry
shift as a Meituan employee went viral on Chinese experienced rapid growth despite the challenges
social media. The two-minute clip, shared by the of COVID-19. Last year, online food orders surged
Beijing Municipal Human Resources and Social 107.9% on a yearly basis. The report shows that
Security Bureau, featured the deputy director of China's 14th Five-Year Plan (2021-25) clearly points
the bureau’s labor relations division spending a out that digital transformation of the service industry
day working as a Meituan delivery driver in the will be further promoted. At present, the online
Chinese capital. The director was filmed rushing and offline integrated development of the catering
around Beijing on a motorbike to pick up food industry has become a general trend, and the trend
orders while struggling with the city’s infamous has reshaped both the supply and demand sides.
congested traffic. At one point he was 20 minutes The report added that although COVID-19 struck
late, resulting in a 60% penalty cut in his delivery fee. China's catering industry in 2020, online ordering
He earned a meagre 41 RMB (US$6.3) at the end of in the catering industry quickly recovered to 2019
his first day. The company also recently found itself levels, and experienced explosive growth in the next
under scrutiny by the SAMR over whether it forced seven months. In December 2020, online orders
merchants to sell exclusively on its platform. The surged 107.9% year-on-year (Yiran).
regulator announced an investigation into Meituan
on April 26, 2021 after receiving complaints from The sales revenue of China's catering sector
the public (Ye). during the weeklong Spring Festival holiday was
356
