Internet & Tech

The Foxconn factor

Another staff death puts pressure on Pinduoduo

Pinduoduo's losses widen as e-commerce player offers incentives

Pinduoduo started out as “the poor man’s Alibaba”, thanks to its founder’s promise of cheaper shopping for people who make bulk purchases online, ordering directly from factories (see WiC404 for our first mention of Pinduoduo and its early business model). Poor no more: the six year-old firm has grown at such a clip since then that its founder Colin Huang overtook Jack Ma as China’s richest internet tycoon last month, according to Bloomberg’s latest wealth ranking.

But on a sourer note, Pinduoduo now has a new moniker as the “the Foxconn of the internet” – an unflattering title that likens the firm’s demanding working culture with that of China’s biggest factory employer, Taiwan-headquartered Foxconn. Foxconn ran into awful headlines a decade ago after a slew of employee suicides (see WiC61) and did little to improve the situation when its founder Terry Gou likened the managing of his workforce with the challenges of running a zoo.

We reported last week how Pinduoduo has been in the firing line too after the sudden death of a young staffer and how it also made matters worse with a careless PR response (see WiC523). The reputational damage deepened this week with the revelation of another tragic death at the e-commerce giant.

The Nasdaq-listed company admitted that an employee surnamed Tan had jumped to his death on January 10, while visiting his hometown of Changsha in Hunan province. In his twenties, Tan had joined Pinduoduo in July last year.

The reasons for his suicide are unclear, although an investigation is ongoing. Pinduoduo added that it had established a new service to help its staff with psychological support but social media was soon flooded with negative comments about the long working hours at the company and those of its peers in the hard-charging internet sector as a whole.

Last week’s news rekindled memories of the harrowing period when at least 10 Foxconn workers killed themselves by jumping from factory rooftops in 2010 (the suicides were blamed on long working hours and high-pressure conditions for employees putting together devices like iPhones on assembly lines).

Perhaps it is a sign of the changes in China’s economy that the focus of situations like these have been shifting away from the manufacturing industry to the internet sector, especially as a number of Pinduoduo’s 7,000 staff used social media to make other allegations about their employer’s behaviour.

One staff member said he was fired after he posted a long essay about the working conditions in the Shanghai office, where he claimed that staff are expected to work up to 17 hours a day.

Pinduoduo denied the allegation but there were other emotive contributions, including photos purporting to show medical staff turning up at a Pinduoduo campus to rush another employee to hospital. The photo was widely shared and the whistleblower followed up with a video in which he said he had been sacked by Pinduoduo less than 30 minutes after the image was posted.

In response Pinduoduo said the man was fired because of publishing inappropriate content on social media, which it described as against the company’s code of practice.

The earlier suicides at Foxconn contributed to a campaign to improve working conditions for factory workers. Local governments subsequently introduced or increased mandatory minimum wages. Foxconn went further, increasing basic salaries for many of its workers by more than a fifth. It also got its employee crisis under control through staff outreach programmes, changes in workplace policy and the spread of production contracts across a larger number of newer factories.

Of course, office-based employment is very different to working on the factory assembly line. But the astonishing rise of China’s internet firms over the last decade has created a new set of punishingly long hours. And social media allows new opportunities for employees to air their grievances, which means that Pinduoduo and its peers can expect to come under more pressure.

Additionally there’s also negative headlines coming from the logistics side of the e-commerce revolution. For instance this week there was the grim news that a food delivery rider from Alibaba’s had set himself on fire in protest over unpaid wages.

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