This Week in China: Will street vendors save China’s economy?

Welcome to This Week In China, a weekly newsletter dedicated to helping LinkedIn members to gain a better understanding of the trending news impacting businesses in China, and explore who could be the next big player beyond the border. Interested in the real deal? Want to know what Chinese people are really talking about lately? You can follow me from my LinkedIn profile page so you won't miss out.

Top News and Views

If you still believe China will bypass America as the largest economy in a short time, you may need to think again. As Premier Li Keqiang said in the latest government report in the newly concluded Two Sessions, “there are 600 million people earning merely 1,000 RMB per month”, or 140.85 USD, “barely enough to rent a home in mid-sized cities”. Credible? FT Chinese used three sets of data to cross-check this figure, and gives us another number of 500 million people: pretty big difference but largely thanks to statistical calibration. Oh, forget about the 1,300 trillion (182 trillion USD) of assets accumulated according to the National Bureau of Statics, as the latter clarified that this astronomical figure was not equal to household assets. No one becomes a millionaire out of this report.

And that could be the thinking behind the government’s high hopes for the street market. Premier Li addressed the important and creative role that street vendors play in China’s local economy, as a way of boosting consumption and creating more jobs. Both were hit hard by the economic downturn and the COVID-19 pandemic. Chinese media are referring to this report on how the “street vendor economy” created over 10 thousand jobs by mid-May in Chengdu, Sichuan, and gained the praise of Premier Li. For context, street vendors were largely banned or under strict scrutiny in major cities like Beijing, where the tidiness and order of the streets are two critical benchmarks of the “urban civilization”. The meaning? Pedlars are regaining their long-lost favor from authorities.

(??Vendor checks 100RMB from customers pay it at a night market in Baocheng Road on June 3, 2020, in Wuhan. ??: Getty Images)

Interestingly enough, Chinese companies are grabbing the opportunity at the speed of light. Cheap commercial vehicle maker Wuling Motors (often mocked as China’s “Rural King”) released a new model of small trucks with the design of Gull-wing plates that can be opened with one press of a button, which allows vendors get to business in one second. Wuling’s modest advertisement article suddenly went viral in WeChat moment, with many professionals joking about the desire to buy one and start their own stalls. Wuling’s stock price nearly doubled right after the release. And, by the way, it was among the first batch of Chinese companies to transform the production line into face mask making after the COVID-19 outbreak. 

（??Take a look at the commercial of this truck. Copyrights belong to Wuling Motor. Screen recording, no audio)

Simultaneously, tech giants are taking steps ahead, with WeChat set to offer subsidies, guidance, and marketing support to SMEs, Alipay to lend money to small retailers at zero interest rate, JD.com to provide stalls with supplies and loans, and Suning (the electric appliance retail chain and owner of Carrefour China) to open up freezers in Carrefour and its own convenience stores, as well as its live stream platforms to night markets.

(??A vendor and Webcasting Hostess presenting goods via online live broadcast in Hankou north international commodity exchange center on March 29,2020, in Wuhan, Hubei Province. ??: Getty Images)

In Julian Huang’s opinion, novice street vendors in Mainland China can learn from their peers in Taiwan, especially those who have been running for over a decade. Before starting, “ask yourself if you have enough enthusiasm, diligence, discipline, and an upbeat attitude”. For those who are already eager to give hawking a try, Kai Meng, purchasing director of Meicai.com, a grocery delivery platform, gives his professional advice: 

1. Be careful of goods selection, focus on satisfying niche needs of customers;
2. Set the right price, make it cheaper than well-known brands with the same attributes and features, and reserve 10-20% for the price reduction;
3. Secure repetitive purchases by adding customers on your WeChat, by giving out 2 RMB of discount in exchange; build groups to manage your clients but don’t overload them with ads;
4. Build your brand on TikTok or Kuaishou (parent company of Zynn), create content, and distribute, aiming to advance your business from a stall to a shop.

Still have doubts? Yes. Contrary to the heated discussions on many social platforms, LinkedIn members in China have their own perceptions and concerns about this economic model that exploded overnight. "The essence of the street vendor economy is overcapacity and contraction of consumption." argues Brad Dai, "it's glorified and overly advocated, and if we reach blindness, it could end up that either the people crammed in and bloodied, or the regulatory policies are put in place to end the farce." While Yongbo Si is worried about tech giants’ speedy interference, he thinks “should cooperate with the government and help it to make the street vendor economy big, instead of controlling the supply of goods on credit”.

So, lemonade, anyone?

Also in the news

China said Thursday it will allow foreign airlines that previously operated flights to the country, but are now barred due to virus control measures, to resume limited flights, just one day after the U.S. said it would launch a reciprocal ban on all Chinese carriers, reports Caixin. The ban imposed by Trump administration was to take effect June 16, stemming from Beijing's refusal to allow U.S. carriers to resume flying to China. Four Chinese airlines currently fly to China from the U.S.: Air China, China Eastern, China Southern, and Xiamen Airline. The latest dispute follows Trump’s decision to forbid Chinese students who have a link to“military-civil fusion strategy” to enter the United States with an F or J visa. (See what Chinese members have to say about this news, mostly in Chinese but translation function is available.)

China has released a master plan for the Hainan free port that aims to build the southern island province into a globally influential duty-free trading center by the middle of the century. The speculation over whether Hainan will replace Hongkong as the major free trade port in the greater-China region is emerging from local media like Global Times. But the majority of LinkedIn China members in our Daily Rundown comment area are not really buying into this concept, arguing fundamental elements such as law, financial system, and a clean business environment make radical differences between the (traditionally) tropical tourist island and the global financial hub. (Check out what Chinese members have to say about this news, mostly in Chinese but translation function is available.)

（??The expansion project of Meilan Airport in Haikou, Hainan province is under construction. ??: Getty Images)

The negative effects of the financial falsifications at Luckin Coffee linger, with the resignation of at least seven CFO from NYSE listed Chinese companies since March, including JD.com and Tuniu.com. Media found that "enjoy the high light of the IPO and leave" has become the approach of CFOs, which is primarily due to both career goals and profitability considerations. The COVID-19 pandemic, the business shrinkage, and the confidence crisis on Chinese firms lead to higher pressure on CFOs, which ultimately led to a steep rise in CFO departures. Meanwhile, news claims that Luckin Coffee is exercising unfair measures against its staff by reducing the manpower in each of its shops, and indirectly forcing its staff to resign, instead of being laid off and receive compensation for redundancy.

Business buzz

Love hotpot? Fan of TikTok? How about both? Bytedance just invested in a local hotpot buffet chain, an unconventional move for this fast expanding content platform giant. According to China Venture, the track of local life service platforms is dominated by Alibaba and Meituan Dianping, while Yiming Zhang, founder & CEO of Bytedance announced that the company will focus on creating more social value. Well, watch TikTok top dances while enjoying a hotpot is fun, anyway. 

The People Magazine in China recently published an article on the difficulties the elder generation faces in a QR dominated society. Grandma and grandpas are constantly challenged by using cellphones to pay for groceries, passing the temperature check when asked for health code, or even registration at hospitals.

This article reminds me of the several years my parents (both in their 60s) have taken to adapt to no-cash payment, not to mention the subscription-oriented online services, and the distracting advertisements that blur the line between real information and sales attempts. Share a similar feeling? Tell me your thoughts in the comment.

(??A job hunter scans health QR code at a job fair in Haikou, south China's Hainan Province. ??: XINHUA via Getty Images)

Talk and Thoughts ??

Jack Zhang, founder of Geekpark and a LinkedIn Influencer, shared the story of interviewing Elon Musk 6 years ago, in an article published right after SpaceX successfully launched manned Loong spaceship and docked with ISS. 

He said in the article, that “The point of commercial spaceflight is to make spaceflight and space exploration less of a government-funded program, and more of an ‘industry’ that can bring in more intelligence and capital, and create a virtuous cycle of values. Such stories have been told time and again in aviation, communications, and computer industries… Commercial spaceflight would truly open up the space age to all humanity, and could even be the beginning of a new chapter in humanity's journey from being able to touch space to be truly willing to move towards a multi-planetary civilization. And business is the key ‘hormone’ that is more powerful than ‘curiosity’, that can ultimately sustain humanity in its stride.”

(Photo courtesy of Peng "Jack" Zhang)

One more Idea of the Week

“Once we know something, it's hard to imagine what it would be like not knowing it, and subconsciously assume that other people should also understand it, resulting in the speaker talking to himself and the recipient being left confused. This is the ‘curse of knowledge’."

• Shuo Yao, Regional CMO of Huawei’s Honor Brand. 

Many people tend to directly state the problem in their debriefing, or present only essential elements that require decision-making by leaders. They thought it was more efficient. But according to Shuo, it's a subconscious "curse of knowledge" which takes for granted that a) other people have a clear understanding of the context, or b) the leaders have the necessary expertise for decision-making.

Most people become leaders because of their ability to integrate resources, and may not know more than you do in a vertical specialty. Decisions require context and knowledge, so never assume that others have all the information they need.

What’s your take on the “curse of knowledge”? Do you have experience being left in the black hole of confusion due to this phenomenon? Share your stories and thoughts in the comments.

That's all for This Week In China. Got questions? Anything I'm missing? Feel free to leave your message in the comments. Likes, shares and comments are highly appreciated to make this newsletter better. You can follow me from my LinkedIn profile page so you won't miss out. Stay tuned, stay in touch!