The Chinese economy and its tech sector, in particular, has been the subject of some commentary for a while now. The massive growth of the economy as a whole and the rapid development of a stable of companies that rival the likes of Google and Amazon have given onlookers plenty to talk about.
There’s a number of reasons why the country has done so well of late. The government has created an environment in which local companies are able to flourish, through funding and relatively attractive tariffs and tax rates compared to foreign competitors. Some argue that that is a protectionist approach, but whichever way you see, the government has certainly helped Chinese entrepreneurs to build some seriously big companies.
As well as money, the government has helped those companies access an asset that’s equally as valuable: data. Access to datasets, of unrivalled size and granularity, means that Chinese companies are able to take advantage of data-driven techniques, including advanced machine learning, that can help them get new business and save money.
There is also a well-reported stream of talented and educated individuals in the country; its schools and technical colleges have produced a wealth of technically and scientifically skilled workers who are able to fuel the powerhouse that is modern China.
But, the BBC reports, this massive growth has hit a bit of a slowdown recently. There is some sense of entropy here – as the BBC notes, though China’s economy is expected to grow by 6.3% this year, which is double the worldwide average – that actually marks a drop, given that in six of the last 15 years it hit double figures, and it’s the lowest level of growth since 1990. It’s nigh on impossible to keep up that level of growth forever.
And tech companies haven’t escaped the bite, according to the BBC’s report. Huge companies like Alibaba and Tencent have cut jobs, while one in five Chinese tech companies is intending to cut recruitment, according to jobs site Liepin.com, as cited by the BBC.
There’s a number of reasons for that, including a newfound difficulty in getting funding. “Before, you could get $3m with two people knocking and a smile. Now you can get $3m with two people knocking and a smile and six weeks of meetings,” says William Bao Bean, managing director of startup accelerator Chinaccelerator.
And some well-known companies are demonstrating the downturn. Mobike, the bike renting company, lost 4.6 billion yuan (more than £5 million) in 2018 and won’t make a profit until 2021, according to Hong Kong broker China Tonghai Securities.
There is also the wider backdrop of the US-China trade war. President Trump, who has criticised China and its trade policies for years, has re-ignited fears over an escalating trade war after recent comments, saying that he will increase tariffs that are already in place and introduce new ones.
This is big news, of course, given that the Chinese economy will soon be the biggest in the world, and clearly a vital market for companies all over the world.
The job market
These changes have affected what it’s like to work for tech companies in China, too. Companies that previously were shelling out on anything and everything are now starting to feel the pinch and count their cash a bit more carefully. Plush offices and posh meals on expenses are starting to dry up, employees note.
Part of the reason companies are becoming a bit cash-strapped is because of the cost of acquiring new customers, the BBC says. With a relatively saturated market, in terms of those who are purchasing online, it costs a lot to persuade customers to shop on any one particular service – often costing more than that customer might actually spend.
And that, in turn, is having an effect on employees. The rise of ‘996’ – working nine until nine, six days a week, has drawn complaints from tech workers.
But clouds have silver linings. Some commentators say that it’s become easier to tempt techies away from the big companies with promises of better hours and working environments. It goes to show that even in a place like China, which has quite a notorious workaholic culture, it’s still a candidate’s’ market.