Chinese behemoth Pinduoduo to take on Amazon in US – with even worse labor practices

Show caption Pinduoduo has become one of the biggest e-commerce companies in the world since it was founded in 2015. Photograph: Andre M Chang/Zuma Wire/Rex/Shutterstock E-commerce Chinese behemoth Pinduoduo to take on Amazon in US – with even worse labor practices One of the world’s biggest e-commerce companies is known for rock-bottom prices – and allegedly brutal conditions Wilfred Chan Thu 25 Aug 2022 11.00 BST Share on Facebook

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Americans addicted to Amazon could soon be wooed by a Chinese tech giant most of them have never heard of. Pinduoduo is planning to expand its reach to the US next month, according to reports in Bloomberg and Reuters. The company is known for delivering goods at rock-bottom prices – while putting its employees through conditions that a prominent labor activist says should horrify Americans.

Described by its founder, the former Google employee Colin Huang, as a cross between “Costco and Disneyland”, Pinduoduo has ridden a wave of meteoric Chinese tech growth to become one of the largest e-commerce companies in the world since its founding in 2015.

Pinduoduo targeted China’s smaller cities and more rural areas, where consumers tend to be less wealthy and more cost-conscious, says JS Tan, an MIT graduate student who researches the Chinese tech industry. Its signature feature is “group buying”, which allows users to organize people to make mass purchases directly from manufacturers at a steep discount. Because Pinduoduo is heavily integrated with WeChat, China’s top social media platform, it’s a snap for users to gather up friends, family and internet strangers to order big batches of everything from electronics to baby formula to groceries – something that became a lifeline during China’s strict Covid lockdowns.

The company’s model has similarities to Shein, the controversial Chinese ultra-fast-fashion brand that uses tight manufacturing networks to churn out trendy clothes to young western buyers. “Like Shein, Pinduoduo mastered the supply side in terms of delivering products at incredibly cheap and incredibly low cost to customers,” Tan told the Guardian. “I think that’s really going to be part of their strategy in coming to the US.”

But the company’s rapid growth has come at a cost. “Pinduoduo is known for its extreme overtime,” said Li Qiang, a veteran labor activist and founder of the non-profit China Labor Watch. “The competition is extremely intense, and the conditions are much crueler than in America.”

Two Pinduoduo employees died within a two-week period from December 2020 to January 2021, igniting a national scandal. The first worker, 22-year-old Zhang Fei, died on 29 December, when she was heading home around 1.30am after a series of extremely long shifts. The second worker, an engineer in his 20s, jumped to his death on 9 January after abruptly asking for leave from the company and traveling home the same day.

The controversy grew when days later, a Pinduoduo employee who called himself Wang Taixu said he had been fired by the company after posting a photo of a colleague being taken into an ambulance after collapsing. Wang subsequently published a lengthy video on the video-sharing site Bilibili detailing labor abuses he had witnessed at the company; he alleged that some workers were made to work as many as 380 hours a month, which the company denied.

A spokesperson said at the time that it fired Wang not for posting the photo of the worker, who the company said had a “stomach problem”, but for making “extreme comments with obvious malice”. Pinduoduo did not immediately respond to a request from the Guardian to comment for this story.

Colin Huang, founder of Pinduoduo, in 2017. Photograph: Bloomberg/Getty Images

Wang also complained about severe overcrowding in Pinduoduo’s offices, and a dire shortage of bathrooms, an issue that attracted significant attention in China. In some cases, there were as few as eight bathroom stalls for a floor with over 1,000 workers, forcing workers to stand in long lines or sneak into neighboring buildings, according to Tan.

“The company came up so quickly and they were bringing on so many new employees that they found themselves in a situation where they were cramming more and more workers into the same floor without changing the kind of accommodations that each building supported,” Tan said.

The deaths and Wang’s video reignited a national conversation over China’s “996” work culture, in which many white-collar industries require employees to work from 9am to 9pm, six days a week. Many social media users called for boycotts against Pinduoduo, and local officials announced investigations into the company. The company was also forced to pull out as a sponsor of the Lunar New Year Gala, the most-watched show on Chinese television. Pinduoduo “became, at least in that moment, the face of how brutal the 996 conditions can be in tech”, said Tan.

After years of breakneck expansion, China’s tech sector recently hit a wall. Since late 2020 the government has pursued a crackdown on tech companies and their owners, and the prospects for growth at home have dwindled. “These companies were competing to capture all these new people coming online, but at this point in China, we’ve crossed that billion-user mark, and the folks who are not online – like the elderly or very young – may not have tremendous spending power anyway,” Tan said. On the whole, Chinese households spend far less than American households, relative to their countries’ GDPs.

That helps explain why China’s tech firms are looking abroad. Other Chinese e-commerce giants, such as Alibaba, Meituan and have found success marketing to south-east Asia and Latin America, but Pinduoduo may be inspired by the success of Chinese companies such as Shein and Bytedance – the parent company of TikTok – in the US.

The question is what kind of company it’s going to be if it sets up offices in the United States. “I think that for American tech workers, this definitely isn’t a good thing,” said Li. “In terms of manufacturing costs, American companies have no way to compete with Pinduoduo. If Pinduoduo succeeds, it could take Chinese-style labor practices and bring them to America.”