A lot of observers make the mistake of assuming that the gig economy is an exclusively Western trend in light of the fact that it seems to align so well with Western values. It is decentralized rather than centralized, it encourages freelancers to compete with one another within whichever platform they are using, it is flexible to the extreme and the list could go on and on… capitalism on steroids would be a reasonable enough description.
When the same observers find out that the gig economy accounts for 50% more of the total work force percentage in China compared to the US (15% in China compared to 10% in the United States), they are left scratching their heads. How on Earth can China have over 100,000,000 freelancers when the quintessence of the gig economy revolves around capitalism on steroids?
Isn’t the entire equation something that goes against everything let’s say Marx and Engels believed in?
Yes, it is.
Can’t it be considered completely ideologically incongruent with the political status quo in China?
Is the Communist Party of China pleased with the situation?
Most definitely not.
What we need to understand is that the gig economy isn’t something China has ultimately ended up embracing because it has some kind of a cultural allegiance to the concept. On the contrary, a more than compelling case can be made that the gig economy is completely incongruent with most of the things today’s China stands for.
Why, then, has it become such an ultra-successful phenomenon?
For the most part, the explanation revolves around the fact that China no longer has a choice.
The Beijing authorities understand all too well that China’s economic model has to merge into one closer to the Western status quo, with services rather than products in the spotlight. To put it differently, the let’s call it pre-2010 model which provided it with the impressive GDP growth rates we have mentioned rather frequently on ChinaFund.com and which is perfectly compatible with an under-developed nation’s economy that is being taken to the next level is no longer something which can take today’s China to the next level.
A China with a more and more robust middle class that is perfectly capable as well as willing to consume the fruits of its labor and switch from export by excellence to ever-increasing internal consumption. A China that understands how important it is to become a force to be reckoned with when it comes to “juicy” high-value added services, a dimension where it is still lagging.
A textbook example to that effect is represented by the trade surplus China is experiencing with the United States. However, this surplus is primarily a function of exported GOODS rather than SERVICES, with over $650 billion in goods and just over $77 billion in services are being traded. When it comes to goods, the “exported to imported” ratio is an impressive 4:1 in China’s favor but as far as services are concerned (little-known fact), the US is actually well into surplus territory.
The Chinese authorities are most definitely wise enough to understand that China cannot afford to ignore areas of potential growth and services most definitely qualify. To grab a piece of this ever-increasing pie (even in the West, we are at the beginning of a gig economy mega-trend) and tap into a generational mega-trend, a fair dose of let’s call it ideological flexibility is required. As a bit of an example, according to China’s #1 online recruiting firm Zhaopin, China’s already-large (as explained at the beginning of this article) gig economy is expected to quadruple in less than 20 years.
Needless to say, the stakes are high enough for even the Communist Party of China to understand that the country cannot simply afford to look the other way.
While on the legislative front, even the CPC is willing to display unexpected tolerance, this doesn’t mean it is all smooth sailing as far as the Chinese dimension of the gig economy is concerned. The average Chinese worker is anything but thrilled about this status quo and as such, protest against the gig economy in general or a certain player (for example, protests by truckers against Manbang, the Uber of the Chinese trucking business) are anything but uncommon.
It is important to understand that even in the West, there are many critical voices. What about various benefits? Health insurance? Retirement options? The list could go on and on. While top gig economy players have adapted and are providing their partners access to insurance options, retirement planning options and other benefits, the battle is far from over… even in the West, where the average citizen tends to be miles ahead of the average Chinese citizen in terms of let’s call them social safety nets.
In China, while there is a system that looks good on paper and while the lives of let’s say those who have solid government sector jobs are on relatively solid footing, the same cannot be said about those who have to switch from one private sector job to another, especially if they are migrant workers due to the mind-numbing manner in which the system in question is organized over in China.
This much is certain: the road to success for gig economy platforms seems to be clear in China, but it is most definitely paved with socio-political challenges, more so in China than in the proverbial West despite the fact that, again, it’s anything but smooth sailing for this sector in countries such as the United States either. At the end of the day, however, standing in the way of progress is not just pointless but downright dangerous, with China not representing an exception to that rule. To further understand such mega-trends and how they can impact you or your organization, our team of experts is at your disposal and ready to be of assistance, simply click HERE for more information.