Like many ambitious young Chinese people, Zhao Junfeng studied hard college and graduate school to get a coveted job as a programmer at a large Chinese internet company.
After graduating in 2019, he joined an e-commerce company in the east China city of Nanjing, married and adopted a cat named Mango. In November 2021, he moved to Shanghai to join one of China’s largest video platforms, iQiyi. He was well on his way to living a coveted middle-class life and documented his rise on his social media account.
Then, barely a month after his new job, he was laid off when iQiyi laid off more than 20 percent of its employees.
The number of unemployed tech workers is growing as China was once dynamic Internet industry gets hit by a tough and capricious one regulatory crackdown. Under the leadership of China’s top politician Xi Jinping, the unbridled hand of the government interferes on a large and small scale, leave company question their strategies and pray, not them The next targets for the raid.
Instead of the pride and ambition that dominated a few years ago, fear and sadness now reign as many tech companies cut their growth targets and lay off young, well-educated workers.
Like their American counterparts, China’s largest technology companies are regulated to limit abuse of power and reduce systemic risks. But Beijing’s hyper-political approach shows that it’s more about the Communist Party take control the industry than about equality of competition.
The raid kills the innovation, creativity and entrepreneurship that made China a technology powerhouse over the past decade. It is destroying businesses, profits, and jobs that once attracted China’s best and brightest.
Even people within the system are alerted by the clumsy approach. The former head of the Chinese sovereign wealth fund pushed Limitations on the Powers of Regulators. Hu Xijin, the newly retired editor of the official Global Times newspaper and a notorious propagandist, said He hoped regulatory action should help make most companies healthier, rather than “letting them die on the operating table”.
The damage is done. Some internet companies have closed while others have suffered huge losses or disappointing profits. Many publicly traded companies have seen their share prices fall in half, if not more.
In the third quarter of last year, China’s largest Internet company Tencent saw its slowest revenue growth since it went public in 2004. Profitability for e-commerce giant Alibaba was 38% year-over-year.
Didi, once the country’s most valuable start-up, reported an operating loss of $ 6.3 billion for the first nine months of 2021. In July, authorities stopped Didi from registering new users and ordered that app stores remove its services by the end of the year cybersecurity investigation.
The online education and tutoring sector was almost eliminated after Beijing ruled that the companies were placing unnecessary burdens on parents and children and hampering an attempt to support the country’s low birth rates. Hundreds of thousands, if not millions, have lost their jobs.
Online social media and entertainment platforms are attracting popular content and influencers as they have repeated government warnings that their products and stars are ideologically unsuitable for young people.
The video platform iQiyi, which fired Mr. Zhao, had a miserable quarter and lost about $ 268 million. Stock prices fell 85 percent from their 2021 high, reflecting investor concerns that the company that once wanted to become China’s Netflix will no longer be able to offer shows that can attract more subscribers and advertisers.
“The biggest problem for our industry is the serious shortage of content,” said iQiyi CEO Gong Yu to analysts in November. He partially blamed the slow approval of the censors for this. IQiyi did not respond to requests for comment.
(Mr. Zhao confirmed the details on his social media account but declined to comment further.)
Many film, television and streaming projects have been canceled or killed due to concerns about increasingly harsh and unpredictable censorship, industry officials said.
Lilian Li, a writer in Beijing, said that Tencent and a studio working with iQiyi approached her last year to create a streaming series based on one of her historical novels. A few weeks later, both companies told her that they had decided not to continue because there was little hope of gaining censorship approval for a story series. She said she received far fewer collaboration requests from content providers in 2021.
Chinese content creators always joke that they dance with shackles, which means that they are trying to satisfy the censorship while reaching out to their audiences. It is now clear that despite all the creative concessions, there is no guarantee that their projects will see the light of day.
One of the most anticipated films for Christmas 2021 had to change its name from “Moses on the Plain” to “Fire on the Plain”, possibly because of its Christianity reference. Four days before the release, the production team said it had been postponed for no reason.
“Limit that, cancel this. Regulate it, censor it, ”wrote Chen Jian, a stock market investor, on the social media platform Weibo. This country “will at some point become a cultural desert”.
Beijing wants its cyberspace to become an instrument of governance and national rejuvenation. And it will punish anyone who doesn’t serve the goal.
In mid-December the country’s Internet regulator said that it had ordered platforms to close more than 20,000 accounts of top influencers in 2021, including people who talked badly about the country’s martyr, entertainers involved in scandals and major livestream stars.
Alibaba was fined a record $ 2.8 billion in September last year. This was followed by a $ 530 million fine a month later against Meituan, the grocer.
Weibo, China’s Twitter-like platform, was fined 44 times between January and November. Douban, the popular movie and book review website, has been fined 20 times.
In December, Huang Wei, a top influencer named Viya, who sells everything under the sun on Alibaba’s Taobao platform – from Kim Kardashian’s scent (who sold 6,000 bottles in the first 30 seconds) to a rocket launch service (for $ 5.6 million) – Was fined $ 210 million for tax evasion. She lost more than 100 million followers after all of her social media accounts were closed.
To prove their loyalty, many technology firms are positioning themselves to help build key technologies that will help the country break free of what Mr. Xi called a “stranglehold” that the United States can exploit. This includes semiconductors, new energy, and other advanced technologies.
A Beijing-based venture capitalist said his company has completely given up investing in consumer technology and is busy convincing scientists and semiconductor engineers to start businesses. It was not easy because not many scientists have the entrepreneurial drive, said the venture capitalist, who spoke on condition of anonymity in view of the political environment.
Li Chengdong, an e-commerce consultant who invests in startups, said some consumer Internet companies he owns are facing higher compliance costs. “To be on the safe side, they have to comply with stricter regulations than the government demands,” he said.
The raids have a chilling effect on the labor market. Many young Chinese are looking for more stable jobs in the public sector even though they pay less.
According to the Ministry of Education, there will be 10 million college graduates in China by 2022. Around 4.5 million have applied for graduate schools, an increase of 800,000 compared to 2021. According to the Chinese state media, more than half a million people have applied for official examinations, an increase of half a million.
Olivia Fu worked for five years as a project manager at the search engine giant Baidu in Beijing before moving to a large state bank last fall. She wrote on the social media platform Red that she went through a midlife crisis after her 30th birthday.
“When I came home after dark and saw my daughter sleeping,” she wrote, “I wondered if this was the job I wanted.”
She now works at the bank from 9 to 5 and has more time with her family. But nobody chats in the office, and no personal items are allowed in the cubicles. The pay is lower.
In her post entitled “Escaping the wave of layoffs on the Internet”, many comments praised her “prediction”.
“I’m so happy that I left the industry,” she said in an interview.