discussion keeps the world turning this is round table work in China is getting a major upgrade.
Food delivery giants are now building dedicated rider apartments and expanding welfare plans.
The stakes for the future of this workforce are immense.
But are these benefits real, permanent gains, or will the cost just be shifted back to the workers through the algorithm?
We're live from our studios in Beijing.
This is Roundtable.
I'm Steve.
Thanks for being with us today.
And for the show, I'm with Fei-Fei and Yushan.
First up, China's largest cities are offering substantial support to their vast rider delivery workforce.
Just recently we saw the rollout of Meituan's rider apartments that dramatically undercut local housing costs.
This strategy, also adopted by LMA, in places like Shanghai, offers apartments designed for rider life.
At the same time, major players like Meituan and LMA, and also JDcom, are enhancing comprehensive welfare coverage under government guidance.
These are significant new labor costs.
So how will the platforms prevent them from being subtly transferred back to the riders through changes in algorithmic pay?
That question and many more.
Fei-Fei and Yusheng, good afternoon to you both.
Before we get into the news, I have to do this.
Because Feifei, who has been somewhat regular on Roundtable, is now joining us full-time.
Yes, from part-time to full-time.
From part-time to full-time.
We're so excited.
Well, we loved it every time you came to the show, but we only got to see you maybe once every few weeks, once a month or once every couple of months.
But now it's going to be nearly every single day.
Yeah, more of me on Roundtable.
I hope the listeners can... and enjoy more of me.
I'm sure they will, yeah.
All right, well, let's get into it then because this is really significant news.
It's great news. for the riders, at least on the surface.
So what exactly is going on here?
Yeah, it's really encouraging, isn't it, to hear that the social welfare and support system is getting more and more standardized these days for the food delivery riders.
Now that we hear that Meituan, which is one of the major players in the food delivery market here in China, they recently announced that it is building riders' apartments.
That's across the country, and they're allowing riders with housing needs to apply for residency.
And about 600 delivery riders in cities like Beijing, southern China's Shenzhen and southwest China's Chongqing will soon move into these new riders apartments.
So they've already registered and what's better is that this whole program, this apartment housing program, is open to riders of all types with no registration, based on delivery model that include both full-time and part-time riders.
But the priority is of course given to riders who are facing short-term or transitional housing difficulties.
So these groups of people, they receive the help first.
And when we see these different types of real apartment offered, I think we can get a fuller picture of what they are really like.
Yeah.
Yeah.
So these are going to cover the costs of water.
That'll be covered. electricity will be covered, heating, internet.
That's a lovely little cherry on top as well.
That's going to be covered.
And then over the next few years I think it's five years.
Meituan is going to put a lot of money into this.
They're investing a total of 10 billion yuan.
That's about 1.4 billion into the program.
There's some specific examples too that I think we should learn about.
Yeah, for a lot of this projects, i would say.
They are located pretty in the central part of the cities.
For example, in beijing, they are located near the temple of heaven, very central yes, and the apartment is priced at 700 yuan, which is about around 100 us dollars a month, very affordable by beijing real estate prices, yes.
And also when it comes to, for example shenzhen, it's in nansha where a single-room apartment for them costs a little over 110 US dollars per month.
And when it comes to Chongqing, it's also in the city center of Jiefangbei, which the monthly rent is 650 yuan, which is about
One thousand two hundred yuan cheaper than the normal market price.
Yeah, and in Shenzhen, the area that you talked about, the market price the regular market price for that area would be over 2000 yuan, but the riders are gonna pay about 800.
And then the area near the temple of heaven in Beijing, Which is, by the by the way, not so far away from us.
The common rental price for that style of apartment is about 1500 yuan but, as you said, the charge to the riders will be about 700 yuan, so more than more than half off, and also the things that they equipped within the apartment.
For example, as Steve mentioned, there will be internet and heating and more to that, there will be, for example, 24 hour hot water, or sometimes they can provide it with washer slash dryer, which is very much in need for these riders who don't have time to do laundry, you know, on a Sunday morning, but they run on a very schedule every day and we talked about i think it was a few months ago we talked about how dryers are becoming more and more common now here in china so they'll be benefiting from that as well um all right so this is going to be the change for the riders but typically where would they live because they have their rider delivery area right a rider in beijing would um focus on one particular set of neighborhoods i would say they wouldn't be going back and forth from east to west beijing and then back again depending on the density of orders how it's distributed in that area there are a lot of um writers they call it the writer's station like where they gather together and that's one major way for how delivery writers um solve their housing problems right now that's the dormitories that's provided by the the rider station so the gathering point they actually provide dormitories that's shared rooms perhaps shared by many people how many exactly we don't really have the data but it's for sure a shared place or a shared individual apartment that they rent outside of the station with either People they know or people they don't know.
These delivery stations, these are apartment complexes or what are they exactly?
More or less like, you know, it's the same for parcel delivery for JD.com or other places.
Zhongtong or other major logistics companies.
They have stations where they sort things out together.
And the stations are also like a training hub or like community hub for the local riders, where they receive trainings, where they communicate, where they gather, when there's no orders.
And they have dorm style rooms there too.
Exactly.
But when it comes to this delivery station, which is basically the last sort of distribution station, distribution center before these riders, you know, going out and send out the orders
They are run on a very small scale because, for example, this station would be only in charge of one residential or several residential communities nearby.
So and they also run a small shop. for example, in that community.
So they also run on a budget.
So you can imagine that the dormitories that they provide may not be as fully equipped.
Not only that, but schedule-wise, it's a little inconvenient.
There was a story of one delivery driver named Yang who said the cost of the station was only 800 yuan a month to stay.
But where Everybody worked different hours.
He was in a shared space with other riders.
And these delivery riders work very odd hours, right?
Sometimes they'll work a day shift.
Sometimes they'll work a late into the night shift.
So what he said was that, because his roommates all work different hours, it was very difficult for him to sleep soundly at night.
And as a result of that, or at least partly due to that, he moved out.
He got his own place and he pays about 1800 yuan a month, including utilities.
But that place is more than 10 kilometers away from the area where he delivers.
Where rents are cheaper.
Yes, exactly.
And I guess that's one of the new...
That's why these new measurements are making a big difference.
Yeah, they are helping with a lot of riders with their housing issues.
And earlier this year South China Morning Post also reported that roughly 200 million gig workers in China.
They make a living from temporary jobs that do not offer traditional employment contracts and associated benefits such as apartments or housing benefits.
And since earlier this year, as some major e-commerce giants like JDM, docom and taobao began to join food delivery sector more and more these platforms they began to gradually introduce social insurance and housing fund benefits for its well, all of their delivery riders, especially the full-time ones.
Right, i want to come back to that point.
Maybe there's a connection there or maybe not because, as you mentioned earlier this year, that's when the, the big players got involved, or more big players got involved Taobao and JD.
And I was wondering if there's a connection there between them getting involved and then all of a sudden increased benefits for the riders.
But maybe I'll save that question for a little bit later.
We should mention this too.
I think it's kind of important.
This isn't the first example for food delivery riders to have some kind of housing arrangement.
No, actually in the year 2023.
In Shanghai, in a district called Putuo, They started to partner with Ulema and started the country's first rider apartments.
And that project offers 98 units with about 300 beds.
And taking advantage of this news of Meituan announcing its own rider apartments, I think some reporters also went back and checked on these projects in Putuo Shanghai, and found that about 85 of the beds are now occupied, So the feedback has been very positive.
Even after two years.
Yeah, so you can see why more players and more such services are provided.
So it could be argued that that was kind of maybe the testing ground, the testing period to see how it would go.
And those apartments, those were specifically designed by the district to be guaranteed affordable rental housing.
Yeah, that's true.
Because the local Shanghai city-wise authority, they kind of have this rolled out, this policy of guaranteed affordable rental housing, which nowadays cover over or around 40 cities across China.
So basically that means to offer temporary rental apartment at below market price to especially new urban residents and young people who need help with housing in their certain phases of life.
And I'm not sure if you guys have checked out this whole, like star rated apartments in Shanghai from Ulama or the newly wrote out Meituan Apartments.
They look like.
They remind me of the youth motel or youth hotel in developed countries, where sometimes there are shared beds.
Sometimes it's like one single studio bed and it's well remodeled to a modern style.
It's more like a hotel style of vibe than a house or so.
As a rider, i can choose if i want to stay in a single bedroom or i want to share with others.
Yeah, there are different levels.
There are even the family style rooms where the riders, if they have family housing need, they can bring their, you know, wife and kids or husband and kid.
Oh very cool, i didn't know that.
So how, how does this all work then?
How does this, How is this being paid for?
Because it's not just the delivery companies.
There's support from government bodies too.
Yeah, exactly.
Because you can imagine, you know, renting certain apartment buildings in the city centers of major big cities like Beijing and Shanghai can be very expensive.
For example, Mei Tuan said the company will invest a total of 10 billion yuan, or roughly more than 1 billion US dollars, in this particular program.
And...
But I think a lot of the money would go to, for example, the facilities, the home appliances within the apartments.
But when it comes to the housing itself, it mostly are coordinated by the government, that they have the capacity to coordinate and use the spaces in the cities to offer to these players in the food delivery industry so that they can make use of it.
Also.
For example, they are also sort of built building the bridges between these tech companies and also real estate management agencies that, for example, these tech companies they won't be able to manage these accommodation or rider apartments themselves.
So they will also work with a third party to do the managing and other services that's provided to these riders.
A lot of collaboration involved then, a lot of... entities working together.
The writers must feel very positively about this, I would think.
What's the feedback been so far?
Well, it's generally very good.
Some writers have already been interviewed and said that before I lived far away and spent one to two hours just commuting every day, and now I live inside the delivery area and the time I save is enough to deliver 10 more orders.
That's a bonus.
Yeah, said by one writer in Chongqing.
10 more opportunities for pay.
Yeah, perhaps more payment and hundreds of, I don't know, tippings, let's hope.
And then of course for them.
After finishing work at night, they can get back home sooner and rest much faster hopefully sounder too.
And it's not just for food delivery platforms that we're talking about.
Many tech companies, like Xiaomi and Huawei.
They're also going after this very similar strategy and providing, or building rather, their own office buildings and provide apartments for employees so that they can get off work and go back home.
Sooner.
And may perhaps come back to work the next morning sooner, too.
So that's in July this year, where Xiaomi announced that they launched the youth apartments in Beijing and also in Nanjing in eastern China's Jiangsu province.
So most of their units are around 55 square meters with rents between roughly...
1700 and 2000 yuan per month, which is also in the relatively lower level of rental payment you pay on a monthly basis in these two cities in particular.
So it's like a trend that's adopted by a lot of the tech major, e-commerce and tech companies nowadays in China.
Well, for me, I think I want to approach to this sort of solution a different way.
Because, when it comes to Xiaomi offering houses kind of accommodations for its workers, I think it's somewhat different from these rider apartments.
Because, when it comes to these riders, they often the case coming from rural areas of China and they come in just looking for money.
That's their only purpose of working as riders.
Other than you know.
If I work as a tech person in Xiaomi, I probably would have other plans in my career.
So when it comes to these riders who come to Beijing or Shanghai looking just for increased income and that comes naturally
For example, a few years back we had discussions about they don't really come had a lot of benefits when it comes to health care.
And, for example, when they run into accidents when they are delivering the food, who is going to cover their expenses in hospitals?
And then...
Now we see that the bigger tech companies are offering health care insurances for these riders.
Yeah, health care insurance and pension insurance subsidies, too.
Yes.
So now I think they are working to increase not only on the benefits but also increase on the level of sense of belonging when I come work and live in the city.
Because for these riders for many years they stay as sort of a marginalized group group in bigger cities.
And it's like no one would pay attention to them.
And for a lot of young people especially.
They would sometimes suffer mental health issues if you work, and just work in a big city day and night.
With no sense of belongings.
But with you know, health care, pension and housing now offered, they can now sort of imagine themselves, you know, a part of the city.
Yeah, you're feeling a little more rooted, a little more grounded, perhaps a little bit more secure.
And again, you know the pension insurance subsidies.
That's a big step towards having employees feel a sense of security.
What are some of the details there?
Yeah, let's talk back to Meituan as an example.
That's back in this October where Meituan announced that its pension insurance subsidy for delivery riders will by then be available nationwide and open to all riders.
That actually began first back in april and back then it was a pilot program for meituan to try to build local pension and insurance subsidy for their riders in chenzhou, in fujian and several other cities.
It then quickly expanded to cities like shenzhen and chengdu and wuhan and also wuxi, that's in jiangsu province.
It That's when it covers the entire country gradually.
And, since February this year, other companies like JDcom.
They have also announced that they will pay social insurance for their full-time or stable part-time delivery riders.
So, as you mentioned Fei-Fei, it is a time where delivery riders they really become of the labor force and start to get more systematic and structured social welfare system.
That's not too different from say, those sitting in the tech company.
Yeah, it's protection for gig workers right right, and this is this is a very positive thing.
I wonder and i want to come back to this point now, the one that i brought up before i wonder if there's an element of how do you call it talent securing, right?
Perhaps, because when you've got more and more big players coming in I mean, there are already an uncountable number almost of delivery riders around the country, and so when you've got more players coming in, that's an increase in competition amongst themselves, but it's also an increase in competition for securing these part-time and full-time employees.
So I'm wondering if that's part is strategy here is by offering more benefits.
Yeah, a lot of these, some food delivery platforms you mentioned earlier.
They, these young people, they come in and they just want to look for a gig job and they deliver foods for people and perhaps two, three months later, after they discover that oh, this is not going to bring me a huge salary, then they'll probably start to work somewhere else.
So these platforms, they want to solve this by trying to stabilize their income and make them feel like they're supported.
We've got the system to support you.
That's where, of course, this is agreed by other industry analysts, where this whole trend, as I mentioned earlier, is a strategy, or rather a strategic move driven by talent grabbing logic from these platforms.
Well, you talk about stability, and I think we have to talk about sustainability.
The number that Meituan's investing here, it's not cheap.
It's 10 billion yuan in a relatively short period of time five years to maintain these low rent prices for their riders.
How sustainable is this?
I mean, this has to be one of the challenges facing the platforms.
Definitely, but I think it also depends on the perspective.
If you look at these, if we call them costs that if Meituan, for example, invested 10 billion yuan into housing projects but If you look at the other side of the issue is that when riders can rest well, they can invest more of their energy and time doing more work, which they want to, because their payment depends on the orders.
And that also brings more income on the other side of the paycheck of the company, on the balance sheet of the company.
So it's more of an investment than anything else.
Yes, I would put it that way.
It's not only about the 10 billion that they spend on these housing projects.
And then maybe even the unforeseen.
For example, if the riders are better rested, well-rested, fewer accidents, perhaps.
Yes, exactly.
Things like that.
And also if, for example, when it comes to health insurance if, for example, this company is providing riders with health and pension insurances, and when it compares to players that don't offer these services to them.
Like what Steve mentioned about the tech, the talent grabbing strategy that more people would like to go to that platform.
That also means more revenues and more orders.
So I mentioned this when we got started.
Is there any concern that the cost might shift back to the riders or perhaps even to customers somehow?
Well, that's what they're trying to avoid.
Nowadays, a significant part of absorbing the cost is actually achieved by distributing the financial and logistical burden through partnerships between local governments, governmental bodies, delivery platforms and also other external resources.
You mentioned something very important Fei-Fei, that the operation system and the maintenance system is not offered by Meituan or Ulema or local government.
It's by a third-party participant. of this whole scheme or program.
So they are all participants and they're part of this in sharing the money spent, or the quote-unquote cost.
In this scenario, and also by tackling major expenses like rent platform, increase the writer's net disposable income and improve their working environment, like we mentioned earlier.
This is their efforts in trying to avoid these problems costs being shared by being burdening their riders or us, who's paying for the delivery.
It's not their plan to shift the the um, the cost back to to anyone other than those who are intended to pay for it.
So then, what's going to happen with the industry?
Will this become a bit of a norm?
I would Definitely.
As I mentioned, you know, when writers don't have the sense of, didn't have the sense of belonging, working in cities, I think now they are transforming themselves from city passerbys to city builders.
Because, you know, right now, in nowadays Chinese cities, it's very difficult to imagine a life without them.
They're essentially a part of everybody's life.
They're everywhere all the time.
Yes.
They never stop working.
While they're working, they never stop moving, I should say.
They are constantly in motion.
They are.
They don't stop.
They go in pick up food, come back to their bike, go drop it off.
Come back to their bike, go pick up more food.
It's just unbelievable.
These riders must be exhausted.
At the end of the day.
Exactly.
I have a lot of respect for them every time I see them on the road.
I always try to prioritize them, especially when I'm driving.
I want them to go first because they seem like they're in an urgent And I think being a rider also, you know, asks you to be very skilled in your time management.
Yeah. you have like 10, 20 orders on your hands.
So now, I think, by offering them services like health insurance, like affordable housing, I think the cities are actively saying they're part of us.
We can't live without you.
You contribute to the city's development.
And that matters more than anything to these riders.
Perhaps it was because...
It is because the riders are all around us all the time that people just started to see them as blending into the background.
But by offering them things that they deserve pensions, affordable housing, taking care of their needs, by making sure they get enough rest, by providing these stations where they can get food when they're hungry, to make sure that they're well fed.
These are things that are deserved, and it's nice to see the riders getting the respect that they deserve.
What's next for the apartments, I wonder?
Apartment 2.0, what's that going to look like?
Yes, it's actually being gradually achieved in major cities such as shanghai.
I think that's the ulama that's doing like a profile or a model for that they provide.
They kind of built their, their writers um community into a cultural hub where those writers working for this company they feel not only a sense of belonging, not only that we have a place to sleep, but also we are part of this bigger group.
We are a family or a community here that we share trainings, food and working culture.
And it's just like a small, not only a company culture, but also just a sense of pride in what they do and a sense of belonging in the local city.
That's where it's being practiced right there in Shanghai.
But let's hope, by the time when more and more major companies are joining this poll, it's going to be spread out all across the country with fuller coverage of such services in their apartments, not only just guaranteeing that they have dry cleaners, but also hey, this is somewhere i feel safe and belong to.
Yeah, very well said.
And also i want to say it's a new business opportunities.
Like you can open up a new startup, a startup just targeting managing these housing apartments, and also you can partner, partnering with home furnishing brands to provide cost-effective furniture and appliances and also property management, and also, you know, different new corporation business models can be, you know, forged in the future.
Sounds like you want to open a Starbucks.
Yeah.
When I get my IPO in a listing stock market.
You're spot on with everything that you both said.
It's a lovely story.
It's a five-year investment from one of the big players, so we'll see how it goes.
But they're definitely off to a good start.
