One night, it was an ordinary walkway in a residential compound in an eastern suburb of Beijing. The next night, it was a night market. Days later, it was gone again.
For a short while, dozens of stalls were set up along a walkway inside the community of around 40,000 residents, selling clothes, packed food, flowers, and accessories.
Wang Meng, 28, was one of those vendors, selling earrings and hairpins.
“In the past, security guards would chase us away immediately,” she told TechNode on Wednesday. “A few days ago people rushed to the street and set up their stalls following Premier Li Keqiang’s remarks on street vendors. The guards tried to cast us out, but in the end they failed.”
The night bazaar popped up during a brief regulatory vacuum in Beijing after Premier Li said street markets were to be legalized on June 1, declaring the so-called “street-stall economy” an “important source of jobs.” This particular market vanished as quickly as it appeared, as Beijing authorities clamped down on spontaneous markets after a five day window.
But elsewhere in China, cities have lifted bans on hawking on public streets in an effort to reboot the economy after the coronavirus outbreak. Chengdu in the southwest province of Sichuan and Nanjing in Jiangsu province have set up thousands of designated areas for street vendors to operate in, state media China News Service reported Thursday.
Li’s public support has made “street vendor” one of China’s hottest buzz phrases—the “internet Plus” or “AI” of summer 2020. Unsurprisingly, tech companies are also jumping on the bandwagon, offering a series of services and incentives tailored for street vendors, including interest-free loans, mobile payment tools, and even food vans for stallholders.
However, vendors interviewed by TechNode were not very interested in tech companies’ much-hyped offerings.
Thanks, but no thanks
Wang resigned her position as a middle manager at a wealth management firm in May. She now makes an average of around RMB 400 ($56.3) per day from her stall, which is equipped with just a table and a lamp.
She sources stock from e-commerce giant Alibaba’s business-to-business (B2B) marketplace 1688.com. The site announced last week it would offer RMB 70 billion in interest-free loans for street vendors for an undefined period of time, allowing them to stock up goods from the platform without paying before they’ve sold them.
Wang says she is aware of the service, but she is not using it. “I prefer to grow my business within the realm of my financial ability,” she said.
Following on the heels of the Alibaba announcement, e-commerce firm JD.com launched the “Spark” plan on Tuesday, pledging approximately RMB 50 billion worth of goods to supply stall owners and shopkeepers and providing up to RMB 100,000 of interest-free credit per merchant.
On the same day, retailer Suning.com said it would offer stall owners free space to store wares in 10,000 freezers in Suning convenience stores and Carrefour supermarkets across the country, according to local media reports.
Other tech companies responding to Beijing’s call to support street vendors include Tencent’s instant-messaging app Wechat, which said it would offer plans (in Chinese) to help with the “digital transformation of small businesses.” Alibaba’s payment tool Alipay said in a blog post (in Chinese) on Tuesday it would also provide small businesses with interest-free loans.
Wang also runs an accessory shop on Alibaba’s online marketplace Taobao which she opened last month. When asked about the incentives offered by tech companies, she said she is more worried about making sales face to face than digital transformation.
Is ‘street stall economy’ the next business fad?
Policy and regulation can have a significant impact on the tech world, especially in China. From mass entrepreneurship to the artificial intelligence boom, government-backed initiatives have created lots of opportunities for Chinese entrepreneurs.
Tech majors often react swiftly to government initiatives. In a Wechat post, Alipay responded to Premier Li’s call in the tone of a young pioneer reporting for duty: “Premier Li, we are already making plans!” The payments platform promised to help to raise income for small businesses from digital operations by 20% and the availability of online loans by 20%.
Chinese tech firms looking for new sources of growth likely also see the “street stall economy” as a new opportunity. Chinese tech companies have long trumpeted so-called “internet thinking”—a business philosophy used by low-margin internet-based services that attract new users by offering them free services or goods. After amassing a sizable user base, they monetize by leveraging online advertising and paid services.
With the potential for street markets to grow into bigger businesses, tech companies are offering them interest-free loans in order to capture their business now in hopes to later sell them lucrative services such as high-rate lending, payment systems, to raw material supply.
Most of the tech companies that are offering interest-free loans to street vendors already offered loans to small- and medium-sized enterprises (SMEs) at sky-high rates.
JD.com offers an online lending service for small businesses with an annual interest rate of 11%, according to its website (in Chinese). Alipay parent company Ant Financial offers a loan service targeting SMEs with an annual rate of up to 17.2% through its online Mybank (in Chinese). By comparison, China’s targeted medium-term lending facility, the Chinese central bank’s policy lending tool for small and private firms, has an annual rate of 2.95% as of April, according to Reuters.
Part-time vendor Li Nan told TechNode she’s looking at loans, but worries they won’t be free forever.
Li, a 22-year-old sales assistant at an internet company based in Beijing, sells prepared seafood she makes at home in the evenings at the same marketplace where Wang’s stall is located. She resigned from her previous company early in the year with the hope of finding a new job after the Spring Festival holiday in late January. However, it took her three months to restart her career because of the Covid-19 outbreak which brought the economy to a standstill. Her new company pays her around RMB 2,000 less than her previous job, she told TechNode.
Li says street selling is just an initial step and she wants to open her own—indoor—seafood restaurant in the future.
“Of course interest-free loans provided by tech companies may help me expand my business considering my financial situation,” she said.
However, Li believes that those loans won’t always be free. “By the time I open my restaurant, I will choose services that suit me the best,” she said.
Come back later (at least in Beijing)
However, Li’s restaurant plans may have to wait for Beijing’s strict city management policies. On Saturday, the City Urban Administrative and Law Enforcement Bureau of Beijing pledged to purge “illegal behavior including street vending,” according to official newspaper the Beijing Daily (in Chinese).
The authorities took action ahead of the announcement. On Friday night, after the city management authorities and security guards took over the night market, street vendors vanished from the street as quickly as they appeared a few days before.
The tech giants are still powering ahead with plans for the street stall economy—but you may have to get outside the fifth ring road to see the results.