With continuing economic development in China, and subsequent rising consumption level, Chinese consumers are demanding more personalized, diversified, and quality clothing. This is reflected by the total sales volume of the garment industry, reaching 2.077 trillion Yuan in 2018. As the 13th Five-Year Plan establishes domestic demand-dominated policy guidelines for the economy, the consumer market has become an important factor in China’s economic growth.
However, since 2019 the COVID-19 pandemic has exploded, leading to exponential increases in cases and border closures – with economic growth slowing as a result. China’s economy and the global supply chain have been deeply affected. The International Labour Organization declared the virus a crisis for the labor market, in which the garment industry took the hardest hit, with China bearing the brunt of the impact.
Preventive and control measures from the Chinese government, constraining the mobility and activity of its people, have led to the closure of most factories and brick-and-mortar stores in 2020. In addition, transportation is disrupted, affecting the supply of raw materials. According to the National Bureau of Statistics, China’s total retail sales of textiles and clothing fell by 23.5% in the first five months of 2020 from the previous year. At the same time, consumers are increasingly shopping online. According to research, more than half (56%) of Chinese respondents said that they expect their online spending to surpass their physical store spending in the next year, suggesting that online sales will increasingly be a large part of the sales industry. 
2. Research Design and Methods
The first focus of this research was an investigation of factory garment workers in late 2020. The entire garment industry can be divided into two major value chains. The downstream chain is clothing production, clothing cutting and sewing; while the upstream chain is distribution and retail. The second phase of research focuses on workers in the upstream chain. We will take the garment industry in the Pearl River Delta region as an example, narrowing the scope to the retail sector. This research aims to explore the impact of the epidemic on retail workers, especially female workers: their job opportunities, employment conditions and labor relations, and their family situations in the past year through the present.
This study focuses on H&M and UNIQLO stores in Guangdong province. According to online sources and official websites, most of these multinational brands’ stores are located in Shenzhen and Guangzhou. Each brand has at least two to three stores in each city within Guangdong. Since there are about 100 stores for the two brands in the list, we decided to narrow the scope. As operations in each brand’s stores are similar, and given our limited manpower to undertake this research and time to make in-person visits, we decided to visit several stores of each brand under investigation – in Shenzhen and Guangzhou only.
The investigation was conducted from January to February 2021. The research method focuses on interviews with salespeople in the form of face-to-face conversation and WeChat messages. Overall, 5 H&M and 4 UNIQLO stores were visited. These stores often have 3 to 5 salespeople working, except the flagships which have more than 10 salespeople. Our researcher conducted face-to-face interviews with 13 people, of which 69% were female (9 people) and 31% (4 people) were male. Among all interviewees, 5 were permanent workers, 5 were temp workers, and 3 were part-time workers. The interviews were not recorded, the content was compiled by our researcher.
3. Research findings
3.1 Impact of the epidemic on the store operation of the clothing brands
Delayed resumption of work
Most interviewees reported that the two clothing brands’ stores were only affected in the first month after the epidemic outbreak (February 2020). H&M temporarily closed one-third of its stores in China. Stores gradually resumed business in March, and employees and customers returned. This helped H&M return to its usual profits in the second half of 2020.
However, the Guangzhou flagship stores of these two clothing brands continued to operate uninterrupted since the epidemic. Despite the low circulation of people during the Lunar New Year in 2020, it was company policy to stay open. Although business operating times were the same, the company strengthened sanitary measures for employees and customers, such as taking body temperatures.
Changes in sales volume and business content
In February 2020, due to the epidemic-related decrease in store attendance, sales volume for the two brands declined. However, business was restored in the second half of the year. Business was affected by the pandemic in the first few months of 2020, but trends have improved since the second half of the year.
During the epidemic, both brands concentrated on online promotion and sales. Online store sales have returned to normal since March, with sales increasing by about 20%. The brand has adopted a variety of promotional methods and developed a new retail “online + offline” model. It also holds regular online promotional activities, offering value-selected products every week, at basically the same price online and offline.
Besides online sales, e-commerce can increase customer flow to offline stores. This happens first through customers attention to the brand’s official media accounts. Second, customers can place orders online and pick them up in offline stores, and can also return/exchange products purchased online in physical stores. E-commerce sites provide location guidance to nearby stores, offering QR code coupons to use in those stores. Third, brand e-commerce networks offer delivery services, and artificial intelligence technology is used to analyze these product purchases, sending resulting information to factories and stores at the same time.
3.2 Changes in labor conditions caused by the epidemic
As there were few customers in the first few months of the epidemic, the employment patterns of the two brands, especially regarding temporary (temp) workers, have undergone several changes. At the beginning of the epidemic, due to low circulation of customers, the scheduled work hours of temp workers was largely reduced, or hiring of temp workers was suspended in the case of H&M. Some UNIQLO branches were closed due to epidemic-related property closures. Though employees were not fired because of the epidemic, some voluntarily resigned due to this.
However, sales volume slowly improved in the second quarter, and all locations started to recover in the second half of the year. At present, there are more temp workers and interns than permanent workers in physical stores. Recruiting temp workers saves resources for the company, as the company does not have to pay social insurance for these workers. Work, thus, can be allocated flexibly. Also, working hours can be more flexible as they are temp workers: they are mostly requested to work during peak hours or during times that long-term workers tend not to be working.
Additionally, due to the increasing importance of e-commerce, some employees are primarily responsible for the delivery of online sales. For example, UNIQLO set up a O2O (Online-To-Offline) department in its flagship store. O2O is an offline business model intended to drive offline operations and consumption through online marketing. These employees are responsible for e-commerce operations, product design, product operations, pre-sales and after-sales customer service, as well as other related tasks.
Working hours and workload
As current sales volume is better than at the beginning of the epidemic, employees now often need to work overtime. At the beginning of the epidemic (from February to April 2020), workload was so low that part-time workers could spend their time using their mobile phones during working hours. However, in the second half of the year, some interviewees report that the pace of work in stores is accelerating, with heightening work intensity: they have to keep standing while working non-stop. In one H&M store in Shenzhen, most customers arrive in the afternoon and workers are so busy that there’s not even time to go to the bathroom. Most interviewees from UNIQLO responded that working in the stores is ‘fast paced’, there’s a ‘heavy workload’, and they ‘feel tired’.
The working hour system for the stores of both brands is a shift system, with morning and evening shifts. Long-term workers have 2 days off each week, 8 days off per month, and 8 hours of work per day. Temp workers can go to work when they are available to do so, and taking time off depends on the workload of the store. Workers stated that although they are allowed to take time off, it’s difficult to get approval when the store is busy, unless ‘you don’t mind losing your job.’
Wages have changed since the epidemic. During the epidemic, employees did not receive any performance bonuses because the businesses did not meet sales requirements. The basic salary of permanent workers has always been around RMB4,000. The company pays for their social insurance, with double pay at the end of the year and paid annual leave.
There are no allowances or social security for temp workers, whose wages are paid hourly. There is no overtime pay, and the only extra income they get is three times their wages if they work on national holidays.
In UNIQLO, workers receive their overtime pay only every three months, not with their monthly wages.
3.3 Impact of the epidemic on the family situation of workers
Family care responsibilities
Most of the interviewees are unmarried and do not have many family care responsibilities. Some of the temp workers are college students studying in Shenzhen, or their parents are in Shenzhen. They primarily work on a temporary basis during school holidays. The main purpose of their work is to earn some pocket money, to reduce the financial burden on their parents, or to accumulate working experience. Other interviewees are long-term workers. They are also unmarried and mostly support themselves solely. There is no difference between the responses of male and female workers.
Willingness to work in this sector in the future
While permanent workers report wanting to continue working in clothing retail, temp workers and part-time workers have different opinions on their future prospects in clothing retail. Again, there is no difference in response between male and female workers.
For temp workers, they are more likely to leave their jobs after the school holiday, when they return to school. Yet, there were two interviewees considering returning to retail after graduation, and becoming a permanent workers. They hope their current work experience will give them the chance to be promoted to store managers in the future, bypassing entry-level work.
Interviews with permanent workers showed their willingness to remain in the industry – they feel they’ll have the opportunity to be promoted to manager if they work well. Further, they believe their job to be enriching, and through it are learning how to operate a fashion clothing store.
From field research and the collected responses of employee interviews, as well as comparisons with the findings from our last survey project, The Half-year Period of Workers Returning to Work in 2020: Changes in Labour Conditions of Garment Industry in the Pearl River Delta Region, we have drawn the following observations, showing the similarities and differences among grass-roots employees in the upstream and downstream of the clothing industry value chain.
Brands are focusing more on the development of e-commerce
First, similar to what was found in the previous report, we found that online promotions gained popularity after the outbreak, becoming a new trend in the clothing retail industry. In the previous report, due to the withdrawal of foreign trade orders from high-end brands, as well as the reduction in demand of production volume from other sources, factories started new businesses amidst the pandemic, using e-commerce platform promotions and sales to expand domestic sales of their own clothing brands. In this survey, we found that sales from retail stores fell sharply in the first month of the outbreak, and performance in the first half of the year was hard hit. In response, brands used social media or e-commerce to promote products, attract target customers, search for potential consumers, and increase turnover. As a result, brands had a better-than-expected recovery in sales since March last year, with online sales growing year-on-year.
However, we could not get in-depth information on the specific impacts of e-commerce growth on store employees. From our understanding, brands further combined online and offline marketing, allowing customers to pick up goods ordered online, return online purchases, and obtain after-sales service in physical stores. Such combinations did not result in the downsizing of in-store retail employees, but rather intensified work for those employees. The effect of e-commerce on the workload of retail workers continues to rise.
Increased fragmentation of retail workers
The outbreak changed the pattern of employment in the garment sales industry, and temp workers became mainstream. In the early stages of the outbreak, temp workers bore the brunt of the economic impact, with fewer scheduled shifts or the cessation of direct employment altogether. Clothing retail stores only retained their long-term workers, laying off temp workers. But with the continuation of the outbreak, coupled with an increase in e-commerce sales, the demand for retail store staff correspondingly reduced. In order to deploy staff more flexibly, stores increased the proportion of temp workers to a point where they far exceed the number of long-term workers. The reduction of long-term workers, resulting in the fragmentation of sales employees — this is the most notable difference after the outbreak.
We had more access to temp workers in the survey, most of whom had only a very basic understanding of the store situation, and had worked for the store for a relatively short period of time, which was clearly the result of work fragmentation in the store. This is detrimental to employees’ familiarity with each other and their resulting solidarity.
Inadequate protection on workers
The most immediate consequence of the fragmentation of work in both brand’s stores is that most employees had low salaries and inadequate social insurance coverage, as temp workers are legally entitled to less labor protections. According to Chinese law, temp workers are those who have fixed work positions, participate in attendance of the unit, obey the rules and regulations of the unit, and are recruited temporarily – i.e. they are part-time employees by law. According to the relevant laws of Guangdong Province, “Work-Related Injury Insurance premiums shall be paid for part-time workers who establish labor relations with employers.” However, in our survey, respondents at both brand stores said temp workers don’t have Social Insurance. At the same time, according to relevant laws, “wage payments for part-time workers can be settled on an hourly, daily, weekly or monthly basis.” This precludes prolonged wage cycles. However, UNIQLO, for example, only pays overtime once every three months, which could be classified as wage arrears. This is nonetheless not regulated by authorities.
This report comes as the Shenzhen government proposes amendments to the Regulations of the Shenzhen Municipality on the Wage Payment to Employees, which proposes to remove regulations that mandate overtime pay for part-time workers, currently set to three times normal wage rates for work on national holidays. This would be a further deprivation of protection for temp workers, already meagre. Until now, no opposition or resistance from temp workers has taken place.
In the previous report, it was noted that the reduction in foreign trade orders at upstream factories had resulted in a significant reduction in the workload of workers, shorter working hours, two-day weekends and downtime on workdays. With downstream sales, store sales began to recover in the second half of 2020, so employees have to work at a higher intensity, working overtime to serve customers or organize products. As the outbreak continues, both brands have been hiring college students as temp workers to cope with demand. But the turnover rate of temp workers is high, and in combination with mandatory training periods for new workers to get familiarized with their workplace, it helps to explain why employees feel their workload is increasing, and that they are struggling to cope.
At the same time, the rapid development of e-commerce is boosting demand for employees. If the total number of staff is not increased, store staff faces significantly increased workloads in e-commerce delivery work and after-sales services.
Less family responsibilities for salespersons paved the way for unchecked behavior from brands
Compared with female factory workers under the age of 40 we met in the previous survey, retail workers had much less difficulty in coping with family responsibilities during the outbreak. Layoffs and decreased wages in factories amidst the pandemic had posed a significant financial pressure on female workers with young children. The reduction of foreign orders originally made prior to the pandemic, as well as shifting production to Southeast Asia, resulted in the downsizing of garment factories. Workers from factories upstream in the value chain generally had a grim outlook.
By contrast, the sales employees interviewed were generally younger, with differing goals in the garment sales industry. Temp workers are unmarried and do not need to take care of parents, relieving them of family burdens. Hiring young people with light family responsibilities as salespeople will undoubtedly lower the barriers to fragmented work; temp jobs without any benefits or social security don’t seem to be a problem for young people with light family responsibilities. Companies are not prosecuted even if there are unlawful practices in the hiring of these temp workers.
At present, the sales model of Chinese brands pays more attention to online interaction with customers than in the past. The role of brick-and-mortar stores is phasing out. How will this change the working conditions of sales employees? In addition, whether the operation mode behind e-commerce and the future development of online sales will affect labor relations and the employment status of employees deserves further discussion.