Under the economic development in China, entailed by a rising consumption level, Chinese consumers are demanding more personalized, diversified, and quality clothing. Such was reflected by the total sales volume of clothing market, which reached 2.077 trillion Yuan in 2018. As the 13th Five-Year Plan lays down a 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 explosion of the COVID-19 pandemic which led to cases increasing exponentially, resulting in border closures and slowing economic growth. China’s economy and the global supply chain had 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 and China bearing the brunt.
Preventive and control measures from the Chinese government, which constrained the mobility and activities of its people, had 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. On the other hand, consumers are increasingly using online shopping. According to a research more than half (56%) of Chinese respondents said they expected online spending to surpass their physical store spending in the next year, suggesting that online sales would be a large part of the sales industry. 
2. Research Design and Methods
This research is based on the first part of the investigation on factory garment workers in late 2020. The entire garment industry can be divided into two major value chains. The downstream chain is the clothing production, involving clothing cutting and sewing; while the upstream chain is distribution and retail. Therefore, this second phase of research will focus on the 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, on their job opportunities, employment conditions and labor relations, and on their families’ situation in the past year and now.
This study aims to target H&M and UNIQLO’s stores in Guangdong. According to online information and official websites, most of these multinational brands’ stores locate in Shenzhen and Guangzhou. Each brand has at least two to three stores in each city. Since there are about 100 stores for the two brands in the list, we decided to narrow the scope. Considering the operation of the stores of each brand is same and our research has limited manpower and time to visit most places, we planned to find the above brands in Shenzhen and Guangzhou by visiting at least two or three stores of each brand for investigation.
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 chat. Overall, 5 H&M stores were visits and 4 stores are of UNIQLO. These stores often have 3 to 5 salespeople on work, except the flagship shops has 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 temporary workers, and 3 were part-time workers. The interview was not recorded, and 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 mentioned that stores belonging to the two clothing brands were only affected in the first month after the epidemic outbreak (February last year). H&M temporarily closed one-third of its stores in China. Stores gradually resumed business in March, and so did their employees and customers. This helped H&M return to its usual income in the second half of the year.
However, the Guangzhou flagship stores of these two clothing brands have continued to operate since the epidemic. Despite the low circulation of people during the Lunar New Year in 2020, it is the company’s requirement to open the business. Although the business operating time was as usual, the company strengthened the sanitary measures for the employees and guests, such as helping them take body temperatures.
Changes in sales volume and business content
In February 2020, due to the decrease in people circulation because of the epidemic, the sales volume of the two brands’ stores was declining. 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 the trend had been improving since the second half of the year.
During the epidemic, the two 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 held regular online promotional activities, value-selected products every week, at basically the same price for online and offline products.
In terms of online sales, e-commerce can increase customers’ flow to offline stores. Customers can pay attention to the brand’s official account and also return/exchange products purchased online in physical stores. Secondly, the brand allows users to place orders online and pick them up in offline stores. It also provides location guidance of surrounding stores and QR codes coupons. Third, brand e-commerce networks offer delivery services. Artificial intelligence technology is used to analyze the products, hence sending corresponding 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 the temporary workers, have undergone some changes. At the beginning of the epidemic, due to the low circulation of customers, the scheduling time of temporary workers was largely reduced or even suspended the recruitment for temporary workers in H&M case. Some UNIQLO branches were closed due to property requirements. Though employees were not fired because of this, some voluntarily resigned due to the epidemic.
However, sales volume slowly improved in the second quarter, and all began to recover in the second half of the year. At present, there are more temporary workers and interns in physical stores than permanent workers. Recruiting temporary workers helps save resources for the company as the company does not pay social insurance for workers. Work, thus, can be allocated flexibly. Besides, working hours are more flexible as they are temporary workers. They mostly are requested to work during the peak hours or during the long-term workers off.
Additionally, due to the increasing importance of e-commerce, some employees are mainly responsible for the delivery of online sales. For instance, UNIQLO set up a O2O(Online-to-offline) department in its flagship store. O2O is an offline business model and is about online marketing driving offline operations and consumption. They will be responsible for e-commerce operations, product design, product operations, pre-sales and after-sales customer service as well as other positions.
Working hours and workload
As the current sales volume is better than the beginning of the epidemic, employees often need to work overtime nowadays. At the beginning of the epidemic (from February to April last year), workload was low and the part-time workers could even play their mobile phones during the working hours. However, in the second half of the year, some interviewees revealed that the pace of work in the store 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 is even no time for them to go to the restroom. Most interviewees from UNIQLO responded that working in the stores are ‘fast pace’, ‘heavy workload’ and ‘feel tired’.
Regarding the working hour system, the stores of the two brands are functioning in shifts, 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. Temporary workers can go to work according to their free time, and taking leave depends on the workload of the store. Workers reflected that although they are allowed to take leave but it’s difficult to get approval when everyone is busy, unless ‘you don’t mind losing your job.’
The wage level has changed since the epidemic. During the epidemic, employees did not have any performance bonuses because the business did not meet the requirements. The basic salary of the permanent workers has always been around RMB4,000. The company buy them social insurance, with double pay at the end of the year and paid annual leave.
There are no allowances or social security for temporary workers’ whose wages is paid hourly. No OT payment. The only extra income is that they get paid three times of their wages only if they work on statutory holidays.
In UNIQLO, workers get the OT payment every three months, not as they are paid the wages monthly.
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 much family care responsibilities. There are few temporary workers who are college students that are studying in Shenzhen or their parents are in Shenzhen. They mainly work temporarily during the school holidays. The main purpose of work is to earn some pocket money, to reduce the burden on parents, or to accumulate some working experience. Other interviewees are long-term workers. They are not yet married too and mostly are supporting themselves on their own. There is no difference between the opinions of male and female workers.
Willingness to work in this sector in the future
Temporary workers and part-time workers have different opinions on the future work as clothing sales, but permanent workers would like continue to work in the store. There is no difference between male and female workers in terms of gender.
For temporary workers, they are more likely to leave the job after the school holiday as they will return back to school. Yet, there are two interviewees will consider joining the industry after graduation and becoming a permanent worker. They hope that their current work experience will help them to have the opportunity to be promoted to store managers and no longer need to engage in the entry work.
However, the permanent workers interviewed showed their willingness to stay in this industry and they also felt that they will have the opportunity to be promoted to manager if they worked well. They believe that this job can enrich themselves, and learn about how to operate a fashion clothing store.
In the field exploration and sharing from the employees interviewed, as well as comparing the findings with 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 much popularity after the outbreak, becoming a new trend in the clothing sales industry. In the previous report, because of the withdrawal of foreign trade orders from high-end brands, as well as the reduction in demand of production volume from other sources, factories opened up new business amidst the pandemic, promoting e-commerce platform sales in order to expand the 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 hit hard. Therefore, brands made use of 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 an in-depth understanding of the specific impact of e-commerce growth on store employees. From our understandings, brands had 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 combination did not result in the downsizing of retail employees in stores, but the intensification of work of employees, since retail employees. The effect of e-commerce on the workload of retail workers are still on the rise.
Increased fragmentation of retail workers
The outbreak changed the pattern of employment in the garment sales industry, and temporary workers became mainstream. In the early stages of the outbreak, temporary workers bore the brunt, with fewer scheduling times or the cessation of direct employment. Retail stores of clothing brands only retained long-term workers and laid-off temp workers. However, with the outbreak continued for a long time, coupled with the increase in e-commerce sales amidst the pandemic, the demand for retail store staff correspondingly reduced. In order to deploy staff more flexibly, stores increased the proportion of temporary workers to a point where the number temp workers exceeds long-term workers. The reduction of long-term workers, entailed by the fragmentation of sales employees — this is the most notable difference after the outbreak.
We were more exposed to temporary workers in the survey, most of whom had a very crude understanding of the store situation and a relatively short working period, which was clearly the result of the fragmentation of the store’s work. This is detrimental to employees’ familiarity with each other and even their solidarity.
Inadequate protection on workers
The most immediate consequence of the fragmentation of jobs in the two brand stores is that most employees had low salary and inadequate social insurance coverage, because temp workers are entitled to less labor protections legally. From the Chinese law, temp workers are those who have fixed work positions, participate in the attendance of the unit, obey the rules and regulations of the unit, and recruited temporarily, i.e. part-time employees in law. According to the relevant laws of Guangdong Province, “Work-Related Injury Insurance premiums shall be paid for part-time workers who established labor relations with employers.” However, in our survey, respondents at both brand stores said temporary workers did not 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, pays overtime pay only once every three months, which indeed can be classified as wage arrears. This is nonetheless not regulated by authorities.
The 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 mandates an overtime pay three times of the normal wage for works on statutory holidays among part-time workers. This poses as a further deprival of temporary workers’ protection, which are already meagre. Up to date, no opposition or resistance from temporary workers have took 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. In terms of sales, store sales began to recover in the second half of the year, so that employees work in the store at a higher intensity, having to work overtime to serve customers or organize products. As the outbreak continues, both brands tend to hire college students as temporary workers to cope with demand. But the turnover rate of temporary workers is large, coupled with the training period that students must go through to get familiarized with their workplace. All of this explains why employees feel that their workload is increasing and that they are struggling to cope.
At the same time, the rapid development of e-commerce boosted the demand for employees. If the total number of staff is not increased, store staffs would be faced with significantly increased workloads in e-commerce delivery work and after-sales services.
Less family responsibilities for salespersons paved ways for rampant behaviors from brands
Compared with female factory workers under the age of 40 we met in the previous survey, sales workers in the outbreak had much less difficulty in coping with family responsibilities. The layoffs or lowered wages in factories amidst the pandemic had posed a significant financial pressure on female workers with young children. Garment factories undertaking foreign orders before the outbreak either reduced orders or moved business to Southeast Asia, resulting in downsizing of factories. Workers from factories at the upstream in the value chain generally had a grim outlook.
In contrast, the sales employees interviewed were generally younger, with differing intention to stay in the garment sales industry. Temporary workers are not even married and do not need to take care of their parents for the time being, relieving them of family burdens. Hiring these young people with light family responsibilities as salespeople will undoubtedly lower the barriers to fragmentate their work; temporary jobs without any benefits or social security benefits do not 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 those 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 stores has been phasing out. How will this change the working conditions of the 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.