From bustling hub to ghost town: heart of China’s e-commerce sector feels price war pain

As China’s economy struggles, a rat race in the e-commerce sector has taken a toll on merchants and manufacturers

Reading Time:5 minutes

China’s e-commerce industry is grappling with the devastating impact of involution. Illustration: Brian Wang

Published: 11:00am, 5 Oct 2024Updated: 12:17pm, 5 Oct 2024

To the unsuspecting outsider, Beixiazhu looks like any unremarkable Chinese village. But for years, this was the place to be for ambitious merchants hoping to strike gold in the country’s booming live-streaming e-commerce industry – until the competition simmered to a boil, driving out sellers as quickly as they arrived.

The frenzy began around 2019, as live-streaming e-commerce took off on short-video platforms like Kuaishou Technology and ByteDance’s Douyin. Beixiazhu, sitting on the outskirts of eastern Zhejiang province’s Yiwu city, the global wholesale capital, became an ideal launch pad for go-getters eager to tap into a growing industry that promised fame and fortune just a live stream away.

Today, the legacy from that period still lingers in the 99 houses once occupied by live-streaming sellers in Beixiazhu. Signs advertising “super supply chains” and “viral hot-selling live-stream products” remain displayed on storefronts. On a weathered wall, one can still make out a fading painted slogan: “Without dreams, why come to Yiwu?”

But the bustling crowds have vanished. Shop owners, once hurriedly packing orders, have slowed their pace.

Advertisements in Beixiazhu promoting classes for aspiring live streamers and “super supply chains” for merchants. Photo: Wency Chen

A business owner, pointing at a narrow path outside his shop, said the place used to be jammed with cars and live streamers. If one product went viral, everyone would jump on it, selling it a lower price to beat each other out. Eventually, it came to a point when no one was making any money, and everything fell apart, he said.

That kind of cutthroat competition is referred to locally as juan, a word that entered the Chinese cultural lexicon in recent years. Derived from the Chinese term for involution, it describes a society or an industry caught in a relentless rat race with no real progress, as people undercut each other until all resources are drained.