Summary of Key Points
This article starts with three recent hot topics: workers in workshops throwing objects, Xingyu Corporation firing fresh graduates, and the subcontracting of the Shanghai GT racing events. It connects these seemingly unrelated social news stories into a complete economic logic: weak demand, rising costs of raw materials upstream, and the fact that the only costs companies can cut are employee salaries and benefits. Workers respond passively by being inefficient, which in turn drives a vicious cycle of "price cuts → quality decline → consumers becoming even less willing to spend → further price cuts" for domestic goods and services. Meanwhile, many companies are turning to exports as a means of profit, making it even more difficult to revive the domestic consumer market. Essentially, this reflects the common perception that it's becoming harder and harder to make money and that there are more and more pitfalls in consumption, all linked together in a chain of cause and effect.
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Detailed and Easy-to-Understand Explanation
1. Why do companies cut costs by squeezing employees first?
Many people are complaining that companies are becoming increasingly stingy: fresh graduates are fired during their probationary periods, benefits are slashed, and workloads double without a raise. The reason isn't that bosses have suddenly become heartless; rather, all other cost-cutting options have been exhausted, leaving only employee costs as the "soft target."
Think about it: the prices of international commodities like oil and iron ore have been rising, and these are globally standardized, so companies can't bargain much on them. Social security and taxes are set by the state, and any violation will result in fines. For downstream suppliers, companies have already pushed prices down to the minimum over the past three years—restaurant owners squeeze the farmers, and factory owners pressure packaging suppliers to the point where they have to recycle cardboard. The only remaining cost to cut is employee costs. Hiring fewer people, reducing probationary periods, canceling benefits, and cutting wages are the easiest ways to save money. However, this approach can't continue indefinitely. Sociologists have long recognized the "weak weapon" of workers: they will do as much as they're paid for, but they may be slow, lazy, or deliberately make mistakes, leading to higher hidden costs. The incidents of workers throwing objects in workshops are a manifestation of this accumulated frustration.
2. Why does cutting prices lead to a cycle of "cheaper products of lower quality"?
Many think cheaper prices are a good thing, but in the long run, it drags down the overall quality of services in the market.
A healthy cycle would be like this: new, high-quality services are first offered to those willing to pay a premium. For example, when Xicha first opened, it sold for 20 yuan, and only young people were willing to try it. As more people started selling milk tea, the supply chain matured, and quality improved, allowing everyone to enjoy it. Eventually, wealthy consumers sought out more expensive options. But now, wealthy people are cutting back on non-essential expenses, and everyone focuses on the lowest prices. To make money, businesses cut corners, reducing quality. If you wanted a day tour for 199 yuan and bargain it down to 99 yuan, the business might have to cut corners to make a profit. When consumers realize that 99-yuan tours are of poor quality, they won't spend that much next time and will look for 59-yuan options, leaving the market with only such tours. As a result, all tours are the same, and even if you're willing to pay 300 yuan for a better one, you can't find it. This is why all ancient towns offer the same sausages and Yiwu souvenirs, and restaurants focus on getting good reviews on platforms rather than on the taste of their food.
3. Why do companies flock to exports?
The domestic market is too competitive and unprofitable. You've probably heard news about China's export data exceeding expectations, with factory orders backlogged for half a year. The reason is simple: exporting is much more profitable. Companies sell standardized products like cups, clothes, and electric vehicles, which are mass-produced on assembly lines with clear costs. There's no need to cater to picky local consumers or deal with employee inefficiencies. Labor costs account for only a small part of the total cost, and profits can be significantly increased through mass production.
But what does exporting really mean? Chinese products are exported, and the money earned is mostly used to buy U.S. government bonds or to acquire resources and equipment abroad, not to raise wages for domestic workers. It's as if we're working for foreigners, saving money that could be used to produce better products for our own people. As a result, domestic businesses are forced to compete on price and quality, making the consumer market more difficult to sustain.
4. Is there no way out of this cycle of price cuts and quality decline?
While this cycle isn't insurmountable, breaking it is challenging. There are exceptions, such as businesses like Pangdonglai that succeed through good service, domestic movies that perform well at the box office, and niche tourist attractions that stand out for their unique experiences. If companies can offer something truly different and of high quality, consumers will be willing to pay and help promote them. However, with slower population growth and tighter budgets, it's difficult to build positive word-of-mouth. The current issues—firing fresh graduates, subcontracting events, and worker unrest—are all part of the same larger problem. Changing this cycle requires offering something truly unique and valuable.