The recent announcement by Banggood Technology, a major Guangzhou-based cross-border e-commerce company, about implementing an extended leave period for employees has sent shockwaves through the industry. This development appears to be more than just an isolated case—it reflects broader challenges facing the cross-border e-commerce sector.
The Banggood Controversy
Operations staff at Banggood Technology recently leaked an internal company email on social media platforms. The correspondence revealed that due to adverse external conditions, sluggish international markets, recurring pandemic impacts, and supply chain disruptions, the company would reduce investment in underperforming product categories and implement an early leave policy for some employees, effective November 10, 2022.
The leave arrangement includes:
- First month (November 10 - December 9, 2022): Full salary payment
- From the second month onward: 80% of local minimum wage, with continued social insurance and housing fund contributions (employee portions deducted from pre-tax wages)
- Leave duration: Indefinite, pending improvements in external conditions and internal operations
The email also outlined specific leave conditions:
- Office attendance during leave period would be recorded as rest days
- Employees prohibited from third-party employment during leave
- Immediate return required upon recall notification, with termination for non-compliance
- Original November shift schedules rendered void
Industry Backlash
The announcement sparked intense debate within cross-border e-commerce circles. While the first month's full salary appeared reasonable, subsequent wage reductions and employment restrictions drew significant criticism.
An industry insider commented: "This approach essentially forces employees to resign voluntarily while minimizing compensation obligations. For long-term employees in major cities, 80% of minimum wage won't cover basic living expenses, let alone rent. Proper severance should accompany business reductions."
Further concerns emerged when Banggood adjusted its fourth-quarter salary distribution:
- Remaining two-thirds of October performance pay distributed November 10-15
- October-December salaries deferred to month-end or early following month
Industry-Wide Challenges
Banggood's difficulties reflect broader pressures in cross-border e-commerce. After years of explosive growth, the sector now faces multiple challenges:
- Sluggish demand: Global economic downturn reducing consumer spending
- Supply chain risks: Pandemic fluctuations and geopolitical conflicts disrupting operations
- Rising logistics costs: Soaring international shipping rates eroding profit margins
- Increased compliance costs: Stricter global regulations requiring greater resource allocation
- Intensified competition: Market saturation from growing participant numbers
Potential Solutions
Industry players must adapt through strategic measures:
- Operational refinement: Transition from expansion-focused to efficiency-driven models
- Market diversification: Reduce reliance on single markets through geographic expansion
- Product innovation: Invest in research and development for differentiated offerings
- Brand development: Build brand equity to command premium pricing
- Regulatory compliance: Strict adherence to international trade regulations
- Digital transformation: Leverage technology to optimize operations and user experience
Regarding Banggood's approach, industry observers note that if genuine operational difficulties exist, negotiating fair severance packages would demonstrate greater corporate responsibility. The current arrangement—combining minimal wage payments with employment restrictions—appears particularly untenable for employees in high-cost urban areas.
As an industry leader, Banggood's actions carry significant influence, potentially setting precedents for smaller competitors. The company's recent workforce reductions suggest broader industry transformation, where only adaptable, innovative, and operationally efficient firms will survive the coming challenges.