I started my professional life as an investment banking analyst at JP Morgan in Tokyo. My boss told me that a junior banker should see the sunrise before going back home. Initially, I thought that was a bad joke. Then I found that, every morning, he really did come to my desk for a check-in meeting.
Life in Chinese tech companies is not that bad, but it’s not marginally better either. Most of them follow a work schedule called “996”—working 9 a.m. to 9 p.m., six days a week. This isn’t only for engineers. It’s typically for all employees, including those in the back office. On weekdays, typically they work to 10-11 p.m. easily.
Why? Why are tech workers in China working so hard? There are two main reasons.
First, it’s because the compensation level in these tech companies is significantly higher than the compensation in other industries in China. The average annual comp at Huawei was about $155K in 2018. That’s about 10X higher than the average comp in Shenzhen. $155K is not a crazy compensation for folks who work at Google or Facebook in the US. However, the average comp in a big city like New York or San Francisco is around $50-60K, not $15K.
Another big reason is that execution is extremely important for the tech industry in China. I will write a separate blog post about this point. If creativity doesn’t matter that much and if it’s all about execution, it makes sense for the company to heavily incentivize very long work hours.
In his podcast series, Reid Hoffman says that LinkedIn China asked a few hundred engineers to stay in a hotel for a few months to develop a localized version of LinkedIn. The result was a big surprise to him because the work was completed within three months; his initial estimates were that it would take at least a year.
As the tech community grows, this “996” work schedule clearly becomes an issue. It requires the entire family to support one tech worker. It also creates lots of mental health issues. Jack Ma faced lots of negative PR due to his public endorsement of “996”. However, as long as the tech companies can offer very attractive comp packages in China, I believe they can continue to enforce “996” throughout the near future.
One important implication for US start-ups is this: Don’t try to compete with Chinese start-ups in a business in which the only key success factor is execution.