Jason Yu Jason Yu

Involution or evolution? — Productivity and innovation in China’s tech culture

China's tech giants have achieved explosive growth, fueled by a unique work culture known as "nei-juan" or "involution." But what happens when intense competition leads to diminishing returns, and a generation of workers starts "lying flat"? Explore the paradox of productivity and burnout in China's tech scene, and what lessons Western tech and startup leaders can learn from it.

Over the past decade Chinese technology companies such as Alibaba, Bytedance (TikTok), Pinduoduo (Temu), Shein, and Tencent have transformed from being known as “copycats” to becoming innovative global competitors. Many have attributed these companies’ success to the concept of 内卷 nei-juan, which is a literal translation of “involution”. This term was originally introduced by an American anthropologist to describe a society’s inability to continue development despite increased effort by the population. In modern China, the term is now commonly used to describe the feeling of frustration people have caused by intense competition in many areas of life.

How did an obscure anthropology term transition to earn the praise of prominent Chinese tycoons like Alibaba’s Jack Ma? And why is nei-juan now facing a backlash with counter-trends such as 躺平 tang-ping “lying flat” among China’s younger and most educated workers? This article delves into the multifaceted nature of nei-juan within Chinese tech company culture. It explores the drivers of Chinese tech’s incredible productivity and competitiveness as well as strategies for Western tech and startup leaders to enhance sustainability. 

It may first make sense to take a step back and appreciate the scale and context of China’s meteoric economic development over the past 40 years. Even as late as the mid-1980s, over 60% of Chinese workers were still engaged in agriculture (compared with ~2.5% of US workers in the same period). At the same time, it is estimated that up to 80% of Chinese industry was directed by the state. Without well-defined paths to private business success, the current generation of Chinese business leaders charted their paths through a fastidious process of experimentation and risk taking. This process of testing and learning is embodied through the folk saying:  摸着石头过河 “cross the river by feeling the stones”. 

The most successful Chinese business leaders were the ones who relentlessly took step after another to cross the river and drove the 25-fold increase in China’s per-capita GDP from 1988 until today. Proponents of nei-juan espouse tenets of high performance working culture that wouldn’t look out of place on posters adorning the walls any Silicon Valley firm: 

  • Take the initiative to solve problems, don’t wait to be assigned a task or project

  • Focus on the value you can contribute to solving a problem, don’t be held back by what you think is possible

  • Assign specific and measurable objectives to every project

  • Prioritize projects and tasks according to their ROI (return on investment)

  • Ensure every project or task has a responsible owner, hold each owner accountable to their deadlines

Chinese tech companies have embraced these tenets to achieve impressive results, with tech industry productivity levels far exceeding those of other industries. The internal pressure to excel, compels individuals to constantly enhance their skills and knowledge, creating a highly driven and rapidly developing workforce. Colleagues commonly say that 1 year working “996”, the expectation at many Chinese tech companies for employees to work from 9 am to 9 pm, six days a week, is worth 3 years of experience at a traditional employer. Ultimately, the rapid development of human capital contributes to these companies’ successful performance. 

Many Chinese tech companies also take pride in their flat organizational structures where the highest performing individuals are able to rise above the competition to drive progress. Without multiple layers of middle management, these 卷王 “kings of involution” are given huge amounts of autonomy to identify problems, develop solutions, and mobilize resources. This creates incredible amounts of organizational agility, enabling these companies to seize opportunities and respond to challenges quickly. This meritocratic process creates a unique talent pipeline propelling the most ambitious and capable individuals into positions of significant responsibility. 

If nei-juan enables companies and individuals to drive so much economic and personal development value, why do detractors argue that it amounts to “capitalistic exploitation”? Why do some former tech workers choose to quit the game altogether through 躺平 tang-ping “lying flat”, a social trend similar to “quiet quitting” in the West?  

A trending topic on Weibo, a social media platform similar to Twitter / X, explained people’s frustration with nei-juan using the metaphor of a movie theater where one person stands up to get a better view. In order to catch a glimpse of the movie, everyone else is forced to stand up. Eventually everyone is standing on their chairs, and a few are even hanging off of the rafters. The movie hasn’t changed, but no one is enjoying the show. Even worse, is that those few who are unable to stand on their chairs are excluded altogether. 

The focus on simple working tenets and rapid experimentation, means that nei-juan culture is optimized towards execution efficiency and speed. This creates incentives for workers and leaders to focus on ever more trivial projects to be seen as the one “taking the initiative” leading to the original meaning of the word itself, involution. A cautionary example of this type of involution may come from Japan, where even until the late 2010’s electronics giants such as Sony, Panasonic, and Sharp poured significant resources competing over the flip-phone market. While there were cultural preferences for flip-phones in Japan, in retrospect it seems short-sighted to have competed so fiercely over a shrinking niche that had already been eclipsed by the introduction of smart phones a decade earlier. 

Nei-juan culture also extracts a human cost on some of the most talented and ambitious young workers. Chinese tech companies use stack-ranking and commonly mandate the lowest 20% of employees to be terminated every 6-month performance cycle. This, coupled with the huge income disparity between tech and non-tech industry jobs, creates a high-stress and high-anxiety work environment as employees face immense pressure to perform and climb the ladder to economic security. Many workers, afraid of falling behind their peers, sacrifice work-life balance, perpetuating the "996" work culture despite government prohibitions. The intense work culture can have significant negative effects on mental and physical health. Several highly publicized deaths of young workers at Chinese tech companies due to 'sudden illness' have caused public outrage. 

Western tech and startup leaders seeking to emulate the rapid scaling of Chinese tech companies should be mindful of the potential downsides of nei-juan culture, such as short-sighted decision making and employee burnout. 

We may take inspiration from the longstanding debate between two major Chinese schools of thought: Confucianism and Taoism. Confucianism is deeply concerned with individual rules of conduct and the proper rituals in the pursuit of an ideal society. This is analogous to the focus on individual effort and adherence to effective working tenets espoused by nei-juan culture. Chinese society has throughout history tempered the strict adherence to rules with a willingness to “go with the flow” that is presented by Taoism. Instead, Taoism proposes that individuals and societies are best able to achieve harmony and avoid undue stress and anxiety by cultivating an awareness of the hidden nature of reality. 

Put into our modern context, leaders may be better able to adapt to dynamic business situations by tempering the the push for execution with a more intentional approach: 

  1. Balance the execution oriented working principles by demanding high standards. A Confucian-like insistence on execution may create the incentive to chase the most obvious and simplest solutions, potentially leading to wasted efforts. For example, running a sales promotion may be the simple answer to increase sales of a struggling product line. However, a more thoughtful leader should challenge their teams to develop a deeper understanding of the root causes that may lay beneath the decreased sales. Do customers have challenges with certain products or features? Has a competitor released a better, more effective product? Is there an industry-wide trend that will make this product line obsolete? Asking these questions and formulating responses may take more time, but ultimately will prove valuable in avoiding unnecessary blunders. 

  2. Set-up guardrails and monitor for unintended consequences. Businesses and their customers exist in an equilibrium not different from those of natural ecosystems. A Taoist poet may expound on the natural balance between the wolf and elk populations in Yellowstone National Park. In a similar way, a call center leader should be aware of the natural interaction between customer satisfaction and customer service call times. In a common example of unintended consequences, when given a goal to improve efficiency and reduce customer service call times, call center agents may achieve the goal by simply hanging up on customers before the determined cut-off time. Without proper planning to simultaneously monitor customer satisfaction rate as a guardrail, the leader may never know that the “most efficient” service agents actually provided the worst service experience to customers. 

  3. Cultivate a more holistic and comprehensive viewpoint. Taoist students practice arts such as painting, taichi, and tea ceremony to develop a more nuanced “feeling” and mastery. For example, taichi novices struggle with the positions of their hands and feet while intermediate students focus on matching the body and breath or maintaining a grounded center of gravity. Business is also an art that takes on many forms. A narrow focus on simply launching may lead to a complete disregard for go-to-market planning, resulting in excellent products failing to gain adoption in the market. When competing in more established markets the water may simply be too deep to cross the river with bare feet alone. 

  4. Embrace humanity. Ultimately different people at different life stages will be able to succeed in a nei-juan environment. While leaders should hold their people accountable for their performance, they should also recognize that pushing employees to work to exhaustion will not result in improved results. Leaders could develop a culture, similar to that at top-tier consulting companies, where employees who are not thriving receive generous time and career coaching to land in a new position in industry. This leaves a good lasting impression on an otherwise disappointing situation. This human-centric approach pays dividends as “alumni” move into leadership positions in other industries, becoming a major source of future business. 

Nei-juan is a term born from China’s tech industry, however it has counterparts within any organization striving for rapid growth. While the '996' work culture may seem foreign, Western tech and startup leaders may also want to ask if they are incentivizing activity over impact, speed over strategy, and individual ambition over collective well-being? The rise of 'quiet quitting', ‘productivity theater’ and other work related social media trends suggest a growing awareness of these potential pitfalls. The undeniable effectiveness of individual ambition coupled with rigorous execution cannot be ignored. While individual ambition and focused execution are undeniably effective, they don't guarantee long-term success. Conscious effort needs to be taken to avoid falling into the trap of involution with holistic thinking and sustainability.


Further Reading

Read More