Beyond unemployment: Informal employment and heterogeneous motivations for participating in street vending in present-day China

Abstract

Chinese

The proliferation of urban street vending in developing countries is generally viewed as being as a result of unemployment. Using a theoretical approach based on mainstream perspectives on informal employment and first-hand material from 200 semi-structured vendor interviews in Guangzhou, we challenge this view by revealing the heterogeneity of people’s motivations for participating in street vending in present-day China. Various types of labourers, including wage workers, farmers, the unemployed and small businesspeople, participate in street vending with diverse motivations, but in a common attempt to improve their livelihoods. Such motivations are driven both by the labourers’ responses to multiple socio-economic forces including unemployment, the low quality of waged jobs, rural poverty, the difficulties of maintaining a formal business and the poor remuneration of jobs in cities, and by their desire to achieve autonomy and flexibility. Street vending is mainly argued to be an effective strategy of ordinary labourers to cope with the unfavourable situations they face amidst socio-economic transformation. It should not be seen as a problem, but a potential part of the solution to the problems arising from socio-economic transformation in post-reform China.

Keywords

Asia employment geography heterogeneity informal employment migrant workers motivations street vending urbanisation and developing countries

Introduction

Street vending has become a remarkable part of the informal economies of contemporary cities in the Global South (Brown et al., 2010; Crossa, 2016). The modernist narrative of street vending as a traditional activity has been challenged by a post-modernist view that regards it as a thriving phenomenon in the global economy (Cross, 2000). Why do people engage in street vending? The answer has long been dominated by the dualist perspective, which attributes participation in informal employment to the scarcity of modern-sector jobs in the context of underdevelopment (Bhowmik, 2005; Iyenda, 2005; McGee, 1977; Skinner, 2008). However, this discourse has been criticised by a body of research based on alternative perspectives that associate the causes of participating in informal employment with socio-economic forces other than unemployment (Biles, 2008; Cross, 2000; de Soto, 1989; Maneepong and Walsh, 2013). Recently, efforts have been made to integrate these perspectives to gain a better understanding of the complexity of participating in informal employment in general (e.g. Adom and Williams, 2014; Perry et al., 2007) and street vending in particular (Williams and Gurtoo, 2012).

We make such an effort in order to seek a comprehension of the participation in street vending in China. Although the heterogeneity of street vendors’ motivations has been recognised (e.g. Flock and Breitung, 2016), the composition and dynamics of these motivations remain under-explored in the literature. Particularly in China, the view of street vending as a sign of backwardness is still dominant. This has largely led to the adoption of the exclusionary policy for street vendors in many Chinese cities. Where the policy is opposed, the justification, derived from the view of informal employment as a result of job scarcity, is generally based on the appreciation of street vending as alleviating urban unemployment (Xue and Huang, 2015). However, this view goes far short of explaining the persistence of street vendors in Chinese cities. In particular, it fails to explain why urban street vending prevails in developed eastern regions of China, where the phenomenon of mingong huang or a surplus of waged jobs has been observed (Wan and Liu, 2007). This illustrates that street vending in China is a complex issue beyond the problem of unemployment and that it has a broader socio-economic meaning.

We address this issue by revealing the heterogeneity of street vendors’ motivations. Based on a critical reading of mainstream perspectives on informal employment, namely dualism, legalism, neo-Marxism and voluntarism, we adopt a nuanced approach that understands people’s participation in street vending as being driven by their responses to structural socio-economic forces and their desire to attain the benefits of informal practices. This approach enables us to not only capture the heterogeneity of the motivations for participating in street vending in the Chinese context, but also to critically evaluate the validity of informality theories in explaining street vending. Analytically, this approach is focused on who participates in street vending, what their motivations are and how these motivations are associated with the socio-economic context. We mainly find that participating in street vending in present-day China results from the responses of various labourers to difficult situations, which are caused by multiple socio-economic forces beyond unemployment. Our findings also explain why street vendors persist in exclusionary policy environments, and offer a new basis for explaining the significance of street vending in China.

Perspectives on informal employment: Towards a comprehensive understanding of street vending

Informal employment is generally defined as income-generating activities that are legal (or non-criminal) but are either not covered or insufficiently covered by the regulatory system (Chen, 2007). Informal employment is commonly divided into two types: informal waged employment and self-employment. Street vending is defined as a type of informal self-employment, as it generally involves a lack of business permits, the violation of zoning codes and a failure to comply with tax or sanitation regulations (Cross, 2000). Street vending has become a particular matter of concern for the International Labour Organisation (ILO) and for international scholars since the 1970s (Bromley, 2000; Huang et al., 2014; ILO, 2002). In the past several decades, four basic theories on informal employment have emerged in the research. These theories conceptualise the nature of informal economies through different approaches. Together they form a theoretical basis for understanding urban street vending in the contemporary world.

Dualist perspective and urban unemployment

The dualist perspective emerged in the early 1970s, when cities in the developing world faced immense poverty and unemployment as a result of unprecedented population growth, large scale rural-to-urban migration and underdeveloped industrialisation (Biles, 2008). In the context of this imbalance between demographic and economic development, informal employment expanded as people without jobs created various income-generating opportunities by their own efforts (Hart, 1973). The urban labour market was thus characterised by two sectors: the formal and informal sectors. The prosperity of the informal sector was believed to have resulted from the formal sector’s inability to create sufficient jobs for urban labour forces (Chaudhuri, 2000; ILO, 2002). This argument was strongly supported by Harris and Todaro’s (1970) model, which indicated that the informal sector allowed for rural-urban migration, even in conditions of high urban unemployment.

The unemployment thesis has been accepted and strengthened by a cluster of studies on street vending. McGee (1977) portrayed street vendors as members of the proto-proletariat, who were unable to find employment in modern industries. McGee presumed that this condition would remain for a long time, due to the nature of capital-intensive industrialisation, which creates limited jobs. Indeed, since the 1980s, the adoption of structural adjustment programs and the periodic outbreaks of global economic crises have aggravated urban unemployment in many developing countries, leaving a considerable segment of urban populations no alternative to street vending (Asiedu and Agyei-Mensah, 2008; Bhowmik, 2005; Iyenda, 2005; Skinner, 2008). Engaging in street vending is thus viewed as a choice made by people who must earn a living under conditions of job scarcity. We indeed support the unemployment thesis, but argue that job shortage is only one of the factors driving people’s entry into street vending. This challenges the underlying assumption in the dualist theory that street vending would shrink and disappear with the creation of sufficient jobs in modern industries (Bromley, 2007).

Neo-Marxist perspective and excessive exploitation of labour

From the neo-Marxist perspective, informal employment is a strategy used by capitalist firms to cut costs, improve competitiveness and to weaken the power of unions (Williams and Round, 2007). Informal employment is seen not as a result of the modern economy’s inability to absorb surplus labour, but as a by-product of contemporary capitalist restructuring. Coupled with deregulation and liberalisation, this process has resulted in the erosion of working conditions, incomes and social benefits (Olmedo and Murray, 2002). Although the neo-Marxist perspective focuses on informal waged employment, it has also detected the effect of deterioration in the quality of waged jobs on the expansion of self-employment. Portes (1997) subtly discerned this effect by arguing that poor working conditions, spurred by a neoliberalising capitalist economy, have triggered a sizeable flow of waged workers towards informal self-employment. He critically summarised the situation as follows:

The informal economy is generally defined in the literature as a refuge for those unable to find jobs in the modern sector of the economy … It is ironic that the advent of neoliberalism has reversed the prior relationship between the two sectors, turning informality into a refuge against the depredations of the free market. (Portes, 1997: 249)

Biles (2008: 552) supported Portes’ argument, maintaining that self-employment allows workers ‘to cope with the vagaries of neoliberalised labour markets in which work is poorly remunerated and precarious, rather than scarce’. In this view, engaging in the self-employment of which street vending is part is an action to avoid the exploitation of waged work. This view has received little attention in the literature concerning the expansion of street vending in contemporary cities, but it is important in the Chinese context. We test the shift of waged workers to street vending, and find it to be an important force for the expansion of street vendors in China today. Seen from this shift, the question of street vending in China is not about the quantity of jobs, but rather the quality of jobs.

Legalist perspective and excessive state regulations

The legalist perspective initiated by de Soto (1989) is concerned with the effects of state regulation on the development of economies. Legality/formality is considered to be a privilege of those with economic and political power, with the disadvantaged being forced into extra-legality/informality to earn a living (Maldonado, 1995). Informality is thus people’s spontaneous response to the excessive and unreasonable state regulations that exclude them from formal economies. Recognising informality as a livelihood strategy, legalists highlight the ingenuity and entrepreneurship involved in creating informal employment. Street vendors are considered to be informal dynamic entrepreneurs who overcome the restrictions and costs imposed by bureaucracy (de Soto, 1989). The view of institutional barriers as a driving factor for participating in street vending is relevant in our study in relation to specific segments of street vendors who want to be businesspeople.

The voluntarist perspective and the advantages of informality

A group of studies on Latin American cities conducted under the auspices of the World Bank have developed a new perspective on informality (Biles, 2008). This perspective considers self-employment to be a voluntary option of labourers as they pursue the advantages of informality that are absent in the realm of formality. Such workers seek flexibility, autonomy and freedom and avoid institutional costs so that they can balance their income earning and non-work responsibilities (Maloney, 2004; Perry et al., 2007). Differing from the legalist perspective, which emphasises informality as a forced choice of disadvantaged labourers facing overregulation, voluntarists highlight the voluntary nature in people’s choice of informality as they avoid rigid regulation and pursue flexibility and autonomy. Although legalists advocate policy formalising informality by eliminating the bureaucratic maze (de Soto, 1989), voluntarists suggest that policy-makers consider the advantages of informality and people’s preferences in making a formalisation programme (Maloney, 2004; Perry et al., 2007). Consistent with the view of voluntarists, some researchers have interpreted people’s participation in street vending as their attempt to pursue flexibility and regain control of their lives (Cross, 2000; Maneepong and Walsh, 2013). We also demonstrate the roles of flexibility and autonomy in motivating various labourers to enter street vending, although the choice is not necessarily voluntary.

Towards a comprehensive understanding of street vending

The perspectives on informal employment reveal that people’s participation in street vending is driven by multiple socio-economic forces that are not limited to unemployment (Table 1). This multiplicity does not mean that the explanations for participating in informal economies are divergent or contradictory. Rather, it indicates that these theories are complementary in that each of them is valid in relation to specific types of informal economies, although none of them are comprehensive (Adom and Williams, 2014; Perry et al., 2007; Williams and Round, 2010). This pattern of partial explanations suggests a need to explain the diverse motivations of informal workers by combining different theories.

Table 1.

Summary of perspectives on the participation in informal economies.

Perspectives	Motivations for participating in informal economies
Dualism	Survive due to job scarcity in formal economies, which is generally related to underdevelopment
Neo-Marxism	Seek an alternative livelihood to escape poor working conditions in wage- earning employment in neoliberalised labour markets
Legalism	Overcome high cost of formality to earn a living as dynamic entrepreneurs in the face of unreasonable state regulations
Voluntarism	Attain flexibility, autonomy and freedom, which are generally absent in formal employment, while earning a living

Divergent explanations for participating in street vending tend to arise from totalising vendors as a single group, without considering the heterogeneity within them. For instance, whereas dualists homogenise street vendors as victims of job scarcity in the context of underdevelopment, legalists treat them all as dynamic entrepreneurs who have to circumvent unreasonable state regulation to survive. Likewise, voluntarists perceive people’s choice of street vending as motivated by their individual preference for autonomy, and disregard that people may be forced to choose street vending in unfavourable situations. These illustrations imply that the explanatory power of each theory depends on which specific segments of the street vendor group are examined. Indeed, recent studies have sought comprehensive explanations by de-homogenising street vendors. Williams and Gurtoo (2012) conducted an important study in which they divided street vendors of Indian cities into traditionalists, survivalists, rational economic actors and social actors. They showed the different motivations of these various vendors, as explained to differing degrees by each of the aforementioned theories. However, they failed to account for the socio-economic contexts in which vendors make decisions.

Another notable study is from Liu’s (2013) doctoral thesis on street vending in Guangzhou. He differentiated the vendors into developmentalists, who dropped low-wage work, and survivalist groups, who were unable to find jobs, and associated their motivations with broader socio-economic contexts. We substantially support Liu’s empirical findings and contribute to the literature by adding significant unnoticed aspects about the causes of participating in street vending, such as rural poverty and the reform of state-owned enterprises. More importantly, we develop a nuanced approach that seeks to better understand the motivations of street vendors in the Chinese context based on a critical reading of theories on informal employment.

This approach understands people’s participation in street vending as being pushed by structural forces imposed on them and pulled by the benefits they seek to gain from street vending. Structural forces refer to the socio-economic factors that shape the circumstance in which people work and live, such as the shortage of jobs in urban labour markets, poor working conditions in neoliberalised economies and high costs of accessing formal business under excessive state regulations. These factors are highlighted, respectively, in the dualist, neo-Marxist and legalist perspectives. They serve as the forces that push people to seek to change their status quo. The benefits of street vending are understood as the advantages that enable people to attain autonomy and flexibility while earning a living, as emphasised in the voluntarist perspective. These benefits serve as pulling forces as the street vending represents an opportunity for people to improve their living. However, pursuing advantages of informality does not necessarily entail the voluntary attribute, which should be redressed by considering the structural forces that may render informal practice as a constrained choice. In short, this approach understands participation in street vending as people’s responses to unfavourable situations shaped by structural socio-economic forces, and to the availability of an informal income opportunity that can improve their livelihood.

As different social groups are situated in different socio-economic circumstances, identifying who participates in street vending is important to discerning push factors and understanding how they value the benefits of practising street vending. However, despite being established by current theories, the structural factors that drive people into informal employment are open to be reconstructed, depending on the type of informal economy that is being examined and the context in which it takes place. As Williams and Windebank (2001: 314) argued, different informal economies are caused by local economic, social and institutional conditions that are combined into a ‘cocktail’. Although current theories explain most of the reasons for participating in street vending in China, the real world is more complex than what they have established. For instance, farmers’ entry into street vending is pushed by rural poverty, and their pursuit of flexibility cannot be considered voluntary. Hence, unnoticed factors are added to the explanatory approach to better understand the motivations of street vendors in the Chinese context. This open-ended analytical approach allows us not only to capture the contextualised heterogeneity of the motivations of street vendors in China, but also to critically evaluate the validity of general informality theories in explaining the case of street vending in specific contexts.

Methodology

This article is based on a case study of street vending in Guangzhou in South China. We conducted semi-structural and face-to-face interviews with 200 street vendors in 20 main locations in Guangzhou from October 2011 to February 2012. These locations were randomly selected from the 262 total locations that were identified by the municipal government as street vendors’ ‘black gathering spots’. The selected locations covered various public spaces mainly in/around commercial areas, transportation stations, the exhibition centre and urban villages, but excluded those within residential neighbourhoods, which are mostly not ‘black spots’. Our survey focused on the street vendors selling goods in these public spaces. They were mobile and unauthorised by the state. In Guangzhou, there are authorised street vendors who sell goods around regulated food markets and have stationary locations. These vendors were not included in the survey. Under this definition, the interviewees were purposely selected, based on their gender and the types of goods sold, in an attempt to analyse the diversity among them. The interview questions concerned the participants’ personal and business situations, their working histories, their reasons for entering street vending and the benefits they received from this work.

Providing a general picture of street vendors in Guangzhou is impossible due to the lack of overall data. We provide some socio-economic features of the sample of vendors surveyed in this article (Table 2). Of the vendors, 58.5% were male and 41.5% were female. They were between 17 and 75 years of age. Approximately 30% of them had engaged in street vending for more than five years and approximately half had done so for between one and five years. Most were rural migrants who immigrated from outside of Guangdong Province and who only had middle or primary schooling. Our sample also included some minority groups, including Miao, Hui, Uyghur and Tibetan people.¹ The goods they sold were very diverse, ranging from fruits, cooked foods and drinks to textile, leather or electronic products, toys, adornments and handiwork.

Table 2.

Profile of street vendor sample (n = 200).

Feature	Percentage (%)	Feature	Percentage (%)
Gender		Place of origin
Male	58.5	Guangdong	31.5
Female	41.5	Henan	26.0
Age (years)		Hunan	11.0
< 18	1.5	Hubei	4.5
18–30	30.0	Guangxi	4.5
31–40	34.0	Other provinces	22.5
41–50	24.0	Nationality
> 50	10.5	Han	88.5
Level of schooling		Minority	11.5
No formal education	12.5	Time spent being street vendors
Primary school	31.5	< 1 year	20.5
Middle school	38.0	1–5 years	48.5
High school	15.5	≥ 5 years	31.0
College	2.5

Our first-hand material was collected in Guangzhou. However, our analysis extends to the general context of street vending across China. We crosschecked and interpreted the findings from our field work by analysing additional data on labourers at the national and regional levels, such as official statistics, surveys and research reports. This analysis aims to reveal the relationship between people’s motivations for participating in street vending and China’s broader socio-economic context.

Examining motivations for participating in street vending

To reveal street vendors’ motivations, the central questions concerned who they were before engaging in street vending and why they turned to this activity. More than half of the street vendors (59.5%) had previously worked in private enterprises and approximately one fifth (19%) were farmers from rural areas. Other participants included former owners of individual enterprises (11%) and former state-owned enterprise workers (3%). The rest (7.5%) had various unemployment backgrounds and included waste pickers, disabled people, homeless people and former prisoners. Different groups have different motivations for deciding to enter street vending. To analyse the diversity of these motivations, we classified the vendors into five sub-groups according to the factors that pushed them to engage in street vending. These groups are shown on the left side of Table 3. The right side of the table indicates the ‘pull factors’ or the benefits that each group sought to gain through vending work. The motivations of street vendors are thus defined by a combination of push and pull factors.

Table 3.

Motivations for participating in urban street vending in China.

I. Factors pushing labourers to engage in street vending			II. Factors pulling labourers to engage in street vending
			Autonomy/flexibility		Subsistence income		Nice income
	Number of responses (single)	Percentage	Number of responses (multiple)	Percentage	Number of responses (multiple)	Percentage	Number of responses (multiple)	Percentage
Over-exploited working conditions	96	48%	79	57.2%	41	29.7%	18	13.0%
Farming makesno money	38	19%	23	43.4%	24	45.3%	6	11.3%
Inability to find a job	29	14.5%	3	10.0%	25	83.3%	2	6.7%
Business failureor difficulty	20	10%	8	38.1%	11	52.4%	2	9.5%
Inefficient income for a livelihood	17	8.5%	4	23.5%	12	70.6%	1	5.9%
Total	200	100%	117	45.2%	113	43.6%	29	11.2%

Notes: a) Panel I shows responses to the question about what drove the interviewees to engage in street vending, with each interviewee giving a single response. b) Panel II shows the responses of each ‘push factor’ group (as given in Panel I), concerning what benefits they obtain from engaging in street vending. Each interviewee was allowed to give multiple responses. c) ‘Subsistence income’ and ‘Nice income’ are used to qualitatively describe participants’ feelings on the economic benefits of street vending. Subsistence income summarises the responses ‘just for a living’ and ‘filling the belly’. Nice income summarises the responses ‘better than dagong (work for others)’ and ‘not bad’, indicating that for some of labourers street vending may be a relatively good source of income compared to their previous or present jobs. These feelings are related to people’s personal living situations and expectations.

As shown in the left panel of Table 3, almost half of the street vendors were migrant workers who had given up their waged jobs in the manufacturing or service sectors due to over-exploited working conditions. The second major group included farmers who had turned to street vending because of poor farming income. The third group included labourers who had been unable to find jobs and turned to street vending as their last resort to survive. The fourth group included merchants who had either suffered business failures or confronted difficulties in starting and maintaining a formal business. The last group included urban workers who participated in street vending to supplement their insufficient salaries.

Concerning the pull factors, most of the responses indicated motivations for subsistence income and autonomy. These responses suggest that street vending participants are equally pulled by desires to earn a living and to attain autonomy. Yet, different groups of participants attached different degrees of importance to the needs for subsistence and autonomy in light of the quantitatively different responses they gave to either factor. This difference may be understood by their social and economic situations. Additionally, a few responses related to the motive for a nice income. This does not mean that the street vendors earned absolutely satisfying incomes, but that some of them earned relatively good incomes compared to their previous or present jobs. Indeed, approximately 21% of the surveyed vendors earned more than 3000 yuan per month, which was higher than the average wage of a migrant worker in China in 2014 (2864 yuan; National Bureau of Statistics of the People’s Republic of China, 2014). However, street vending is undoubtedly a way of making a living, as the majority of the surveyed vendors reported earning less than 3000 yuan per month and approximately half (45%) less than 2000 yuan per month.

We now turn to interpreting the motivations of different groups of street vendors and the relations between their motives and the broader context of transformation in China.

Over-exploited working conditions and rapid industrialisation

Many of the street vendors used to be employed in factories in the electronics, textile or leather industries. Others previously held service sector jobs, such as working in restaurants or clothing stores. They had originally escaped the poverty of the countryside, but this escape led to the hardship of factory life, which induced a desire to turn to self-employment. For many, leaving waged employment was not forced upon them by factory closures or economic downturns, which is common in many developing countries. These people chose street vending to avoid over-exploitation in jobs characterised by low wages, wage arrears, excessive work hours and the loss of dignity and hope. A street vendor who quit her job at an electronics factory eight years earlier described factory life as follows:

Every day I had to get up at 6:00 am and eat an unpalatable breakfast. The rice was not fully cooked, and the cucumber was spoiled. It was said that we could get off work at 8:00 pm, but we actually often worked until 10:00 pm without any additional payment. The wage was low, about 1000 to 2000 yuan per month. The factory held a month of your salary to control you. If you left, you lost it. If you stayed, your salary was often suspended. You had no way! I left after several months and gave up all the payment I should have received.

After wage issues, the second factor inducing workers to opt out was the rigid and ruthless regimes of modern economic sectors. The interviewees said that they worked in insecure environments, living in fear of developing a disease or being crippled by the machines. They were often mistreated and subjected to restrictions on their freedom. Their desire to govern their own lives drove them to leave and turn to street vending as a flexible form of self-employment. Street vending provided them with a source of income while enabling them to return to their hometowns when necessary to take care of their families. This flexibility was important because as migrants they were unable to settle their parents and children in the city. One of them gave the following explanation:

I can’t bear the control of somebody else. The factory has its regulations. If you don’t conform to them, you get a scolding and punishment. I can’t take it. I like freedom. Importantly, I can return to my hometown whenever necessary to look after my parents, who are in their 70s. In the factory, it is much too difficult to ask for a leave and the boss will deduct your wages!

This flexibility was particularly important for women, given their familial role in Chinese society. Many of the female labourers said they gave up waged jobs after marriage, and took to street vending because it enabled them to balance work (which was necessary for maintaining their livelihoods) and their familial responsibilities, such as cooking, housecleaning and childcare. On Guangzhou’s sidewalks, it is common to see a mother carrying her baby on her back while managing trading activities. This is why autonomy is as important as subsistence for this group of workers. A female vendor who quit three jobs explained the necessity for street vending:

Factory work is no longer suitable for me, as I need to periodically go back to my hometown to see my children. The factory usually refused my requests for a vacation, so I quit. I miss my children and I miss home so much, but I have to work. My children need me, and often ask me not to work outside, but if I don’t work, who would support the family and their education?

Additionally, a lack of hope for promotion in waged sectors drove some of the young migrant workers to start businesses on their own. They did not want to just make profit for others with no possibility of promotion. They realised that their lack of social and human capital was the reason they failed to obtain promotions and that they could not change the situation. However, a change for the better could lie outside of the futureless waged job sectors. For these people, street vending is not only an alternative income opportunity against capitalist over-exploitation, but also an entrepreneurial activity for accumulating capital and experience towards a future formal business. This motive helps explain the increase in young street vendors in Chinese cities in recent years.

In sum, this group of workers took up street vending to avoid the fate of cheap labour and over-exploitation, rather than in response to job scarcity. Generating exploitative jobs in China is closely related to the industrial race to the bottom, which is characterised by relying on industries at the low end of global value chains and by employing cheap labour. A national report provided a broad profile of the ill treatment of migrant workers: 46% worked nine hours or longer per day, 52.2% experienced wage delays and 76% did not get overtime pay (State Council of China, 2006). Another sample survey of 1024 migrant workers in developed regions of China revealed the phenomenon of physical abuse: 1.8% had been hit by managers, 1.5% had been locked up, 2.3% had been prohibited from using the toilet while working and 2.5% had been prohibited from drinking water while working (Wan and Liu, 2007). Although such abuses frequently incur workers’ protests, they have received little significant political response due to the lack of union protection and the state’s prior support of capital for the sake of economic development in China (Pun and Lu, 2010). When ‘there is no future as a labourer’ (Chan, 2010), quitting becomes a rational choice. This is what we see in the experience of workers who have shifted to street vending. Their choices imply that the existence of street vendors in China is not simply a problem of job scarcity, but one concerning the low quality of jobs in rapidly growing economies.

Poor income from farming and rural poverty

Two groups of farmers who engage in street vending were identified. The first group included those who either rented out or abandoned their farmland and took to full-time vending work as a new means of livelihood. These individuals never tried to find city jobs, as they supposed there were none suitable for them. The second group included those who retained their farm work, but moved to cities in the non-farming seasons and took up street vending to supplement their poor farming income. These vendors also had no interest in waged employment, as they needed to return to their hometowns in the farming seasons. Therefore, autonomy was just as important as economic income for them in terms of the benefits they gained from street vending. Interestingly, in this seasonal group of vendors, there were a few Tibetans who moved to southern cities in the winter to avoid frigid weather in their hometowns, in addition to supplementing their income. They usually returned to their hometowns when summer arrived. Consequently, Guangzhou often sees more street vendors in the winter than in the summer.

When the former farmers were asked why they engaged in street vending, the most common answer was that ‘farming makes no money’. These farmers attributed their poverty to three factors. First, farmers generally only acquire a patch of farmland of two or three fen (1 fen = 66.7 m²) from the government. The small scale of production and their reliance on simple technology restricts the profitability of farming. For them, farming only meets their basic needs for food, what they call ‘filling the belly’. This income is far from enough to pay for their children’s education or to meet other daily expenses. Second, although the prices of agricultural products have risen and the taxes on farmers have declined owing to the national support policy, currency inflation has resulted in a continual increase in the prices of chemical fertiliser and diesel, thereby increasing the costs and risks of farming. Third, farmers are vulnerable to natural disasters. They lack state protection against floods, droughts or typhoons, which can drive them to bankruptcy overnight, reduce them to complete poverty and run them into debt. A fruit vendor who abandoned her farmland sadly recounted her experience:

You earn little money by farming. I used to plant bananas in my hometown, but it was all destroyed by a typhoon. I lost a lot of money. The chemical fertiliser was very expensive and cost me a lot of money. I gave up. What do you think I can plant without capital? I therefore moved to a city to take up street vending. I need to earn money for a living and to support my children’s education.

The motivation of farmers to engage in street vending implies that migrating from rural to urban areas is less a result of surplus rural labour than a response to pervasive poverty in rural areas. Surplus rural labour is considered as the main push factor of rural outmigration in rural-urban migration theories (Fay and Opal, 2000). It is unlimited in Lewis’s dual economies (Kirkpatrick and Barrientos, 2004). However, the analysis here suggests that rural migration is not necessarily due to surplus labour. That the farmers either abandoned their farmland to become street vendors or switched between farming and vending work in cities illustrates that some rural-urban migrations are not surplus rural labour. Farmers move to cities because of wage differences or expected wage differences between the city and the countryside (Harris and Todaro, 1970; Lewis, 1954), but they may not be surplus labour forces in rural sectors. As Sun (2003) has argued, in China a considerable number of farmers moving to cities are not directly responding to the condition of labour surplus in agricultural sectors, but to their poverty status. This means that rural poverty renders each rural labourer a potential migrant regardless of whether he or she is surplus (Sun, 2003). With the expectation of a better livelihood, farmers in poverty – whether surplus or not – have an incentive to participate in urban street vending.

Rural poverty in China is closely related to the uneven development of urban and rural areas. As shown in Figure 1, the per capita income of peasants has grown much more slowly than that of urban residents since 1980. For decades, there has been a growing rural/urban income gap. At present, urban residents typically earn triple the income of peasants, who earn only approximately 10,000 yuan per year on average. This unevenness is attributable to the nation’s development strategy, which prioritises the development of cities while neglecting the countryside (Lu, 2010). Indeed, more financial and policy supports have been provided for urban development in the past several decades. As Lu (2010) has pointed out, from 1978 to 2006 the proportion of the total national fiscal expenditure invested in agriculture declined from 13.4% to 7.9%. Meanwhile, the proportion of the total national fiscal support for social welfare in rural areas decreased even more drastically, from 36% to 20%. Despite the increasing policy support given to rural areas in recent years, rural poverty remains a serious problem facing China. Without an improvement in the urban-rural income disparity, poor farmers will continue to seek informal forms of employment, such as street vending in cities.

Figure 1.

The per capita incomes of urban residents and peasants in China since 1980.

Unemployment, insufficient labour demand and the state-owned enterprise reform

The unemployed people engaging in street vending fell into three groups. The first group included workers laid off by state-owned enterprises, who were called xiagang gongren. Official data indicate that approximately 22 million laid-off workers were thrown into urban labour markets from 1997 to 2005 (Ministry of Labour and Social Security of China, 2007). Although many of them obtained jobs under support from government re-employment projects, 2 million remained unemployed (Ministry of Labour and Social Security of China, 2007). Some of the laid-off workers grew hopeless and resentful, and turned to criminal activity, whereas others despaired of the future and became monks (The Laid-off Workers’ Re-employment Survey Group, 1997). Many found it very difficult to find jobs due to their older age (The Laid-off Workers’ Re-employment Survey Group, 1997). Therefore, some of these displaced people took up street vending as a survival strategy. One of them complained to us in anger:

Street vending is a way of begging for food! Stealing, robbing and begging are all ways of begging for food. Nobody wants to do this. None of the rich do this. I do it for subsistence and my children. I tell you that street vending cannot be completely eradicated. If there were no street vendors, the crime rate would be higher.

The second group included workers dismissed by private enterprises. Due to their older age and lack of new skills, they were unable to be re-employed in competitive urban labour markets. The third group included those who had always been excluded from urban labour markets, such as the disabled, former convicts and the homeless. The disabled and former convict street vendors said that they were discriminated against in urban labour markets and decided to support themselves on their own to reduce the economic burden they put on their families. The homeless said that they desired to make a living independently, and did not want to rely on the government or on begging from society. Hence, for the homeless and for other unemployed groups, engaging in street vending was a choice made out of economic necessity. Understandably, these participants reported that the most important benefit they derived from street vending was earning a living.

Urban unemployment has long been a problem in China. Market-oriented reform has stimulated the restructuring of state-owned enterprises, which continually throw redundant workers into the urban labour markets. However, long-term trends in technological innovation are expected to weaken the effect of economic growth on creating job opportunities. The upgrading of industries and the robotisation of production in China have reduced the demand for labour, especially for workers with low skills. A recent report predicted that in every year for decades to come there will be 12 million more urban workers added to the ranks of those unable to find jobs in the modern waged sector (Wu, 2013). This trend implies that street vending will persist as a form of employment and play an important role in alleviating urban unemployment.

Entrepreneurship, competitive business and institutional barriers

The former entrepreneurs who engaged in street vending due to business failures or difficulties fell into three groups, each of which reported different motivations. The first group included former owners of formal shops, located either in shopping malls or along streets. The increasingly competitive economic environment and increasing rent of their shops rendered them unable to maintain profitable businesses. For these participants, the need to make a living was pressing, but autonomy was also important, as they disliked the prospect of rigid waged work. Street vending was an appropriate activity for them through which to escape difficult times. One of them described the process of being expelled from formal business:

You do well, but so do others. You face drastic competition. When your business has but meagre profit, you are finished, especially the small merchants like me. Many of us lose a lot of money in business, run into debt and have hard lives. Yet we seek to make a comeback one day by turning to street vending.

The global economic crisis in 2008 and China’s lowered economic growth rate in recent years have produced an economic climate of intensified competition in which petty merchants suffer the most. This climate has led to the emergence of the second group of entrepreneurs, who have retained their shops but participate in street vending to increase their sales volumes. For example, a man may sell clothes in the streets while his wife takes charge of their indoor business. Another shop owner may continue selling in the street at night after finishing his daytime business. These vendors are doing their best to reduce business risk.

The third group included wannabe entrepreneurs, some of whom were graduates without work experience and others who were former wageworkers. These were people who entered the street vending business to accumulate capital and business experience towards becoming entrepreneurs. It should be noted that the former wage workers in this group were not driven to become street vendors to escape exploitative jobs, but because of their personal preference for entrepreneurship. However, in addition to high shop rent, an array of institutional costs in terms of various administrative fees and complicated requirements for various licenses obstructed them from starting formal businesses. For these people, participating in street vending was an entrepreneurial response to excessive state regulations.

Urban poverty, low salaries and inflation

The last group of participants were members of the urban working class, who took up street vending on a part-time basis as a necessary second source of income. These people worked in service sector jobs, such as restaurants or clothing shops, earning salaries that were far too low to sustain a family. Some of them explained that they earned enough when they were single, but having a child after marriage rendered them unable to make ends meet. This group of participants, therefore, was driven to street vending more by economic necessity than desire for flexibility, although the latter enabled them to earn additional income without quitting their waged jobs. Around 8.00 pm one day, a toy vendor was having dinner as his wife beside him was looking after their baby. He explained his situation:

When I was single, I earned about 1000 yuan per month, and that was just enough for my living. However, everything has increased in price. How can you support a family with children today on 1000 yuan? With low levels of schooling and lack of skill, people like us are fundamentally unable to find a job with sufficient income. In this society, we can’t live without a second income!

Such living conditions are usual in Guangzhou. As shown in Table 4, for the low-income households in Guangzhou, the difference between wage income and living expenses was −2508 yuan and the difference between total income and total expenditures was −1124 yuan. The data suggest that the low-wage workers would have the incentive to reduce the income-expense gap by participating in street vending as a secondary source of income. Moreover, although wages in low-end service jobs either remain low or grow very slowly, the cost of living in the city is continually increasing due to currency inflation. Especially in Guangzhou as a globalising city, the Consumer Price Index (CPI) has grown rapidly. From 1990 to 2014, for example, the CPI in Guangzhou increased from 322 to 916, and during that period the city’s CPI was approximately 1.5 times higher than the national average.² Participating in street vending is thus a choice of the working poor to alleviate relative poverty and enhance their economic security in increasingly expensive cities.

Table 4.

Income and expenses of households at different income levels in Guangzhou in 2013 (yuan).

	Average	Low income	Low-middle income	Middle income	High-middle income	High income
a. Total income	47,880	18,616	33,220	46,987	56,686	85,011
b. Total expenditures	40,758	19,740	30,305	38,249	46,881	69,743
Difference (a–b)	7122	−1124	2915	8738	9805	15,268
c. Wage income	33,743	13,008	25,271	34,879	39,810	62,434
d. Living expenditures	33,157	15,516	24,616	30,934	39,036	56,181
Difference (c–d)	586	−2508	655	3945	774	6253

Source: Guangzhou Statistics Yearbook 2014.

Conclusion

The heterogeneity of the motivations for participating in street vending in present-day China results from the responses of various labourers to their difficult situations, which are caused by multiple socio-economic forces beyond unemployment. These motivations are significantly, but not comprehensively, explained by theories on informal economies. The structural factors that push people into street vending not only involve unemployment, deteriorated working conditions and unreasonable state regulations, which are highlighted by dualism, neo-Marxism and legalism, respectively, but also rural poverty, low wages in urban service sectors and increasingly competitive business environments. These factors push various labourers, such as wageworkers, farmers, small merchants and the unemployed, to turn to street vending to improve their livelihoods.

In addition to pushing factors, labourers are pulled by the advantage of street vending, as highlighted by the voluntarist perspective. This advantage enables people to attain autonomy/flexibility while earning a living. Despite the preference for autonomy, however, the choice of street vending cannot only be considered as being voluntary, as it is made out of pressures produced by structural push forces. This suggests that the voluntariness behind participating in informality should be scrutinised by examining the socio-economic situations in which people make the decision. Our findings illustrate that street vending reflects both the general processes behind the rise of informal economies and the specific dynamics of itself as a particular informality. To understand participation in informal economies, we suggest a nuanced approach that captures and decomposes the heterogeneity of the motivations of informal workers in a specific context.

Of the multiple factors driving participation in street vending, two deserve further discussion, as they reflect two major processes and results of the transformation in China. First and foremost, poor working conditions have contributed to the expansion of urban street vending by considerably shifting wage workers towards it. This is the result of both the development of China as a ‘world factory’ and the emergence of global neoliberalised labour markets. In the context of this shift, street vending is not a stepping stone for rural migrants to enter modern industrial sectors, but an alternative livelihood strategy for escaping capitalist overexploitation. As such, street vending is not so much about the quantity of jobs, but about their quality in terms of wages, dignity and social benefits. This view explains why street vending proliferates and persists in China, despite the country’s rapid economic growth and the availability of jobs. Meanwhile, although dualism assumes that informal sectors would shrink and disappear with the creation of sufficient jobs in modern sectors, our findings suggest that job creation without improvement of job quality may not lead to an expected reduction in street vending.

Second, rural poverty as a result of uneven development in China has contributed to the expansion of urban street vending by pushing a considerable number of poor farmers towards it. As ‘farming makes no money’, poor farmers, regardless of whether they are surplus labour or not, have an incentive to move to cities and participate in street vending to improve their livelihoods. In this light, street vending in Chinese cities is not only an issue at the urban scale, but also a problem of rural poverty and uneven development on the regional scale.

Our main argument is that street vending participation in China is a result of choices that various groups of disadvantaged labourers make to improve their living in the face of adverse conditions. This view forms an important basis on which we can evaluate the significance of urban street vending in China today and judge the policies towards it. The most important implication is that the current exclusionary policy in many Chinese cities is ill advised. Street vending is a strategy used by disadvantaged labourers to cope with the difficult situations they face in the context of transformation. Thus, the exclusionary policy does no more than deprive these people of the opportunity to get by, and would give rise to intractable social problems, such as aggravating unemployment and poverty, increasing protest by workers with poor-quality jobs and enhancing dissatisfaction among poor farmers.

Street vending should not be seen as a problem, but as a potential part of the solution to the problems related to poverty, poor job quality and unemployment mentioned previously. We strongly argue for an inclusionary policy framework for street vending, as it would help mitigate the social problems facing China today. Our findings also suggest that this policy should differentiate support to different sectors of the vendor group, given their diversity. Moreover, policy concerns should also be extended to the issues of relative poverty, job quality and regulation of small business to create better income opportunities for vendors. Detailed discussion of the inclusionary policy is beyond the aim and scope of this article. We call for further exploration of the inclusionary policy in future street vending research.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

This research is supported by the National Science Foundation of China (Ref. 41401169; 41320104001), the Provincial Science Foundation of Guangdong (Ref. 2015A030313842) and the High-level Leading Talent Introduction Program of GDAS (Ref. 2016GDASRC-0101). The usual disclaimers apply.

Notes

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