In China, the concept of digitalization is strongly desired, and even conventional industries are actively embracing digital technology in the hopes of gaining a competitive advantage. However, the excessive obsession and improper use of technology by some of them pose a threat to personal privacy.
Most recently, Bianlifeng, a Beijing-based convenience store chain, has come under fire for collecting massive personal information without the knowledge of customers and pedestrians.
In order to find a perfect location for new storefronts, the firm stealthily dispatched a crew of "information collectors" to set cameras at the doorways of residential and office buildings, capturing everyone passing by.
According to a report from Southern Weekly, in Beijing, Bianlifeng has recorded videos of the entrances of most office buildings located in urban areas, including those of some government agencies and state-owned enterprises.
Zhuang Chenchao, CEO of Bianlifeng, once told the press that 70-80% of the company's data is collected by camera, which is also the "core advantage" of the company. “When it comes to selecting a new location, we don't need any human judgment or experience at all," the CEO said.
After setting up a new storefront based on the secretly collected data, the company's self-developed algorithm began to play a significant role, controlling almost every aspect of daily operation.
Cameras cover almost every corner of Bianlifeng‘s storefronts. Every action taken by a customer after entering the store will be recorded and become the basis for the system's decision-making. Meanwhile, the behavior of shop assistants, including organizing shelves, cleaning, heating fast food, etc., is also collected and used to improve store management.
In addition, Bianlifeng uses web crawlers to capture local consumers' consumption data on e-commerce platforms and comment data on social platforms to determine which products are most suited for sale in the store.
Graphic information, both inside and outside the store, is captured by Bianlifeng without the knowledge of pedestrians and customers. Although the company claimed that the information was purchased through a third party, according to Southern Weekly's investigation, there are at least hundreds of thousands of such videos on the company's backend, which is suspected of infringing the privacy of a huge number of individuals and institutions.
Furthermore, the data-driven system has also put a lot of pressure on employees, since practically salesclerk’s every move has to be done as instructed by the system -if the move did not follow the instructions, the system would sound an alarm. Once an employee leaves the monitoring area for more than 3 minutes, the system will inquire as to why he/she left and will request him/her to return promptly.
Zhuang's obsession with technology like data-driven and algorithms has a history. Before setting up Bianlifeng, Zhuang was the CEO of the online travel agency Qunar. The travel industry is brimming with travel sites which have an enormous collection of travel listings, hospitality reviews, and reviewers’ profiles, therefore, OTA platforms normally take advantage of data crawling to help their businesses to function better.
When the convenience store was established in 2015, Zhuang set the principle of replacing human decisions with algorithms as much as possible in operations. Now, the tech-enthusiast believes that the effectiveness of this self-developed model has been verified. "Sales of newly opened stores keep rising while the rent continues to fall, and our algorithm will be updated frequently," he previously told the press.
Zhuang is not the only tech-savvy player in this traditional consumer market. Sparkling water brand Genki Forest, founded by Tang Binsen, former CEO of a gaming firm, won Chinese consumers‘ favor with Japanese-style packaging. And this packaging style is determined by A/B testing, the most common tactic in the Internet industry.
The adoption of the technology has indeed helped Bianlifeng and Genki Forest to expand rapidly, outpacing a significant number of competitors.
Bianlifeng's algorithm, which is based on massive data generated by camera and web crawling, can not only allow the convenience store chain to grow rapidly but also improve operational efficiency. Benefiting from this, it has established about 700 locations in Beijing in the last three or four years, with plans to open 4,000 stores by the end of 2021 and 10,000 stores by 2023.
But under China's Personal Information Protection Law (PIPL), which came into force in November, Bianlifeng should be more compliant. The PIPL laid out ground rules around how data should be collected, used, and stored. Similar to Europe's GDPR, companies would need to obtain consent before collecting and using data from customers under PIPL.
The company was looking to go public in the US with an initial public offering (IPO) that could raise roughly $500 million, Bloomberg reported on July 8, 2021. As regulators tighten their oversight of Chinese companies seeking overseas listing, concerns over Bianlifeng's data security must be addressed.