Hundreds of thousands of Chinese housekeepers have been left in despair as they cannot claim their salaries for the services given. Many are women from the country’s poor rural areas.

According to Chinese financial media Caixin, the cleaning workers and clients have also seen their housekeeping payments evaporate.

The mayhem happened after a series of housekeeping platforms in the country crumpled, with owners disappearing together with money from clients and investors.  

One example is Shenzhen Qingsongdaojia Technology, which was one of the top three platforms for housekeeping services. After the platform closed in July, it left hundreds of millions of yuan in unpaid bills to consumers. About 5,000 workers were stranded.

The situation has worsened to the point that even court intervention is not helping. Such is the case with the family services platform Guanjiabang . Workers have sought legal assistance from local governments, but nothing was resolved. According to Caixin, even as plaintiffs won their lawsuits, the company lacked the funds to make the court-ordered payments. No money was forced out from its founder either since he had no registered asset.

Like other industries in China, these businesses have suffered since COVID emerged two years ago. But Caixin notes that the platforms have also been knocked down over other reasons, including wrong business strategy and lack of supervision.

These sites have made a few common mistakes: betting on market share by spending a lot on marketing and offering deep discounts.

Swan Daojia spent 1.5 billion yuan (over $208 million) on marketing from 2018 to the first quarter of 2021. Over three years, their customer acquisition costs increased by 70%, and they recorded a total net loss of about 2 billion yuan (roughly $278 million).

As reported by Nikkei Asia, Swan Daojia was also accused of offering false background information about nannies. News sources say that several of their nannies have been caught abusing young children. 

Qingsongdaojia also stumbled after a lavish promotion program. To attract more attention, it advertised home cleaning for 29.9 yuan but promised to pay cleaners at least 35 yuan for each household. The business suffered net losses of 137 million yuan ($19 million) from 2014 to the first half of 2018. Investors stopped funding the platform after 2018.

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