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The sudden eviction of tens of thousands of migrant workers from their homes in Beijing is threatening the business model of the country’s booming ecommerce industry, a pillar of China’s vaunted “new economy”.

Low-wage migrant labour is used to transport everything from toothpaste to televisions across the “last mile” of China’s sophisticated logistics network. Dirt-cheap wages make it possible to order low-cost items that are not viable in higher-wage economies — a single cup of coffee, for example, can be delivered for just Rmb5 ($0.80).

But the government “clean-out” of workers prompted by a fatal dormitory fire a fortnight ago is placing pressure on a sector boasting giants such as Alibaba and JD.com that are among the world’s most valuable companies.

“As many delivery people are being cleaned out, it will get more and more difficult to hire,” said Huang Gang, a logistics expert at the China E-commerce Association. “Wages in logistics will increase.”

One courier for SF Express, China’s biggest logistics service, estimated that 20 of its distribution centres — about a 10th of its Beijing total — had been closed. He said six colleagues in his team of 50 had to sleep in their delivery vehicles in temperatures of -5C after their houses were demolished last week. The company has since provided new dormitories to rehouse staff.

JD.com, Alibaba’s biggest rival, messaged its in-house delivery personnel this week saying it would renovate workers’ dormitories to meet building-safety requirements and help relocate evicted staff. The company, which identified labour shortage as a threat to its business model in its last annual report, has 10,000 couriers in Beijing according to market research group IDC.

Three-quarters of Chinese couriers earn less than Rmb5,000 a month, according to a survey by the China Federation of Logistics & Purchasing. Most must pay for their phone calls to consumers and provide compensation if items are damaged.

The clean-out has also closed logistics warehouses and distribution centres judged a fire hazard or without a building licence. Many warehouses must be relocated from the city centre to the outskirts.

While Beijing’s municipal government wants to cap the roughly 22m population at 23m by 2020, increases are permitted for those with a city hukou, a region-based registration document. To meet the overall target it is forcing out “low-end people”, a term the government once used for low-income migrant workers that it is now disavowing following a public backlash.

People walk among the wreckage of buildings destroyed by authorities on the outskirts of Beijing © AFP

Four big listed logistics companies — Best, ZTO, YTO, and STO — announced that delivery times would be affected until the end of December. One ZTO courier said his usual daily load of 100 packages had dropped to 20 in the past week, while several stalls on Alibaba’s ecommerce platform Taobao have stopped shipping to Beijing.

“Many delivery companies have stopped receiving Beijing-bound packages because they don’t have the capacity to deal with them,” said Wang Fei, chief executive of Beijing-based warehouse-sharing company Lianzhong Cloud Warehouse. “Delivery companies face hundreds of millions of renminbi in losses.”

Warehousing accounts for roughly a third of total logistics costs, according to Chu Xuejian, dean of the Modern Logistics Research Center at Shanghai University.

“Previously companies could rent very cheap warehouses, many of which were in violation of building regulations,” he said. “But now they need to move out to legal buildings which are more expensive.”

The evictions have also disrupted the lives of many young professionals who make up the majority of the city’s booming tech sector.

One young woman working for an internet company in Beijing’s tech district in Haidian, where there have been many evictions, was given three days to move out of her apartment. Her post on online forum Zhihu saying she had become “one of the floating Beijingers” was swiftly deleted by censors.

Baidu, China’s dominant search engine and the most valuable tech company in Beijing, has made preparations to help employees. “We have already actively liaised with hotels and moving companies to provide a special discount for Baidu employees and made space for leaving luggage in our offices,” a spokesperson said.

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