Disneyland reopened, schools are returning, factories are at capacity, and unrestricted travel is widespread. China’s current ‘New Normal’ looks remarkably like the ‘Old Normal’, with a few visible differences.
The tangible changes that have been observed include a much more widespread wearing of face masks than before the crisis, ‘protection measures’ including temperature checks and registrations in areas of greater congestion, and a shift from bricks and mortar retail to ecommerce. With most media returning close to pre-crisis levels, cinema appears to be the main casualty with closures continuing, possibly caused by a general nervousness in gathering people in confined spaces.
The expected but limited and sporadic coronavirus cases cropping up locally and a control on the borders (all incoming travelers still require 14 days quarantine in government facilities), means residents in cities like Shanghai, where there has not been local coronavirus case since early March, are living a life very similar to before the epidemic. Only time will tell if this status quo can be maintained.
TV: The increase in TV viewership in China has proven to be short-lived, with ratings between April 27th and 3rd May falling to the pre-crisis level. In mid-February at the height of the domestic epidemic, TV ratings in China were about 53% higher comparing to pre-epidemic period.
OOH media: As of May 3rd, OOH traffic has almost returned to pre-crisis levels after decreasing by 70% during the epidemic in February. According to Tesla, more than 90% of superchargers (to charge their cars) have been activated in May in China compared to 30% in mid Feb.
Cinema: Cinemas in China remain closed and no confirmation yet when they will reopen to the public.
Digital media: After a 30% surge in usage during the COVID-19 crisis peak, digital media consumption returned to pre-crisis levels to approximately 3.5 hours daily as of May 3rd.
Online video: As of May 3rd, digital video consumption continued to be higher than in the pre-crisis period, with Chinese Internet users spending about 64 minutes on video daily (7 minutes longer compared to the pre-crisis level).
eCommerce: As of May 3rd, eCommerce scale has dramatically changed with the number of online shoppers jumping by over 100 million, from 610 million in December 2018 to 710 million in March 2020.
Social: As of May 3rd, the time spent on social media has almost returned to pre-crisis level with users on average spending two minutes longer than in the pre-crisis period (68 min vs 66 min). During the epidemic, Chinese users increased their usage time of social media by 15%, reaching 75.9 mins per day.
Economy and Industry
According to China’s Automobile Association, the number of vehicles sold in April reached 1.43 million, representing a 36.6% monthly increase vs March and a 5.6% decline YOY. The total number of vehicles sold between January and April was 4.44 million, representing a decline of 32.7% YOY.
According to China’s National Bureau of Statistics, Consumer Price Index (CPI) in April rose by 3.3% YOY, with food products (14.8%) and consumer goods (4.7%) seeing the sharpest increase.
As of May 12th, 80% of residential compounds allow door-to-door delivery, according to eCommerce platform JD.com. Previously delivery companies had to drop off at compound gates, within community drop off lockers or at local convenience stores.
2200 cinemas have been closed and 5328 film & television companies went bankrupt in 2020 Q1. Industry leader Wanda Cinemas reported a loss of RMB 550 million in 2020 Q1. Even in 2019, the growth of newly opened mega and big cinema (with more than 10 screens) was slowing down while consumers showed preference of private cinemas where they can choose their own movie. To boost the industry, the China Film Administration announced to implement tax exemption policy for cinema and movie industry from 1st January to 31st December 2020.
The traffic of 10% of shops in shopping malls bounced back to 80% of pre-epidemic level nationwide by 16th April. Even with 90% of shops reopened, only restaurants and dining services have seen quick recovery while apparel, cosmetic and children entertainment venues are still struggling to attract offline traffic.
Day to Day Life
By May 11th, almost 108 million students (including almost 3 million university students) returned to school This is equivalent to 40% of the total number. Currently four regions in China continue to keep their schools closed and students at home: Beijing, Hebei, Hubei and Heilongjiang.
After being closed for three months, Shanghai Disneyland reopened to the public on May 11th, with all tickets being sold out. This theme park in Shanghai became the world’s first Disneyland to reopen.
Alibaba-owned online travel agency (OTA) platform Fliggy launched a range of discounts for China’s nurses, covering 15,000 hotels and 1,000 attractions in 300 cities to celebrate International Nurse Day (12th May) and express gratitude for their sacrifices during the COVID-19 crisis.
On May 11th express delivery company SF Express launched Fengshi, a food delivery service catering to corporate employees. The service also supports in-store pick-up for some vendors. At present, nearly 100 well-known restaurants joined the service, including Pizza Hut, Kung Fu, Yoshinoya, Domino’s, Yunhai Cuisine, Xibei, Zhou Heiya etc.
Lectra, a high-end automobile brand owned by Geely, launched a livestreaming session on 25 Apr in collaboration with the social commerce RED influencers ABCMama and Chen Yihui during which they shared their test drive experience of Lectra’s SUV Collar 02. The brand revealed that 301 viewers made a test drive appointment through the link shared during the livestream session and 196 of them placed a purchase order on the website within two weeks.
Korean electronics company LG Electronics has signed a partnership with China’s eCommerce platform JD.com to sell RMB 5 Billion worth of products. LG will also invest in JD Home Appliance Stores and set up over 1,000 whole-house appliance demonstration stores, creating smart offline retail platforms in lower-tier markets.
One of China’s recent ‘overnight successes’, the chain Luckin Coffee, has been mired in an accounting scandal that has so far resulted in an 80% decline in value, a forced suspension from trading on the US stock market and the resignations of its CEO and COO. Whilst the business plans to forge ahead, brand health tracking indicates a significant drop in consideration and brand reputation.
In related news, China’s digital media company Tencent has announced a strategic investment in the fast food and coffee chain Tim Hortons China which would be used for business expansion from the current 50 to 1500 restaurants in the next few years. The business that originates from Canada did not disclose investment details.
Bilibili’s market valuation rose by USD 480 million to over USD 10 billion, after the company’s video for National Youth Day (4th May) went viral and created sufficient buzz to influence the stock market price. The company’s stock value on the Nasdaq has almost doubled in the past 5 months.
The number of livestreaming viewers in China reached 560 million (62% of all China’s Internet users) as of March 2020, representing a growth of over 240% YOY, according to China’s Ministry of Commerce.
Bain & Company predicts that the global share of Chinese consumers in luxury purchases will grow from 35% in 2019 to 49% in 2025, while the shares of American and European consumers are forecasted to decline from 22% and 17% in 2019 to 18% and 14% respectively each in 2025.
For earlier weekly reports delivered throughout this crisis, click here
Sources: Infosys, eMarketer, iResearch, Disney China, China Automobile Association, China’s National Bureau of Statistics, Fliggy, China’s Ministry of Commerce, SF Express, YouGov, Shanghai Daily, Geely, Tencent, Bain & Company, JD.com, EntGroup, EastMoney
Thanks to our PHD China Insights team for their contributions.
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