China’s retail sales continue to recover, but are yet to reach last year’s level as some observers predict the tightening of household purse-strings due to fears of future recessionary impact.

Whilst international airlines start planning the resumption of their China flights, there is no easing of restrictions on incoming travelers so far (only citizens are permitted to enter the country and must serve 14 days quarantine in government hotels or facilities).

And even with trade tensions at an all-time high, American brands continue to enter the Chinese market during this tumultuous time – with Revlon’s re-entry in the country being somewhat overshadowed in Shanghai by the opening of the first Popeye’s Louisiana Fried Chicken!

 

MEDIA

 

TV: Viewership in China has continued to drop, with ratings for the week between May 4th to 10th, dropping 3% below the pre-crisis levels, compared to 53% higher ratings during the pandemic peak in February.

Cinema: Cinemas in China remains closed and the authorities are yet to announce the reopening date.

Digital media: After the 30% surge in usage during the COVID-19 crisis peak, digital media consumption returned to pre-crisis levels and stabilized to approximately 3.5 hours daily as of May 10th.

Online video + short video: As of May 10th, digital video consumption continued to be higher than in the pre-crisis period, with Chinese Internet users spending about 1 hour 47 minutes on online and short video daily (13 minutes longer compared to the pre-crisis level).

Social: As of May 10th, the time spent on social media almost returned to pre-crisis level with users in average spending one minute longer than in the pre-crisis period (67 min vs 66 min). During the epidemic, Chinese users increased their usage time of social media by 15%, reaching 75.9 mins per day.


COVID-19-RELATED UPDATES

 

Business and Economy 

According to China’s National Bureau of Statistics, total retail sales in China in April fell 7.5% year-on-year, but grew 6.5% month-on-month to RMB 2.82 trillion.

Offline entertainment venues are still struggling. While restaurants and bars have largely reopened, the same cannot be said for the live entertainment venues, with someone of them such as DDC Dusk Dawn Club in Beijing, Arkham Store in Shanghai, Tu Space in Guangzhou closing down permanently. The management of Livehouse, a live entertainment business with venues in Beijing, Shanghai and Guangzhou, has stated that they are still trying to figure out how to revive their hard-hit business. 

A significant number of airlines has announced they would be, subject to the government approval, restarting their flights to China, including Asiana Airlines (12 routes, including Beijing and Shanghai), Delta Airlines (Shanghai), Korean Air (Beijing, Shanghai, Qingdao), Turkish Airlines (Beijing, Shanghai, Guangzhou), United Airlines (Beijing, Chengdu, Shanghai) and Qatar Airways (Beijing, Shanghai, Guangzhou), in spite of the entry suspension for non-Chinese citizens.

 

Brands

Alibaba’s eCommerce platforms (Taobao, Tmall, Juhuasuan) and Pinduoduo were the key choices of Chinese consumers for online purchases of fresh food produce in 2020 Q1 (33.9% and 33.3% respectively), followed by JD.com/Jingxi (25.1%) and Suning/Suning Pingou (4.7%), according to iiMedia Research. 

China’s robotics company Yogo Robot has launched a robot delivery service. Since the start of COVID-19 pandemic, the company’s unmanned delivery service has increased up to 10 times and more than 100 delivery robots have been deployed nationwide.

Real estate conglomerate Wanda has announced it will hold a livestreaming recruitment session for China’s 2020 university graduates. The company also said it plans to offer 180,000 new positions in 2020, out of which 50,000 will be open to the recent graduates.

 

Day to Day Life

82% of Chinese consumers who have recently started using new brands did it due to the compassionate way the brands have responded to the pandemic outbreak, according to a research by PR company Edelman. 

The Wuhan authorities have announced their plan to test all 11 million residents on COVID-19,in order to prevent reoccurrence of the pandemic.

Education companies and organizations in Shanghai (training centers, kindergartens) can resume their business starting from 2 June, announced by the municipal authorities.

On 19 May, 81 cities in China released loan-free coupons on mobile payment platform AliPay that allow small businesses to borrow up to RMB 20,000 without paying interest. 


OTHER UPDATES

 

Industry Update

China’s livestreaming market is expected to reach RMB 73 billion in 2020 (+19.7% YOY), out of which RMB 24 billion is the live gaming share, according Qianzhan Research.

China’s KOL economy to reach the value of RMB 361 billion in 2020 (+33.7% YOY), with KOL eCommerce expected to be worth RMB 107 billion (+35.4% YOY), forecasted by Frost & Sullivan, Qianzhan Research and EqualOcean. 

China’s ACG video platform Bilibili has announced it had 172 million monthly active users (MAUs) in 2020 Q1, representing an increase of 70% YOY and 51 million daily active users (DAUs, +69% YOY). The number of paying subscribers reached 13.4 million, representing an increase of 134% YOY.

China’s online video content platform iQiyi has announced that the company’s revenues in 2020 Q1 reached RMB 7.6 billion, an increase of 9% YOY. Out of this sum, RMB 4.6 billion or 60% came from paid subscriptions, representing an increase of 35% YOY

China’s digital ecosystem Tencent’s revenue in 2020 Q1 reached RMB 108 billion (+26% YOY).Social app WeChat’s number of monthly active users (MAUs) reached 1.2 billion globally (+3.2 vs 2019 Q4) and its Mini Programs now have over 400 million daily active users (DAUs).

In spite of the revenue fraud scandal and subsequent firing of the CEO and COO, China’s coffee chain Luckin’ Coffee has continued expanding its network in 2020 Q2, opening in average 10 new stores daily, with the total number reaching 6912. However, the brand’s stock fell by 36% on the first day of trading on the NASDAQ after over one-month suspension.

 

Brand News

US beauty brand Revlon has re-entered China through eCommerce and with the appointment of K-pop celebrity Jessica Jung as their brand ambassador to appeal to young Chinese consumers.

Luxury brand Dior has partnered with a virtual influencer in China by releasing a short “cyberpunk” film starring existing anime star Nova Xuefei.

US fried chicken restaurant Popeye’s opened its first China restaurant in Shanghai on 15 May, attracting a large number of customers with steep discounts (up to 65% with a price limit of RMB 100). The company also announced it plans to open another 150 restaurants in the country. 

China’s milk tea chain HeyTea started a collaboration with Startfield, a plant-based meat company, by launching a plant-based meat cheeseburger on 18 May. Sold for RMB 25 and available through HeyTea’s WeChat Mini Program, the product was sold out within seconds.

On 17 May, Li Bin, CEO of electric vehicle (EV) company NIO, sold 320 vehicles totally worth RMB 128 million during its half an hour livestreaming session on short video platform Douyin (TikTok in China).

Freshippo, Alibaba-owned O2O supermarket chain, announced launching of its new “0” food product line that will contain “0 antibiotics, 0 artificial hormones and 0 pesticides”.

 


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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We are providing a weekly update on the impact and implications for this current health crisis.

If you have questions or suggestions, please feel free to email us at:

Mark Bowling – CSO PHD China mark.bowling@phdmedia.com or Vladimir Prostran – Group Director Strategic Insights PHD China vladimir.prostran@phdmedia.com