Is it business as usual already? With the majority of China back to work, and slowly getting back to school, there is a cautious optimism about life returning to normal.
More government initiatives and spending inceptives are being announced to speed up the economy, and whilst the country’s GDP has taken a hard hit, consumer confidence appears to be high. What has our PHD China Insights team uncovered in the market this past week?
Economy and Trade
It is being reported that industrial activity in China has completely recovered (Index 101), with the benchmark being two weeks before the quarantine of Wuhan, according to Goldman Sachs.
China’s GDP dropped by 6.8% in 2020 Q1. Beijing and Shanghai both saw their GDP declining (6.6% and 6.7% respectively) due to the impact of COVID-19 pandemic. Shanghai also reported a loss of 63,200 jobs.
Day to Day Life
Looking forward into ‘the next two weeks’, most Chinese consumers’ spending will increase (by 11%) but income and savings they predict to decrease in the short term (by 16% and 29% respectively) although they remain confident about the economic recovery (index: 143), according to McKinsey. More spending is anticipated on household supplies (+25%), groceries (+13%), skin care and make-up (+9%), but less on apparel (-1%) in-home entertainment (-3%), and quick service restaurants (-22%).
The same research indicates the biggest concern amongst Chinese consumers about the pandemic is not knowing how long it WILL last, followed by overall public health, safety of their family and relatives in high-risk population groups.
The Wuhan local government released shopping vouchers on 19th April on its designated WeChat Mini Program in order to help the economic recovery. The total value of vouchers is RMB 30 million and they attracted 2.39 million consumers within the first hour. All vouchers were collected by a number of lucky consumers within 9 minutes.
After selling only 18,600 vehicle units in 2019 (-63% YOY) in China, Renault have announced their exit from China’s market and withdrawing from the joint venture partnership with Dongfeng Motor Group.
Victoria’s Secret announcement of a new brand ambassador, actress Zhou Dongyu (known for her tomboy looks), has sparked a heated social discussion on standards and conventions of beauty in China, with some wondering if the brand is either being bold or has lost its touch.
Starbucks and KFC have launched sustainable meat alternatives in China, with the former launching its “Beyond the Meat” offering and the latter starting the sale of plant-based chicken nuggets.
Luxury brand Hermes announced RMB19 million (USD2.7 million) in sales on the day of reopening of its flagship store in Guangzhou on 11th April.
Travel and Transport
53% of surveyed Chinese consumers are planning overseas trips in 2020 and more than 25% of them plan to travel abroad during the country’s Golden Week (1st to 7th October). 71% of them would consider traveling to Thailand, 72% would stay in hotels (as opposed to AirBnB) and 83% would travel independently. CTrip remains the most popular online travel agency (at 61%), followed by Fliggy (16%), hotel websites (9%) and Booking.com (5%).
Shanghai government has announced the installation of an additional 3,000 car battery power chargers in the city during 2020. Currently there is 1 charger for every 1.7 vehicles which is already much higher than the national average of 3.29.
The national television company CCTV launched a campaign “Thank you for joining shopping for Hubei” in order to help the economy of Hubei province, collaborating with various celebrities such as Austin Li, Zheng Shuang and Zhu Guangquan. The livestreaming sessions on platforms such as Douyin, Kuaishou, Pinduoduo and Taobao included the promotion of agricultural foods from Hubei and helped sell over 790,000 tons of produce within several days.
Lifestyle service platform Meituan has launched a collaboration effort with 19 FMCG brands to release coupons that should help encourage consumer spending in this category. This also indicates the platform’s first serious foray as a potential ecommerce competitor to main players TMall and JD.
Mobike celebrate the Earth Day (22 Apr) by partnering with German design brand YUUE and manufacturing furniture out of scrapped bicycle parts to promote sustainability under the slogan “Born for Environment”
Social media platform Weibo has launched a new feature called Weibo Mini Store (Xiaodian), aiming to utilize its user base and turn them into salespeople who will sell products to others and collect commission on each sold item.
Sources: McKinsey, Goldman Sachs, Dairy Association of China, China Dairy Industry Association, National Institute for Nutrition and Health, C9 Hotelworks, China National Bureau of Statistics, Meituan, Digitaling, TMT, Tesla
Thanks to our PHD China Insights team for their contributions.
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