The world is changing in significant ways and marketers need to understand and navigate the new landscape. In our In Lockdown series, our Research & Insight teams from around the world delve into different sectors and trends, and share their learnings.
Here, Senior Planner Jolie Li and Planning Director Kate Wang examine the changes in behaviour that emerged in China during the lockdown, and the lessons that can be learned for those markets at different stages of the pandemic.
China has experienced around two and half months’ national lockdown since the end of January 2020. Confidence is high that the worst is behind us; according to GWI’s multinational study, over 85% Chinese respondents expected the outbreak to be over in three months nationally (this figure is 35% in the UK and 50% in the US).
As I write this, back at my desk in We Are Social’s office in Shanghai, it’s important to note that while we may not be in a full lockdown, we are still far from ‘back to normal’. Many of the behaviours that emerged in lockdown are still with us, whether out of necessity or choice. So here, we look at the current situation in China, and what lessons can be learned for those at different stages of the pandemic.
Growing National Pride for Chinese Domestic Brands
China’s domestic brands have been supporting initiatives by the government and other organisations by pouring huge amounts of money and resources into this fight. This is despite their own dramatic losses, and as such, this led to a wave of favorable discussion online. Some headlines like “After The Outbreak, Let’s Shop Crazily for These Domestic Brands” showcased Chinese consumers’ recognition and pride for these home-grown companies.And we have seen this behaviour in other markets too - shift to buying local in Italy and France as well.
Some notable domestic brands such as Mengniu and Yili have donated millions, or even hundreds of millions, to the frontline. By making donations, some previously low-profile local brands have suddenly caught people’s attention. For example, the skincare brand DR PLANT has donated twenty million + to fight the virus; this has been widely noticed and recognized by consumers after popular celebrity William Chan shared the news in his Weibo account. As people rally around domestic brands, any support from global brands has been overshadowed. Chinese consumers’ boosted confidence and pride for domestic brands through the epidemic has paved the way for more ‘new Chinese brands’ to prosper in the future.
During the outbreak, brands’ social responsibility has been examined closely by Chinese consumers, and this appears to have influenced their consideration in the long term. Alibaba’s new retail store Hema has rolled out a shared-employee initiative in cooperation with a couple of restaurant brands, which has creatively solved the increasing demand for online food delivery while easing the payroll pressure of the highly affected industries. Some well-known Chinese automotive brands such as BYD and WULIN have temporarily transitioned their businesses into mask making so as to support the national urgency.
Increased Online Consumption Accelerated Brands’ Digitalization
Moving to the lives of people, the impact from the national lockdown is even clearer. The most dramatic change, as expected, is increasing digital behaviors and the spike of online consumption. 86% Chinese respondents said they’re spending more time on their smartphones since the start of the outbreak, the highest among other affected countries such as the US, Italy and Spain. People’s activities, from shopping to entertainment or work, have all moved online.
According to data, e-sales on Jingdong to Home jumped 470% YoY during the Lunar New Year week (24th Jan -30th Jan). China will see even more online shopping even after the epidemic has subsided; for example, iiMedia Research states that China's online grocery market is now expected to grow 62.9% in 2020 to 264 billion yuan compared to a 29.2% growth in 2019.
To keep up with this increase in online shopping, brands have looked to collaborate with ecommerce platforms to drive sales. The likes of Calvin Klein, Make Up For Ever and LorealPro have partnered with Tmall Club (a shopping festival hosted by the biggest online shopping site) in creating new “cloud shopping” experiences for consumers. For example, Calvin Klein launched an online pop-up store with the first ever immersive 3D interaction experience on Tmall.
Calvin Klein’s online pop-up store on Tmall.
‘Cloud’, or online, entertainment is on the rise, with variety and fitness using creative methods to produce content. "Tian Tian Xiang Shang," one of China's hottest variety shows, has introduced a brand new way to make programs: Cloud shooting. It invites celebrities to record their sections at home, which are then broadcast on the show (link). Some major sports brands also started to launch cloud fitness programs. For example, Under Armour invited fitness experts to teach audiences how to exercise at home through Tik Tok and other live streaming platforms. Most consumers will get used to this kind of engagement and keep leveraging this interaction even after lockdown.
Online classes & meetings
With around 200 million people and students resuming their work and study through the internet, the usage of online office apps has sharply increased. Microsoft’s Teams saw a 500 percent increase in meetings, calls, and conference usage in China since the end of January.
People’s instant shift to online consumption has pushed the rapid digitalization of brands. The integration of social, e-commerce and O2O (online to offline) has become more important than ever and some brands have reacted quickly to this. For instance, the digital-savvy beauty brand Perfect Diary rapidly moved its offline makeup experts online and leveraged more than 10,000 WeChat groups for private-domain social engagement and commerce. The brand’s sales even grew 250% in both January and February compared to sales a year ago.
While China is out of lockdown, these behaviours have given new momentum to China’s digital economy. It has grown at an annual rate of more than 20 percent in recent years and accounts for about a third of gross domestic product and quarter of the national workforce (link). And it seems as though now, it will only grow faster.
The Rising Trends of Post-Epidemic China
The epidemic has significantly shaped China’s industrial environment. Its instant impact on people’s lives has accelerated transformation and innovation in many sectors. Some new lifestyles and consumption demands are rising, which are leading the new trends for the future. In post-epidemic times, understanding these trends will help businesses grow more steadily and sustainably.
1. People will pay greater attention to health management
From food and fitness to home environment and medical services, people are pursuing higher health standards and experiences.
Food safety: Consumer attitudes toward increased health and wellness are set to remain heightened well after the pandemic ends. In fact, 80% of respondents said they will pay attention to eating healthily after the epidemic is over, according to Nielsen research. Brands that focus on health and safety concepts in the future are likely to see strong demand from consumers who see a renewed sense of importance in staying healthy. For example, Yimishiji, an online food market brand that promotes organic food and mindful eating has gained increasing attention from consumers seeking a healthy diet.
Fitness & Sports: Home exercise programs and the fitness equipment industry are well positioned to grow. Live broadcasts of fitness classes have surged 513% on online sports platform PP Sport since the company launched its courses in late January. This looks to continue: 75 % of the respondents from a recent Nielsen study said they would spend more on sports and fitness in the future.
Smart home & IoT: People care more about the internal environment of their homes. Contactless smart home appliances provide a more convenient, healthier and safer home experience. The Nielsen study found that during the epidemic, contactless services were top of mind for Chinese consumers. Consumers who previously were more conscious about traditional areas like safe hygiene and healthy eating, are now further adopting technology-enabled smart health. Smart homes, empowered by IoT technology, will further meet people’s increasing desire for a more interconnected tech-enabled lifestyle.
Online medical services: The limited medical resources during the outbreak and people’s need for instant health check and treatment have accelerated the development of online medical services. Ping An Good Doctor, a healthcare services platform, had a nearly 900% increase in new users from December 2019 to January 2020. The number of online users and visits also has surged at Ding Xiang Yuan, an online community for healthcare professionals, and Chunyu Doctor, a telemedicine platform (link). It is likely that even after the outbreak, people will show greater willingness to try digital health services.
2. Online, remote work collaboration becomes more familiar to people and will become a part of future work habits
Since lockdown, many Chinese companies have rapidly adopted local productivity solutions such as Alibaba’s DingTalk or WeChat Work to communicate and deliver weekly meetings, training, and lectures. Remote work has never been so familiar in people’s lives.
The global market for video conferencing alone is estimated to reach US$6.7 billion by 2025, according to a separate report by US consulting firm Grand View Research (link). The rapid transition between online and offline work, the increasing blurred boundaries between work and life, and more flexible professions derived from the Internet have all provided strong foundation for the development of online remote work and its integration, which has led the rise of a new working culture.
3. People are more likely to enhance their financial management due to the financial challenges brought by the epidemic
Financial management tools, such as Daodao pocket book, have seen sharp user growth since the outbreak.
Moreover, research showed that during the outbreak, people planned to adjust their living conditions and invested more on finance and real estate.
Precious lessons have been learned in lockdown, but people are now happy to start getting their lives back. The brands and corporations that have weathered through and won the hearts of people will expect to grow. The turbulence tested brands’ agility to transform and innovate, and many are now better set up to succeed in the longer-term.
While China is out of lockdown, the pandemic is yet to come to an end. It will still take some time for society to get back to normal, especially for industries like tourism, hospitality, entertainment and retail that are still struggling. But for now, we’re grateful for the small things and are looking to the moments of hope for the future.