Research Knowledge

Corona Virus – Impact On Consumption in China

Posted on Wednesday 1 April 2020

ICG member Felicia Schwartz shares her knowledge.

New areas of opportunity
The Corona virus outbreak has nudged or forced many consumers to try new services and products, creating an opportunity for a number of new sectors. Among respondents to the Kantar survey on the Virus impact, 84% tried at least one new service for the first time, the highest being online medical consultancy and online education, followed by working from home software and apps and digital entertainment services .*16 A Digitas Subscription Study of the China Market in 2019 shows a rising trend for subscription services which should only be boosted by the recent virus outbreak. According to the study, TV/movie services (60%) was the top category for subscriptions among Chinese adults, followed by groceries , clothing and accessories (49%), transportation (48%), and music(45%). *17 Self-care, stress management & healthy living will be amongst the prevailing themes in 2020. Fitness and exercise will increase, both within and outside of the home. Cabin fever during the quarantine has meant that downloads of fitness apps such as Keep, and views of exercise videos on Douyin and Kuaishou spread. On the videostreaming site Bilibili, views of fitness content jumped by almost 50%.*18 Travel themes of relaxation and discovering new destinations will resonate most intensely with Chinese consumers after the coronavirus passes, according to CLA, a China consultancy based in California.

Luxury and fashion to increase digital presence
As one of the hardest hit sectors during the outbreak, the luxury sector is finally looking more seriously at digital and tech solutions. This includes e-commerce for the brands that resisted online sales so far, and “see now, buy now” live-streaming, to offset revenue loss caused by the virus and improve their future prospective. Prada just joined Tmall, Alibaba’s e-commerce platform. Belgian brand Delvaux launched on JD.com, and French label Lanvin partnered with the high-end ecommerce platform Secoo to live-streaming their Fall/Winter 2020 fashion show, incorporating a “see now, buy now” function.19 Further digitalisation is also anchored in sustainability. In the fashion industry, where cancellations of Spring shows abounded in China and abroad, there is a certain amount of soul searching underway regarding the huge carbon footprint of the industry. Professionals like Julie Gilhart, CDO of Tomorrow, a business accelerator for brands, sees great possibilities in Shanghai Fashion week going digital, possibly via tie-ups with e-commerce players such as Alibaba and JD.com. She muses that this would provide a layer of access and transparency to China’s emerging designers and creative.20 CSR and holistic messaging .

During the virus peak in China, many brands and KOL’s moved from sales messages to more holistic messages about keeping healthy and positive. Some of this might hang-over and inform a less sales-y and more conscientious tone that espouses expectations already present amongst China’s young consumers. Amongst brands getting directly “stuck in”, Dolce & Gabbana is cooperating with the Italian private college Humanitas University to support a study into immune system responses to the COVID-19 virus*21 and Chanel donated $1.4 million to support China and its citizens, as reported by BOF. *22 Domestically, Weiliang recounts how Alibaba stood out with acts of solidarity such as buying masks from across the world, and helping Chinese farmers overcome interrupted distribution chains. “On social media, she says, consumers clearly commended certain brands for their donation for the fight against the coronavirus, and others for continuing to offer the same high level of service/product under challenging circumstances. On the other hand, companies like Dangdang.com an online book retailer , were named and shamed for keeping people working in unsafe conditions during the outbreak. “ Brand love won throughout this period will surely go a long way and criticism might hurt brands in the long run. Going forward, the most important strategy is to maintain effective communication with Chinese customers, by active engagement rather than active promotion, according to Reuter Communications, a PR agency connecting luxury brands and Asian consumers. This is the ideal time for brands to re-humanise how they are perceived through more empathic communication and playful, gamified content featuring storytelling and rewards. This year’s slew of Valentine’s campaigns in China included some good examples, from Louis Vuitton’s mini program campaign which extended the spectrum of love from individuals to the collective, demonstrating the support and solidarity towards their Chinese customers. To home-grown cashmere company, Erdos Group, promoting the slogan “love is the cure”.*24 Given the additional surge and evolutions in China’s digital channels, Western players will also have to rethink the roles and functions of different platforms and how to maximise their brand message on Weibo, WeChat, little Red Book, Douyin, Bilibili, and other channels.

1*https://www.campaignasia.com/article/coronavirus-impact-on-fmcg-lessonsfrom-the-sars-outbreak/457997 *2 https://www.foodnavigator-asia.com/Article/2019/10/03/No-compromise-ontaste-Conscious-indulgence-trend-observed-in-Chinese-consumers *3 https://www.kantar.com/Inspiration/Coronavirus/Measuring-the-impact-of-thecoronavirus-on-Chinas-consumption *4 https://www.monigroup.com/article/5-ways-coronavirus-changing-how-chinauses-tech *5 https://medium.com/swlh/tech-in-the-time-of-corona-virus-d19711fd5367 *6 https://www.scmp.com/economy/china-economy/article/3052891/coronaviruschinas-consumers-will-not-rescue-economy-when *7 https://www.portada-online.com/tag/retail-marketing/ *8 https://www.techinasia.com/chinas-ecommerce-robots-delivery *9 https://jingdaily.com/the-virus-crisis-forces-retailers-to-think-omnichannel/ *10 https://www.scmp.com/business/companies/article/3048819/chinas-us23trillion-property-sector-tries-out-vr-amid *11 https://jingdaily.com/consumer-sentiment-will-define-a-post-coronavirus-china/
*12 https://www.kantar.com/Inspiration/Coronavirus/Measuring-the-impact-of-thecoronavirus-on-Chinas-consumption *13 https://www.scmp.com/economy/china-economy/article/3052891/coronavirus-chinas-consumerswill-not-rescue-economy-when *14https://www.kantar.com/Inspiration/Coronavirus/Measuring-the-impact-of-thecoronavirus-on-Chinas-consumption *15 https://jingdaily.com/consumer-sentiment-will-define-a-post-coronavirus-china/ *16 https://www.kantar.com/Inspiration/Coronavirus/Measuring-the-impact-of-thecoronavirus-on-Chinas-consumption *17 https://www.marketing-interactive.com/study-subscription-service-usage-inchina-beats-out-us-uk * 18 https://www.theguardian.com/commentisfree/2020/feb/25/coronaviruslockdown-chinese-social-media-laughter-anger *19 https://jingdaily.com/made-in-italy-luxury-brands-halt-production/ *20 https://jingdaily.com/can-digital-save-shanghai-fashion-week/ *21 https://www.hunimed.eu/news/coronavirus-dolcegabbana-and-humanitastogether-for-research/ *22 https://jingdaily.com/resort-shows-cancel-postpone-covid-19-pandemic/ *23 https://www.campaignlive.co.uk/article/western-luxury-brands-navigate-chinanow/1675621 *24 https://jingdaily.com/how-these-6-brands-look-beyond-love-in-this-valentinesday/

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