The Post-Pandemic Chinese Economy Self-Salvations And The Opportunities

7 min readMay 26, 2020

A pandemic of the Covid-19 has now caused more than 4.76 million people around the world sick and killed over 316,000 people worldwide. As China moves into its second month of recovery, it gives us an idea of how the post-pandemic world and economy will look like.

While every industry is facing its own difficulty to stay afloat, some industries have shown more signs of robustness than others. The overall great news across the board is, Chinese consumer spending is slowly bouncing back.

The pandemic happened right before the Chinese New Year, when most of the working population in metropolitan cities went back to their hometowns, leaving annual nation-wide shut-down for most small businesses.

The national lockdown imposed by the Chinese government pushed small businesses off the rim. In numbers, 80% of the brick and mortar businesses remained shut from January to February, and the total retail sales of the country declined by 20.5%.

Since the reopening, Shanghai’s retail business has recovered 66.91% of last year’s level and according to CITIC Securities, the expected growth of total sales of Chinese retail business in March would decline only by 5% rather than the 20.5% initially thought.

Photo Courtesy of Value Retail — (Value Retail)

However, the wishfully-expected “revenge buying” style to make up for suppressed buying during quarantine isn’t really happening, as some quarantine habits outlasted the lock-down and consumers are also limiting their activity radius for health concerns.

According to a tourism report during the Qing Ming break by Meituan, local tourists account for 65% in tourism spot ticket sales which is the opposite of past years where hot spots are crowded with tourists from other provinces. On-demand services in China are booming as the “lazy economy” continues.

Restaurant on demand

Offline dining got hit hard around the world during this pandemic. While most of the Chinese restaurants have started take out and delivery service, this is far from a perfect fix as restaurants struggle to cover losses with online-only traffic.

However, some companies have been able to adapt to and benefit from the situation faster than others. The chain restaurant Waipojia (aka Grandma’s Home) that specializes in traditional Southern Chinese cuisine recently launched a sub-brand Laoyaji, which only offers one simple product, duck stew.

The duck stew is priced around CNY 160 and has been bringing the Waipojia over 200 orders per day per store since the quarantine life started.

Restaurants hope to get by with the delivery services need to be good at those games by adjusting the menu offering, starting special promotions, and emphasizing efficiency to maximize output.

As competition gets more fierce on delivery platforms, some companies opt for unique channels. Xibei Youmian Cun, a chain restaurant brand expands to partner with WeChat that lets users order directly through WeChat mini-programs. Companies also partner with YouKu (Chinese YouTube) and Baidu’s delivery platform Ele.me to showcase the dishes in TV shows that can be delivered at your fingertip.

According to a 2018 Chinese restaurant industry report, 94.7% of Chinese customers pick a restaurant because of its few signature dishes. This signals the future of catering success lies in omnichannel availability that enables take out/delivery in multiple platforms as well as simplification of the menu offering.

From ride-hailing to goods-delivery

Ride-hailing companies that have been hurting are reacting fast and pivoting to delivering food and goods to people’s homes.

Didi Chuxing, the ride-hailing leader in China launched its delivery service in 21 Chinese cities in March in an effort to fulfill the increasing needs of on-demand delivery and compensate drivers with more income during this time.

Just a few days ago, Didi founded another company specialized in regular goods and product delivery, signaling its expansion into a bigger market that the gig economy could shine in.

Compared with its major competitor Meituan, a “super app” that features services including restaurant reviews, food delivery, ride-hailing, and movie ticket purchasing, Didi has been losing the battle in recent years.

With no obvious industry leader in the goods transportation industry, Didi’s move into a new foray may finally save itself and inspire other companies who are in the losing battle to “jump out of the box” and mark new territories.

For companies who operate in the gig economy, the key to survival during this time is to recognize the changing consumer demand to adapt to the “new norms” of the post-pandemic life and redistribute resources to where they are needed the most.

It’s also a turning point for the on-demand industry, as users who had never imagined using these services are “forced” to try the services during quarantine and getting used to the convenience from delivery-to-your-door, that could be more open to it thus opening up more possibilities for user adoption.

Data-infused pivot from export-oriented to domestic

According to the World Trade Organization, the scale of the entire global trade market will shrink around 13% to 32%. According to data from the Chinese Customs, China’s total import and export value is CNY 6.57 trillion in the first quarter of 2020, down by 6.4% from last year, and the export value is CNY 3.33 trillion, down by 11.4%.

Chinese manufacturers that were an export-oriented struggle to survive and have to find ways to shift their focus to domestic consumer demand.

Back in 2008, export-oriented manufacturers were facing similar challenges but had to abandon the plan to shift focus due to the lack of resources. With the existence of PinDuoDuo, JD, and Alibaba, companies today are able to switch to domestic consumer needs faster than ever with valid information on distribution channels and marketing strategies.

Taobao, the leading Chinese e-commerce platform, has launched a special discount section to support manufacturers transferring into the C2M business model.

Since April, more than 20,000 manufacturers have joined the section, and Taobao will feature them in the special section with a billion view traffic to support them. Alibaba is also providing small businesses and manufacturers the holistic consumer profile, accelerating the digitization process for manufacturers in terms of customer acquisition, communication, and relationship management.

Live streaming to survival

Dou Yin, Tik Tok’s Chinese version has taken on a new role as an alternative e-commerce platform, as founders and CEOs of major Chinese tech companies, start to leverage its live-streaming function to promote their products in hope of saving their sluggish sales.

Yonghao Luo, the CEO of Smartisan, a popular phone brand in China, led the trend as he started selling Smartisan phones via Douyin live-streaming. Later, he also started selling products from other brands, life supplies like food, skincare products, and designer goods.

While Luo is criticized for some mishaps during live-streaming such as mispronouncing brand names, overall he has achieved a 7.2 million following and sales of CNY 140 million during one session.

Following his performance, other entrepreneurs including James Liang, Chairman of ctrip.com, biggest flight tickets booking platform, Mingzhu Dong, Chairwoman of Gree Electric Appliances, and Weibing Lu, VP of Xiaomi Group presented their “shows” as well.

According to the data by iiMedia.cn which is a leading global data analysis and consulting organization, the Chinese live-streaming e-commerce market in 2019 reached a market size of CNY 433.8 billion and is expected to reach CNY 900 billion in 2020.

Continuing its popularity with lipstick and make-up sales, tech entrepreneurs’ involvement proved live-streaming can also sell products that are more expensive and oftentimes requires more scrutiny.

The companies that are good at saving themselves during this difficult time are the ones that have strong value propositions and step up to fill the ever-changing consumer needs.

In the “The Pandemic & Redefined Consumer Habits” report by Guotai Junan Securities, several changes born out of the pandemic are here to stay and continue to change our lives.

Whether it’s the increasing online consumption of products and services, the growing demand for a healthier lifestyle, or the emergence of technology-boosted contact-less services and the continuing growth of “lazy economy,” how companies view and adapt to the changes is the key to surviving in the post-pandemic economy.