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Chinese Consumers Under the COVID-19 Dome

This article was taken and updated from an earlier piece I wrote in mid-March when most of the world is confronting and battling the massive onslaught of the evil force of COVID-19. Much has changed in the last two months. Although the situations in many countries still remain bleak and uncertain, many are trying out all means to bring life back to normal.

The status in China now is perhaps encouraging for the rest of the world. Business activities have largely been restored back to normal. Traffic jams in major cities are good signs that more people are returning to work or going about their daily routines. Schools have just re-opened in a stage by stage manner earlier this week, with more activities returning to normal in the following weeks. Once schools are re-opened, this will accelerate recovery of business activities exponentially as parents no longer need to stay home to care for their kids, freeing themselves up to resume work in a normal sense. But most Chinese citizens remain vigilant about personal hygiene and self-protection to avoid falling victim to the virus given that the 2nd Wave of the outbreak is said to be lurking, unsymptomatic carriers of the virus cannot be easily detected but could be roaming around spreading the virus without themselves knowing.

Ever since the lockdown of cities around China to combat the COVID-19, everyone in China was grounded at home for almost a month, or even longer. The way of life, by right, would have been turned upsidedown. People should be getting crazy without being able to step outside of their homes or were allowed a limited time per family to exit for their shopping needs.

Quite a few clients have asked me about my take on the impact the COVID-19 may have on Chinese consumers when the situation is over. I'm summarizing a few key points here to share with you all.

Impact on daily-life is saved by online shopping and delivery services

It takes a bit of getting used to in order to adjust to the life of being confined at home. But, thanks to the proliferation and broadly used online shopping and the extremely well-developed delivery network around cities, all is not entirely inconvenient.

The online shopping experience during the hardest hit days in China did not differ too much from the normal days, except for the delivery time or the number of days required took a bit longer. But for grocery shoppers, you still got what you needed to be delivered to your residential compound. The only difference was, you needed to personally pick up your groceries at the gate of your compound, a small price to pay to maintain family life as usual.

In the past, not everyone felt comfortable ordering their daily produce or greens online, fearing for being short-changed by sellers giving them products that were not fresh. But the COVID-19 lockdown period and self-quarantine facilitated repeated trials if you have not done so before, obviously not by choice. And we humans are creatures of habits. By the time the virus-scare is over, I would expect the online grocery shopping will remain relatively stable with just a bit of decline, but overall at a level higher than before. With things returning to normal now in China, reports on the increase in online purchases remain under the spotlight for many consumer products.

Human Interactions Will Drive Recovery

The key element missing for the past few months in China was human interactions. Gathering with friends, chatting with colleagues over coffee or a nice meal was impossible. Concerts canceled, trips delayed. When conditions allow, interacting physically with others will likely become the first thing people have in mind. Home-bound activities will reduce. Instead, outdoor gathering, or getting close to nature would be seen as compensations for the lost two months in their fight against COVID-19.

But people will still be cautious over the coming months and avoid places that are too crowded. So, hiking may resume, traveling to scenic places with lots of natural environment could see an increase in the coming months.

But the first thing to pick up would likely be eateries. Restaurants and bars/pubs once allowed to open will be filled by their regular patrons, but perhaps in smaller cliques than usual. Home cooking may reduce, and together with home food delivery. That's because of their urge to go out rather than continue their home-cooking or delivery meal routine.

Beauty and Skincare may Pick Up

The impact of COVID-19 is not just on public health, but also on economic growth and business bottom-line. Many companies would not last past this period or will be forced to scale-down. Uncertainty is looming over many people's mind, securing their job and income could become a challenge.

If one is familiar with interesting social psychology finding of lipsticks during economic crunch, you might know what I'm talking about. The findings from a 2012 paper showed that females will tend to buy more beauty products to enhance their personal look in times of economic crisis and reduced interest in luxury and big-ticket items (Hill et al., 2012). This is based on an evolutionary psychology perspective that our innate tendency to enhance our chance for mates and care will be heightened during a time of crisis.

Translating into the modern world, it is basically looking for a sense of security. Enhancing one's look and one's personal image will be the undercurrent at the back of the minds, especially females. Call it compensation or self-enhancement, whatever way you like, the impact is likely to be on beauty products and skincare. Something far from being a big-ticket item, but yet brings about utility and emotional values important to their survival in a crisis situation, albeit emotionally.

Chinese Tourists May only Benefit a Few Countries

Chinese tourists being the cash-cow for so many countries in the past years, buying up luxury items around the world, shopping for things that would otherwise be more expensive back in China. This phenomenon may hardly be seen this year around the world.

But didn't I say that people will be longing to go out, to be close to nature? Yes, I did. And that still holds.

The unfortunate scene of many countries failing to contain the outbreak in so many countries have sent a rather disappointing safety and public-health signal to the Chinese consumers. Most people starting to feel much safer staying within the borders of China than traveling abroad, a result reflected also in the report prepared by the strategy advisory consulting firm Oliver Wyman (Penhirin & Sham, 2020). In the report, only 16% claimed to wait until no more infections in China or not traveling this year due to the virus (Exhibit 1).

Social media is now flooded with those living or working/studying overseas wanting to come back to China because of the lack of safety they feel elsewhere. And this is also reflected in the report, showing a reduction in overseas travel interest from 36% last year to 23% currently, and of those wanting to travel overseas, 57% indicated Asian destinations being their likely places (Exhibit 2 & 3).

From what I gather, when the situation in other countries returns to normal, say by the middle or later part of the year, perhaps only those countries with an acceptable record of containing the spread and with an abundance of natural beauty and resources will still be able to appeal to Chinese tourists. And of course, the level of discrimination against Chinese as now commonly seen in many countries will also be an important consideration in their choice of future destinations.

For holidaying abroad is not a necessity, it will take stronger efforts than before to woe the Chinese travelers if the destination country did not handle the COVID-19 crisis well.

I wish everyone around the globe to stay safe, healthy, and stay vigilant. Don't worry too much, things will eventually return to normal - a well-proven fact that has stood the test of time.


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