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Smarter Consumers Borne out of Epidemic

2020-07-24 22:02:00 Source:China Today Author:KANG PU
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To mitigate the economic fallout of the ongoing COVID-19 epidemic, China has been boosting consumption with a host of incentives including tax cuts, subsidies, and vouchers for consumers. As a result, the recovering consumer market is indicative of China’s economic resilience. The epidemic will probably not come to an end soon, but while hitting the economy hard, it is also reshaping consumption in many ways.
                

The advertising board for collecting coupons via the JD shopping app is put up at Wangfujing Street, Beijing, on June 14, 2020.

Recovering Consumption

As the epidemic ebbs away, many Chinese cities have relaxed social-distancing restrictions. Streets are alive again as people begin coming out of their homes and line-up to treat themselves at food stalls and restaurants.

“Finally, I can pamper myself with a decent meal,” said Zhao Xinqi, a resident in Wuhan, the city hit the hardest by the coronavirus. Tired of eating food she prepared herself at home and the delivered take-out food over the past two months and more, Zhao had spent the past several days eating outside, to appease her palate needs for gourmet food.

The catering sector was the first to know that the pent-up demands started to release. “Restaurants have been seeing brisk business particularly after the COVID-19 tests for all residents in Wuhan assured us that it is safe to dine out,” said Xu Ping, a senior manager from Wushang Plaza, a leading shopping hub in Wuhan. “Restaurants have been packed.”

Another sector on the recovery track is retailing. Many cities across China rolled out vouchers to spur consumers to consume. The shopping craze is particularly eye-catching on online platforms. For example, JD.com witnessed a 500 percent jump in grocery sales on June 18, a shopping spree day originally curated by the Chinese e-commerce giant. From June 1 to 17, the sales of more than 3,000 varieties of products on JD.com hit RMB 1 million (US $141,600).

“The epidemic has reinforced consumers’ habit of shopping online,” said Zhao Ping, director of the department for international trade studies at the Academy of China Council for the Promotion of International Trade. Notably, live streaming has given a big boost to online sales. Apart from selling goods, businesses have gone online through live streamed activities to persuade consumers to pay for services relating to such areas as traveling and fitness. “As epidemic prevention becomes a routine of our daily life, online consumption is very likely to maintain its robust momentum,” Zhao said.

Chinese shoppers also brought hope to the luxury goods industry. L’Avenue Shanghai, a flagship shopping center for luxury brands, logged surging sales earnings during the month of April. The figure for Louis Vuitton products went up 25 percent, Van Cleef & Arpels jewelry 57 percent, and Dior products 112 percent compared with the previous month.

                                                

Employees of an e-commerce company in an industrial park for e-business in Fuyang, Anhui Province, are busy with packaging roasted goose eggs on June 18.

“The state policy of stabilizing employment, finance, foreign trade, investment from home and abroad, and market expectation has done much to assure consumers, investors, and the market of a promising future. As a result, China is taking the lead to emerge from the epidemic fallout and witness recovering consumption,” Zhao Ping said.

Keeping a Quality Life

Lu Hong, aged 34, works as a security guard of a company in Luoyang in central China’s Henan Province. His wife is a real estate agent. Before the coronavirus struck, the couple was able to put away some savings every month. With shrinking incomes, they now have to live on a budget.

“I was anxious. I didn’t want my family to get affected too much by the coronavirus,” Lu recalled. The couple then found many ways to keep their quality life. They chose the best deals from different online retailing platforms, sought as many coupons as possible, and refueled their car at gas stations which offered discounts. Lu also learned how to complete some basic daily tasks by himself like cooking at home.

“We feel happier doing things at home,” Lu said. Like Lu, many young Chinese re-examined their habits of consumption and living while staying at home amid the epidemic. While saving money, they also had great fun.

As more consumers get more pragmatic, affordable and quality domestically-made products are gaining increasing popularity. “I have been choosing domestically-made goods over imported ones,” said Zhou Li, who was born in the 1980s. “Since many international brands are made in Chinese factories, why don’t we support our own brands?”

Zhou is one of many Chinese consumers who saw the value of homegrown brands. According to the 2020 report on the development of consumer brands in China released by AliResearch (the research arm of the Chinese e-commerce giant Alibaba Group), more than 80 percent of Chinese online shoppers’ shopping carts were products made in China in 2019.

The epidemic has made spending more rational and increased the appeal of cost-effective homegrown brands, said Zhao Ping, predicting that the edges and popularity of domestic products will continue.

As the epidemic wanes, Wang Shiwen, a Beijing resident in her 20s, has spent several weekends in the suburbs of Beijing to unwind and enjoy picturesque scenery. Instead of reckless spending, she planned the trips in advance and chose economic accommodations, transportation, and services. “What matters most is having some quality time with friends and family in a refreshing environment,” Wang said.

“The recovery of the service sector reflects the upgrading of consumption. The service sector was hit the hardest by the epidemic. It also is bouncing back fast as the epidemic is brought under control,” Zhao said.

Preparing for Emergencies

On the shopping spree day of June 18, online retailing platforms rolled out a variety of financial plans to spur consumers to splurge. JD.com offered interest-free payments by instalments over 24 months, and Tmall.com lured shoppers by allowing them to postpone the first instalment by one month to August, making it possible for consumers to purchase products on that day, and then complete the transaction by instalments over the five months starting from August.

However tantalizing the finance plans may have been, consumers still showed refrainment and rationality.

Hou Yifan works in a construction company in the city of Shijiazhuang, Hebei Province. The young man realized one major reality over the past months while having to stay at home during the coronavirus outbreak — he had to save money for unpredictable risks. On the last single-day shopping spree festival of November 11, 2019, he bought a phone by instalments. “I am still making payments on it. I had a salary of merely RMB 1,500 every month for the first few months of 2020, and it was financially stressful,” Hou said. He has developed a habit of keeping records of his spending. “Now, before making any purchase, I consider if it is really necessary,” Hou said. He resisted the urge of buying a new camera on June 18 by instalments.

Hou is not alone. More and more Chinese are deciding to save more instead of overspending. The People’s Bank of China, the country’s central bank, released a survey on urban depositors during the first quarter of 2020 on April 28. According to the survey, 53 percent of the respondents said they would save more, and the share was 7.3 percentage points higher than the last quarter. Statistics by the central bank also verified the trend. The amount of renminbi deposits went up by RMB 8.07 trillion during the first quarter of 2020 in China.

Apart from the reality that people were forced to save money as they could not go out to spend their year-end bonus on travel and other consumptions, another contributing factor to this rise is an increasing awareness of the need to prepare for unpredictable future financial risks.

Young and middle-aged Chinese manage their personal wealth in various ways. Wang Yu works in a pharmaceutical company in Beijing. As a result of the COVID-19 epidemic, she has found it more difficult to get promoted or a pay raise. The good thing is she has well managed her personal finances. “I have some savings, stocks, and bonds. Although the amount is not high, they are safe,” Wang said.

The risk of personal finance management is rising amid a volatile capital market due to the coronavirus. Zhao Ping said more people would choose low-risk finance products.

Lu Hong and his wife knew the importance of managing their family wealth after the coronavirus breakout, which also increased their awareness of risks and made them value heath even more. “We don’t know what will happen next. It’s better to do more and prepare for the future,” Lu said while pondering over buying life insurance for his families.

Zhao suggested that consumers should keep expenditures within the limits of their income and avoid financial burdens brought by overspending. “Everyone should learn to be a smarter buyer,” Zhao said.

To mitigate the economic fallout of the ongoing COVID-19 epidemic, China has been boosting consumption with a host of incentives including tax cuts, subsidies, and vouchers for consumers. As a result, the recovering consumer market is indicative of China’s economic resilience. The epidemic will probably not come to an end soon, but while hitting the economy hard, it is also reshaping consumption in many ways.

Recovering Consumption

As the epidemic ebbs away, many Chinese cities have relaxed social-distancing restrictions. Streets are alive again as people begin coming out of their homes and line-up to treat themselves at food stalls and restaurants.

“Finally, I can pamper myself with a decent meal,” said Zhao Xinqi, a resident in Wuhan, the city hit the hardest by the coronavirus. Tired of eating food she prepared herself at home and the delivered take-out food over the past two months and more, Zhao had spent the past several days eating outside, to appease her palate needs for gourmet food.

The catering sector was the first to know that the pent-up demands started to release. “Restaurants have been seeing brisk business particularly after the COVID-19 tests for all residents in Wuhan assured us that it is safe to dine out,” said Xu Ping, a senior manager from Wushang Plaza, a leading shopping hub in Wuhan. “Restaurants have been packed.”

Another sector on the recovery track is retailing. Many cities across China rolled out vouchers to spur consumers to consume. The shopping craze is particularly eye-catching on online platforms. For example, JD.com witnessed a 500 percent jump in grocery sales on June 18, a shopping spree day originally curated by the Chinese e-commerce giant. From June 1 to 17, the sales of more than 3,000 varieties of products on JD.com hit RMB 1 million (US $141,600).

“The epidemic has reinforced consumers’ habit of shopping online,” said Zhao Ping, director of the department for international trade studies at the Academy of China Council for the Promotion of International Trade. Notably, live streaming has given a big boost to online sales. Apart from selling goods, businesses have gone online through live streamed activities to persuade consumers to pay for services relating to such areas as traveling and fitness. “As epidemic prevention becomes a routine of our daily life, online consumption is very likely to maintain its robust momentum,” Zhao said.

Chinese shoppers also brought hope to the luxury goods industry. L’Avenue Shanghai, a flagship shopping center for luxury brands, logged surging sales earnings during the month of April. The figure for Louis Vuitton products went up 25 percent, Van Cleef & Arpels jewelry 57 percent, and Dior products 112 percent compared with the previous month.

“The state policy of stabilizing employment, finance, foreign trade, investment from home and abroad, and market expectation has done much to assure consumers, investors, and the market of a promising future. As a result, China is taking the lead to emerge from the epidemic fallout and witness recovering consumption,” Zhao Ping said.

Keeping a Quality Life

Lu Hong, aged 34, works as a security guard of a company in Luoyang in central China’s Henan Province. His wife is a real estate agent. Before the coronavirus struck, the couple was able to put away some savings every month. With shrinking incomes, they now have to live on a budget.

“I was anxious. I didn’t want my family to get affected too much by the coronavirus,” Lu recalled. The couple then found many ways to keep their quality life. They chose the best deals from different online retailing platforms, sought as many coupons as possible, and refueled their car at gas stations which offered discounts. Lu also learned how to complete some basic daily tasks by himself like cooking at home.

“We feel happier doing things at home,” Lu said. Like Lu, many young Chinese re-examined their habits of consumption and living while staying at home amid the epidemic. While saving money, they also had great fun.

As more consumers get more pragmatic, affordable and quality domestically-made products are gaining increasing popularity. “I have been choosing domestically-made goods over imported ones,” said Zhou Li, who was born in the 1980s. “Since many international brands are made in Chinese factories, why don’t we support our own brands?”

Zhou is one of many Chinese consumers who saw the value of homegrown brands. According to the 2020 report on the development of consumer brands in China released by AliResearch (the research arm of the Chinese e-commerce giant Alibaba Group), more than 80 percent of Chinese online shoppers’ shopping carts were products made in China in 2019.

The epidemic has made spending more rational and increased the appeal of cost-effective homegrown brands, said Zhao Ping, predicting that the edges and popularity of domestic products will continue.

As the epidemic wanes, Wang Shiwen, a Beijing resident in her 20s, has spent several weekends in the suburbs of Beijing to unwind and enjoy picturesque scenery. Instead of reckless spending, she planned the trips in advance and chose economic accommodations, transportation, and services. “What matters most is having some quality time with friends and family in a refreshing environment,” Wang said.

“The recovery of the service sector reflects the upgrading of consumption. The service sector was hit the hardest by the epidemic. It also is bouncing back fast as the epidemic is brought under control,” Zhao said.

Preparing for Emergencies

On the shopping spree day of June 18, online retailing platforms rolled out a variety of financial plans to spur consumers to splurge. JD.com offered interest-free payments by instalments over 24 months, and Tmall.com lured shoppers by allowing them to postpone the first instalment by one month to August, making it possible for consumers to purchase products on that day, and then complete the transaction by instalments over the five months starting from August.

However tantalizing the finance plans may have been, consumers still showed refrainment and rationality.

Hou Yifan works in a construction company in the city of Shijiazhuang, Hebei Province. The young man realized one major reality over the past months while having to stay at home during the coronavirus outbreak — he had to save money for unpredictable risks. On the last single-day shopping spree festival of November 11, 2019, he bought a phone by instalments. “I am still making payments on it. I had a salary of merely RMB 1,500 every month for the first few months of 2020, and it was financially stressful,” Hou said. He has developed a habit of keeping records of his spending. “Now, before making any purchase, I consider if it is really necessary,” Hou said. He resisted the urge of buying a new camera on June 18 by instalments.

Hou is not alone. More and more Chinese are deciding to save more instead of overspending. The People’s Bank of China, the country’s central bank, released a survey on urban depositors during the first quarter of 2020 on April 28. According to the survey, 53 percent of the respondents said they would save more, and the share was 7.3 percentage points higher than the last quarter. Statistics by the central bank also verified the trend. The amount of renminbi deposits went up by RMB 8.07 trillion during the first quarter of 2020 in China.

Apart from the reality that people were forced to save money as they could not go out to spend their year-end bonus on travel and other consumptions, another contributing factor to this rise is an increasing awareness of the need to prepare for unpredictable future financial risks.

Young and middle-aged Chinese manage their personal wealth in various ways. Wang Yu works in a pharmaceutical company in Beijing. As a result of the COVID-19 epidemic, she has found it more difficult to get promoted or a pay raise. The good thing is she has well managed her personal finances. “I have some savings, stocks, and bonds. Although the amount is not high, they are safe,” Wang said.

The risk of personal finance management is rising amid a volatile capital market due to the coronavirus. Zhao Ping said more people would choose low-risk finance products.

Lu Hong and his wife knew the importance of managing their family wealth after the coronavirus breakout, which also increased their awareness of risks and made them value heath even more. “We don’t know what will happen next. It’s better to do more and prepare for the future,” Lu said while pondering over buying life insurance for his families.

Zhao suggested that consumers should keep expenditures within the limits of their income and avoid financial burdens brought by overspending. “Everyone should learn to be a smarter buyer,” Zhao said.

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KANG PU is a reporter with the overseas edition of People’s Daily.

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