In the midst of the coronavirus pandemic, many economies worldwide have begun to show signs of slowing down and with some even stopped. If you are a business owner that is experiencing difficulties under the current disruptive circumstances in your home market, you are not alone.
this blog will explore the probabilities that the on-going Chinese economic recovery may be a way out for your business, and perhaps even better, a means to grow significantly in these uncertain times.
What’s the situation of Chinese industries and the consumer market now?
April 8th, 2020 marks the milestone of China successfully defeating the domestic COVID-19 epidemic, as China lifted its lockdown on Wuhan. However, the country’s economic jump-start has already commenced in mid-March, when various cities embarked on campaigns encouraging companies and factories to resume business production after the COVID-19 epidemic was largely under control. Undoubtedly, the Chinese government plays an essential role in this economic revival.
To this date, 96.6% of China’s large and medium-sized corporations have resumed their operations according to NBS’ survey. China’s Cabinet has rolled out a series of batches of robust measures as a means of helping small businesses, including trillions of RMB in direct funding and business loans. To boost consumer demand, a remarkable sum of coupons and tax cuts for certain purchases are provided or made available to its citizens.
In some industries, we can see a clear rebound within just a couple of weeks from the economic restart. The best example is inbound tourism. During the Qingming Festival (March 4th– 6th), the first holiday after the ease of social distance rules, most provinces have reopened 50-85% of their travel destinations. Interestingly, the UNESCO world heritage site, Huangshan mountains, was flocked with 20,000+ visitors, forcing it to unfortunately shut down again.
What are the opportunities with China for international companies at these special times?
With the gradual recovery from most sectors, amid the global pandemic, some areas are expected to grow more significantly, especially in the coming months:
Global healthcare collaboration
With China extensively offering medical supplies and expertise to countries in need, barriers in cross-border medical supply (especially medical equipment) trades are expected to be lowered greatly.
Investments in strategic high-tech industries
The fact that Western businesses are currently in great need of capital to survive this huge economic fallout in their own markets has created great opportunities for Chinese investors, especially in industries such as 5G, high-speed railways, new energy vehicles, artificial intelligence and Internet of Things (IoT).
With the likely economical and structural changes that will occur in most economies caused by the COVID-19pandemic leading to boosted communications and collaborations with China. The stance Western countries have towards China previously could likely be softened especially in regard to international trade. Consequently, many favourable policies from Chinese provincial or local governments to stimulate international trade and investments can also be expected.
Fast forward to Chinese consumer markets influenced by the COVID-19 outbreak, some consumer behaviours have been heavily reshaped which has given rise to great opportunities for international players. Especially for those offering solutions in online health, SaaS-based enterprise collaboration, online education, and fresh food eCom (source: iResearch Analytics, see below).
Where can your business focus, and how can your business take advantage of China’s economic recovery?
At this stage, it is clear that China economy will bounce back as fast as it can with a strong push from the Chinese government. Taking this into consideration the market recovered rapidly after the SARS outbreak almost 20 years ago now, along with that it is fair to expect considerable growth from industries taking the biggest hit by the COVID-19 outbreak such as sectors mentioned before that are experiencing the biggest expansion during the outbreak.
The service industry
This includes tourism, food, hotel, transportation, and entertainment industries, where businesses experienced sharp declines due to the restrictions implemented by healthcare and administrative authorities. The market bounce is not going to be completed overnight, but if you and your business are in the above industries, this is the time to run your marketing and sales campaigns and to attract your consumers’ attention, before your rivals have resumed their businesses.
China continues to provide massive amounts of materials and products for global supply chains among various sectors such as automobile manufacturers, electronics and machinery and retail products. The lifted lockdown has encouraged the mass migration of many workers and labour-intensive manufacturers which are seeing a significant number of front-line employees returning to production.
Given a long production pause and late deliveries among Chinese factories during the novel coronavirus outbreak it is likely that manufacturers now have a long list of orders to fulfil. If you have suppliers or manufacturing partners located within China, it is advised to start communicating with them and secure your materials/products for a speedy delivery date before their other clients do; this does not mean that they shall be delivered right away. It is wise to take consideration of the rest of your supply chain, i.e. the logistics, storage, and other stakeholders especially in other markets, to determine the most suitable date for receiving orders.
Niche consumer market
Months of quarantine at home during the outbreak has allowed many Chinese consumers to develop favourite past hobbies, new habits, interest in various subject matter and sharing content on their selected social media platforms. And these listed activities are most likely to stay and grow further, despite the fact that many are gradually returning to a more normal life.
This “new norm” brings opportunities to your business if your offering can match some niche demand of consumers. For instance, due to the limited resources regional hospitals and healthcare centres had during the outbreak, the high risks of contamination from visiting the hospitals, a large number of Chinese patients are either susceptible in catching the virus or having other health issues which could turn to areas of online health consultations and pharmaceutical deliveries to be a profitable alternative solution. If your business is in the digital healthcare sector with a strong focus in areas of wellbeing solutions and expertise space this can be a huge opportunity to take advantage of in China that will only grow further.
China’s recovery from COVID-19 is not yet 100% secured given ongoing threats of imported coronavirus infection cases taking place at the moment. Despite this, the country has now temporarily suspended the entry by foreigners holding existing Chinese visas or residence permits. Along with that, another challenge in this current economic recovery situation is the recession that is being experienced in the global market. As exports account for a large proportion of China’s economic growth, this rebound actually will heavily depend on how the world is fighting against the coronavirus pandemic in the next few weeks going forward.
It is also worth mentioning that, despite the differences in language and legal practices amongst others, the Chinese market has its own characteristics and with the proven business operation measures used elsewhere, these may not work as effectively in China. Having trusted partners or employees with a deep understanding of your business and China is essential to your success.