Coronavirus Learnings From China

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As preparations are being made to (partially) lift the lockdown restrictions in Wuhan, there are signs that life in China is beginning to get back to normal. Reports of a near-zero transmission rate and the reopening of shops and factories appear to signal China’s status as a “post-Corona” country.

So, whilst the UK endures a period of tighter restrictions, what lessons can brands’ and businesses learn from China’s handling of the crisis? What short-term measures can be taken to help limit the impact of the virus? How can businesses adapt to safeguard themselves now and thrive in the future?

Below is a round-up of how Chinese brands, large and small, have adapted to the outbreak, both with short-term changes and longer-term strategic shifts. There are insights for UK businesses to take note of. Many already have.

Maximize E-Commerce

Short-Term:

Perhaps unsurprisingly, Chinese consumer spending has changed significantly, from offline to online since the beginning of 2020.

As China – restricted by lockdowns and virus containment measures – became a largely stay-at-home economy in the first quarter of 2020, e-commerce has been the driving force for sales. An iMedia report (17th March) predicts near 63% growth for China’s online grocery market this year and it is likely that this trend will be replicated in other countries across the world. Even last Friday – before stricter measures were introduced by the UK government – online grocer, Ocado, was forced to suspend activity on its website, citing the unprecedented level of demand sparked by the COVID-19 crisis.

While more countries grapple with “squashing the sombrero”, stay-at-home economies will increasingly look to e-commerce options for essential and non-essential items alike. Fast-food chain Leon is just one of the UK businesses adapting to these changing marketplace conditions. Its announcement of a new e-commerce platform – allowing customers to order a delivery slot in advance – illustrates its willingness to change and offer value to customers despite challenging times.

Nike’s announcement of third-quarter sales last Tuesday (which topped expectations) is further evidence of how a focus on e-commerce can help to stem sales declines in a difficult trading period. Nike saw a rise of 30% in digital sales in Greater China during the quarter, helping to offset the negative impact of temporary bricks and mortar store closures.

Long-Term:

In addition to the short-term benefits for online retailers (or bricks and mortar stores that are taking retail online), it is likely that the trend will outlast this pandemic, as consumers opt for convenience.

The below graph (Statista, March 2020) shows the projected year-on-year revenue increase in the Chinese e-commerce sector. While it is expected that total online sales will drop from 2019’s year on year (owing to less purchasing of discretionary items), the trend is clear: e-commerce is only going to increase and retailers across the globe should be ready to take advantage of this by focussing on their digital offering.

(Statista, March 2020)

Be Flexible

Businesses that are willing to adapt and change are well-placed in times of crisis. Take Hema, for example. The online food retailer owned by Alibaba (China’s biggest e-commerce company), has recently been in talks with restaurant chains over temporarily hiring employees from the hardest-hit sectors to meet increased demand. This proactive approach will both assist a sector that is trying to keep up with an increase in demand and give much-needed employment to those who would otherwise face furlough or redundancy.

In the UK, we are already witnessing unprecedented demand in the retail sector, with supermarkets looking to employ additional staff to help cope with a spike in national demand. Tesco has suggested that it will look to make around 20,000 temporary positions in its bid to “feed the nation”. Tim Martin – boss of the Wetherspoon pub chain – has recently encouraged members of his staff – who are currently out of work owing to pub and club closures – to take positions at supermarkets whilst the pandemic plays out. Martin has offered former employees first priority on future applications with the chain once the industry is back on its feet.

 Harness Social Media

Let’s face it, hours of self-isolation and quarantine are only going to increase our use of mobile devices. With a captive audience stuck at home, the opportunity for brands to use social media to engage with their communities is better than ever.

It is not just community support that social media can harness. Brands across China have been using China’s most popular social media platform – WeChat – to increase online sales and engage employees in some healthy competition. Cosmo Lady – China’s largest underwear and lingerie company – set up a sales ranking among all employees (their CEO and chairman included) and encouraged them to use their social circles for product promotion. Cosmetics company Lin Qingxuan also adapted its approach using social media following the closure of several of its stores. Redeploying bricks and mortar staff as online influencers has helped them to drive digital engagement and online sales.

Seize Opportunity

Undoubtedly there will be difficult times ahead in certain sectors (travel and leisure are likely to be hit the hardest), but the pandemic has also given rise to new areas of growth. B2C e-commerce, remote meeting facilities and hygiene products, for instance, have all seen increased demand in recent weeks.

In China, Kuaishou – an extremely popular short video app with more than 200 million daily users – promoted online education services in a bid to assist students with their learning following the closure of schools and colleges.

Here in the UK, Atom Learning – the UK’s leading 11 plus/pre-test learning platform – hosted its first live lesson to c. 1000 Year 5 students in its virtual classroom and have just announced that their online resources will be offered to any pupil for free (regardless of whether or not they have a subscription) whilst schools remain closed. Additionally, schoolchildren have also begun a new routine of waking up to a daily fix of PE with The Body Coach – Joe Wickes.

The list of start-ups developed during the financial crisis of 2008 (including Uber and Airbnb) is a timely reminder that when one door closes, another opens. Brands and businesses must think about how they might be placed to offer a solution in these challenging times. 

Think Ahead

China appears to be staging a recovery and – whilst it is too difficult to predict the economic impact in other countries – it is worth considering the speed of the upturn. Companies need to plan for the future – during the crisis – to come out stronger on the other side. Chinese firms in the travel sector, for instance, used the downturn in short-term business to focus on longer-term projects. Instead of making redundancies and laying workers off, companies encouraged employees to improve internal systems and develop new skills, so they would be better prepared on the other side of the pandemic. It is unthinkable that – once this is all over – there won’t be a surge in the leisure industry and purchasing of discretionary goods. Companies should – wherever possible – look forward and start planning for the upturn now.

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