COVID-19 – business as usual?
In 2002, when SARS (Severe Acute Respiratory Syndrome), a pneumonia-like virus broke out in China, the country was mostly supplying the World with low-cost goods like t-shirts and sneakers. Today, China is one of the key commerce players in the global economy.
During SARS, China’s trade suffered significantly, and stock markets fell up to 15%. However, the recovery was quick, and markets became stronger than ever. Today, fear of the virus also means people tend to avoid activities that expose them to the risk of infection. For example, going to restaurants, movies, shopping or using public transport and public services.
Although there seems to be general anxiety associated with the epidemic, which could negatively impact sales, in today’s online world, certain sectors may be benefitting.
How COVID-19 is affecting China
Wuhan – the city where the virus originated, has been on lockdown since 23 January 2020. Public life within the city, including public transport, flights and train have all come to a stop. Due to the lockdown, the city’s 11 million residents turn to order food and other items of daily life online. But even delivery comes with a certain risk. For example, Chinese food deliverer Meituan – has adapted its food delivery app with lightning speed considering the lockdown. Now, customers and delivery drivers don’t have to meet face-to-face. The food can be dropped off at the doorstep, reception or nearby as per the buyer’s request.
And with a mobile payment rate of 95% in China, there’s no cash involved.
However, all of this has severely impacted the offline economy but favors online services for shopping items for daily use. As a result of being homebound, Chinese consumers spend more time than ever on their smartphones and online. People who were still purchasing goods offline now prefer to buy on online shops increasing the market share for e-commerce in China.
The virus that is currently spreading in China and beyond its borders has financial markets rattled. Experience with virus outbreaks in the past shows the markets often bounce back quickly. As the Chinese stay home for health reasons, Chinese consumers also shop online for their essentials. Paired with popular cross-border e-commerce shopping and with fewer restrictions in the medical sector, which continues to open opportunities for businesses to import goods and expand their market.