Business China

Will China's E-Commerce Reshape a Reopening World?

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Most entrepreneurs and industries faced serious challenges due to the strain of COVID-19 and the precautions that were implemented to survive the pandemic. However, many businesses started to digitalize their operations to find an alternative solution for the stability of their businesses and revenue generation.

Meanwhile, there has been a worldwide economic crisis during this period as both supply and demand dynamics of consumers evolved according to pandemic needs and survival. Despite these negative consequences, China’s e-commerce enterprise continued to flourish and adapted rapidly to new consumer behavior and buying patterns.

The way the Chinese overcame the market crisis is exemplary for all companies across the world that are trying to fight the adverse effects of COVID-19.

The Effect of E-Commerce on the Economy

Within a few weeks after the spread of the coronavirus and the implementation of guidelines, it became evident that consumer buying patterns and purchasing power will change dramatically till the pandemic lasts as well as after it.

There was a considerable change in consumer demand—consumers drifted away from luxurious and fashionable products to livelihood and isolation products like healthy food, sanitizers, and other cleaning equipment.

Besides this, the most visible change was observed in consumers’ reliance on online shopping or e-commerce platforms like China’s Alibaba Group, which dominated the world with online delivery systems like AliExpress.

Moreover, Tencent Holdings Ltd. took over consumer demand with their e-commerce stores like Inc. and Taobao.

In 2020, there was a significant increase in the sales of online food items across January and February amounting to 26.4 percent, as compared to the sales in 2019 in the same months. According to the stats, iiMedia Research predicts that the online grocery market in China will grow to 62.9% by the end of 2020.

In addition to that, it predicted that Alibaba’s Hema and the 7Fresh supermarkets of that are famous for their round-the-clock deliveries for online shoppers will continue to expand throughout 2020.

The overall economy of China was seen to improve within a few months after the outbreak. There were signs of recovery around all the business sectors of the country which was a big deal, given that the Chinese faced one of the worst coronavirus attacks around the world.

One of the major indications of good economic infrastructure is the country’s percentage of coal production. China rose back to producing 70% of the world's coal which had previously dropped to 43% in 2019. Within a month, supply chain congestion rose to 73% from 62%, which shows that China’s workforces are functioning optimally and returning to normalcy.

In addition to that, the real estate business went up by 47% compared to 1% according to the figures in 2019. This shows that industry leaders around the world do want to establish a representative office or set up a subsidiary in China once again.

China's E-Commerce Platforms Dominate the World

China’s e-commerce is famous worldwide due to its vast variety and fast online delivery. They’re known to have one of the most innovative yet fast-moving e-commerce sectors across the world.

There’s a long list of entrepreneurs and brands that have either started their subsidiary or opened a company in China to operate their B2C operations online. As mentioned previously, e-commerce giants such as, Tabao, Pinduoduo, MTDP is also known as Meituan Dianping, Tmall, etc., usually operate their businesses via ‘super apps’ that have one of the largest ratios of online buyers worldwide.

China has developed a large web of delivery networks over the last decade which has enhanced the online shopping experience and increased the number of online buyers worldwide. However, the support given by the Chinese government has made it possible for e-commerce stores and integrated mobile payment networks like Alipay and WeChat to expand their services rapidly and enhance the consumer experience.

China’s government has consistently put in efforts to build an advanced internet infrastructure all over the country for the development of the e-commerce sector. Besides that, the Chinese are striving to launch their new infrastructure plan that comprises digital services like 5G networks, data centers, and IoT to develop their e-commerce sector further.

Another major cultural difference between China and other countries is that their population mainly uses smartphones to make transactions. However, this culture is now enabled in many countries as the majority of people use social media to buy and sell goods. This also shows how China easily overcame the lack of market access during the coronavirus outbreak. Chinese people were quicker in adapting e-commerce operations as compared to other countries. The rise in the demand for e-commerce also shows that consumers are more comfortable with online shopping as compared to traditional shopping methods.

Innovation During the Economic Crisis

During the lockdown, many companies shifted their focus to formulate strategies that can take them out of the crisis. However, the challenge that was faced by a large population was to fulfill consumer demand for essential products with the help of China’s B2B and B2C e-commerce stores.

These essential products included remote meeting services, food and drink, health insurance, social media, and hygiene products. Since COVID-19 restrictions forced stores to shut down, most of the retailers are now approaching customers via social media. For instance, a cosmetic brand in China named Lin Qingxuan had to shut down 40% of its stores all over the country. However, they managed to conveniently shift more than 100 beauty advisors from their stores to social media as online influencers.

This helped them leverage digital tools like WeChat to generate sales online. In Wuhan, a company had to close all of its stores but shifted its operations to online platforms by using this strategy, and you might be surprised to learn that the company made 200% more sales than they did in previous years.

Besides digitalizing operations, there was increased flexibility in labor forces and thus an innovation of labor sharing was adapted quickly as well. To balance the financial loss faced by the companies, they started to relocate their staff to other departments where they can become resourceful such as, post-recovery planning or designing new products, etc. Some companies even distributed their workforce with other companies.

For instance, businesses like hotels and cinemas that were hit hard during lockdowns shared their workforce with Alibaba’s supermarket chain Hema due to its increased demand for delivery services. Besides that, O2O companies like Meituan and JD’s 7Fresh also borrowed labor from restaurants. This helped online businesses to get out of pressure and streamline the online purchasing process.

Future Outlook

Industries and businesses are frantically trying to adopt innovative solutions. We understand that every country does not have similar resources to combat the consequences of the pandemic on consumer behavior.

However, you can always observe and learn from countries that are consistently trying to overcome the economic crisis such as China.

Utilize Social Media to Integrate Employees

While most companies are working from home, there are new sets of challenges faced every day. However, Chinese companies use their super apps like WeChat to communicate with their business partners and employees.

For instance, China’s largest lingerie company called Cosmo Lady launched a program to increase its sales via WeChat. The company had employees to promote its products in their social circles. Cosmo Lady also created a sales ranking for all its employees including the CEO and the chairman. This motivated other employees to participate in the program as well.

Seek Opportunities amidst Adversity

We can observe how the Chinese market was disrupted during the coronavirus outbreak; still, there was an increase in demand in many sectors. These sectors mainly include B2C and B2B e-commerce, and social media.

For instance, video platform Kuaishou, valued at $28 billion, offered online education to counter the shutdown of schools, colleges, and universities. Many other video platforms collaborated with the Ministry of Education to launch an online cloud classroom for better learning resources.

On the other hand, a large restaurant chain planned to offer its semi-finished dishes to fulfill the need for home cooking during the lockdown.

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