The Zero-COVID lockdown's long-term impact on Chinese consumption - June 2022 - TO ACCESS MORE INFORMATION ON THE BEAUTY MARKET IN CHINA, PLEASE ...
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The Zero-COVID lockdown’s
long-term impact on Chinese
consumption
June 2022
Image source: yitiao WeChat, 汤俊,, 2022 TO ACCESS MORE INFORMATION ON THE BEAUTY MARKET IN CHINA, PLEASE CONTACT DX@DAXUECONSULTING.COM
CONTENT OUTLINE
1. Zero-COVID’s economic impact 03
2. Our 7 hypotheses on on Zero-COVID’s impact 14
on Chinese consumption
3. Takeaways on Zero-COVID’s short to long-term 52
consumption impact
4. Overheard in Shanghai 53
5. About us 54
© 2022 DAXUE CONSULTING 2
ALL RIGHTS RESERVED
Zero-COVID’s economic impact © 2022 DAXUE CONSULTING 3 Image source:RESERVED ALL RIGHTS yitiao WeChat, 田方方, 2022
Takeaways from the 2019-2020 lockdowns
Mobile games saw explosive growth Education moved online
The average DAU of Arena Of Valor reached 50 million After the government announcing to postpone the starting day of
during CNY 2020. school, online learning APPs achieved dramatic growth.
Rise of short-videos and livestreaming Telemedicine was boosted
Short videos become popular, especially Douyin and The demand on remote medical inquiry and O2O medical
Kuaishou， while live-streaming, movies and TV dramas ecommerce increased remarkably.
also gained momentum.
More demand for grocery delivery Remote work became mainstream
Major platforms were in short supply in March 2020, and The DAU of Dingtalk is exceeded 100 million in 2020, with absolute
the DAU of JD one-hour delivery reached 1 million, while advantage in the market.
Hema reached 400 thousand.
Growing health awareness Revenge spending
An Ipsos survey revealed that 84% of 3,000 respondents Mainland China personal luxury sales increased by 48% compared
claimed paying more attention to their health after the first to 2019.
wave of COVID.
© 2022 DAXUE CONSULTING 4
ALL RIGHTS RESERVED
Differences in the 2020 and 2022 China COVID outbreaks
2020 2022
The virus was mysterious, scary and often compared with More is known about the virus and there is more criticism
the deadlier SARS, lending support for government for heavy government intervention.
intervention
The first strain was more harmful and people were not Though more contagious, the Omicron variant is less
vaccinated VS deadly and people are vaccinated
It was critical to prevent the spread of the virus to the rest The rest of the world has accepted that COVID-19 is now a
of the world part of life and is loosening their policies
Non-Tier-1 cities were more affected by the virus Tier-1cities such as Shanghai and Beijing were affected the
most
Source: Hill & Associates, 2022
Image source: 永康路KFC爷爷, Eric Chen, 2022
© 2022 DAXUE CONSULTING 5
ALL RIGHTS RESERVED
New elements to patriotism
“Zero-COVID” has become a new focus of nationalism.
Xi’s attack against ‘doubters’ Censorship of WHO recommendation Chinese social media prohibition of
Shanghai lockdown videos
On May 5th, 2022 – President Xi sent a Posts featuring WHO chief Dr. Tedros
message saying, “We will resolutely Adhanom Ghebreyesus have been censored on A six-minute film titled “The Voices of April”
struggle against all words and deeds that the Chinese Internet after he referred China’s documenting realistic scenes of what was
distort, doubt, and deny our epidemic flagship zero-COVID policy as “not sustainable”, happening during the Shanghai lockdown,
prevention policies.” this includes all Chinese social media originally published by Forever strawberry
platforms like Weibo and WeChat. garden ( 永 远 的 草 莓 园 ) on WeChat, was
instantly censored. This sparked outrage and
opposition from netizens on Chinese social
media.
An article titled “What exactly is causing the
nationwide censorship of that video?” written
by Lei Silin (雷斯林) addressed question like,
“Why and who gave them the right to scrub
Source: Reuters – Tingshu Wang, 2022
such a mild and objective video from the
internet?” was also censored.
Source: SupChina, 2022
#动态清零# dynamic zero
#抗疫守护计划# anti-epidemic protection plan #到底為什麼要全網刪除那則視頻？#
#上海疫情# Shanghai epidemic Image source: NicoDerouge, 2022
Why was that video removed from the internet?
#封闭# lockdown
© 2022 DAXUE CONSULTING 6
ALL RIGHTS RESERVED
Chinese netizens debating zero-COVID versus coexisting with the virus
The zero-COVID strategy has sparked online debates, with netizens expressing their opinions about the zero-COVID strategy versus
coexistence: ”We cannot trade million of lives for coexistence” as opposed to “I dare you to stay in lockdown for the rest of your
life!”
China is a country that has the ability to stay zero-
COVID. Under the circumstance that the long-term
China's healthcare system simply can't afford it. Have
impact of COVID infections are still poorly understood,
you considered the elderly and children? Who can
those who propose to coexist with COVID are either
guarantee that there will be no long-COVID effects
stupid or evil!
lasting decades?
If the virus continues to exist for decades,
When will people understand that we need to will China be like this for decades? As long
coexist with COVID. I often wonder if China is as COVID exists abroad, it will not disappear
coming to an end. in China.
© 2022 DAXUE CONSULTING 7
ALL RIGHTS RESERVED
Zero-COVID’s impact on GDP
The larger-than-expected Omicron outbreak has disrupted China’s 5.5% GDP target growth rate. Private consumption and real
estate investment delayed, manufacturing, infrastructure, and production have all slowed down.
2022 China GDP growth forecast + Q1 actual growth (%)
Before the Ukraine The lockdown in Shanghai officially
War and Omicron began on March 27th, 2022, which lasted
outbreaks in China for almost two months, with restrictions
2-month lockdown in loosening from the week of 16th May,
Global Shanghai and
policy 2022.
Oil price additional large cities
5.2 uncertainty Omicron Supply Repeat of
outbreaks chain Q1 2020 4.8 In Q1 of 2022, the Chinese economy has
-0.2 disruptions 0.4 4.5
-0.2 shock expanded 4.8% y-o-y, which was above
-0.4 the market consensus of 4.4% and faster
-0.3 Policy 3.8
than the 4.0% growth from the previous
support
period.
Source: Trading Economics, 2022
Mobility returns to However, rising uncertainty amid COVID-
normal in May (1-month 19 lockdowns and slowdowns in the
lockdown in Shanghai) 1.3
economy could result in a slower growth
in the following months. In addition, the
economy will mostly be affected in Q2 of
2022, which has yet to be seen.
Previous Forecast Downside Worst case Q1 actual
aa made in
forecast scenario scenario growth rate
Source: Allianz Research, 2022 April
© 2022 DAXUE CONSULTING 8
ALL RIGHTS RESERVED
The zero-COVID lockdowns impact China’s Dual Circulation Strategy
China’s new economic model - the Dual Circulation Strategy (DCS), aims to shield the nation from global volatility and pivot the
Chinese economy toward greater self-reliance.
China’s retail sales monthly growth rate (%) China’s monthly trade statistics
(year-on-year change, %)
pr-21 Apr-21 17.7%
Export Import
a y-21 May-21 12.4%
u n-21 Jun-21 12.1% 32.7 31.4 Omicron
28.2 28.0 26.9 outbreaks
u l-21 Jul-21 8.5% 25.4 24.2 in China
ug -2 1 Aug-21 2.5% 20.4 21.7 20.9
19.2
17.2
ep-21 Sept-21 4.4% 19.5 14.7
19.9 10.5
ct-21 Oct-21 4.9%
ov-2 1 Nov-21 3.9% Delta outbreaks 3.9
6.3
-0.1
ec-21
Dec-21 1.7%
0
eb-22 Jan, Feb-22 6.7%
a r-2 2 -3.5% Mar-22 Jul-21 Oct-21 Jan-22 Apr-22
Omicron outbreaks in China
pr-22 -11.1% Apr-22
Source: China’s General Administration of Customs
Source: National Statistics Bureau, 2022
China's retail sales declined by 11.1% year-on-year in April 2022.
Although the country's export growth in April 2022 was the slowest
This was the sharpest slump recorded since the 15.8% drop in
in nearly 2 years, imports are declining faster than exports,
March 2020 due to the first wave of the COVID-19 pandemic.
demonstrating that the decline in Chinese domestic consumption
Decline in domestic consumption drives domestic companies to
will push companies to sell their products abroad.
potentially look overseas for revenue.
© 2022 DAXUE CONSULTING 9
ALL RIGHTS RESERVED
Weakened demand in retail, offline entertainment is suffering
The prolonged pandemic and the recent waves of lockdowns are discouraging consumers from purchasing certain categories of
goods. The closure of theatres and staying at home more have also led to people watching more shows and movies online.
Retail sales decreased during 2022 Q1 The lockdown gave a blow to cinemas and theatres
Y-o-y retail sales by sector (%) Chinese box-office in 2022 Q1 amounted to just
RMB 16.1 billion, thus recording a 28% drop y-o-y.
Food 10
Medicine 7.9 During the same period, less than half (47.4%) of all
Beverages 6 the cinemas in China were opened due to the
Oil and derivatives 4.7 outbreaks in Shanghai, Tianjin and Jilin.
-4.8 Office appliances
-7 Tobacco and liquor Meanwhile, less than 20% of cinemas were doing
-8.1 Home appliances business in other provinces like Shenyang, Qingdao,
-10.2 Daily necessities Suzhou and Xiamen.
-11.7 Building & decoration items Source: Artisanal Gateway, 2022
-14 Furniture
Between mid-February and mid-March 2022, over
-21.8 Communication appliances
4,000 live performances were cancelled or
-22.3 Cosmetics
postponed nationwide.
-22.8 Clothing
-24 Catering services As a result, Chinese theatres are projected to
-26.7 Gold and jewellery further decrease in revenues by 35% compared
-31.6 Cars to Q1 in 2022, thus pushing major theatres to
move their shows online.
Source: National Bureau of Statistics; FT, 2022
Source: China Performance Industry Association, 2022
© 2022 DAXUE CONSULTING
10
ALL RIGHTS RESERVEDHotels adapt to providing staycations and ‘studycations’ to stay afloat
The continuous waves of lockdowns as well as the change in consumers’ travel habits and preferences are putting a strain on
Chinese tourism and hospitality industry. In such hard times, some hotels find ways to cater to the local market rather than the
tourism market.
A dark moment for tourism
Hotels adapt to survive
o During Labour Day holidays in 2022, the number of
domestic tourists equalled to just 160 million, a decrease
As new Omicron cases
of 30% y-on-y.
mushroomed across the country,
o Despite domestic flights recovering during Q1 of 2022, some famous hotel chains decided
the crash of the China Eastern flight in March is likely to to broaden their offer to mitigate
further disturb the air travel market in the short run. the impact of the pandemic.
o Tourism in Fujian and Sichuan (where the pandemic was In March 2022, Mandarin Oriental
mostly kept under control) during the first days of May Pudong launched a “studycation”
generated more than RMB 10 billion, proving Chinese package including in-room online
consumers’ willingness to travel again once things return schooling, 3 meals per day, and
to normal. daily supervision from the hotel
staff.
o Camping is becoming increasingly popular. The number
of hotel bookings close to camping areas increased by Parents were meanwhile granted a
1.5 times y-o-y – hotels can capitalize on such camping 30% off on their spa treatments
frenzy by providing camping experiences to their guests. and F&B services.
Source: Ministry of Culture and Tourism, Qunar Source: SCMP
© 2022 DAXUE CONSULTING 11
ALL RIGHTS RESERVEDNetizens show clear intent on revenge shopping and travel once lockdowns lift
People in locked down cities are looking forward to traveling and shopping again. However, the pandemic led to a change in travel
preferences and the consumption recovery is unlikely to be as strong as in 2021 due to increasing economic uncertainty.
Most mentioned destinations 35% of people in lock downed cities expressed on social media their intention to
after the lockdown lifts on spend on tourism after the lockdown is lifted. According to a McKinsey survey, since
Chinese social media the outbreak, Chinese travellers tend to prefer short trips and boast stronger interest
in visiting cultural and historical sites compared to the past.
Travel 15%
Park 13%
Picnic 11%
Bar 8%
48% of Chinese netizens
Cinema 8% revealed their desire for
normality, giving hopes for a
Café 8%
recovery in consumption.
Vacation 8%
“I really want to go to a concert. I want to go to the
Moreover, conversations about
Disneyland 5% supermarket and buy a lot of food. I want to go to the
the 618 festival have suddenly
botanical garden, to the zoo, to the aquarium. I want to
Seaside 4% spiked, surpassing those in
go to Disneyland, I want to have a picnic, I want to go
2020, showing that shopping
camping.
Universal Studios 3% is back on consumers’ agenda.
What would you like to do after the lockdown is over?”
Source: Publicis BrandRadar (2022)
© 2022 DAXUE CONSULTING 12
ALL RIGHTS RESERVEDGovernment policies to boost economy after the first COVID outbreak
The COVID-19 pandemic made it clear that it is time to stimulate domestic consumption by improving income distribution and expanding
the social safety net. However, the Chinese government is likely to prioritize measures for stabilizing the economy by boosting export and
increasing public spending first.
Chinese government’s stimulus package
Public investment Foreign trade and investment
+8.8% public-works spending by the According to officials more challenges are yet to come in following years.
government in March 2022 Proposed supportive measures for foreign trade companies include following sectors:
• Export credit insurance • Imports of high-quality products and services
+RMB 1.5 trillion Infrastructural • Foreign exchange services and export tax rebates
• Service trade, digital trade, and cross-border
investment in 2022 • Cross-border e-commerce and overseas warehouses service trade.
Proposed infrastructure spending on following
sectors:
• Water
• Transportation
• Energy Domestic consumption
• Pipeline networks
• Flood control and drainage facilities Proposed supportive measures for stimulating consumption
• underground integrated pipeline corridors • Increase income, improve income distribution, and enhance social infrastructure at a community level (e.g.
community pensions and childcare)
• Expand domestic service industry and develop rural e-commerce and express logistics and distribution.
Source: Government Work Report (2022)
© 2022 DAXUE CONSULTING 13
ALL RIGHTS RESERVEDOur seven hypotheses on the future of Chinese consumption during
and after Zero-COVID
1 The lockdowns are likely to continue in a city-by-city basis
The economic situation launches luxury spending into a new phase focused on value and
2 inconspicuousness
3 The Zero-COVID policy is going to accelerate the China+1 strategy
4 Rising mental health issues due to prolonged lockdowns is pushing China’s mental health
industry to mature
5 Group-buying will continue to rise in the long run even when the pandemic is over
Digitalization will reach new heights as consumers seek experiences from the comfort of
6 their homes
7 The single economy is reshaping China’s consumption landscape as lockdowns extend
© 2022 DAXUE CONSULTING 14
ALL RIGHTS RESERVEDH1: Lockdowns are likely to continue on a city-by-city basis
Short-term
Source: ⽥⽅⽅ , 2022
15
Image source: 田方方, 2022Due to how contagious Omicron is, lockdowns will unlikely beat it
Before the Omicron outbreak in China, stay-at-home orders have proven to lower transmission rate, with a 90% decline in the number of new
cases from the 2020 lockdowns. However, the Omicron variant is the most contagious strain so far, and is often asymptomatic, making it
harder to control.
How is Omicron more contagious: Percentage of people from China and US who are
• Multiplies 70 times faster than the Delta variant vaccinated against COVID-19 (as of May 9, 2022)
• 3-4 times more transmissible than Delta
Fully vaccinated Partly vaccinated
The CDC suggests that getting vaccinated and staying up to date with
booster shots are the best protection against Omicron. China 87% 2% 89%
Transmission rate of various COVID-19 strains US 66% 11% 78%
Source: Our World in Data, 2022
Although almost 90% of the Chinese population is vaccinated
against COVID-19, China’s existing vaccines, however, do not
employ mRNA technology, which is suggested to be more
effective against Omicron.
However, on May 9, China has launched the world's first clinical
research on a trial for an Omicron-specific vaccine in Hunan
Province, which is expected to be completed in 3-4 months.
Source: The Economist, 2021
© 2022 DAXUE CONSULTING 16
ALL RIGHTS RESERVEDNot all city’s lockdowns will be even
Lockdowns play a central role in China’s zero-COVID strategy. However, there will be differences in the lockdowns between high-tier cities
and low-tier cities such as Shanghai and Beijing versus rural areas. Municipal-level government has defined three zones: lockdown, control,
and precaution - depending on the risk of spread, living environment, ability to identify close contact, and type of risk.
High-tier cities VS Low-tier cities
Beijing: Low-tier cities in Hubei:
“High-risk” zone > ≥ 2 cluster cases OR > 5 new COVID cases in the “High-risk” zone ≥ 50 COVID cases in the past 14 days
past 14 days
“Medium-risk” zone ≥ 0 COVID case in the past 14 days
“Medium-risk” zone ≥ 1 cluster cases OR 2-5 new COVID cases in the
“Low-risk” zone = 0 COVID case in the past 14 days
past 14 days
“Low-risk” zone = 0 COVID case in the past 14 days Erlianhaote in Inner Mongolia:
Shanghai: “High-risk” zone ≥ 50 COVID cases in the past 14 days
“Lockdown” zone > 0 COVID case in the past 7 days “Medium-risk” zone ≥ 0 COVID case in the past 14 days
“Controlled” zone = 0 COVID case in the past 7 days “Low-risk” zone = 0 COVID case in the past 14 days
“Precaution” zone = 0 COVID case in the past 14 days
Low-tier cities in Hunan:
• “Lockdown” zone - cases exist in residential areas or living “High-risk” zone ≥ 10 COVID cases in the past 14 days
surroundings
• “Controlled” zone - cases exist at workplace or activity areas “Medium-risk” zone ≥ 0 COVID case in the past 14 days
• “Precaution” zone - any area except “lockdown” and “control” zone “Low-risk” zone = 0 COVID case in the past 14 days
Source: People’s Daily, 2022; Beijing Government Website, 2020; Hubei Government Website, 2020;
Erlianhaote Government Website, 2021; Hubei Government Website, 2021
© 2022 DAXUE CONSULTING 17
ALL RIGHTS RESERVEDH2: The economic situation launches luxury spending into a
new phase focused on value and inconspicuousness
Short-term
18Inflation and lockdowns drive down consumer confidence
Rising inflation and the spread of the Omicron variant are inducing Chinese consumers to prioritize quantity over quality, thus favoring less
expensive FMCG products and higher volumes of items per trip.
China and US National Consumer Change in Chinese Mainland FMCG household FMCG growth rates
Confidence Index spending as of Dec 2021 Fiscal year 2021 vs 2020
(Oct 2021-Apr 2022)
Average Pack Size
China US Global avg Inflation 1.9% Average Price in KG/L
Volume
80.0 Delta Omicron Volume Change 5.8% 4.1%
72.8 outbreak outbreak
75.0
67.8 2.9%
70.0 -1.1% Store Choice
65.0 61.9
60.0 Promotion Choice 0.1%
53.6
55.0
48.3 48.2
50.0 -7.1% Product Choice
45.0
-0.4% FMCG Spending
2
-0.9%
21
21
21
1
22
2
22
1
21
t-2
r-2
-2
l-2
p-
v-
c-
b-
n-
g-
ar
ju
ap
oc
no
se
de
ja
fe
au
m
Source: IPSOS, 2022 Source: Kantar, 2022 Source: Kantar, 2022
Soon after the Delta outbreak, consumers
According to Ipsos, although China’s National and Expectations Consumer Confidence
started opting for larger pack sizes and higher
indexes remain positive and China outperforms the US and the global average, such two
purchasing volumes per trip at the expense of
indicators have both been experiencing a drop since November 2021, illustrating that the
quality in the FMCG. This trend is likely to
fear for further city-by-city lockdowns is reducing Chinese consumers’ willingness to spend.
continue as long as lockdowns hit other cities.
© 2022 DAXUE CONSULTING 19
ALL RIGHTS RESERVEDRough waters are ahead for luxury in China
The current wave of lockdowns, along with rising inflation, is fuelling fear of uncertainty which is in turn pushing Chinese
consumers to reduce non-essential spending. The consequent decrease in first-time luxury consumers is going to curb the rise
of China’s luxury sales this year.
The impact of lockdowns in China on luxury brands
23.7% of surveyed people are willing to consume more -1% y-o-y
LVMH
The Asia segment (excluding Japan) was the
54.7% of respondents are planning to save more +2.9% y-o-y
only region without a double-digit growth. Sales
dropped from 41% to 37% during 2022 Q1.
21.6% of surveyees are keen to invest more -1.9% y-o-y
Kering
Source: People’s Bank of China, 2022 Q1
Due to its exposure to China, Gucci recorded a
slower growth than the other houses of the
group.
• Entry-level consumers accounted for 50% of luxury shoppers in
China in 2021.
• Rising uncertainty triggered by both domestic and international Chanel
factors is inducing consumers to save money, leading to fewer Double-digit decrease in Chinese revenues as
first-time luxury consumers in 2022. around a third of beauty & perfume stores and
• In contrast, core luxury purchasers, whose demand tends to be 16 fashion shops are closed.
less elastic, will probably favor more discreet luxury goods.
Source: LVMH, Kering, Reuters, 2022
© 2022 DAXUE CONSULTING 20
ALL RIGHTS RESERVEDCore luxury consumers will favor quiet luxury brands
The economic slowdown, along with rising inflation, increasing unemployment and the common prosperity campaign, is going to
prompt Chinese wealthy to lay low and favor discreet inconspicuous luxury brands, such as Bottega Veneta and Hermès.
Considering China’s uneven income distribution, such
period of economic downturn is going to discourage
Chinese High Net Worth Individuals from flaunting their
wealth. Therefore, brands with more sober designs and
“Gold-brown Hermes bag Halzan 25 with golden buckle. I love less evident logos are going to benefit from the growing
this bag! Pleasant to feel, the leather is soft and textured. It is appetite for inconspicuous luxury.
very discreet without any big logo, impossible to recognize
at first glance. (…) ~I don’t dare to post it on my WeChat
Moments as my friends are almost all bosses, colleagues, Digital shopping accounted for about
working partners.”
19% of(excluding
total sales in 2021
duty-free shopping)
#没有logo的包# bags without logo >45k posts
#爱马仕低调 # Hermès low key >22k posts Source: Bain (2022)
#低调奢华包包 # Low key luxury bags >17k posts
# Celine无LOGO # Celine without logo >15k posts The desire for more privacy and discretion may keep
sustaining the growth of online luxury sales in the future,
The absence of a big logo is regarded as a perk by many contributing to convert e-commerce into China’s leading
users on Xiaohongshu and a way to feel part of a community sales channel for luxury goods.
of luxury connoisseurs.
© 2022 DAXUE CONSULTING 21
ALL RIGHTS RESERVEDLuxury brands to expand into Tier-2/-3 cities where consumers are still optimistic
Before the recent wave of lockdowns, luxury brands were already interested in investing into Tier-2 and Tier-3 cities due to their
low penetration rate, faster economic growth, and expanding middle class. Considering recent lockdowns mainly disrupting Tier-1
cities, brands’ expansion into lower-tier cities is bound to accelerate in the years to come.
Distribution of luxury consumers as of July 2020
40% of China’s population living in Tier-2 and Tier-3 cities in 2019
40%
by city tier
Source: National Bureau of Statistics, 2019
Tier-3 and Tier-1
below 30%
25%
11 out of 20 of the best performing cities in terms of economic
growth in 2019 were Tier-2 and Tier-3 cities
Source: PwC, 2021
Tier-2 New Tier-1
22% 23%
Luxury brands like Gucci and Source: Tencent, 2022
Prada already operate stores in
Tier-2 and Tier-3 cities, such as
Urumqi, Taiyuan, Sanya, Harbin, Even though luxury consumers in Tier-1 and New Tier-1 cities
and Haikou. account for 53% of the overall consumer base and contribute to
54% of luxury sales, those residing in Tier-2 and Tier-3 cities
Source: Dianping, Gucci’s store in Taiyuan
boast a stronger growth in spending and purchasing power.
© 2022 DAXUE CONSULTING 22
ALL RIGHTS RESERVEDH3: Lockdowns are going to accelerate the China+1 strategy while
giving China the opportunity to move up the value chain
Medium-term
© 2022 DAXUE CONSULTING 1
ALL RIGHTS RESERVEDDisruptions in the supply chains are going to boost the China+1 strategy
The “China Plus One” strategy is employed by international companies to reduce reliance on China. Lockdowns are forcing
factories to shut down and restricting mobility of goods. As a result, Southeast Asian countries are going to be the most popular
destinations of Foreign Direct Investments (FDIs) diverted from China.
The Omicron outbreak in China was a reminder for foreign companies to outsource their supply chain in lower-cost countries to benefit from
less strict containment measures, cheaper workforce, and weaker currency.
Tesla Inc:
‘Shanghai plant closed down for three weeks in April. The factory, which typically
ships around 60,000 cars a month, delivered only 1,512 vehicles last month.’
Over 180 global companies say they were
affected by China’s lockdowns in their first-
Sony Group Corporation:
quarter earnings calls or financial statements in ‘Cut its PlayStation 5 sales forecast to about 18 million units this fiscal year from
2022 - as recent lockdowns paralyzed the major a previous estimate of 22.6 million, citing supply-chain complications.’
industrial hubs of the country and disrupts the
global supply chain.
LG Household & Health Care Ltd:
‘Sales of beauty products plunged 40% in the quarter as restrictions battered
store traffic and travel retail channels.’
Source: The Edge, 2022
© 2022 DAXUE CONSULTING 24
ALL RIGHTS RESERVEDWith China+1 and the lockdowns, work opportunities will move up the value chain
As foreign companies leave the country, unemployment is bound to increase in the short run, but in the long run could also give
China the opportunity to move up the value chain.
China’s unemployment rate Distribution of the workforce across economic
(Jan ‘21-Mar ’22) sectors in China from 2010 to 2020
5.8%
Manufacturing Tertiary
5.5% 5.5% 47.7%
5.4% 46.1%
5.3% 43.3%
5.3% +0.3% 40.6%
-0.2% 5.1% 5.1% 5.1% 5.1% 36.1%
5.0% 5.0% 5.0% 34.6%
4.9% 4.9%
30.3% 29.9% 29.3%
28.7% 28.2% 28.7%
2010 2012 2014 2016 2018 2020
1
21
1
2
21
1
1
21
21
21
21
22
22
1
1
l-2
-2
-2
-2
-2
r-2
-2
p-
g-
c-
n-
b-
n-
n-
b-
ar
ar
ay
ov
ct
Ju
Ap
Se
Au
Ju
Ja
Ja
De
Fe
Fe
M
M
O
N
M
Source: National Statistics Bureau, 2022 Source: MOHRSS, 2021
Growth in China’s industrial production eased back to 5.0% year-over-
As China attempts to move away from low value-added activities,
year in March (from the surprisingly strong 7.5% year-over-year
manufacturing is no longer at the core of the national economy.
increase recorded across January and February).
Since 2011, majority of China’s labor force has been employed in the
service sector and the proportion of people working in the tertiary
COVID-19 outbreaks in a number of industrial centers (most notably
sector in China has been steadily growing. The acceleration of the
Shenzhen) have impacted productivity levels, however this was more
China+1 strategy could give a boost to such trend.
evident in surveys than industrial production data.
© 2022 DAXUE CONSULTING 25
ALL RIGHTS RESERVEDH4: Rising mental health issues due to prolonged lockdowns is
pushing China’s mental health industry to mature
Medium-term
26
Image source: ZZIPPY, 2022Lockdowns will overall increase the demand for mental health services in China
According to social listening, people appear to be less high-spirited due to prolonged home quarantine.
January 2022 February/March 2022 April 2022
Hopeful Overwhelmed Critical
Health Harbin Overflow
Back to Uni
Group buying
Policy
New Year Wish COVID go away!
Medical treatment
End earlier Hope University lockdown Food problem
Time with family Hong Kong Shanghai Delivery
Meet friends
Stay for CNY Lockdown
Volunteer
Safety
Online courses
Source: BrandRadar, 2022
• The Omicron outbreak began in
• In preparation for Chinese New Year • Beijing 2022 Winter Olympics in February
Shanghai in late March resulted in a 2-
• People was feeling hopeful during • Hong Kong experienced an Omicron
month lockdown
the new start of a year outbreak, exceeding 50,000 cases a day
• Group buying took off in April to solve
in early March
“food problems”
© 2022 DAXUE CONSULTING 27
ALL RIGHTS RESERVEDPeople are looking the most for anxiety and teen counseling
There is a major shortage of mental health counselors. For every 100,000 people, there are 2.2 psychologists and psychiatrists in China
according to the WHO (versus 42.4 in the US).
Keywords Search Index
Compared to previous period
Anxiety 37%
焦虑
Depression
14%
Search frequency of terms related to mental health 抑郁
in March and April 2022 Teen counseling
24%
Numbers are an index for comparison, not actual search frequency 青少年⼼理咨询
Emotional counseling
情感咨询 13%
© 2022 DAXUE CONSULTING 28
ALL RIGHTS RESERVEDMental health apps are seeing a surge of downloads
Psychological service platforms such as Xinli001 (壹⼼理) and Yidianling (壹点灵) are getting more users amid the zero-COVID lockdowns.
Number of downloads (on iPhone) between February and May 2022 May 26th
Xinli001 Yidianling 1,910
2000 Yidianling
Feb 23rd downloads
1800 Mar 24th
1,075 1,185
1600 Xinli001
Yidianling
downloads
1400 downloads
1200
1000
800
600 May 25th
First omicron Shanghai lockdown 1,228
400 Xinli001
outbreak in Shanghai commenced on
200 on March 1st March 27th downloads
0
1
7
3
9
5
3
9
5
1
7
2
8
4
0
6
2
8
4
0
6
-0
-0
-1
-1
-2
-0
-0
-1
-2
-2
-0
-0
-1
-2
-2
-0
-0
-1
-2
-2
02
02
02
02
02
03
03
03
03
03
04
04
04
04
04
05
05
05
05
05
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
22
22
22
22
22
22
22
22
22
22
22
22
22
22
22
22
22
22
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Source: Qimai Data, 2022
Xinli001 is a psychological service platform Yidiangling is an online psychological service platform,
that provides consultation, assessment, and providing both online and offline counselling, instant talk,
online courses, with over 22 million users and and online courses and tests, with 25 million registered
500 psychological counsellors. users and 30,000 professional psychological counsellors.
© 2022 DAXUE CONSULTING 29
ALL RIGHTS RESERVEDRise in the mindfulness economy
The rise in downloads and usage in counseling and meditation apps indicate the potential growth in the “mindfulness economy”. This
includes services and mobile apps for meditation, apparel brands and mobile apps for yoga, and any platforms providing mindfulness
information.
Meditation Yoga Information
In 2021, 1% of Chinese regard 21.6% of Chinese who exercised in the Self-help books account for almost one-
meditation as a daily habit last year did Yoga/Pilates (2020 survey third of China’s printed book market
compared to 14% of Americans of 2,100) (source: study by Eric Hendricks-Kim)
Apps
Apparel brands
#3 eBook in China
Counselling for Toads: A
Tide Now Lululemon Psychological Adventure
By Robert de Board
Companies incorporating Apps
meditation at work #3 Most Popular Book on
Douban (⾖瓣) in May 2022
Maybe You Should Talk to
Daily Yoga Wake
Someone
Didi Chuxing By therapist Lori Gottlieb
© 2022 DAXUE CONSULTING 30
ALL RIGHTS RESERVEDIncreased focus on wellbeing could cause backlash on hustle culture
Though 996 (9AM-9PM 6 days/week), 700 (being responsible for work at all hours of all days) and 715 (15 hours a day every
day) are technically illegal, they are still occurring in many companies around China.
Public litigation of “996” work culture
There’s some positions that require long hours, and that’s
understandable. However, it is unfeasible for companies to
put the physical and mental health of their employees at risk.
- Dong Mingzhu, a delegate to the National People's Congress
and chairwoman of Gree Electric regarding 996 work culture
Source: Zhengyi Ku Weibo, 2022
Why do companies keep long work How mental health awareness could unravel What lies between “lying flat” (躺平) and the
hours? 996? extreme “996” work culture?
• The employees need the money • Employees decide their mental health is • A new trend called ”45 degree life” is
• Strong hierarchy not worth sacrificing for a paycheck (内卷) trending in China, implying young people
• Management’s focus on ‘input’ (hours • As more people have access to are looking for a more balanced life
worked) rather than output (efficiency) counseling, there’s strength in numbers between burning out and lying flat
• Cultural glamorization of grit (忍) • The law is already on the employees’ side • Companies may put more efforts into
fostering a healthier work culture
© 2022 DAXUE CONSULTING 31
ALL RIGHTS RESERVEDH5: Group-buying will continue to rise in the long run
even when the pandemic is over
Long-term
32
Image source: 汤俊, 2022Increased downloads of group buying apps due to lockdowns in high-tier cities
Meituan Select and Pinduoduo, two major players of the group buying market, also led China’s community group buying craze
two years ago, when the pandemic first hit the country. Although the number of Pinduoduo downloads on iOS appear to be
declining, active users and revenue increased q-o-q by 4% and 7% respectively during Q1 of 2022.
Source: Pinduoduo, 2022
Number of Pinduoduo downloads (on iPhone) Number of Meituan Select downloads (on iPhone)
between February and April 2022 between February and April 2022
Mar 8th Mar 31st
258,520 Mar 11th
Mar 28th 15,351
Duo Duo 12,123 Meituan
300000 downloads 249,482 20000 Meituan
Duo Duo downloads
downloads
250000 downloads
15000
200000
150000 10000
Shanghai Shanghai Shanghai Shanghai
100000 reported 3 local lockdown
reported 3 local lockdown 5000
50000 COVID cases enforced on COVID cases enforced on
March 8th March 27th March 8th March 27th
0 0
2022-02-25
2022-02-27
2022-03-01
2022-03-03
2022-03-05
2022-03-07
2022-03-09
2022-03-11
2022-03-13
2022-03-15
2022-03-17
2022-03-19
2022-03-21
2022-03-23
2022-03-25
2022-03-27
2022-03-29
2022-03-31
2022-04-02
2022-04-04
2022-04-06
2022-04-08
2022-04-10
2022-04-12
2022-04-14
2022-04-16
2022-04-18
2022-04-20
2022-04-22
2022-04-24
2022-02-25
2022-02-27
2022-03-01
2022-03-03
2022-03-05
2022-03-07
2022-03-09
2022-03-11
2022-03-13
2022-03-15
2022-03-17
2022-03-19
2022-03-21
2022-03-23
2022-03-25
2022-03-27
2022-03-29
2022-03-31
2022-04-02
2022-04-04
2022-04-06
2022-04-08
2022-04-10
2022-04-12
2022-04-14
2022-04-16
2022-04-18
2022-04-20
2022-04-22
2022-04-24
Source: Qimai Data, 2022
© 2022 DAXUE CONSULTING 33
ALL RIGHTS RESERVEDThe group buying market already had momentum before the lockdowns
While in 2020 we saw a rise of contact-free delivery, in 2022, the focus shifted to group buying. Individual online delivery services
were prohibited during the lockdowns, as a result, consumers worked together to do group purchases as a community.
Total users of community group buying and online delivery
in China (in million)
Users in community group buying industry (in million)
Platforms Users in online delivery industry in December each year (in million)
646
2. Deliver to 544
1. Order online
pick-up location 470
406 420 398 419
343 335
212
3. Pick-up items at 2017 2018 2019 2020 2021
Community designated locations Pick-up locations Source: CNNIC, 2022
buyers in community
Community group buying allows a group of people to buy items In 2019, the number of group buying users surpassed online delivery
in bulk at a lower price. Originally popular among rural and users. At least 23 cities in China have experienced lockdown
middle-aged women, it has now spread to Tier-1 cities due to restrictions between 2020 and 2021, which brought neighbors closer,
the lockdown. thus pushing community group buying to the spotlight.
© 2022 DAXUE CONSULTING 34
ALL RIGHTS RESERVEDThe 2022 lockdowns drive community group buying from rural to the mainstream
The decrease in consumer confidence and rising uncertainty from the risk of further lockdowns will push people to form habits of
stocking up and saving money. As a result, group buying, a more cost-effective way of buying necessities, may be brought from
rural to the mainstream in the long run.
• Lockdowns in 2022 hit many higher-tier cities in
Consumer Confidence Index in China from January China, thereby prompting not only rural consumers
2021 to March 2022 but also consumers from all over the country to
save money and stock up on groceries.
127 • Consumer confidence dropped to the lowest point
in March 2022 and is likely to keep decreasing.
122.8 122.8
121.5 121.2 121.5
119.5
117.5
113.2
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
59.7%
'21 '21 '21 '21 '21 '21 '21 '21 '21 '21 '21 '21 '22 '22 '22 Consumers spent less than
Source: National Bureau of Statistics in China
they did before the pandemic.
Source: Data 100, 2022
Image source: 安特瓦信, 2022
© 2022 DAXUE CONSULTING 35
ALL RIGHTS RESERVEDCommunity WeChat groups have created a new digital group-buying infrastructure
The 2022 lockdowns created communities in residential areas, whereas previously, urban neighbors interacted very little, now
there are residential community groups established. Additionally, F&B brands like KFC and Ramen Talk have adapted their
online ordering to cater to community group buying.
This WeChat group
has 204 users from
the same residential
community. “Residential group 5 meals of tonkotsu
orders, delivered ramen for ￥105
on-time with care”
“Taking orders for
Sofia ice-cream!”
Number for community 5 meals of beef
leaders placing orders ramen for ￥130
The group organizer
initiates new group over ￥3000
buying orders
5 meals of tomato
A link to WeChat tonkotsu ramen for
mini program for ￥105
ice-cream group
buying. Click the
link to participate
in the purchase.
Source: daxue consulting, 2022
© 2022 DAXUE CONSULTING 36
ALL RIGHTS RESERVEDConsumers are likely to continue group buying after lockdowns
Consumers may still choose group-buying as one of the primary channels for grocery even when the pandemic is over due to of its
lower purchasing price, better quality products, and the closer community brought by the 2022 outbreak.
Drivers of group buying
Lower Purchasing Price: I used to watch Douyin (Chinese Tiktok)
• Retail prices usually decrease when more purchases are involved short videos during my spare time but now I
• More consumers involved in purchasing increases bargaining power check Meituan and my WeChat group
whenever I’m free.
Xiang Meiling – a local living in Hubei province
Source: SCMP, 2022
Closer Community:
• The rapid pace of life weakens the sense of community
• Group buying provides a chance to connect people who are living in
the same neighborhood, creating a closer community
Better Quality:
• Increased information-sharing within community buyers
• Products with inferior quality and unacceptable prices do not last
long in a community-buying situation
• In the long run, the items that survive in the group buying channels
may boast a high quality at a reasonable price Source: Eric Chen, 2022
© 2022 DAXUE CONSULTING 37
ALL RIGHTS RESERVEDH6: Digitalization will reach new heights as consumers
seek experiences from the comfort of their homes
Long-term
38
Image source: ZZIPPY, 2022Lockdowns led to a surge in interest towards video games
Demand for digital entertainment and livestreaming content has grown further under the lockdowns. In particular, video games
saw significant increase in interest, with consumers both playing and watching more content.
Video games are becoming increasingly popular Potential growth in the Livestream gaming market
Time spent on gaming per day, pre- and post-lockdowns Game livestreaming market size, 2020-2024
(in minutes) (RMB billions) 69.04
100
Before lockdown After lockdown 59.2
49.7
60 39.7
30
40
30
10 15
Overall Avg Lower Quartile Upper Quartile 2020 2021 2022E 2023E 2024E
Source: International Journal of Mental Health and Addiction, 2022 (N = 5,268) Source: iResearch, 2021
The median age of video game players is 27, with 52.6% being Leading game livestream
male. However, female students in their 20s were the most likely platforms such as Huya Live and
to increase their time spent gaming after lockdowns were lifted. Douyu Live (left), are expanding
Finally, stress and anxiety were also strong indicators for increase into live commerce and paid
in game time. subscription livestreaming.
Source: International Journal of Mental Health and Addiction, 2022
Source: Douyu, 2022
39
© 2022 DAXUE CONSULTING
ALL RIGHTS RESERVEDDemand for ecommerce livestreaming is poised to explode
Demand for ecommerce drastically outweighed the supply during lockdowns due to handicapped supply chains. When
lockdowns are lifted, there will be a a surge in ecommerce spending as people reclaim the consumption they missed out on.
Ecommerce livestreaming sees massive built-up demand due to Livestreaming as a form of ”social commerce”
lockdowns. Particularly in Shanghai, the shut-down of ecommerce
consumption resulted in accumulated demand. When lockdowns are
Social commerce refers to ecommerce in which online interaction
lifted, this will be a key driver of livestreaming ecommerce sales.
drives sales. People were deprived of social interaction during the
lockdowns. As a result, they were eager to interact with streamers
Gross Merchandise Value of livestreaming ecommerce in 2020- and brand ambassadors.
2023 (RMB billions)
Source: McKinsey, 2021
4,900
3,500
Key Opinion Consumers vaunt a great influence on
2,200 spending habits
1,240
While high profile KOLs are a major aspect of consumer’s spending
decisions, people increasingly seek out the voices of their fellow
2020 2021 2022E 2023E consumers. Perhaps out of people’s need for social interaction,
Source: Statista & iResearch, 2022 livestreams with KOCs became prevalent over the course of the
lockdowns.
Top 3 livestreaming platforms in China:
Douyin KOCs can range from someone’s close friends to their local
Taobao Live Kuaishou
(Chinese Tiktok) community, but the general theme remains: they are not paid to
promote products and thus perceived as more trustworthy.
Source: Tenba Group, 2022 Source: QPS, 2022
© 2022 DAXUE CONSULTING 40
ALL RIGHTS RESERVEDReturn of online grocery shopping and food delivery
People that struggled to fulfill basic needs under the lockdown will become more conscious of their access to food. Consumers
are now likely to purchase more groceries online. In the short term, demand for takeaway services will be immense in cities that
lock down.
Online groceries have become the most reliable method of obtaining food in the face of COVID lockdowns. As lockdowns are lifted in Shanghai,
the online food delivery industry sees recovery and digital transformation.
Online food delivery market size in China 2020-2024
In face of the Zero-COVID policy, severe lockdowns have prevented (RMB billions)
consumers from shopping in-store. Existing consumers will likely 1,131
1,206
continue using online grocery shopping, as there is always a chance 1,061
920
of lockdowns under the Zero-COVID policy.
695
Predicted online grocery sales in China 2021-2025
(RMB billions)
2,548
2,266
1,982 2020 2021 2022E 2023E 2024E
1,674 Source: IMARC Group, 2021
1,334
The food delivery industry in Shanghai is receiving government
support in its digitalization efforts. The Shanghai District Government
worked with Tencent to develop an online system on the company’s
WeCom platform, helping restaurants connect with professional
delivery businesses, and arrange their own delivery riders.
2021 2022E 2023E 2024E 2025E Source: Global Times, 2022
Source: eMarketer, 2021
© 2022 DAXUE CONSULTING 41
ALL RIGHTS RESERVEDDigital lifestyle content boomed during lockdowns
During the lockdowns, demand for lifestyle activities exploded. However, the lifting of restrictions acts as both a threat and
opportunity for these sectors.
Fitness livestreams Online recipe apps
In early 2022, Liu Genghong went viral during lockdown with Recipe apps were a major hit over
his livestream workout sessions on Douyin (Chinese Tiktok). the course of the pandemic, as
His livestreams have been viewed >100 million times in total, cooking became a necessity for
breaking Douyin’s viewership record of 2022 so far. those who would normally eat out.
Source: ECNS, 2022
It is also a way to learn a new skill,
alleviate boredom, and give people
an emotional outlet.
When lockdowns are lifted,
consumers will begin eating out
and buying delivery. There will be a
risk of losing consumer
engagement.
Source: Dao Insights, 2022
Liu’s popularity during the lockdowns revealed the underlying When supply chains recover and
ingredients become easier to
demand for both fitness and livestreaming content. Consumers
Source: 下廚房 (xiachufang) access, firms must utilize this
are becoming increasingly more conscious of their health and
fitness. opportunity in order to retain users.
© 2022 DAXUE CONSULTING 42
ALL RIGHTS RESERVEDThe dramatic rise in digital health and wellbeing solutions
Digital health tools will become a major market in China, following 2 broad directions: online primary care to alleviate overloaded
hospitals, and AI-powered digital healthcare solutions.
Solutions to congestion and overcrowding in hospitals COVID accelerated the adoption of AI technology
China’s largest and most advanced hospitals have experienced AI applications and automated systems were developed to support
overcrowding for years as people tend to visit larger hospitals medical staff in the fight against COVID. This include temperature-
for basic medical issues better suited for primary care clinics. screening systems, health chatbots, and AI-equipped diagnostic
assistants, which have significantly improved efficiency in identifying the
Online medical consultation, telemedicine, e-pharmacy, and OTC virus.
drug delivery services can provide unmatched convenience to
Harness the Power of Alibaba Cloud’s Medical Brain
consumers, solving the key pain point of hospital congestion.
Source: McKinsey & Co., 2021
Revenue in China’s digital health sector, 2020-2026
(RMB billions) Medical Data Data Cleaning Smart Application Data Platform
192 Integration and Storage Docking Console
174
157 Construction
140
122
101 Alibaba recently developed “Medical Brain” (above), an AI software that
82
helps physicians diagnose and propose treatment options.
Source: Alibaba, 2021
AI-powered disease prevention, diagnosis, and monitoring software
2020 2021 2022E 2023E 2024E 2025E 2026E will be in high demand as China seeks to improve the quality and
Source: Statista Global Consumer Survey, 2022 efficiency of its healthcare system.
© 2022 DAXUE CONSULTING 43
ALL RIGHTS RESERVEDSome apps risk losing users after lockdowns are lifted
Although the number of active app users grew considerably under the lockdowns, app usage behavior will normalize when
restrictions are eased. Certain apps may be able to keep their userbase, but many others are at risk of losing them.
App sectors with highest MAU growth in Shanghai Some app sectors are at a higher risk of losing users as
during 2022 lockdowns (%) people return to normalcy and in-person consumption.
Food Recipes 16% Mobile Games:
Low Mobile games are designed to be addicting
Risk and are a source of entertainment without
Mobile Games 13% many substitutes.
Health and Fitness 12% Health and Fitness Apps:
Medium Gyms are a substitute to home-workout
Online Video 5% Risk apps, but fitness trackers remain crucial to
enthusiasts.
News and Events 5%
Food Recipe Apps:
High People will be eating out or ordering takeout
Source: iResearch mUT, 2022
Risk as there is currently substantial built-up
demand.
The top growth areas consists of apps that helped improve people’s
Source: Publicis Brand Radar, 2022
lives under the lockdowns. They held a monopoly over their respective
industries during the lockdowns as people had no alternatives.
© 2022 DAXUE CONSULTING 44
ALL RIGHTS RESERVEDCompanies exploring new ways to to engage with customers
The “520” holiday in 2022 showcased a variety of highly digitalized and interactive marketing campaigns, such as IP
collaborations and the use of NFTs. This showcases the digitalization trends in digital marketing and that Chinese consumers love
engaging with their favorite brands.
IP Collaborations Interactive Events Limited “520” NFTs
Keep Pepsi
520 Sports confessions Jay Chou concert replays
Nestle X Mr Love I Do X King of Glory Amiro X V&A museum Balenciaga Lancôme Lyfen
Brands collaborated with other IPs to make Consumers are increasingly becoming
use of their brand equities. Digital IPs like King interested in NFTs and related
of Glory have dedicated fanbases who are BMW NetEase Cloud Music
technologies. Brands can design and sell
willing to spend, whereas the V&A museum’s Event Bilibili coin Love MBTI test their own NFTs in order to capture this
brand connotes sophistication and artistry. growing market.
Publicis, 2022
© 2022 DAXUE CONSULTING 45
ALL RIGHTS RESERVEDH7: The single economy is reshaping China’s
consumption landscape as lockdowns extend
Long-term
46The pandemic correlates with decreased marriage rate and divorce spikes
Marriage and birth rates disproportionally declined during the pandemic. Meanwhile, the average number of people living in one
household in China dropped around 10% from 2019 to 2020, correlated with lower birth rates.
Marriage, divorce and birth rate in China from 2016 to 2020 (%)
44%
Marriage rate Divorce rate Birth rate
13.6
Urban women age between 18 and 26 had
12.6
no plans to get married in the near future,
10.9 while 25% of men said the same
10.4
Source: Communist Youth League Survey (N = 2,905)
8.3 8.5
7.7 7.3
6.6
5.8
• People have postponed their marriage and
pregnancy plans due to COVID uncertainty.
3.0 3.2 3.2 3.4 3.1 • China saw a spike in divorces after the 2020
lockdown, as couples were forced to spend more
time together. Whether this trend repeats in the 2022
lockdowns remains to be seen.
• China introduced a ‘cooling off’ law, involving a 30-
2016 2017 2018 2019 2020
day waiting period for divorces to reduce divorce rate.
Source: China’s Ministry of Civil Affairs & National Bureau of Statistics of China, 2020
© 2022 DAXUE CONSULTING 47
ALL RIGHTS RESERVEDWomen are increasingly empowered economically
Although men still earn more than women on average, the gender pay gap is closing.
Average monthly income among Chinese Top 6 most searched product categories by women on
respondents by gender, 2018-2022 e-commerce platforms during January 2022:
Male Female
26.6% Skincare products 10.4% Kitchen appliance
9,848 9,776
9,467 9,328
8,545 22.6% cosmetics
8,006 8,173 8,138 7.1% Dairy products
7,245
6,589
17.6% snacks 5.8% ready-to-eat meals
Source: QuestMobile, 2022
As marriage rate declines, and more
2018 2019 2020 2021 2022
>80% women are in the workforce, they
spend more money on themselves.
Source: Zhaopin.com, 2018-2022
of surveyed high-income Jewelry houses that have always
Although men on average still earn 12% more than women in China, women in China intend to targeted consumers in the bridal
the average monthly income for women is seeing a 30% increase buy diamond jewellery market are now attempting to widen
over the past five years, whereas the average monthly income for for themselves. their audience.
men increased by 22%. Source: De Beers, 2020
© 2022 DAXUE CONSULTING 48
ALL RIGHTS RESERVEDThe rising single population in China amid COVID-19 brings opportunities to pet brands
More than half of the single people in China own pets in 2021, compared to only a quarter of non-singles. The pet industry in
China is also experiencing a steady growth in general, and is predicted to continue to expand in the following years.
Single and non-single pet ownership in As more people are choosing to stay single due to COVID and other factors, the
China, 2021 pet industry is bound to continue to boom.
58.4%
In fact, cat food, among all industry, was the best-selling category on Tmall
Global and Alibaba’s cross-boarder ecommerce marketplace during 2020
“Single’s Day” (11/11) shopping event. Sales for other pet-related goods and
services are also growing steadily.
26.3%
Source: CGTN, 2020
Market scale of China's pet industry,
2016-2023 (RMB billion)
445.6
Single Non-single 396.0
348.8
Source: iiMedia Research, 2021 298.8
252.1
199.1
154.5
Pets provide companionship, reduce 107.2
boredom and stress, and are a cheaper (or 72.5
alternative) investment than children, more
and more single people in China are turning
2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
towards pet ownerships.
Source: iResearch, 2021
© 2022 DAXUE CONSULTING 49
ALL RIGHTS RESERVEDSolo travel is becoming mainstream in China
The outbreak of the COVID-19 pandemic gave a significant boost to solo travels
60% Solo travelers on average spend 60% more than those
who travel with companions
Source: Tongcheng, 2019
Of 1,682 respondents in April 2020
claimed being unwilling to join any
group tour in the near future, against Over 50% of the people who take flights alone would
10% of surveyees planning tours including purchase flight accident insurance and flight delay
more than 10 people. insurance.
Source: McKinsey, 2020
“Buy now, pay later” is common among solo travelers.
Over 22.8% of solo travelers chose to pay by installment,
especially Millennials.
Health concerns and a greater flexibility in choice
of transportation were the main drivers behind
the success of solo travelling in China. Solo travelers are more likely to be interested in
exploring niche food and local cultural experience,
instead of popular tourist attractions.
Source: Tongcheng, 2019
© 2022 DAXUE CONSULTING 50
ALL RIGHTS RESERVEDMore industries are cashing in on the singles economy
Companies are targeting singles as a new consumption demographic, as the single population keeps increasing and more people
are expected to live alone in China.
Food Delivery
Singles in China are reliant on food delivery services; 45.7% of the single people reported that they tend to order food delivery.
Dating Apps
As the pandemic made it difficult to meet in person, people are turning to online dating platforms. Momo is the most popular in
China as of December 2021, with 53 million MAUs.
Health & Wellness
COVID-19 boosted health awareness in China. The single population is one of the key demographics for the health and wellness
industry, as singles have more time to explore workouts and wellness activities.
Ready-to-eat meals
Pre-prepared meals are increasingly popular in China. 34.4% of the single people have a preference on ready-to-eat food.
Source: iiMedia, 2022
© 2022 DAXUE CONSULTING 51
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