Trade in China during the coronavirus pandemic
I personally heard about the novel coronavirus disease for the first time on January 9, 2020 – the article addressed comparisons to SARS and Thailand had already imposed restrictions on travelers from Wuhan. I was curious to see how the Chinese government would react to such a development so close to Chinese New Year; after all, about 300 million Chinese (mostly so-called migrant workers, i.e., workers who work permanently in other provinces) would be on the move because of the holidays. On January 23 – 14 days after the announcement – and two days before the start of the Chinese New Year, the time had come: Wuhan was sealed off. Before that, hundreds of thousands, possibly even more than a million people, were able to escape to other provinces and presumably contributed to the rapid spread of the virus.
Even before the end of the Chinese New Year on February 5, interpersonal contact was prohibited in the other provinces. Retail stores and restaurants also closed out of fear of contagion.
After the end of the holidays on February 5 (comparable to the Christmas holiday season in Europe), the schools remained closed, migrant workers were not allowed to return to their jobs, and the opening of most shops (except pharmacies and food markets) was restricted. People in the big cities were urged not to leave their homes. More than 800 million people live in cities and metropolitan areas in China. Chongqing alone has 37 million inhabitants. The population density in China is dramatically higher than in Europe.
A good starting point for crisis management
Trade and the population reacted very well to this situation after the holidays. Even before the crisis, the conditions in China were completely different from those in Europe. That, plus their experience with SARS (2002/2003) affected their management of the crisis.
- Asians are used to wearing face masks or shields to protect themselves and others from colds. People immediately started wearing masks as usual. Initial panic buying focused on masks, hygiene products, and paper towels.
- After SARS (2002/2003), fever clinics were set up throughout the country to serve as contact points for the ill. This relieved the strain on regular clinics (although there were, of course, glaring bottlenecks that even required the construction of two hospitals in Wuhan).
- Measuring fevers and taking temperatures have been part of public life since SARS. Every restaurant, every retailer uses a small electronic device to take its customers’ forehead temperature upon entrance.
- More than 1 billion people use smartphones – and even if we don’t like to hear it, China’s internet infrastructure is better than Germany’s.
- People in China communicate privately via WeChat, the Chinese equivalent of WhatsApp. WeChat is also a commercial platform and has been used for payment processes for years!
- The share of e-commerce in China is significantly higher than in Germany (15–18% of retail sales). Accordingly, they have an army of delivery companies that must also be considered “systemically relevant.” Distribution and delivery are extremely efficient, with more than 90% of delivery companies using e-bikes. Customers are used to using home delivery options.
With these conditions, neighborhood retailers were also able to continue to serve their customers. Order and payment via WeChat, delivery via delivery company – just no longer to peoples’ front doors, but only to the residential district’s delivery zone.
Live streaming as a crisis medium
All retailers understood that their contact with customers must not be interrupted during the crisis! Livestreaming became the medium of the crisis overnight and was especially pushed by Taobao Live, which saw a 719% increase in retailers using livestreaming for the first time in February alone. IKEA started livestreaming on March 10 and had several tens of thousands of visitors within minutes.
Delivery zones were set up at record speed at the entrance areas to the residential districts where customers could pick up their orders. As a general rule, their body temperature was also measured at the same time.
Alipay (the largest Chinese payment service that has the data for more than 1 billion customers in its database and can easily link the data without involving third parties) released a nationwide coronavirus app at the beginning of February that allows every user to monitor his or her own health as well as the situation in their neighborhood.
Traffic light logic (green, yellow, red) is used to evaluate the health status of each user of the Alipay coronavirus app. It also shows the app users what is happening in their environment so that they can avoid hotspots.
All, of course, under (voluntary) renunciation of data protection as understood in the German model and in cooperation with all institutions. In return, users with a green status are allowed to move about unrestricted. The pandemic is revealing the different mentalities of people in the East and the West on an unprecedented scale. The need to protect oneself and the willingness to take responsibility cannot be reduced to the question of the political system!
Contactless becomes a necessity
China experienced a boom in the use of new technologies (robotics, drones, self-driving vehicles, etc.). Suddenly, contactless was no longer an economic issue but a necessity. We have also seen a similar development in Germany, resulting in cashless payments, digitalized processes, and an increase in e-commerce. Suddenly we are even used to masks in public.
The lockdown started to be gradually lifted on March 26 and, in just a few days, all the major malls were back to business as usual. It was once again possible to bring home deliveries to the door. However, it took several months for customers to return to their typical behavior. After SARS, it took about five months until the circumstances and sales returned to ‘normal.’ There is also a certain probability that customers will simply retain certain practices, especially in Germany.
No one wants to take the risk of forecasting the specific economic damage at this time. Some experts predict the gross national product of China will decrease by at least 2%. Trade, tourism, and exports are the three main affected areas. CNBC reports a 3.5% increase in Chinese exports in April but a 14.2% year-on-year decrease in Chinese imports, highlighting the expected economic impact in Europe.
I hope our everyday life gets easier with no increase in new infections.