Shopping galas prove effective for recovery

January 19, 2023

BEIJING – Nation’s buying power ramped up amid optimization of COVID-19 measures

Wang Zhen, 28, a white-collar worker in Shenzhen, Guangdong province, just placed an order online with her mobile phone. Gift boxes of protein powder, multivitamins, mineral tablets and nutrition supplements like wolfberry honey and collagen will be delivered to her home in the next few days.

“I bought these commodities as Chinese New Year presents for my parents. I will go back to my hometown in Changsha, Hunan province, during the upcoming Spring Festival holiday this year for a family reunion,” Wang said.

“My parents were infected with COVID-19 a month ago and recovered after taking medicine. I hope the nutritional goods will boost their immunity.”

Apart from health-related products, she also purchased a robotic vacuum cleaner and an automated dishwasher to free her parents from tedious and repetitive daily housework. “Online shopping is very convenient and more discounts are available during some promotions in the run-up to the holiday,” she added.

Healthcare products, smart home appliances and pet products have gained popularity among Chinese shoppers who have started stocking up ahead of the Lunar New Year, which falls on Sunday.

Data from Tmall, Alibaba’s business-to-customer platform, showed that the demand for medical supplies, including thermometers, disinfectants, antigen test kits and pulse oximeters that measure oxygen concentration in arterial blood, has grown exponentially in recent weeks.

Sales of health and nutritional products to boost immune systems surged 400 percent month-on-month in the first half of January, with protein powder, vitamin C and probiotics increasingly favored by Chinese consumers, according to AliHealth, the health and medical unit of Alibaba.

Young consumers have shown rising enthusiasm for keeping pets and increased their spending on smart pet products. According to Tmall, the transaction volume of automatic pet feeders soared nearly 100 percent year-on-year in 2022, while the turnover of smart water dispensaries and pet drying boxes increased about 50 percent and 40 percent, respectively.

In addition, small home appliances and intelligent home equipment have seen robust growth in sales during the Spring Festival promotional gala. In particular, large-screen televisions, air fryers, floor-cleaning machines, dishwashers, blenders and other kitchen appliances have enjoyed rising popularity among Chinese consumers.

Online retailer Suning.com said the turnover of dishwashers at its brick-and-mortar stores skyrocketed 325 percent year-on-year from Jan 4 to Jan 11, while the transaction volume of 65-inch to 75-inch TVs and floor-cleaning products skyrocketed 190 percent and 56 percent, respectively, from a year earlier.

Hong Yong, an associate research fellow at the e-commerce research department of the Ministry of Commerce, said major Chinese online retailers have launched promotional events ahead of the weeklong Spring Festival holiday, the most important holiday for Chinese people, in an effort to promote the recovery of consumption.

Health-related products are expected to be at the forefront of people’s minds in terms of making special purchases for the celebration. Hong noted that online promotional activities will further unleash pent-up consumption demand and inject strong impetus into China’s immense consumer market following the optimization of China’s COVID-19 response measures.

Moreover, fashion and personal care products have gained traction among Chinese consumers. Sales of smartwatches, plush toys and cosmetics increased by 122 percent, 150 percent and 500 percent, respectively, from Dec 16 to 26, compared with a month earlier, according to a report released by JD’s omnichannel retail services JD Daojia and Shop Now, a one-hour delivery service jointly launched by JD and Dada Group.

Online orders placed for delivery to other cities increased by 118 percent year-on-year, with Shenzhen and Guangzhou in Guangdong province, Beijing, Shanghai, and Chengdu in Sichuan province ranking as the top five cities placing orders. These items are likely gifts arranged for family members and loved ones in other cities.

The report also pointed out that the sales growth rates of flowers and cleaning products were prominent in Beijing, while vegetables, eggs, ready-to-eat food and fruits ordered by people living in Shanghai doubled from Dec 16 to 26.

Pre-cooked food and meal kits have also been popular with consumers during this period, with cherries and strawberries having become the most popular fruits during the promotional gala. Furthermore, both sales of gift boxes filled with baked goods and baijiu, or white liquor, increased tenfold.

Consumption has become a major driving force for boosting the stable recovery of the national economy. Data from the National Bureau of Statistics showed China’s final consumption expenditure contributed to 65.4 percent of China’s economic growth in 2021, driving GDP growth by 5.3 percentage points.

“Chinese shoppers have attached great importance to safety and health, and prefer to buy high-quality products, as well as enjoy the services that make their lives safer and more comfortable. Health-related commodities like nutritional products, medicine and fitness equipment have been increasingly favored by consumers,” said Wang Yun, a researcher at the Academy of Macroeconomic Research affiliated with the National Development and Reform Commission, the country’s top economic regulator.

With continuously optimized COVID-19 prevention and control measures, China’s consumer market has witnessed rapid recovery, Wang said, adding she is optimistic that consumption, as a significant pillar of economic development, is expected to maintain growth momentum this year, with the growth rate reaching more than 6 percent.

The tone-setting Central Economic Work Conference in mid-December said that China will focus on boosting domestic demand by prioritizing the recovery and expansion of consumption in 2023. The country will strive to enhance consumption capacity, improve conditions and make innovations in creating more consumption scenarios.

Wang’s views were echoed by Jiang Han, a senior researcher at market consultancy Pangoal, who said an increasing number of people are inclined to embrace their home lives, where they yearn for care and companionship.

Bai Ming, deputy director of international market research at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said Spring Festival is the traditional festival that Chinese people attach the most importance to, and it’s also a peak season for consumption.

In the wake of COVID-19 being managed as a Class B infectious disease, Bai said the steady recovery of consumption during the Chinese Lunar New Year holiday will bode well for China’s economic performance this year.

Chinese consumers have become more conservative regarding buying nonessential goods and are placing greater emphasis on the quality of products, with homegrown brands gaining increasing popularity among millennial and Generation Z consumers amid the COVID-19 pandemic, said a report released by global consultancy PwC.

Charting a new path for sustainable growth is more important than ever for corporate strategy, said Jennifer Ye, PwC consumer markets leader for the Chinese mainland, suggesting that brands should “enhance their product innovation capabilities, increase R&D investment and continuously create new products that meet the actual needs of consumers”.