China in the time of the coronavirus: behaviour and opportunities

China-Retex
Redazione
07 Mar 2020

Due to the spread of the novel COVID-19, China is experiencing a critical situation throughout its territory. To this health emergency are inevitably associated economic and social consequences.

The epidemic outbreak had a strong impact on the domestic retail market, as a large part of the Chinese population remains in enforced quarantine. The opening hours of shops and shopping malls have been significantly shortened, and rentals for commercial premises have plummeted.

RETAIL vs VIRUS, IN CHINA

The countermeasures taken by luxury brandsand distributors differ in strength and duration. Galeries Lafayette Beijing has already halted operations on 4 February, and Plaza 66, the famous shopping mall on the two Shanghai towers, decided to cut rents by half over the next period. The same decision was also made by Harbor City shopping mall, a benchmark of reference for luxury sales in Hong Kong.

This situation could induce discouragement on the part of all those operating on the Chinese market. But, as with other such events, the need for adaptation and change indispensable for recovery draws a different picture and outlines interesting opportunities for the future.

Today online channels represent a significant opportunity for various reasons. Traditional retailing through small stores, by independents or small businesses, no longer meets today’s customers needs and expectations. This is true for every type of distribution, from basic supplies to luxury goods.

RETEX INITIATIVES

Retex accompanies and has long supported the presence of Made in Italy on the Chinese market. This is why we believe that with the appropriate commercial and communication choices the current difficulties can be positively addressed and start thinking in terms of development.

Given current exceptional circumstances, we take therefore immediate actions to preserve the investments made by the brands on the Chinese market and strengthen their presence. These initiatives are geared towards communication and at developing relations with local customers, using advanced live streaming technologies and WeChat miniprograms.

PROPER COMMUNICATION IS CRUCIAL

Across all product categories, e-commerce becomes an incentive for the creation and/or expansion of consumer communities linked to the brand or local businesses. More generally, the space inevitably left free by the personal relationship is taken up by the online relationship.

It is not wonder, then, that the average time spent on social networks in China is significantly increasing. As a result, close attention must be paid to not just what it is communicated, but also how it is communicated. And conveying it properly is crucial, like the impact had by the brands’ actions.

Inevitably there is great deal of support on the part of all market players active in China. Many companies raise and contribute money to the fight against COVID-19, but with no evidence of charitable nature attached to their marketing strategies, as this would be counterproductive.

From out direct experience of the WeChat ecosystem, we suggest avoidingwith a strong commercial focus. In this phase, communicating with people matters infinitely more than sales promotions. The recognition of the priority to be given to the buyer’s well-being and peace of mind is a prerequisite for a correct commercial relationship, both now and in the future.

E-commerce giants, such as Alibaba, have started to adopt supporting measures. The provision of subsidies for the supply chain and logistics is just an example, like the facilities for operators who use the platform.

MAKING VIRTUE OUT OF NECESSITY

Necessity, however, stimulates the search for innovative solutions, encouraged by the large availability of technology. The Shanxi Xian Terracotta Warriors Museum had to close its doors, but it is now possible to visit it for free online.

After the virus crisis, as happened with the SARS epidemic, there will probably be a rebound in sales and an increase in consumer spending. Many authoritative sources speak of a possible recovery already in May, and the revival of tourism for the summer holidays.   

IFS Chengdu is one of the most leading luxury malls in the country, with over 600 fashion and luxury brands, and currently has exclusive initiatives underway with WeChat. The mall’s holding company, Wharf Holdings, has already invested $1.5 million to help combat the virus.

In an interview with Jing Daily, the IFS Chengdu’s management summarized the situation as follows: “The virus is an emergency and a testament to brands’ operational capabilities. What happens is temporary, and once the virus situation is overcome, consumer confidence and purchasing desire will be restored. Our tenants are looking forward to the future”.