Chinese consumers expect the coronavirus outbreak to last until July according to a machine learning generated report. Despite widespread anxiety, observers expect the market to bounce back quickly and urge businesses to prepare in case the crisis ends earlier than expected.
Conducted by Zectr, a Hong Kong machine-learning startup, and Re-Hub, a Shanghai-based digital transformation firm, the study surveyed 900 consumers from Beijing, Shanghai, and Guangzhou about their outlook on the crisis and buying behavior.
The COVID-19 outbreak has undoubtedly shaken Chinese consumers. Consumer incentives were already low amid economic uncertainties and the recent epidemic only further encouraged savings instead of spending.
After the first confirmed case originated from Wuhan, the coronavirus rapidly spread to other Chinese cities. The disease has claimed over 3,000 lives in China, vastly exceeding the fatalities of the 2002 SARS outbreak.
The spread of the coronavirus in China appeared to have slowed down since late February after aggressive measures like city lockdowns. Workers are slowly getting back to work. Chinese consumers are willing to unleash their bottled-up demand and savings, and businesses should prepare accordingly, the study suggested.
A brand’s vocal support for China during the crisis would encourage consumer spending, according to the study. The respondents rated on average 7 out of 10 for the importance of a brand speaking out on social media to support their country when they make a purchase decision.
If the epidemic persists, the spending on packaged foods would increase by 16 percent and alcoholic beverages 5 to 9 percent. Some products like household goods would do well regardless of the scenario. The crisis has also driven consumers toward online marketplaces, showing growth potential for e-commerce companies like Alibaba.
A Reuters poll consulting 40 economic experts in February projected the Chinese economy to experience a slump in the first quarter of 2020. A bounce back would follow in the second quarter, with a median projected growth of 5.7 percent. Chinese consumers are more pessimistic about the future, expecting the crisis to last for another 4 to 5 months.
Although the situation in China is looking up, a number of major economies saw a surge of cases in the past few days. The spread of the virus in the rest of the world would bring broader global economic worries that could deal another blow to China’s recovery.
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TNL Editor: Daphne K. Lee (@thenewslensintl)
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