05/04/2020
- The coronavirus pandemic has completely changed patterns of consumer psychology across the world, experts say
- Complexity of the crisis, the number of variables and its magnitude make a consumer recovery unprecedented and difficult to predict
The coronavirus has caused panic buying around the world as consumers frantically stockpile of goods such as toilet paper, hand sanitisers and masks. Illustration: Brian Wang
Before the coronavirus crisis began rippling through the global economy, Susan Wang had big plans for 2020.
Not only was she going to buy a new Apple MacBook and iPad, plus a projector so she could host friends for movies at home, but she was set on making a career move.
“I was planning to change my job, but my headhunter told me that all recruitment has been postponed to the second quarter,” said the 27-year-old who works for a British company in Hong Kong.
“Our headquarters in London has a plan for redundancy, too. It is better to save some money in case I get laid off.”
As Covid-19 spreads across the world, sending stock markets reeling and prompting big companies to slash jobs, Wang has become increasingly frugal like scores of other consumers from China to the United States.
She has stopped eating at restaurants and now tries to keep her weekly food bill under HK$500 (US$64), whereas in the past she wouldn’t think twice about spending HK$100 per meal.
Amid mounting uncertainty, the
coronavirus pandemic – which has claimed the lives of more than 41,000 people and infected at least 842,000 worldwide – is fundamentally changing consumer behaviour in Asia, Europe and North America.
Consumer experts said the 2009 global financial crisis, the Great Depression that started in 1929 and the September 11 terrorist attacks give some clues about how and when global consumption might recover. But the complexity of this crisis, the number of variables and its magnitude make this consumer recovery unprecedented and difficult to predict, they added.
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“The coronavirus pandemic has completely changed patterns of consumer behaviour all over the world. People are afraid, and when people are afraid, they go into survival mode,” said Jesse Garcia, a Los Angeles-based consumer psychologist, who is also the CEO of market consulting firm My Marketing Auditors.
plummeted a record 44 per cent in February and those figures are only expected to get worse, with sales forecast to slump between 30 and 40 per cent in the first half of the year, according to the Hong Kong Retail Management Association.
In the US, retail sales dropped by 0.5 per cent in February, even before many states had issued stay-at-home orders to protect the world’s largest economy. The decline was the biggest fall since December 2018.
Experts say non-essential products and services are set to be worst affected by the coronavirus pandemic, while goods and services that can be consumed at home will see a spike in sales.
The coronavirus pandemic has completely changed patterns of consumer behaviour all over the world. People are afraid, and when people are afraid, they go into survival mode – Jesse Garcia
“Online consumer behaviour is frenetic,” said Ross Steinman, a professor of psychology at Widener University in the US state of Pennsylvania. “Consumers are refreshing and refreshing and refreshing websites to secure grocery delivery times, purchase paper towels from their usual big box retailer and scavenge for rice and canned soup from third party sellers on Amazon.
“A pronounced spike in coronavirus cases will only amplify the freneticism.”
So far, one of the
biggest shortages for consumers is toilet paper. Television stations across the globe have beamed images of empty supermarket shelves and huge queues as people hoard toilet paper rolls, masks and hand sanitiser.
The frantic stockpiling can be explained by a psychological concept called informational conformity, said Vicki Yeung, associate professor at the Department of Applied Psychology at Lingnan University in Hong Kong.
A pronounced spike in coronavirus cases will only amplify the freneticism – Ross Steinman
“When people lack knowledge and are in an uncertain situation, they tend to follow the group’s behaviour and blindly conform, but once they obtain more information, and digest and process the situation, the panic gradually fades away,” she said.
“During this Covid-19 pandemic, people generally feel jittery and anxious because they feel their sense of control has disappeared.”
Unlike other recent global crises such as the September 11 attacks, the coronavirus is less a one-time sharp shock to the system and more of a rolling source of anxiety that could retreat and resurface repeatedly, consumer behaviour experts said.
This was the pattern with the Black Death plague that hit Europe in 1347 and returned episodically over many years, ultimately killing millions of people.
During this Covid-19 pandemic, people generally feel jittery and anxious because they feel their sense of control has disappeared – Vicki Yeung
“It may be we’ll have to shut down things again in October or August. And this could go on for years,” said Charley Ballard, an economist with Michigan State University in the US. “The more that happens, the more damage it does to buoyant consumer psychology.”
Furthermore, relative to the 2009 financial crisis and even the Great Depression, when much of the damage was concentrated at least initially in the financial sector, this crisis has seen virtually the entire economy grind to a halt all at the same time, devastating employment and consumption.
Last week, a record 3.3 million Americans applied for unemployment benefits within one week, as restaurants, hotels, barber shops, gyms and retail outlets shut down in a nationwide bid to stem the pandemic. The previous record of 695,000 was set in 1982.
On Tuesday, Goldman Sachs predicted the US jobless rate will hit 15 per cent in the second quarter of this year from the coronavirus economic freeze, and could rise further beyond that to near the historic peak of 24.9 per cent seen in 1933 during the Great Depression. Economists at the St. Louis district of the US Federal Reserve projected unemployment could cost as many as 47 million jobs in the US this year, sending the unemployment rate past 32 per cent before making a sharp recovery.
US now has world’s most coronavirus cases, surpassing China
China’s unemployment rate jumped to 6.2 per cent for January and February from 5.2 per cent in December and 5.3 per cent a year earlier. It was the highest level since records began in 2016, but did not include China’s estimated 291 million migrant workers.
Consumer spending accounts for more than 60 per cent of the Chinese economy and drives 70 per cent of the US economy. But with the pandemic causing many people to go into hibernation and likely to lead to cycles of job cuts, economists have predicted a consumer-led global recession by the second quarter of this year.
Just how long it will take for consumer behaviour to return to normal depends on each person’s psychological resilience, including how quickly they can adapt to change, how optimistic they are and whether they can adopt strategies to regain a sense of control, Yeung said.
Anirban Mukhopadhyay, chair professor of marketing at Hong Kong University of Science and Technology said as long as the coronavirus threat was still present, people would remain fearful to some extent. But he added that people were resilient.
Satellite images show world sites deserted amid coronavirus pandemic
“Human beings adapt to events and stimuli over time,” Mukhopadhyay said. “Research has shown that even people who win lotteries tend to return to their earlier levels of life satisfaction after some months, as do people who have to have amputations.
“So even if the source of the fear does not go away, we learn to live with it.”
Ballard, from Michigan State University, estimated it could take upwards of two years for American consumers to feel secure enough in their jobs and gain enough confidence to fully open their wallets. A longer and more episodic duration for the disease could push that higher, he added.
Further complicating the consumer picture, he said, is that many supply chains are at risk of breaking. And consumers will be wary of spending for a while in many traditional areas, including crowded sporting events and concerts, restaurants and flights.
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Some experts have even suggested that consumer behaviour may be permanently changed as a result of the pandemic.
“It seems very unlikely that people will get back to life as it was before, once the coronavirus is over,” said Andreas Kappes, a lecturer in psychology at City University of London.
“People’s behaviour is extremely orthodox, often referred to as the status quo bias and captured in expressions like ‘past behaviour best predicts future behaviour.’ Now, the crisis forces us to change our behaviour, radically, and we might discover that new way suits us better.”
Source: SCMP
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01/05/2019
- Xi’s message talks of promoting ‘peaceful development’ as Reiwa era begins in Japan
- Analysts see diplomacy as latest steps towards bringing an end to bitter rivalry
The Japanese flag flies at the Great Hall of the People in Beijing on October to mark the visit of Japanese Prime Minister Shinzo Abe to China. Photo: Kyodo
Chinese President Xi Jinping congratulated Emperor Naruhito on his ascent to the throne of Japan in an effort to strengthen China’s ties with its neighbour and competitor as Beijing’s trade dispute with the United States went on.
Xi sent greetings on Wednesday in which the president stressed the importance of relations between Beijing and Tokyo, China’s state-run Xinhua news agency reported.
The two countries should “work together to promote peaceful development and create a bright future for bilateral relations”, Xi said.
The president also sent a message to Akihito, now Japan’s emperor emeritus, and “expressed his greetings and wishes”, Xinhua said.
Akihito, 85, relinquished the throne to his son at midnight on Tuesday, bringing the Heisei era that spanned his 30-year reign to an end.
Naruhito took the Chrysanthemum Throne to begin the Reiwa era with a pledge to become a “symbol of unity”.
Xi’s message came as China and Japan tried to repair relations damaged by disputes over the East China Sea and the bitter legacy of the second world war.
Washington was locked in a trade tariff war with Beijing, and President Donald Trump’s America First policy had prompted fears about the US’ commitment to Asia at the highest levels of Japanese government. These have pushed Beijing and Tokyo closer and, in October, Japanese Prime Minister Shinzo Abe visited Beijing.
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Xi was expected to attend a Group of 20 summit to be held in Osaka in June. A source said officials were considering whether Xi would dovetail a state visit to Japan with the summit.
Felix Wiebrecht, a China researcher at the Chinese University of Hong Kong, said in the international environment China was more willing to put a deep-seated rivalry aside and take Japan as a partner.
“Facing increasing tensions with the US, China is naturally turning towards other potential opportunities for cooperation,” Wiebrecht said.
“Xi is indeed very likely to visit Japan this year since it seems that both he and Abe are interested in strengthening their cooperation. A visit this year could be seen as a culmination in normalising their relationship and comes at the right time for China as its conflict with the US intensifies”.
Ryo Hinata-Yamaguchi, a visiting professor at Pusan National University in South Korea and an adjunct fellow at the Pacific Forum foreign policy research institute, said Xi’s message could be seen as Beijing’s expectation on Tokyo to keep relations positive.
“[But] this would raise questions in Japan, particularly regarding regional and bilateral security issues, as well as the trade issues between the US and China,” he said.
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“The big question is whether China – as well as the US – expects Japan to work as some kind of mediator between Beijing and Washington, causing dilemmas for the Japanese government”.
Some observers remarked on the possibility of sideline meeting between the two leaders at Osaka.
“Xi could meet with Abe [at G20] in a bilateral context too,” Zhang Baohui director of the Centre for Asian Pacific Studies at Lingnan University in Hong Kong, said.
He also felt that Xi may make a separate state visit to Japan, after the G20 meeting closed.
“Japan is reportedly interested in having a second and separate visit by Xi later in the year … The Japanese efforts are part of a broader attempt by the Abe administration to improve relations with China,” Zhang said.
“A separate state visit would cement the full recovery of Sino-Japanese relations since the 2012 Diaoyu Islands dispute,” Zhang said.
Xi Jinping, then Chinese Vice-President, meets Emperor Akihito in Tokyo in December 2009. Photo: Xinhua
Japan and China both claim the territorial rights over the Senkaku Islands – also known as the Diaoyu Islands – in the East China Sea.
In 2012, Japanese government purchased three of the disputed islands from private owners, which prompted large-scale protests in China. In the following year, Beijing set up the East China Sea Air Defense Identification Zone which included the islands, requiring all aircraft entering the zone to file a flight plan, further intensifying the conflict between the two countries.
Efforts this summer to intensify diplomacy “should bring greater stability to the East China Sea and may even lead to greater Sino-Japanese cooperation on regional issues like economic integration”, Zhang said.
“But Japan’s concern for a rising China and China’s expanding maritime activities in the East China Sea will continue,” Zhang added, noting that Japan has also expanded its military capabilities in disputed areas such as the South China Sea.
Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe are likely to continue their diplomacy during and after June’s G20 summit in Osaka. Photo: EPA
Source: SCMP
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CHINDIA ALERT: You'll be living in their world, very soon 