04/05/2020
BEIJING (Reuters) – Tang Yue, a 27-year-old teacher from the city of Guilin in southwest China, steam-presses a blue dress and takes dozens of photographs before picking one to clinch her 200th online sale.
For a growing number of Chinese like Tang, hit by job losses, furloughs and salary cuts, the consumer economy has begun to spin in reverse. They are no longer buying – they are selling.
Instead of emerging from the coronavirus epidemic and returning to the shopping habits that helped drive the world’s second-largest economy, many young people are offloading possessions and embracing a new-found ethic for hard times: less is more.
With Tang’s monthly salary of about 7,000 yuan ($988), the self-described shopaholic said she has bought everything from Chanel lipsticks to Apple’s (AAPL.O) latest iPad in the past three years.
But the adrenaline rush that comes with binge-shopping is gone, said Tang, whose wages have been slashed with the suspension of all the classes on tourism management she usually teaches.
“The coronavirus outbreak was a wake-up call,” she said. “When I saw the collapse of so many industries, I realised I had no financial buffer should something unfortunate happen to me.”
There is no guarantee that the nascent minimalist trend will continue once the coronavirus crisis is fully over, but if it does, it could seriously damage China’s consumer sector and hurt thousands of businesses from big retailers to street-corner restaurants, gyms and beauty salons.
To be sure, there are signs that pent-up demand will drive a rush of spending as authorities reopen malls, leisure venues and tourist spots. In South Korea, the first major economy outside of China to be hit by the virus, people thronged malls this weekend to go “revenge shopping” to make up for time lost in lockdown.,
There are some signs that a similar trend will take hold in China, where some upscale malls are starting to get busy, although luxury firm Kering SA (PRTP.PA) – which owns Gucci, Balenciaga and other fashion brands – has said it is hard to predict how or when sales in China might come back.
A recent McKinsey & Co survey showed that between 20% and 30% of respondents in China said they would continue to be cautious, either consuming slightly less or, in a few cases, a lot less.
“The lockdown provided consumers with a lot of time and reasons to reflect and consider what is important to them,” said Mark Tanner, managing director at Shanghai-based research and marketing consultancy China Skinny.
“With much more of their days spent in their homes, consumers also have more time and reasons to sort through things they don’t feel they need – so they’re not living around clutter that is common in many apartments.”
#DITCHYOURSTUFF
Tang made a spreadsheet to keep track of her nearly 200 cosmetic products and hundreds of pieces of clothing. She then marked a few essentials in red that she wanted to keep. In the past two months, she has sold items worth nearly 5,000 yuan on second-hand marketplaces online.
Bargain-hunting online has become a new habit for some Chinese as the stigma that once hung over second-hand goods has begun to fade.
Idle Fish, China’s biggest online site for used goods, hit a record daily transaction volume in March, its parent company Alibaba (BABA.N) told Reuters.
Government researchers predict that transactions for used goods in China may top 1 trillion yuan ($141 billion) this year.
Posts with the hashtag #ditchyourstuff have trended on Chinese social media in recent weeks, garnering more than 140 million views.
Jiang Zhuoyue, 31, who works as an accountant at a traditional Chinese medicine company in Beijing – one of the few industries that may benefit from the health crisis – has also decided to turn to a simpler life.
“I used to shop too much and could be easily lured by discounts,” said Jiang. “One time Sephora offered 20% off for all goods, I then bought a lot of cosmetics because I feel I’m losing money if I don’t.”
Jiang, the mother of a 9-month-old baby, said she recently sold nearly 50 pieces of used clothing as the lockdown gave her the opportunity to clear things out. “It also offered me a chance to rethink what’s essential to me, and the importance of doing financial planning,” she said.
Eleven Li, a 23-year-old flight attendant, said she used to spend her money on all manner of celebrity-endorsed facial masks, snacks, concert tickets and social media activity, but now has no way to fund her spending.
“I just found a new job late last year, then COVID-19 came along, and I haven’t been able to fly once since I joined, and I’ve gotten no salary at all,” said Li, who said she was trying to sell her Kindle.
Some are even selling their pets, as they consider leaving big cities like Beijing and Shanghai where the high cost of living is finally catching up with them.
NO RETURN TO OLD WAYS?
As the coronavirus comes under control in China, the government is gradually releasing cities from lockdown, easing transport restrictions and encouraging consumers to venture back into malls and restaurants by giving out billions-worth of cash vouchers, worth between 10 yuan and 100 yuan.
But many people say they are still worried about job security and potential wage cuts because of the struggling economy. Nationwide retail sales have plunged every month so far this year.
Xu Chi, a Shanghai-based senior strategic analyst with Zhongtai Securities, said some Chinese consumers may prove the ‘21 Day Habit Theory,’ a popular scientific proposition that it only takes that long to establish new habits.
“We believe people’s spending patterns follow the well-known theory, which means most people in China, having been cooped-up at home for more than a month and not having binge-shopped, may break the habit and not return to their old ways,” Xu said.
Jiang said she was determined not to return to her free-spending ways and planned to cook more at home.
“I’ll turn to cheaper goods for some luxury brands,” she said. “I’ll choose Huawei’s smartphone, because (Apple’s) iPhone has too much brand premium.”
Tang, who has recently used 100 yuan of shopping coupons to stock up on food, is going to hold the purse strings even tighter.
“I’ve set my monthly budget at 1,000 yuan,” she said. “Including one – and just one – bottle of bubble tea.”
Source: Reuters
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06/04/2020
SHENYANG, April 5 (Xinhua) — Huo Chunlei, who runs a hotpot restaurant in Shenyang, capital of northeast China’s Liaoning Province, said he did not lay off any of his staff, although the restaurant is having difficulties for reopening after two months of closure in China’s nationwide measures of coronavirus control.
A few weeks after Chinese provincial-regions with low risk of the novel coronavirus gradually resumed work and production, shops and eateries have reopened, and roads become bustling again, as hundreds of millions of people confined at home for weeks in compliance with epidemic prevention rules get back to a normal life.
Huo’s restaurant has been in operation for a week. Only half of the tables are filled at dinnertime. The revenue is barely enough to cover the expenses of the house rent and employee wages, he said.
However, he said his business is able to survive because of the government’s bailout policies. For example, the approval of deferred payment of social insurance premiums for his employees alone can save him 80,000 yuan (about 11,250 U.S. dollars) a month.
“The staff are willing to stay, as we are all confident in tiding over the difficulties together,” he said.
The local governments at all levels have rolled out a slew of measures to shore up the catering business, including cutting taxes, reducing house rent as well as water and electricity fees.
The governments in Liaoning, Shandong, Jiangsu and Zhejiang provinces have issued coupons with a value ranging from 10 million yuan to 100 million yuan to encourage people to spend on dining out.
Before the production resumption, there were some consumer councils’ surveys showing that consumers had suppressed consumption desire for dining out and shopping as well as going to movie theaters, gymnasiums and tourist spots after the epidemic crisis ends.
“The so-called retaliatory consumption has not yet appeared in the catering industry, as people are still wary about the infection risk, but there will be a gradual recovery growth,” said Chen Heng, executive director of Hainan Hotel and Catering Industry Association in the southernmost Chinese province of Hainan.
“Before reopening, we increased the distances between tables, but with reduced tables, there are still many empty tables at dinner time. My restaurant used to have all seats full and even queues,” said Huo.
Like Huo, Lin Lunheng, founder of the Fuzhou Super Dinner Co. Ltd. in southeast China’s Fujian Province, is also worried about business.
“Although the chain stores have reopened, revenues have decreased by 70 percent compared with that before the epidemic. This is a big blow to restaurants,” said Lin.
The Italian style chain restaurant has offered e-coupons to draw customers.
As the spring weather is getting more and more pleasant, consumers’ desire for dining out and travel is growing. According to a survey report jointly released by the China Travel Academy and Trip.com Group on March 19, Chinese are longing for tours across the country, with Yunnan, Hainan and Shanghai among the top destinations.
Source: Xinhua
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19/03/2020
NANJING, March 19 (Xinhua) — Chinese cities are encouraging residents to dine out and shop with measures such as handing out e-vouchers to boost consumption sectors hit hard by the novel coronavirus outbreak.
Like many living in the eastern city of Nanjing, Wang Linlin was waked up by her alarm clock at midnight and with a few clicks on her cellphone, she was ready to meet her luck of the draw: getting a meal voucher worth 100 yuan (about 14.2 U.S. dollars).
“I’ve always been thinking about hanging out and having hotpot with my friends after the epidemic, so getting a voucher would be great,” Wang said.
Nanjing has been giving out vouchers worth 318 million yuan to its residents since Sunday. People are invited to participate in lotteries for e-vouchers which can be used in restaurants, gymnasiums, bookshops as well as tourist spots, helping the service sector bounce back.
The voucher bonus has been well received as more than 1.6 million local citizens have registered for the lotteries as of Monday, according to the Nanjing Big Data Administration Bureau.
Besides Nanjing, many other regions have also been taking similar actions.
Macao gives out vouchers totaling 2.2 billion patacas (about 275 million U.S. dollars) to its residents. The city of Ningbo in east China’s Zhejiang Province is issuing consumption vouchers worth 100 million yuan while the city of Jinan, east China’s Shandong Province, is handing out vouchers worth 20 million yuan to stimulate spending on tourism and culture.
Due to the coronavirus outbreak, Chinese customers have shied away from restaurants and shopping malls. China’s retail sales of consumer goods, a major indicator of consumption growth, declined 20.5 percent year on year in the first two months of this year, according to the National Bureau of Statistics.
“People are more willing to dine out with the vouchers, which can boost confidence in the catering sector and finally get the economy back on track,” said Shen Jiahua, chairman of a chain restaurant company in Nanjing.
After the coronavirus outbreak ends, people are eager to spend generously. According to a survey conducted by the Jiangsu consumers council, nearly 90 percent of the respondents expressed suppressed consumption desire.
Restaurants, shopping malls, movie theaters, gymnasiums and tourist spots are the top five destinations for consumers to unleash their spending spree after normal life resumes, the survey showed.
Local officials across China have been taking the lead in recent days in patronizing restaurants and shopping malls, hoping to use their appearances in public to persuade more residents to go outside.
In provinces such as Jiangsu, Anhui, and Jiangxi, government notices have urged officials to dine out and go shopping to help related businesses through the epidemic period.
“Government officials are using their actions to convey confidence and support work resumption and consumer spending,” commented a Chinese netizen.
Source: Xinhua
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