China - Now more than ever

March 27th, 2020

Digitalization in China

Now More Than Ever

Even before the corona crisis hit China at the beginning of the year and massively restricted the everyday life of the world's most populated country, China was already a big step ahead of Germany in terms of digitalization.
One simple example is mobile phone coverage: while you usually lose your network connection entering a subway station in Germany, you won't experience any reception problems in China—even while riding 1,300 km from Beijing to Shanghai on the bullet train, you can rely on always having online access.
What's more, 740 million Chinese are online in social networks in 2020. The most successful app, WeChat, even has over a billion active users globally every month, and the Chinese software company ByteDance is setting new standards in social media around the world with TikTok.
China also has a digital lead in areas of everyday life that still take place almost entirely offline in Germany. According to a PWC study from 2019, 68% of Chinese consumers buy products online at least once a week. According to forsa, the German share is around 14%. In China, products from absolutely every category are ordered online—from care products to vegetables. This has been part of Chinese everyday life for several years.

Everyone Is Streaming Live

While China has been battling its way through the corona crisis in recent weeks, further shifts towards e-commerce have taken place. Where before only well-known influencers set up livestreams to promote the products of major brands, now everyone is streaming live. Farmers advertise their harvest from home and thereby prevent food from being wasted, real estate agents guide virtually through apartments and car dealers present all features of their sales models in the livestream. The Chinese cosmetics brand Forest Cabin even trained 1,600 vendors in doing livestreams, thus enabling them to make products accessible to consumers and attract new customers, despite the crisis.

E-Commerce Is an Integral Part of Everyday Life

In the period of the lockdown and also afterward, e-commerce has become an even more integral part of everyday life. In particular for everyday goods, online demand has continued to grow as people are still very concerned about hygiene and social distancing has become the new norm. There is an exciting new development in logistics: in some places robots are taking over the last mile of delivery for large platforms. For example in February, JD robotically delivered supplies to a hospital in Wuhan, and robots were also used in a field hospital to ease the burden on medical staff. With all the experience gained during the crisis, a first step has been taken to test robots and drones and use them in everyday life as soon as possible. The crisis has accelerated the development and implementation of new technologies.

What conclusions can a European brand draw from the events of recent months? Investing in the Chinese market today and building a well-thought-out presence—for example on Tmall Global—not only enables participation in the world's largest consumer market, but companies also gain real insights into the future of retail, giving them a head start that they can use profitably in other markets.

Due to the fact that the legal situation for cross-border trade has been made much less complicated, not only in China, but for example also in Malaysia, Singapore and Indonesia, brands can manage their business from Europe without the need for a local branch.

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