China - At a pause or making the next leap?
China’s zero Covid policy has had profound impacts since 2020, which will persist even as the economy re-opens in 2023.
Ipsos research finds that concerns about the risk of infection, and about not being able to work normally have been even higher in 2022 than they were during the initial 2020 period.
Against this backdrop, innovations continue. In the fast-moving retail sector, Ipsos data shows that the ‘arrive-home delivery’ and convenient store business has been growing very fast. New technologies like ‘delivery stations’ and delivery robots have provided more flexibilty for consumers too.
Ecommerce plays an important role in the Chinese economy and there are some new trends emerging. For example, TikTok have predicted that the ‘Interest based ecommerce’ market size could reach 9.5 trillion CNY in 2023, which would be about 25% of the total ecommerce market.
Meanwhile, and supported by the government, the new low-carbon energy industries are growing fast. The NEV business is recognized as a combination of Auto and Consumer Electronics rather than pure Auto, and it is the domain of different players. In Ipsos’ 2022 NEV Brand Competitiveness Index in the China market, BYD ranked 1st and Tesla 2nd. Three major Chinese brands (NIO, Li and Xiaopeng) ranked 3rd to 5th. Traditional auto brands ranked lower.
China’s population growth is very small now and our population bonus is starting to disappear. The population aged between 15 and 59 has decreased by 6.8% compared to ten years ago, and the population above 60 has increased by 5.4%.
Growing businesses by simply winning new users is therefore becoming more difficult, and increasing the LTV (lifetime value) of consumers is the challenge (and the future) facing all businesses.
China’s population growth is very small now and our population bonus is starting to disappear
Lifeng Liu
Patrick Xiang
You can hear our Marketing Director, Patrick Xiang, discuss the end of Zero COVID, the Chinese economy, and China’s changing position in world in our special Almanac podcast (from around 22m:40s).