McKinsey in China have done a typically good job of highlighting some of the pre-existing consumer trends in China which have only accelerated as a result of COVID-19, and are now placed on “fast forward”. See Fast-forward China: How COVID-19 is accelerating five key trends shaping the Chinese economy
These five trends are:
- Domestic Consumption
- Maturing Consumers
- Social Awareness
These are all important but the first one, “digitisation” is, in my opinion, the most important and relevant for foreign entrepreneurs and SMEs seeking a new market entry point in China.
According to McKinsey “before COVID-19, China was already a digital leader in consumer-facing areas – accounting for 45% of global e-commerce transactions while mobile payments penetration was three times higher than that of the US. Consumers and businesses in China have accelerated their use of digital technologies as a result of COVID-19. Based on our mobile surveys of Chinese consumers, about 55% are likely to continue buying more groceries online after the peak of the crisis. Nike’s first-quarter digital sales in China increased 30% year-over-year after the company launched home workouts via its mobile app, while property platform Beike said agent-facilitated property viewings on its virtual reality showroom in February increased by almost 35 times compared with the previous month”.
The way I see it, the traditional (physical) barriers to entry in China are being removed as a result of digitisation. If you have a product, service or idea which will resonate with Chinese consumers, you can now ‘live stream’ directly into their bedroom or home office. So what are you waiting for?