5 min read.
Due to the COVID-19 outbreak, China’s economy is not spared and came to a standstill earlier in the year. In order to contain the virus, Beijing implemented large-scale shutdowns and quarantines to limit human contact. China reported that its first quarter GDP contracted by 6.8 percent in 2020 as opposed to a year ago. In spite of the sluggish economic growth, it is not all gloom and doom as selected sectors have benefited from this global crisis.
Globally, telecommuting services such as Zoom and Slack have added hundreds of new job openings and telemedicine services continue to be on high demand. On the other hand, according to a Statista online study in February, Chinese respondents are expecting a few industries such as medical education, artificial intelligence, Internet and e-commerce platforms to thrive after the outbreak.
We have shortlisted the following five growing and promising industries in China — not in order of importance — for entrepreneurs and enterprise owners who are interested in future-proofing their business offerings specific to the Chinese target market.
1. Live Commerce:
A convergence of livestreaming and e-commerce, the live commerce concept can still be very fresh to the West but it has definitely taken off in China. Everbright Securities noted that the live commerce market was worth 440 billion yuan (US$63 billion) in 2019, a 220 percent increase on 2018.
After the country’s lockdown, many small retailers have turned to livestreaming as a way to stay afloat. From houses, cars and clothes to food and film tickets, live commerce hosts use limited-time discounts to encourage quick orders, which can be extremely useful in engagement and sales conversions.
As of February 2020, the Taobao Live Broadcasting New Economic Report revealed that more than 100 occupations have vied for spots on Taobao Live Selling. The number of new merchants on Taobao live broadcast continued to soar in March and rose by more than 300 percent year-on-year. No job? Fret not, go live! Live commerce is no longer a gimmicky business but a way to make up for the employment gap in traditional industries.
2. Cross Border E-Commerce:
As an attempt to revive foreign trade, China will be setting up 46 new integrated pilot zones for cross-border e-commerce. It is great news for those who are looking to be involved in this space as SCMP stated that on top of 59 existing ones, companies in the 46 new integrated pilot zones will enjoy support policies including exemption of value-added and exercise taxes on retail exports and more favourable corporate tax rates. Overseas warehouses have been encouraged to offer resources for small and medium-sized enterprises.
The government is exempting small and micro enterprises and rural areas from the replacement of interest income that are on loans of 1 million yuan and below. On top of that, they are boosting smooth international freight channels, such as China-Europe freight trains, and improving cargo connections to stabilise global supply chains.
With the government’s support to lift foreign trade and investment, it is definitely timely for companies to enter the cross border e-commerce market. In accordance to the data from the General Administration of Customs, retail sales at China’s cross-border e-commerce businesses recorded a 38.3 percent increase and reached 186.21 billion yuan (US$26.4 billion) in 2019.
3. Supply Chain and Logistics:
The crisis certainly taught retailers a valuable lesson; modern supply chains must be optimized and managed remotely. Unlike most countries, China has been proactive in enabling businesses to experiment with digitally-run supply chains and will continue to do so as a way to maintain the country’s international attractiveness.
Based on JingDaily, the northwestern Chinese province of Shaanxi has been using drones for its local logistics network for a few years. Similarly, other Chinese supply chain companies have been employing groundbreaking technologies like cloud-based systems, data analytics, and artificial intelligence to redesign supply chain operations. Through logistics arm Cainiao Network, the Alibaba Group aims to achieve 24-hour delivery across China and 72-hour delivery to the rest of the world.
Likewise, JD.com uses smart warehouses equipped with robots, last-mile delivery by automated drones and cloud computing. The focus on revolutionising digitised supply chain model makes China a world leading adopter of emerging technologies.
4. Online Entertainment:
It should come as no surprise that the pandemic led to soaring traffic for online streaming platforms. Whether you are a content provider or a brand looking to engage your users in China, online entertainment platforms are no longer a nice to have but a must to get on as they offer a great way to monetize content.
Entrepreneur.com stated that the total users increased by 17.4 percent to reach 310 million during the Chinese New Year holiday compared to a regular week in January. A few movies were forced to give up their theatrical releases on the big screens and proceeded with releases on streaming platforms instead. “Lost in Russia” became the first Chinese movie released online for free in January on ByteDance platforms, including DouYin, Xigua Video and Toutiao. It achieved more than 600 million views within the first three days.
Additionally, Chinese comedy “Enter the Fat Dragon” starring Donnie Yen was released on iQiyi and Tencent Video on February 1, with viewers paying for early-access. The movie generated 63 million paid views on Tencent Video platform within the first three days. A total of 26 web movies were released online during Chinese New Year holiday this year, nearly half of which were on iQiyi platform.
5. Online Education:
With the virus outbreak, the solution to school closures during the outbreak was rather clear – online education. According to China Briefing, the country’s online education industry is now one of the most lucrative with annual revenue increasing from 122.54 billion yuan (US$17.5 billion) in 2015 to 269.29 billion yuan (US$38.5 billion) in 2019.
The shift of traditional classroom to digital learning is made possible by DingTalk, an office software developed by Alibaba group. The software is widely adopted by schools and students and has been installed 1.1 billion times.
In a similar fashion, Tencent quickly developed an online education live port known as Tencent Classroom and supported the online demand of schools in Wuhan province. 81 percent of the platform’s users have chosen to learn online through Tencent Classroom.