Home NewsCoronavirus How will the Coronavirus shape China’s future?

How will the Coronavirus shape China’s future?

by Tom Pattinson
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The full extent of the impact of COVID-19 on the Chinese economy remains to be seen, though even the best-case scenarios suggest it will be significant. Companies are facing new challenges and – in some cases – are fighting for survival. By Tom Simpson

With the vast majority of China’s population stuck at home, companies are finding ways to adapt their operations, and digital technology is playing a major part in that. Whilst some of these adaptations will be only temporary, many will lead to long-term shifts in market behaviour.

Remote working is the most obvious change, with China going through the world’s largest remote working experiment. Companies such as Tencent and DingTalk have been quick to respond by making their office collaboration services available for free.

The shift towards cloud-based work collaboration systems has already been in motion for years, but we will now likely see an accelerated rollout across China, with many companies choosing to integrate for the long-term.

This could also lead to more companies adopting flexible work arrangements for their staff – something which is still very uncommon among China’s state and private sector businesses.

The remote working changes are not just limited to the corporate sector. Schools have also turned to remote teaching, with solutions providers offering free use of their services.

Digital delivery primarily of English-language learning by companies such as VIPKid has been around for a while but has rarely been deployed in schools on such a major scale.

Online education is expected to boom over the coming years, with a major barrier being the lack of familiarity of students, their parents, and schools to conducting lessons digitally.

COVID-19 could be a key moment for China to adapt on a significant scale.

Digital delivery of healthcare services has also been deployed on a never-before-seen scale, with systems established to provide online consultations with potential COVID-19 patients.

COVID-19 could be a key moment for China to adapt on a significant scale.

Prior to the outbreak, digital solutions had been considered a potential way to alleviate the pressure on China’s healthcare sector. This moment could be the catalyst that sees a significant rollout of such services, with a growing number of companies involved in the sector, including Huawei, JD Health, and Ping’an.

Digital acceleration could also involve the entertainment sector. China’s cinemas have been closed since just before Chinese New Year, cutting off essential box office revenues at a time when receipts are usually at their highest.

In response, Producer Xu Zheng negotiated with Bytedance to make his latest film available to watch for free. Xu’s “Lost in Russia” became the first film to be released on streaming platforms during Spring Festival, at the same time setting a new benchmark for what can be achieved online.

Netflix has, of course, already been pioneering this approach worldwide (excluding China), but with the success of “Lost in Russia,” expect to see a growing number of platforms and producers working together to release major titles.

Second only to the efforts of China’s medical professionals are those of the consumer supply chain and delivery sector. The streets of China’s major cities have been all but empty save for delivery bikes since the crisis began.

Companies like Freshippo, the groceries delivery subsidiary of Alibaba, have remained open throughout the crisis. It has been the only way to get hold of fresh groceries without having to visit supermarkets, and coming in to close contact with people. Consumers will likely carry these habits forward and do more of their fresh food shopping online.

Bulk buying has become more common, with families stocking up on key food, drink, and household supplies. This digital acceleration will be an example for companies who have recently started their expansion into China. For instance, Costco has recently announced that it will soon launch its second store on the Mainland. They will certainly be taking note.

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