Chinese Consumers Post Covid

April 29, 2020


What does a post COVID-19 world mean for Chinese consumers? For what they consume and for how they consume? Will their behaviors largely just revert to the patterns that held pre COVID-19 or will this prove to be a fundamental discontinuity in Chinese consumer behavior?

And will this mean that consumer focused companies operating in China need a new playbook?


The most powerful force driving for a return to business as usual is cash. Companies, with Chinese companies usually fastest off the mark, are deluging their customers with time limited discount coupons for everything from white goods to meals in restaurants. It’s the “you never forget how to ride a bike” logic, get consumers back in their old pattern of behavior as quickly as possible, make that deferred consumption – for a mobile phone, for a birthday celebration – happen, and people will just continue as before. Even Apple, traditionally reluctant to offer discounts, has lowered the prices of IPhone 11 models in China as its shops reopen and see a dramatic bounce back in sales as a result.

Governments are leaning into this mindset also. Subsidies for purchasing electric vehicles which were due to expire have been extended for another 2 years. Some local governments are issuing coupons redeemable at small local service businesses. Guangzhou has increased the monthly quota for new car purchases from 4,000 to 10,000 per month with local subsidies piled on top of the national subsidy program for buying low emission vehicles.

The return to work in late March and the return to school in April bring back well-worn patterns of how time and money is spent, buying breakfast on the way to work, ordering in lunch from Meituan, stopping in on the convenience store on the way home

Consumption of daily purchase items is likely to pick up largely where it was pre COVID-19



Chinese consumers have always had heightened awareness of health and safety issues and with good reason. From tainted baby milk powder through to out of date goods being recycled to adulterated cooking oil and fake pharmaceuticals sold online, Chinese media is awash with examples sufficient to scare consumers away from any products they don’t know the full provenance of. Over the years this have benefited many multinational brands with products imported into China with their perception of greater quality. COVID-19 has raised this consumer sensitivity to new heights and extended its focus beyond products into services. Is the hygiene in this restaurant, on this bike, in this nail salon, in this ride share what I want it to be? How can I tell? Do I trust the brand providing me this service?

We expect that large private sector service aggregators such as Meituan and Ali take on the role “inspector” issuing their own seal of approval to establishments and service providers that excel on health and safety? They have an opportunity to ratchet up the trust in their brand significantly if they invest well behind this. And such is their market power that a service provider could not afford to be kicked off their platform or to be continuously rated poor by the platform or customers on health and hygiene.

Moreover, this crisis has made much clearer the risk of going to hospitals during a virus crisis – more chance of catching the virus there given the concentration of sick people than anywhere else. In a society where many regard mask wearing in public as a normal precaution even socially polite, this could cause a massive and permanent change in behavior. Chinese consumers will still want access to the best doctors, who remain concentrated in the leading hospitals, but they won’t want and won’t believe they have to show up in person every time to get that advice. Consumers will now embrace digital health at scale – on line video consultations, health monitoring tech, self-testing and more. Hospitals should also embrace this – its more time efficient, its less costly, it takes pressure off their physical infrastructure. And insurers love the additional data it provides them, creating the possibility of better outcomes at lower cost. A trifecta of forces that will be hard to resist. 

Knowing where food comes from and how it has been handled through the chain rises in importance post COVID-19. The same applies to pharmaceuticals. This will drive multiple changes. More direct delivery of food from the brand owner to the consumer, never touching retail or third-party warehouses. More use of blockchain to be able to see exactly when food was harvested, where it was stored (and the hygiene rating of the store), where it was processed/packaged (and its hygiene rating). Will this finally kill wet markets? Probably only aggressively enforced regulation can do that fast, but post COVID-19 consumer needs will certainly accelerate their demise.

For online purchasing, COVID-19 has created what will be a sustained step change in two ways. First, sustainably penetrating food and grocery for many families that while already buying many goods online had held back from buying food that way. That it was convenient and cost effective was not a surprise, that quality could be delivered perhaps. Ordering food to be delivered home as you are leaving the office and have it be there when you get home is a great time saver and if quality is the same as picking it for yourself, why , sustainably penetrating older consumers who had resisted buying on line to date. The step change is among older consumers. Forced to buy online for the first time as a result of being confined to their homes, they have become more confident in doing so over the last 2 months. They will now continue to buy this way.


Beyond reestablishing connection to consumers that may have become much looser during the lockdown, companies need to look hard at whether their brand is communicating the attributes needed in a post COVID-19 world. Does it contain the needed elements of trust on health, hygiene, and overall safety? Not just “we won’t make you sick” but to the positive “our products and services are better for you” – the ingredients, the materials used, the packaging, the practices that our workers use. What can you assert and be believed, what do you have to show and prove? Can you use blockchain? Can you put video of your processing facilities on line 24/7? What else can you do? There are opportunities now for brands to really break away from competition with true, visible, provable differentiation on these dimensions.

Bankruptcies will hit smaller companies, especially service providers hardest. They ran out of funds during the crisis, they were weren’t able to sustain connection to their customers as they had little or no on line presence. The growth of chains, many working through franchises, in the service sector will accelerate as a result of this.

New regulations after a crisis such as this is always going to impose greater burdens on businesses, to ensure they have high hygiene standards and to demonstrate this to inspectors. The marginal small business may find this all too much, higher costs and less access to finance.   

Good times will not return quickly for most businesses