China's Zero-COVID Lockdowns Will Have Long-Term Impact on Chinese Consumption - Findings from Daxue Consulting Report

The Zero-COVID Lockdown's Long-Term Impact on Chinese Consumption report by daxue consulting, Shanghai-based strategy consulting and market research firm

After Shanghai's two months of lockdown, Daxue consulting evaluated long-term consumption impact as alongside high potential for lockdowns in other cities.

SHANGHAI, CHINA, June 16, 2022 /EINPresswire.com/ -- The recent wave of lockdowns is putting a strain on the national economy and the 5.5% GDP target growth rate appears to be an increasingly distant goal. As people are asked to stay at home and with factories and stores being shut down, China’s domestic consumption and export are declining, thereby posing a threat to the dual circulation strategy, China’s new economic model aimed at breaking the national

dependence on exports. However, despite retail, entertainment, tourism, and hospitality being the most affected industries, netizens have shown clear intent on revenge shopping and traveling once lockdowns lift, thus giving hope for a recovery in consumption. The question is, how the experience of Zero-COVID impacts Chinese consumers for the short, medium and long-term.

Download the full report on the lockdown's impact on Chinese consumption: https://daxueconsulting.com/zero-covid-lockdowns-impact-on-chinese-consumption/

Below are the China market research firm's seven hypotheses on the Zero-COVID lockdown's impact on Chinese consumption:

1. Lockdowns are likely to continue on a city-by-city basis, but there will be differences between high-tier and low-tier cities

Despite the high vaccination rate in China, stay-at-home orders have proven to lower the transmission rate from the 2020 outbreak, as a result, lockdown measures are likely to continue on a city-by-city basis, based different tier systems.

2. The economic situation launches luxury spending into a new phase focused on value and inconspicuousness.

The launch of the common prosperity campaign, along with growing social inequalities due to the pandemic, is discouraging Chinese high-income people from flaunting their wealth, thus pushing them to favor discreet luxury brands. Furthermore, recent lockdowns are mainly disrupting Tier-1 cities, therefore, brands are likely to expand into lower-tier cities in the near future.

3. Lockdowns are going to accelerate the China+1 strategy while providing the opportunity to move up the value chain

As lockdowns have disrupted the production and manufacturing of goods, Southeast Asian countries are going to be the most popular destinations for Foreign Direct Investments diverted from China, with over 180 global companies being affected in the first quarter of 2022.

4. Rising mental health issues due to prolonged lockdowns are pushing China’s mental health industry to mature

Due to recent lockdowns, more and more people downloaded mental health apps on their smartphones. Meanwhile, searches frequency of terms relating to mental health throughout March and April 2022 recorded an increase as well, thus creating opportunities in the mindfulness economy, such as meditation and yoga classes.

5. Group-buying will continue to rise in the long run even when the pandemic is over

Once confined in lower-tier cities and rural areas, group-buying has now landed in higher-tier cities as well. Due to its cost-effectiveness, community-building effect, and better quality of products, group-buying in China is likely to stay even when all restrictions have been lifted.

6. Digitization will reach new heights as consumers seek experiences from the comfort of their homes

Gaming, livestreaming, and ecommerce were not the only winning industries during the lockdown. In fact, healthcare, fitness, and food recipe apps also saw an increase in demand. However, some sectors may lose newly acquired users once people return to normalcy.

7. The singles economy in China is reshaping the consumption landscape as lockdowns extend

COVID-19 led to a decline in marriage rate and a spike in divorce rate, triggering a rise in the single population. Isolation and health concerns are boosting pet ownership and solo traveling, as well as untapping opportunities for single-oriented industries.

See the data backing up these hypotheses in the full report