Online trading after the lockdown – the current situation in China

Life in China is slowly recovering. Shops open again, people are allowed outside the front door again for no particular reason and restaurants are open again. Even in Wuhan, the Epicenter of the coronavirus, people can leave their homes and go to work again. Productions are started up again. Doctors who came to Wuhan from Beijing in January left again. They had helped the Wuhan hospitals fight the virus. However, there is still a risk of getting infected. In order to be ahead of a possible second wave, people in China are increasingly measuring fever. But what about online trading after the lockdown?

Online trading after the lockdown: normality is slowly returning

"In office buildings, public facilities or just on the street, there are temperature controls everywhere," says Damian Maib, who is currently in Shanghai. “A lot is still being tested. Sick people are isolated. Even foreigners must quarantine. ”Maib had to quarantine for two weeks after entering Shanghai.

So one can only speak of normality to some extent. However, it is an enormous step for the economy that shops are open again and production facilities are also starting up again. To the Spread of the virus to prevent, hygiene standards must be met meticulously. This means, for example, wearing breathing masks.

Even in factories, great care is taken to maintain safety distances, which leads to delays and lower production capacities. Therefore, popular products from China are produced again, but not in sufficient quantities. "It's going uphill, but that Production capacity are far from pre-crisis levels, ”Maib is convinced, who also organizes protective masks for the German government and takes a look at production facilities on site.

2020 the lowest economic growth since the 1970s

Retailers whose products were less in demand during the crisis, such as furniture manufacturers, are currently benefiting from increasing domestic demand. However, this cannot compensate for the missing orders from abroad. The lowest economic growth is expected for this year since the 1970s. Another factor is increasing unemployment, which is reflected in reduced consumption. Further easing abroad and a resumption of global trade could help China's economy to recover most quickly from the crisis. So that traders in Germany can benefit from the experience from China, it is worth taking a look at the crisis winners there.

Online trade emerges stronger from the crisis

In China, it is becoming clear that online trading is emerging as the winner of the crisis. As foreseeable in Germany, online food retailing and everyday goods were particularly successful. Sectors such as furniture, jewelry and fashion suffered losses of up to 30 percent as these product categories were less in demand. Many saw a similar development Cosmetics manufacturer across from. However, some retailers were able to stabilize their sales here through innovative marketing.

Current trends such as live streaming and increased influencer marketing could also generate more sales after the crisis. Maib sees the Chinese cosmetics company Lin Qingxuan as a suitable example: The company had to close 40 percent of its stores and therefore quickly trained all the beauty consultants from these stores to become influencers. This enabled them to increase their sales by 200 percent compared to the previous year. An effect that is gradually becoming apparent in Germany: Entrepreneurs who respond to the current situation with innovative ideas and solutions could have a good chance of coming out of this crisis stronger.

Another trend is the acceleration of digitization. The state and the economy are increasingly offering more digital options to reduce personal contacts. In China, the passport can now be extended via the app, and health checks can also be carried out to a certain extent by telephone. This trend is only beginning in Germany, but here too business and politics are working on solutions to offer more digital systems.

Growing out of the crisis with the market

The growth of the Chinese markets continues. The pace of growth has slowed, but the Chinese economy will continue to grow this year. While the easing is now taking effect in Germany, it is recovering chinese economy from the slumps little by little. For German retailers, this means that if they enter the market now, they will grow out of the crisis with it. The Chinese market can now be an alternative, especially for traders who otherwise sell a lot on the American market or have thought about expanding there.

The entry into the Chinese market can currently be particularly worthwhile for providers in the healthcare industry. For Chinese customers, the "Made in Germany" label means security. Consumers know about the strict regulations and hygiene regulations in Germany. As the topic of health for Chinese is increasingly coming into focus, retailers in this area could benefit. For example, sales of nutritional supplements rose sharply in the period after the lockdown.

About the author: Damian Maib is the founder of the agency Genuine German and expert in online trading in China. He has already advised German companies such as the drugstore chain dm. He recommends: “A comprehensive competitive analysis should be carried out before entering the market. You also need a local partner who knows the cultural peculiarities, but also the peculiarities of the market. ”
Entry into the Chinese market can be worthwhile for German dealers. However, it should be noted that entering a new market always involves challenges. The Chinese market has some differences from western markets, so experts should start with advice. (sg)

Also read: Retail 2020: Covid-19 plummets in Germany