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COVID-19 // China POV Vol.4

Vol.4: An update from Havas Group China on media behavior and consumption during the COVID-19 global pandemic.

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COVID-19 // China POV Vol.4

  1. 1. April 3rd 2020 HAVAS GROUP CHINA Corona Virus Market Update
  2. 2. 2 Content 1. COVID-19 situation update 2. Immediate consumption impact 3. Media consumption impact 4. Economic outlook 5. Outlook key categories 6. Media market implications 7. POV & recommendation
  3. 3. 3 COVID-19 Situation update
  4. 4. 4Sources: Ipsos; Cosmose; GWI Even when positive on the future, Chinese are still concerned. Brands can be meaningful now, helping overcome some barriers to enjoy daily life again 70%Plan to increase purchase right after COVID-19 Mar 20th, 2020 59%Are optimistic about the future of China’s economy Mar 13th, 2020 84%Try to avoid crowed places because of COVID-19 Mar 20th, 2020 55%Keep concerns about the COVID-19 situation Mar 20th, 2020
  5. 5. Chinese are discovering the new normality 5 • After two months prevention and control, China reported no new locally transmitted infections for some days in row. Wuhan and Hubei other cities ease the lockdown. According to China's National Health Commission website, most of people can even stop wearing masks if they’re at home or if they’re outdoors and in well-ventilated spaces where there aren't a lot of people. • Normality appears to be returning to China’s cities. The roads are gridlocked. Metro stations are more crowded again with commuters. While with increasing imported cases, things are still a little stilted with office buildings, shopping malls and other public places still requiring people to be registered and their temperatures recorded. Several areas require people to show a “green” reading though a smartphone app called Health Code, through WeChat or Alipay. • More restaurants and even nightclubs are back open again, but don’t attract large audiences, with their face masked mixologists and live streamers. Local authorities are still urging diners to change their chopstick habits and stopping dipping them in communal dishes during the pandemic. • Although most in China think that the worst is over, Chinese are worried about a second wave of COVID-19 infections due by imported cases and the spread of the virus oversea. China has closed its borders for foreigners, and again closed indoor tourist attractions and cinemas that had recently reopened. sources:China skinny
  6. 6. Chinese are discovering the new normality 6 Sources: China skinny; BCG • Ctrip started selling travel packages and attraction tickets; tickets to 1,449 well-known tourist spots across the country could be bought online while 40% of China’s top national tourist spots have reopened; Results from a recent Ctrip online survey of nearly 15,000 netizens showed that 78% expressed willingness to travel in the near future. Qunar stated online searches for China’s upcoming May 1 holiday soared 76% this week compared to a week ago. • Offline business is recovering, 80% of fashion & luxury shops reopen with shop traffic recovered 30%-40% at weekends of mid March • Xinjiang became the first province to start school again following no new cases of coronavirus infection for 34 days long. 15 provinces have announced the school reopen times. College entrance exam will be delayed for one month.
  7. 7. 7 Consumption impact
  8. 8. January-February consumption recap: China’s retail consumption plunged heavily to -20.5% 8 Retail onsumption YOY Growth Rate Restaurants -43.1% Jewelry -41.1% Auto -37.0% Furniture -33.5% Apparel -30.9% Cosmetics -14.1% Food +9.7% E-Commerce +3.0% Key Category Consumption YOY Growth Rate Sources: National Bureau of Statistics
  9. 9. Big purchases keep on being postponed, major categories for daily pleasure are recovering 9 Phase Cancel or reduce Unchanged or limited Increase Phase 2 Stabilization Feb 9 -End of the outbreak Phase 3 Post outbreak - Recovery • Big purchases keep postponing: real estates, furniture, cars, luxury products. The expected reducing family income make people spend more “restrained” • Domestic travel show sign of recovery, driven the upcoming Qingming holiday and May 1 holiday, OTA platform live streaming by CEO also helps • Almost all international travel are canceled • Big family purchase categories without urgency: cars, furniture etc. • Online entertainment • Epidemic related products: masks, household cleaning, medicine grow stable • Online education market keeps growing • Food market increased earlier and now back to normal • Online shopping; small electronic • OOH activities are recovering • Personal care products • Major appliances, consumer electronics, liquor, etc. • Luxury: overseas buying high drecrease, domestically to compensate (when stocks are available) • Apparel • Indulgence food & beverage • Entertainment, especially OOH activities like cinema, outdoor. • Domestic travel • Health related categories, including healthy food, gym • Small home renovations and decorations • Adult and kids education • Insurance Sources: desk research and social listening, multiple sources Havas Group
  10. 10. 10 Some key developments during the stabilization phase
  11. 11. With consumers’ optimistic sentiment towards epidemic, the offline business shows a good first step to recover 11 People are lining up for famous local snacks at Shanghai Nanjing road, but keeping 1m social distance Sales achieved 11M RMB on the first 5 hours of Hangzhou tower reopen 92% of consumers express confidence in China’s approach on the COVID-19: Sources: Nielsen survey Chinese government's appropriate preventive and control measures Chinese government's timely and transparent disclosure of information.
  12. 12. Strong self indulgence needs in food & beverage is seen after the long time of quarantine 12 402% Take away orders Since Mar 2nd when most people resume work, take away orders significantly increased. Milk tea which is considered as the origin of happy, increased 744% orders Sources: Fuzhongzhelianmeng; iResearch 744% Milk tea orders Milk tea brands launch 5L big bucket to cater to consumers’ needs Hotpot restaurants start to line up
  13. 13. Meanwhile, people are longing for more out of home activities, keen to start domestic traveling 13 Sources: iResearch; Qunar 6% 5% 10% 7% 6% 9% 28% 20% 14% 21% 19% 17% 38% 12% 13% 11% 16% 17% 18% 11% 22% 28% 25% 31% 33% 25% Beauty activities Concert/ Exhibition Gym/ Take a fitness group lesson Massage/sauna/Bathe Play basketball/football with friends Outdoor activities(KTV/ Mahjong/Secret room) Outdoor family activities Outdoor exercises Visit friends and relatives Shopping Travelling Go to cinema Hang out with friends Suspended activities by epidemic The most desired top3 activities after the epidemic is over Top activities desired by consumers 76% online search increase for May 1 holidays compared to a week ago according to Qunar 5000+ people visit the west lake in one day after quarantine
  14. 14. Online shopping further increased during the epidemic, expected to be continued afterwards 14 40% of consumer have increased their frequency of buying online. 89% say they will be more willing to buy online once the epidemic is over Chinese E-commerce remain strong despite the epidemic Most brands seem to be overperforming compared to last year Cosmetics and F&B sales remain strong, fashion slump Sources: Nielsen survey; Cosmose Overall more consumers are shopping for the first time across platforms such as third-party applications, brand websites and community shopping via WeChat
  15. 15. Taobao launches the global first C2M centric platform 15 Taobao expects the C2M initiative will bring 10 billion new orders to factories across the country over the next three years while transforming 1,000 manufacturers into “super factories” with output exceeding 100 million yuan each and driving productivity at 10 factory clusters in China to 10 billion yuan or more Taobao has launched a new initiative to help drive the digital transformation of traditional factories in China using its consumer-to-manufacturer (C2M) system • Taobao initiate its first factory shopping festival start from 3/29, consumers can buy products at a wholesale price • Taobao will provide precise targeting to support business affected by epidemic • The new platform will help Taobao to increase penetration into low tier markets, competing with Pinduoduo Sources: South China Morning post
  16. 16. Acceleration of 020, extending to brand experiences 16 More luxury brands are seeking online opportunities 1. Show customers they cared, sending messages and offering flexibility around licensing 2. Accelerate the digital initiatives • launch online training program in February: Launch WeChat Mini Program to expand its reach; Launch kid’s fitness program • Partnership with Alibaba on content– Youku and DingTalk Offline industries accelerate digital initiatives during these challenging times Fitness brand Les Mills case Improve omni channel to cover more occasions 1. Deliver within 1 hour with wide distribution which can cover low tier market 2. Connected Suning xiaodian/Suning grocery market/Carrefour APP together 3. Upgrade APP/mini program/social media to open online purchase by livestreaming and promotion 4. Improve online finance service, online payment, tec. Suning case Source: desk research Havas Group
  17. 17. Riding on the trend of national collectivity: consumers appreciate brands that contribute to society during this hard time 17 What brands are expected to do in advertising: •Talk about how the brand is helpful in the new everyday life: 77% •Inform about their efforts to face the situation: 75% •Offer a reassuring tone: 70% There are clear pitfalls to be avoided in advertising: •Should not exploit coronavirus situation to promote the brand: 75% •Should avoid humorous tones: 40% What consumer expect brand to do in advertising during the epidemic: Chinese oil giant Sinopec sell groceries in a touch-free style Chinese electronic giant Gree announced to launch KN95 masks and medical-grade masks People can order online, drive to the gas station without getting out of the car. Staff put their order into the trunk. 999 medicine crossover with Ramen Talk launch warm chicken soup ramen What are Chinese brands doing? Source: Kantar
  18. 18. 18 Some outlooks for the post-outbreak recovery phase
  19. 19. 70% of consumers plan to increase spending after COVID-19, but expected to be more selective in what they buy in long term 19 31.4% 68.6% Will not increase Will increase 11.0% 12.6% 12.0% 64.4% Will increase Will cut down Will remain unchanged Will be more "restrained" New trend in allocation of personal disposable income after Covid-19 Will you increase consumer spending in long term Sources: Cosmose In the short run, the “Buy” mentality is in dominance as people need a release from the limitation of epidemic. In the long term, mature middle-class buyers tend to be more selective in what they buy, which lean towards items of better quality and that can be used for a longer duration; The younger group (Gen-Z), who are now a major power in luxury buying, are more likely to have a stronger post-epidemic attitude of “enjoy while one can” and this may also show up in their consumption behavior patterns.
  20. 20. In short term, out of home activities see a biggest increase, but many categories show still less consumption than normal 20 28% 27% 38% 29% 25% 33% 35% 27% 19% 19% 18% 21% 64% 61% 36% 51% 58% 41% 37% 49% 65% 59% 61% 52% 8% 13% 26% 20% 16% 26% 29% 24% 16% 22% 22% 27% 3C product Beauty/ skin care Ourdoor dining Colthing Daily food/ tobacco and… Cinema Travel Transportation Insurance Medical Education Fitness spend less remain unchange spend more category average 27% 53% 21% Short term impact on categories after epidemic -6% +6% +4% +3% -2% -4% -6% -7% -9% -10% -12% -14% -20% Sources: iResearch increase - reduce In short term after epidemic, most categories still consume less than normal level, but much better than during epidemic (-6% vs. -52%). Travel (29%), Fitness (27%), dining out (26%), Cinema (26%) are the high potential categories to enjoy a retaliatory consumption. Consumer show stronger interests towards Fitness (+6%), education (+4%), and healthcare (+3%) than before epidemic. vs. -52% (during epidemic)
  21. 21. In long term, most categories will rebound to normal level. Fitness/healthcare/edu/insurance expect to see a good momentum 21 9% 11% 9% 10% 6% 8% 9% 7% 5% 5% 6% 5% 87% 81% 86% 83% 86% 83% 78% 81% 82% 80% 76% 77% 4% 7% 6% 8% 7% 9% 12% 12% 13% 15% 18% 18% 3C product Outdoor eating Beauty/ skin care Colthing Daily food/ tobacco… Cinema Tourism Transportation Insurance Education Medical Fitness spend less remain unchange spend more category average 8% 82% 11% Long term impact on categories after epidemic +3% +13% +12% +10% +7% +5% +3% +1% +1% -2% -3% -4% -5% Sources: iResearch increase - reduce In long term after epidemic, most categories will recover to normal level (short term vs. long term = -6% vs. +3%) Fitness (+13%), Healthcare (+12%), Education (+10%), Insurance (+7%) would enjoy a good growth after epidemic Out of home activities which expect to see retaliatory consumption will return to normal
  22. 22. Exercising more to stay healthy: fitness is enjoying a big growth 22 75% say they will spend more on sports / fitness in the future 150% 134% 56% Yoga mat Rowing machine Chest developer Fitness equipment significantly increased in Feb (JD data) Sources: Nielsen survey; JD
  23. 23. New eating habits: lunch boxes brought to work with healthy home cooked meals, more veggies and proteins 23 80% would pay attention to eating healthily even after the epidemic is over 50% changed their ordinary diets substantially during the epidemic Sources: Nielsen survey; JD 40% 37% 35% 33% Vegetable Fresh fruit Eggs Dairy After resume work, most people bring lunch box with home cooking food to office. Sales of ecteronic heating lunch box on JD increased 347%
  24. 24. Home economy gains steam: upgrading needs from equipment to small renovations and decorations Previous kitchen “highlight” become a must Sources: Tmall; JD; Suning sales data 283% 140% Sandwich machine Electronic hotpot Dish wash machine Healthy need driven appliance 380% 91% 200% Steam mop Sterilizing cabinet Degerming related 1500% 24
  25. 25. 25 Media consumption impact
  26. 26. Video & gaming DAU and time spend has seen a moderate increase compared to 2019, but decline slightly after resuming working 26 701 738 789 765 94.5 107.2 128.4 121 0.0 20.0 40.0 60.0 80.0 100.0 120.0 0 200 400 600 800 1000 1200 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Video Service Apps User Behavior Average DAU scale Average use time Unit: Mil Unit: mins Source: iResearch 249 295 309 298 70.2 72.5 76.7 76.9 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 0 50 100 150 200 250 300 350 400 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Gaming Apps User Behavior Average DAU Scale Average Use Time Unit: Mil Unit: mins
  27. 27. Daily active usage of OTV increased significantly, all the top 5 platforms gained more active users compared to 2019 27 365 401 464 451112.1 114.0 132.0 122.1 0.0 20.0 40.0 60.0 80.0 100.0 120.0 0 100 200 300 400 500 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Online Video User Behavior Average DAU scale Average use time Unit: Mil Unit: mins 167 153 78 32 22 176 158 83 38 24 205 183 107 52 26 196 179 103 48 26 iQIYI Tencent Video Youku Mango TV Bilibili 2020 Top 5 Online Video Apps by DAU 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) Unit: Mil Source: iResearch
  28. 28. Including further growth for Bilibili, as an emerging video platform for young audiences 26 Mil DAU Ranking No.5 in Online Video apps by DAU 82 mins/day Avg. use time per user 7.95 Mil VIP Source: iResearch, period: 2020/03/22; Bilibili 2019 Q3 financial report 28
  29. 29. Short video continues its steady growth on use time, while daily active user level stays high 29 430 465 499 460 39.0 51.5 58.3 60.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 0 100 200 300 400 500 600 700 800 900 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Short Video User Behavior Average DAU scale Average use time Unit: Mil Unit: mins 211 123 52 46 36 254 141 55 50 35 285 153 58 53 36 281 142 57 50 35 Douyin Kwai Watermelon Video Douyin Volcano Edition Baidu Haokan Video 2020 Top 5 Short Video Apps by DAU Scale 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd)Unit: Mil Source: iResearch
  30. 30. Kwai’s growth is driven by young users in lower tiers 142 Mil DAU Rank No.2 in Short Video apps by DAU 40 mins/day Avg. use time per user 15 Mil UGC contents per day Source: iResearch, Kwai 30
  31. 31. Social DAU and use time normalize to pre-CNY level. Resulting in a positive trend in active usage vs. 2019 for WeChat, Weibo and Red 31 896 344 182 16 13 912 325 206 14 14 911 332 222 15 15 911 330 218 14 15 WeChat QQ Weibo Baidu Tieba LRB 2020 Top 5 Social Apps by DAU Scale 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd)Unit: Mil 1220 1241 1267 1249 92.5 97.4 99.9 94.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 0 200 400 600 800 1000 1200 1400 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Social Networking User Behavior Average DAU Scale Average Use Time Unit: Mil Unit: mins Source: iResearch
  32. 32. Influencer’s monetization decreased as campaigns got postponed, but rising viewership/followers and high engagement 32 Content From a content standpoint this is a boom period for many influencers. Consumers are bored and eager to explore and engage. Influencers experiencing the strongest growth through: Brand deals cancelled or postponed – many until as late as May, expect to be back to normal until June’s 618 shopping festival Sources: Campaign China With consumers confined to their homes, commercial live-streaming has been booming. One report found that 574 accounts on popular video platforms Douyin and Kwai each gained between 100,000 and 500,000 new followers between 20 January and 2 February. Top Taobao live-streamer Austin Li 10 February drew more than 16 million viewers. Items were selling out before he could even finish. Fitness Cooking Comedy
  33. 33. Brand CEOs have become new influencers 33 During the epidemic, several brand CEOs are doing live streaming to sell products, including Ctrip co-founder Jianzhang Liang, Intime CEO Xiaodong Chen, Lingqingxuan CEO Chunlai Sun, Suning Hailan Xu, etc. They try to leverage their influence power and their knowledge to brands/products, to seek opportunities for brands during this hard time. They all achieved a notable viewership and sales. Ctrip co-founder Jianzhang Liang live streaming in Sanya’s hotel, achieved 10M hotel sales in 1 hour Local cosmetic brand Linqingxuan CEO Chunlai Sun’s first live streaming attract 60000+ viewers, sell 400K in 2 hours, which equals 2 months offline sales in tier 1 cities Sources: Sina news
  34. 34. 34 6 6 17 31 9.0 10.0 31.6 51.6 0.0 10.0 20.0 30.0 40.0 50.0 0 10 20 30 40 50 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 DingTalk User Behavior Average DAU Scale Average Use Time Unit: Mil Unit: mins 0.93 1.21 57.46 61.2 0 10 20 30 40 50 60 -0.10 0.10 0.30 0.50 0.70 0.90 1.10 1.30 1.50 2020 Feb 2020 Mar avg.(till 22nd) 2020 Tencent Meeting User Behavior Average DAU Scale Average Use Time Unit: Mil Unit: mins Compared with 2020 Jan, DingTalk: • average DAU scale has quintupled • average use time also saw a quintuple increase Compared to 2020 Feb figure, Tencent Meeting : • average DAU scale has increased 1.7 times in Mar Source: iResearch, period: 2019.01.01-2020.03.22 Among office efficiency apps, DingTalk and Tencent Meeting continue their strong growth momentum
  35. 35. DingTalk growth is driven by male audiences in lower tiers 31 Mil DAU Rank No. 1 in Office apps by DAU 52 mins/day Avg. use time per user 10 Mil Companies’ choice Source: iResearch 35
  36. 36. Navigation apps usage rebounds as people return to work, while travel apps usage remains low 36 171 175 150 162 18.7 18.3 12.7 19.7 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 0 50 100 150 200 250 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Travel & Navigation Apps User Behavior Average DAU Scale Average Use Time Unit: Mil Unit: mins 81 44 8 8 6 4 1 81 43 7 5 6 3 1 74 35 5 4 4 3 1 83 39 5 5 4 3 1 AutoNavi Baidu Map Ctrip Qunar 12306 Fliggy LY.com 2020 Top 2 Navigation & Top 5 Tourism Service Apps by DAU Scale 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) Unit: Mil Source: iResearch
  37. 37. Out of health concern, the DAU of food delivery apps is lower than 2019 avg. but shows an increasing trend with more time consumption 37 22.8 23.0 21.3 22.2 14.0 12.8 11.5 16.8 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Food Delivery and Menu User Behavior Average DAU Scale Average Use Time Unit: Mil Unit: mins 12.0 2.7 1.7 1.0 0.9 12.6 2.8 1.8 1.0 0.8 11.4 2.5 1.7 1.2 0.9 11.7 2.8 1.9 1.2 0.8 Dianping Ele.me Meituan Xiachufang Douguo Food 2020 Top 5 Fresh Food E-commerce Apps by DAU Scale 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) Unit: Mil Source: iResearch, period: 2019.01.01-2020.03.22
  38. 38. 2020 TV ratings show a natural decline as consumers resume work 6.9 9.5 7.7 7.2 10.2 7.9 6.5 9.2 7.1 3 4 5 6 7 8 9 10 11 12 Jan Feb Mar(3.1-3.14) Tier1 Tier2 Others Mar VS Feb Tier1:-19% Tier2:-23% Others:-23% 38 Source: Infosys, Target:P18-45, Period:2020/01/01 – 2020/3/14, Timeslot: All Day Tier1 including(BJ、SH、GZ、 SZ),Tier2 including almost Provincial capital After resuming office work, rating in March saw a clear downward trend Reach of TV has Decline significantly, especially in Tier1&2 cities 77.8 83.6 70.1 79.8 86.7 69.4 84.1 87.7 72.9 50 55 60 65 70 75 80 85 90 Jan Feb Mar(3.1-3.14) Tier1 Tier2 Others
  39. 39. While some prime time ratings still maintain at higher level 39 Source: Infosys, Market: 57 Markets, Target:P18-45, Period:2020/1/01 – 2020/3/14, Timeslot: 1800-2300 1/21-11/27 1/28-2/2 2/3-2/8 2/9-2/15 2/16-2/22 2/23-2/29 3/1-3/7 3/8-3/14 Hunan STV 1.49 1.56 1.55 1.69 1.88 1.99 1.78 1.59 Jiangsu STV 1.31 1.39 1.29 1.65 1.35 1.49 1.90 2.12 Dragon TV 1.21 1.48 1.46 1.69 1.57 1.76 1.80 1.86 Zhejiang STV 0.67 1.13 1.10 1.23 1.55 1.37 1.89 1.80 0.00 0.50 1.00 1.50 2.00 2.50 Dragon TV <安家> 2/21-3/14 ave. rating:1.75 Hunan STV <下一站幸福 1/26-2/18 ave. rating:1.88 Hunan STV <完美关系> 2/18-3/14 ave. rating:1.92 Zhejiang STV <我在北京等你> 2/23-3/14 ave. rating:1.77 Jiangsu STV <我在北京等你> 2/23-3/14 ave. rating:1.90
  40. 40. 40 During the COVID-19 outbreak, CCTV and PSTV released dozens of related news programs and reports During the spread of coronavirus disease period, mainstream TV channels aired live COVID-19 related reports and scientific knowledge programs, raising public awareness of the disease and prevention instructions. Top 5 satellite TV channels and top 4 online video platforms have decided new prime time series lists. Overall, satellite TV channels and online video platforms are pursuing cost efficiency. Satellite TV channels purchased backlog TV series and online video platforms increased copyright exchange to control spending. Source: CSM Media Research Ver8.0 Update on 28th Feb
  41. 41. 41 Cinema venues closed again, after more than 500 had reopened • Over 500 movie theatres reopened in China have been ordered to close again after trading began to resume. On 27th Mar evening, China Film Administration issued a notice ordering all venues to shut down, just one day after it was announced that Shanghai was set to reopen more than 200 theaters over the weekend. • "This second closure will not be a one- or two-week issue. They are going to be even more cautious when they attempt to reopen again — and this will set us back a long time.“ said an executive at a major exhibition company. Source: https://www.thepaper.cn/newsDetail_forward_6729750
  42. 42. 42 OOH: community & office media are the first choices for outdoor advertising • Drugs, health products, disinfectants and other related products have increased their exposure, mainly through community media and office building media. • Community and office building media are diverse and numerous, many clients adopted creative formats and hot topics to draw people’s attention.
  43. 43. 43 Outdoor also plays an active role in celebrating COVID-19 heros Outdoor, especially digital outdoor, has played a very active role in spreading real-time COVID-19 related information, public service advertisement and celebrating heros around the globe. In UK, local digital outdoor media companies such as Ocean Outdoor, JCDecaux and Clear Channel have launched NHS (UK National Medical Service System) version of the epidemic prevention advertisements to pay tribute to medical staff and to remind people of relevant precautions. More than 50 Shanghai info WeChat Accounts payed tribute to Shanghai heroes as they are heading back Shanghai. At the same time, the same poster was released at 77 core shopping malls and displayed on outdoor landmark screens in Shanghai.
  44. 44. 44 Economic outlook
  45. 45. China GDP growth is estimated by multiple sources to fall to 1%, as the global outbreak intensifies 45 “The impact on China’s economy of the Covid- 19 outbreak is set to be much deeper than that of SARS. Assuming that the virus does not flare up again, we expect China’s real GDP growth to stand at only 1% in 2020, compared with an estimated 6.1% in 2019. The slowdown will be concentrated in the first quarter of the year and will still be felt in the second quarter. Growth will recover in the second half of the year when China typically produces most of its GDP.” --- EIU Real GDP growth (% in 2020) Real GDP growth (% in 2020) Previous forecast (before outbreak) Australia -0.4 2 Brazil -5.5 2.4 Canada -1.3 1.8 China 1 5.9 France -5 1 Germany -6.8 0.9 India (2020/21 fiscal year) 2.1 6 Indonesia 1 5.1 Italy -7 0.4 Japan -1.5 0.4 South Korea -1.8 2.2 Mexico -5.4 1.1 Russia -2 1.6 Saudi Arabia -5 1 South Africa -3 1.4 UK -5 1.1 US -2.8 1.7 Global (market exchange rates) -2.2 2.3 Source: The Economist Intelligence Unit, March 26 Disclaimer: Based on figures of the The Economist Intelligence, 26 other sources show similar projections. As reference, to be revised based on current global outbreak situation
  46. 46. Though a reduced family income is expected, Chinese are optimistic in country’s economy recovery 46 Sources: iResearch; McKinsey Chinese say that the COVID-19 didn’t affect their job much 80% 2% 39% 59% Increase Maintain Reduce Expectation for this year family income Mar 3rd, 2020 Mar 22nd, 2020
  47. 47. Government spending stimulation have started, even to the level of giving out coupons 47Sources: Sina finance • Consumption has been the top 1 driver for China’s economy for 6 years in a row, which contributes 57.8% to total GDP in 2019. • President Xi chaired a meeting focusing on China stabilizing economic and social development. The meeting underscored "unleashing consumption” that had been suppressed by the outbreak and strengthening new and upgraded consumption to compensate the lost consumption on goods and services during the outbreak. • Local government are trying best to drive consumption: Suggest 4.5 days work day per week so people have more time to consume and travel Until Mar 27th, about 26 provinces give out 4.3 billion RMB consumption coupon (including restaurant, shopping mall, library, car purchase, etc.) and travel coupon Estimate to have 20% additional consumption increase
  48. 48. At the same time 6 government regulations have been announced to drive then domestic economy in the long term 48 Published by National Development and Reform Commission on 3/13/2020 1. Optimize the supply side of domestic market - Improve the competitive power of local products & service, further develop on local brands (new category, better quality, new brand), cut the tariff 2. Upgrade culture & tourism consumption - Enrich culture & tourism product, improve inbound tourism and environment, innovate in culture & tourism’s advertising and promotion 3. Develop urban & rural integrated consumption network - Create consumption center, optimize the distribution of business network, improve logistics development 4. Speed up in developing intelligence consumption ecosystem - Speed up 5G development, encourage in developing intelligence shop/city/commercial area, encourage integration of online and offline, push forward green consumption 5. Continue to uplift people’s consumption power - Stabilize and increase people’s welfare 6. Create safe consumption environment - Improve market order supervision and consumer rights protection, strengthen credit system development Sources: China National Development and Reform Commission
  49. 49. 49 Outlook key categories
  50. 50. 50 Travel & Tourism
  51. 51. With COVID-19 turning into a global pandemic, China's overseas travel will usher to a low point Hong Kong and Macao prohibit entry of non Chinese nationality Domestic epidemic situation improves and scenic spots open EU closed border for 30 days US border closure Overseas Chinese Returned Australia and New Zealand close border No entry to African countries No entry to Russia The global epidemic situation is tense, and many countries have closed their borders. International flight and hotel business will be affected in the short term. Domestic situation is improving and domestic tourism is expected to recover China temporarily closes its borders to foreign nationals Source: Xinhua News Agency 51
  52. 52. So willingness to travel domestically significantly increases from May, driven by the May 1 holiday, while mainly safely using the car 52 4% 8% 16% 15% 15% 15% 8% 14% 2%3% Mar:4% Apr:8% May:16% June:15% July:15% August:15% September:8% October:14% November:2% December:3% People’s willingness to travel in 2020 after end of COVID-19 41% 29% 16% 14% Car:41% Railway:29% Bus:16% Plane:14% Mode of transport Top 10 destinations inside China 1. Yunnan 2. Hainan 3. Shanghai 4. Tibet 5. Beijing 6. Sichuan 7. Guangdong 8. Zhejiang 9. Chongqing 10. Xinjiang Source: Dragon Trail Research 2020
  53. 53. China temporarily closed its borders to all foreign nationals 53Source: Ministry of Foreign Affairs
  54. 54. 54 COVID-19 global spread continues impacting tourism related areas AIRPORTS/AIRLINES Many indoor scenic spots and entertainment venues in China have announced that they have temporarily closed again following the suspension of work at cinemas, amid the epidemic control and prevention. Shanghai: skyscrapers such as Shanghai Tower and Oriental Pearl Tower, will close again starting 30th Mar after reopening for 19 days. Entertainment venues such as KTV and internet cafes have also been suspended in many places of China outside Shanghai. Domestic outdoor scenic spots have seeing an opportunity. Bookings for railway and tourist attraction tickets, (most of them within the same province), more than doubled in the week ended March 23 from a week earlier, according to China Top OTA Fliggy. Meanwhile, hotel bookings jumped by 30% from a month ago. High-end hotel packages, theme parks for families, and nature tours were most popular among travel products. INDOOR ENTERTAINMENT The Civil Aviation Authority of China (CAAC) is limiting the number of international flights coming in and out of China in order to curtail the rise of imported coronavirus (COVID-19) cases in the country. From 29th Mar, Chinese airlines are only allowed to maintain one route to any specific country with no more than one flight per week each, while foreign airlines are only allowed to maintain one route to China with no more than one weekly flight. OUTDOOR ATTRACTIONS Source: CAAC, CGTN, yicaiglobal
  55. 55. Tourist attractions around the world go digital, offering virtual tours Great Wall of China An attraction visited by millions of tourists in person every year, the Louvre Museum has also created a selection of virtual tours based on its permanent collections. Japan National Tourism Organization has created a 360-degree virtual reality video that lets you explore Tokyo in a 3 minute tour. Louvre, Paris One of China’s most famous tourist attractions has temporarily closed all tours. Offers virtual tour to explore its beauty remotely. Tokyo https://www.thechinaguide.com/destination/great-wall-of- china https://www.louvre.fr/en/visites-en-ligne https://www.youtube.com/watch?v=OR_Y7vj66PU&featur e=emb_title Some examples 55
  56. 56. Chinas tourism industry takes various methods to keep the sector grounded Seeding through online tour • Many Museums and scenic spots offer virtual tour: such as the Palace Museum, Shaanxi History Museum, etc. • People can watch live-streaming to experience the attractions online with a host. Using live-stream to drive direct sales • The cooperation between some live streamers and famous tourism brands, such as Atlantis and Marriott, has brought about tens of millions of yuan of transactions. 56Source: https://news.cgtn.com/news/2020-03-07/Tourism-live-streaming-on-rise-in-China--OFeh5V73VK/index.html
  57. 57. Russian Hermitage Museum opened its Tmall store 2018 20192016 EC platforms become more and more popular for merchandising sales National Museum of China Following the success of many local museums selling souvenirs, posters and branded merchandise The British Museum Shaanxi History Museum
  58. 58. 58 FMCG
  59. 59. Fresh Food e-commerce platforms growth rate has slowed down, but remains on a much higher level compared to 2019 59 2.65 3.59 3.60 3.64 6.7 5.0 5.5 6.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 0.00 1.00 2.00 3.00 4.00 5.00 6.00 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) 2020 Fresh Food E-commerce User Behavior Average DAU Scale Average Use Time Unit: Mil Unit: mins 0.89 0.63 0.51 0.31 0.24 0.93 0.66 0.59 0.39 0.22 0.88 0.67 0.59 0.43 0.25 0.91 0.63 0.59 0.46 0.28 Dmall Miss Fresh JD Daojia Hema Yonghui Life 2020 Top 5 Fresh Food E-commerce Apps by DAU Scale 2019 avg. 2020 Jan 2020 Feb 2020 Mar avg.(till 22nd) Unit: Mil Source: iResearch
  60. 60. China’s retailers are launching CSR initiatives • Hema, the top online fresh food retailer, initiated a shared employee program that temporarily hires laid-off workers from restaurants. • Hema gain access to a ready pool of staff, while restaurants no longer had to worry about the fate of their employees in the short term. • Medical staff have garnered a lot of attention during the virus outbreak. Their brave and selfless action has earned respect from communities the world over. Companies can help consumers express their gratitude to medical staff. • Papa John’s, a popular pizza chain in China, has offered the "buy one get one free" program to medical staff, with an enclosed "thank you" note. 60Source: https://cj.sina.com.cn/articles/view/5617041192/14ecd3f2802000vi6j; https://www.weibo.com/papachina?from=feed&loc=at&nick=棒约翰PapaJohns Hema is temporarily employing displaced foodservice workers Papa John’s offers heavily discounted meal deal for medical staff
  61. 61. Brands like Pepsi leverage Big Data to optimize targeting in digital Passion points of Post-80s-and-90s Ali Big Data 95% Netizen Coverage Inclusion Belonging Cultural Identity Passion points of TA Abundant Interest Tags Group Tags(Choose 3) 2 Age 34 Region 31 Dialects 2 Genders30 Taste 4 VO Mechanism Creative H5 Inclusive Micro-FilmTag inclusion Campaign Summary Key Takeaways Pepsi delivers multi-culture of modern China and the hometown memory of each individual to involve people in joining the Chinese New Year campaign via Creative H5. • Creative H5: Big Data + Multi Entry + Rewarding The mechanism of H5 combine passion points of TA and Ali big data, which means consumers can choose group tags to customize their hometown memory. • Multi-entrance on Ali system: Consumers can take the entry of H5 by opening apps or clicking on Taobao banner or AR scanning or searching the key word ”Qiongding(穹顶)” which means center in Chinese. • Taobao virtual coins as reward, to stimulate consumer to engage and share H5, the first commercialization of virtual coins, which may have further implications in the future. • In 2019 Chinese New Year Festival, Pepsi upgrade Annual Campaign - Take the Happy Home by combining passion points of the young with Ali big data in the form of Inclusive Memory of Home thematic H5. • And this campaign attracted 30 mil participants, 3.1 mil inclusive memory, 9.9 mil virtual billing of Taobao, 2500 sets of gift packages and entitled gold award of ROI, Top Digital and so on. 61 Source: Ali and Media Data
  62. 62. 62 Luxury and Fashion
  63. 63. The Chinese luxury market is estimated to keep a decrease in 2020, even after recovering from April with most stores reopened 63 80% luxury & fashion stores have reopened by Apr 1st 30%-40% shop traffic recovered until mid Mar at weekends 40%-50% During lock down: 75%-85% decrease Rebound quickly: after 6-8 weeks after ease lock down, 40-50% decrease Limited impact from epidemic, estimate to have only 5%-10% decrease at end of 2020 Disclaimer: As reference, to be revised based on global outbreak and supply chain effect China luxury market growth rate estimation by month 2020 Source: BCG, April 1st., 2020
  64. 64. Further digitalization through streaming and AR to compensate life events Luxury and fashion brands will need to ramp up online operations in response to a hard-hit physical retail sector, as COVID-19 accelerates deeper shifts characterized by the now-digital Shanghai Fashion Week (SHFW). SHFW has teamed up with Alibaba’s online marketplace Tmall to broadcast its entire roster of runway shows online from March 24th to 30th on Taobao Live, Alibaba’s livestreaming channel, making it the first fashion week event to go fully digital. Broadcasting shows is not the first time. This time, however, viewers can purchase items online while watching and making comments on shows in real-time. What’s more, many of the catwalks took place with green-screens behind the models to boost VFX. “We have integrated some of Alibaba’s most advanced technologies to bring a new and elevated experience to consumers,” explained Mike Hu, general manager of Tmall Fashion and FMCG. Shanghai Fashion week via streaming and with AR 64Source: https://www.warc.cn/newsandopinion/news/luxurywitnessesitsowndigitisationwithshanghaifashionweekabellwether/43430?utm_source=daily-email-free- link&utm_medium=email&utm_campaign=daily-email-apac-prospects-20200330; http://sh.sina.com.cn/news/m/2020-03-20/detail-iimxyqwa1968487.shtml
  65. 65. Campaign Summary As well by CHANEL for their 2020/21 AW fashion show Key Takeaways Result • Campaign Period: 2020.3.2-2020.3.3 • Est. Budget: 3.0Mil. • Market: Nationwide • Key Platform: • Chanel launched real-time live stream of fashion show in China for the first time. • Leverage Tencent Video(3/3) & Weibo(3/2-3/3) to promote the fashion show during this special situation caused by COVID-19. • Invited many celebrities and influencers and used the fans tool & fans top to enhance awareness. Continuous resource launch to drive more traffic to live stream. Paid Social Mobile APP • Official Weibo Performance: Repost: Over 331,000 Comments: Over 3,172 Like: Over 415,000 Views: 15,110,000 • Tencent Video Performance: Views: 3,164,964 Source: Media Data 65
  66. 66. Key Takeaways • Cartier launched new products, Juste un Clou series and Guirlande de Cartier series, on Tmall Super Brand Day. • One month in advance, Cartier started to warm up on its Weibo by cooperating with various top celebrities with strong characteristics (stylish, cool, young, talented). Cartier teamed up with young celebrities for Tmall Super Brand Day 66 Campaign Summary 1.13 Campaign Warm-Up 1.14 1.15 1.16 2.10 Jackson Wang 王嘉尔 Brand Ambassador Meiqi Meng孟美岐 Vin Zhou 周震南 Sean Xiao 肖战 • It is common nowadays to see jewelry brands working with top-tier celebrities to target young consumers with strong purchasing power. • Followers of the celebrities are very active on social media and with high willingness to interact, that is sharing, liking, and commenting. • Cooperation is not limited to brand ambassadors only . There are brand’s friend 品 牌挚友, brand’s ambassador 品牌大使, brand’s spokesperson 品牌代言人,and other titles for different levels of cooperation in China. • Each Weibo post, corresponding to one celebrity, obtains 1 mil+ shares, 100k+ comments, and 500k+ likes. Super Brand Day “Guirlande De Cartier Bag” “Juste Un Clou Bracelet” Source: Cartier Weibo owned channel
  67. 67. 67 Automotive
  68. 68. Auto assembly lines are restarting in China • Japan's big three, Honda, Nissan, and Toyota, have resumed operations in China. • Volkswagen have resumed production in most of its plants in the country. • BMW, Mercedes-Benz (Daimler AG), Jaguar Land Rover and Volvo have all been in the process of rolling out cars from their Chinese lines. • PSA Group has resumed operations. • Ford have restarted, they are almost at 100% capacity. • Fiat Chrysler has also reported that 90 percent of their dealerships and 95 percent of their staff are back in the workforce. • Tesla is back on track as well. Source: https://www.autoindustriya.com/auto-industry-news/china-s-auto-industry-is-starting-to-bounce-back.html 68
  69. 69. Car Sales declined by 79% in February Unit:000’ • China's automotive industries suffered historic drops in activity in February as the government locked down cities and restricted travel to contain the spread of the novel coronavirus pandemic. • Car sales in China collapsed 79% compared to a year ago, according to data released by the China Association of Automobile Manufacturers on 17th Mar. It was the biggest ever monthly decline, according to Reuters. Only 310,000 vehicles were sold. • Sales of new energy vehicles, which include electric or plug-in hybrid cars, plummeted 75% to 12,908, even though the government has been pushing hard for the adoption of such cars. China Association Of Automobile Manufacturers (CAAM), China Passenger Car Association (CPCA) 69 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Y2018 2,809 1,718 2,656 2,319 2,288 2,274 1,889 2,103 2,394 2,380 2,548 2,661 Y2019 2,367 1,482 2,520 1,980 1,913 2,056 1,808 1,958 2,271 2,284 2,457 2,658 Y2020 1,927 310 - 500 1,000 1,500 2,000 2,500 3,000 Monthly car sales in China
  70. 70. Some of auto service and travel APPs provide free sterilization service for car owners 70 JD Auto provides free and high-end O3 sterilization services for taxis and special vehicle owners of Dida, ensuring the return-to-work and travel safety for passengers since 9th Mar. in over 2,000 stores. Auto service brands provide free in-car sterilization for any customer who provided personal information on their official website. (From late Feb. to mid Mar.) Source: JD&TUHU official news
  71. 71. GITI launched online livestreaming to train national dealers 71Source: GITI official website During the COVID-19 outbreak in China, GITI is seeking more channels to engage with consumers and to support dealers. During 27th – 29th Feb 2020, GITI invited three professionals who have concrete experiences in store managing and retailing, to do livestreaming. They gave some professional advices and supported dealers under this stress environment. Results: • Average 10,000+ people online watching per episode. • Sold 100,000+ tires, 30 Mil RMB
  72. 72. 72 Media market implications
  73. 73. Total media-spend growth slow-down projected to 8% in 2020, growth comes from digital 73Source: eMarketer, March 2020, billions, by media
  74. 74. 74 POV / Recommendations
  75. 75. Recommendation on overall marcom strategy 75 1. Focus on products/services out of your portfolio or brand experiences that can overcome some barriers to enjoy daily life again: • Bring a small scale enjoyment to daily life: indulgence food & beverage, OOH activities, domestic travel, home decoration, family enjoyment etc. • Overcome barriers of concern, like healthy living and financial security. • In all cases don’t relate your message to the epidemic. We see this is not appreciated, consumers are still a bit depressed and careful. They think brands should not take advantage of that. So back to business as usual means back to core meaningful brand message as usual. 75
  76. 76. Recommendation on overall marcom strategy: 76 2. Timely and constantly update your roadmap to recoup your business. According to the effects and latest's prediction for your category: • Consumption is expected to rebound quickest for those categories that cater enjoying daily life, following a supply chain that has not internationally been effected. • China has today a well developed retail, e-commerce and logistics industry which enables to rebound quickly. • A large group of consumers still has good spending power and saved extra money over the last 2 months. • At the same time groups of consumers, especially SME related consumers who are hit the hardest now and by the following slow down, will see heavily decreasing spending power. • Additionally the government implements policies to boost domestic consumption. 3. Continue to keep brand exposure during the stabilization period which is still going on: • It is important to maintain consumers brain position of your brand. • Higher media inflation is expected in the post-Corona period and shortage of inventories, especially in H2.
  77. 77. Recommendation on overall marcom strategy 77 3. Focus on the post-Coronavirus period, try to preempt with pressure on branding and pursue more tactical campaigns in the post period: • Many (international) brands will quickly focus on China, especially now the virus is heavily effecting other key markets. China stays the growth driver for many businesses like lifestyle, luxury, tourism and automotive. • Some product launches have be postponed or soft launched, they will see launch campaign shortly. • Many brands will do promotions to recoup sales loss. 4. There are more opportunities now than before in China to resonate on collective benefits: • We see that national pride is accelerating in its upward trend based on how China has controlled the situation, resonance in your messaging keeps being appreciated, especially by younger audiences. • Support local economy, domestic production and more fragile communities, like small manufacturers and farmers.
  78. 78. Recommendation on media strategy 78 Additional notes: It is estimated that TV, online video, short video, news app’s usage and stickiness will greatly increase. So far, the Chinese national and top media have opened “Fight Against Coronavirus” column to rolling update the real-time epidemic status from Jan 20,2020. Which almost fully catch the Chinese audience’s attention. Phase Digital TV Outdoor Phase 2 Stabilization Feb 9 -End of the outbreak Focus on digital media as it will remain their primary source of consumption and less time will be devoted to entertainment than in the beginning. OTV, social and news content will occupy most consumers' time As consumers return to work, daytime ratings will decline and evening prime- time ratings will hold up Drop in spending. Focus outdoor media concentrated commuting routes, residential Media / lift Media and in BCDs Phase 3 Post outbreak - Recovery Gradually return to normal. Higher inflation rates expected for platforms popular during the outbreak. Return to the original usage pattern Gradually return to normal 1. Tailor your media strategies speedily for the stabilization stage in which we are now, and for the post outbreak stage soon to come: 2. Keep using new digital opportunities and formats that have risen during the outbreak, they have been proven more meaningful media to consumers now. 3. Lock premium resources for the post outbreak period. Create some bandwidth and leeway beyond standard formats and requirements to reserve and book premium resources. 4. Look for opportunity buys in media types that have been highly effected: OOH, transport media and cinema.
  79. 79. MOBILE DATA STRATEGY VIDEO & AUDIO NATIONAL/LOCAL PUBLISHING NATIONAL/LOCAL OUTDOOR SPONSORSHIPS SPORTS MARKETING BRANDED CONTENT EXPERIENTIAL MARKETING SOCIAL MEDIA CREATIVE STRATEGY CRM SEARCH INNOVATION GEO-LOCATION PERFORMANCE MEDIA MUSIC GAMING ENTERTAINMENT INTEGRATIONS COVID-19 challenges and opportunities need a multiple expertise and a fully integrated approach with speed to market. Within Havas Village we can efficiently mobilize the team you need. 79 E-COMMERCE
  80. 80. Including dedicated health specialists from Havas Health & You 30+ MEDICAL EXPERTS 20+ STRATEGY PLANNERS 120+ DEDICATED STAFF 70+ in Shanghai 40+ in Beijing Digital & Data Association programs/ campaigns Medical PR & Events MedicalPatient education Creative & Production Strategic Planning Key clients Scope Structure 80
  81. 81. SHANGHAI 11/F Novel Building 887 Huaihai Zhong Road Shanghai 200020 +86 21 3397 8666 GUANGZHOU Room 07, 16/F CTF Finance Centre, No 6 Zhujiang Road East, Tianhe District Guangzhou 510130 +86 20 3877 3282 BEIJING 1006, 10th Floor, China Youth Plaza, 19 Dongsanhuan North Road, Chaoyang District, Beijing 100020 +86 10 5923 2791

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  • kewong

    May. 5, 2020

Vol.4: An update from Havas Group China on media behavior and consumption during the COVID-19 global pandemic.

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