Vol.1: An update from Havas Group China on media behavior and consumption during the COVID-19 global pandemic.

1. February 2020
HAVAS CHINA
Monthly Market Update

2. 2
Coronavirus

3. 2019nCoV outbreak background
3Source: Toutiao News
• A new coronavirus (2019nCoV ) strain has caused an outbreak in the central Chinese city of Wuhan, spreading
since December 2019 and now declared as a global health emergency by WHO. In Jan 2020, Wuhan and 6 Hubei
cities ‘locked down’. While the growth of new confirmed cases continues, the isolation of Hubei cities appears to
be helping to reduce national acceleration of the virus for now.
• The government and public are 100% committed to fight this virus. 2 brand new hospitals have been built in
record time in Wuhan, the epicenter of the outbreak. Airport, railways and metro lines have increased preventive
measures. As of Feb 8th, 2020, 71.85 billion RMB is arranged to be invested in the epidemic prevention and
control.
• The CNY holiday was officially extended to February 3rd. More than 1/3 of provinces extended that Spring Festival
to including February 9th. Businesses re-open after the extended CNY break, but many citizen will resume work
remotely.
• As of Feb 9th, China has reported 40,235 infections and 909 casualties. Outside of China 319 cases have been
confirmed and the virus has spread to 24 countries. The mobility rate remains ~ 2%, which is much lower
compared to previous SARS (9.6%) or MERS (34%) outbreaks.

4. Travel Food Entertainment Emerging Lifestyle
• Avoid using public
transportation
• Cancel unnecessary trips
• Use more private cars
• More consumers order
food online – APP like
Hema, Jingdong, Dingdong
are gaining traction
• Amount per basket is
bigger than usual
• Prefer home cooked food
• Watch TV / Online video
(Iqiyi, Tencent, Douyin, etc.)
• E-Gaming
• Use fitness APP to stay in
shape
• E-clubbing
• E-Reading
• Online doctor/pharmacy
• Online education
• Home office – online
meeting
Consumer behavior changed to minimize exposure during outbreak
4
Sources: social listening
Digital lifestyle accelerated and consumers embrace functions and services to answer their needs faster
and safer

5. Media consumption immediately impacted on during outbreak
5
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 1
Early outbreak
Jan 20-Feb 8
Because consumers are stuck at home, traffic to all
digital content has increased, especially news, games,
social media, online video, and Internet television
Because consumers are stuck at home,
television is another important type of
media that has higher exposure to
consumers this period
Almost no consumption
Phase 2
Stabilization
Feb 9 -End of the outbreak
As all consumers return to work, digital media will
remain their primary source of consumption and less
time will be devoted to entertainment.
News, social and video content will occupy most
consumers' time
As consumers return to work, daytime
ratings will decline and evening prime-
time ratings will hold up
Outdoor media are concentrated at
the point of alignment between the
company and the home, usually on
transportation and in the workplace
Phase 3
Recovery
After the outbreak
Gradually return to normal, and discussion of the
outbreak will be decreased. Social concerns will shift
and the content market will return to normal
Return to the original usage pattern, but
it's possible to stay focused on the
content and get used to it.
Gradually return to normal

6. TV/OTT increase in usage, while cinema facing challenge
6
TV usage increase as people avoiding
going out
CNY accounts for 30-40% of the box office.
Due to epidemic, many movies was forced to
cancel. “Jiongma” hence seek online platform
to launch the show+18.1%
vs. 2019 CNY
+30 mins
vs. 2019 CNY
Overall rating
during 2020 CNY
Daily watch time per
person during 2020 CNY
OTT provide more programs
to grow membership
Changhong provide special
epidemic programs during the
outbreak
Cinema are all closed, movie move from
offline to online

7. The winner – some sectors are set to benefit
7
Sources: The economist
Pharmaceuticals
Companies will see
strengthened demand for
vaccines and antibiotics
E-commerce
Consumers will avoid
bricks-and-mortar stores
and embrace e-
commerce / delivery to
minimize infection risks
Online entertainment
Spending more time at
home and indoors,
consumers time spend
on internet services will
spike
Insurance
Will taking a short-term
hit, will benefit in the
long term from increased
awareness

8. The loser – some sectors will have a negative effect
8
Sources: The economist
Travel and tourism
Will be hit the hardest
given quarantine
restrictions and short
term decline in consumer
spending for travel
Logistics
Will see distribution
interrupted by
quarantine measures and
face a lack of delivery
staff
Manufacturing
A labor intensive sector
that will be hit hard,
impacting global supply
chains
Luxury goods
Short term spending will
drop as consumers limit
purchases to essential
items

9. The 2019nCoV outbreak result in travel decrease sharply in both
outbound and national during CNY
9
Forecasted that China would rack up Three Billion trips during
the 2020 CNY
• China’s railways expected 440 million trips during the festival period,
a growth of 8% vs. last year.
• 79 million passengers were expected to take flights (+8% vs. last year)
But those figures have been hit hard with the 2019nCoV
outbreak becoming serious
• More than 30 international airline companies have canceled all/most
of the routes to China.
• 127 countries have tightened the entry toward visitors from China
(suspension, 14-20 days quarantine).
• As of 31st January, the order cancellation rate of domestic travel on
OTAs has reached 70-80%.
Source: Bureau of Exit and Entry Administration of the Ministry of Public Security, Fliggy

10. Besides donation, brands are quickly responding to meet
consumers’ needs
10
Sources: Linkedin ashleytalks
Company RMB donations
No. 1 Alibaba 1,000,000,000
No. 2 Tencent 300,000,000
No. 3 Baidu 300,000,000
No. 4 Heng Da 200,000,000
No. 5 ByteDance 200,000,000
No. 6 China Merchaints Bank 200,000,000
No. 7 Meituan 200,000,000
No. 8 Sunac China 110,000,000
No. 9 Kuaishou 100,000,000
No. 10 Country Garden 100,000,000
No. 11 Vanke 100,000,000
No. 12 TAL Education 100,000,000
Chinese tech giants are leading the way in
charitable donations to fight Wuhan Flu.
NetEase Yanxuan
The first one to support on the
safety products, indicating no
markup will be charged
Dingxiang Doctor
Launched Coronavirus real
time broadcast, online
doctor (free for Hubei),
epidemic knowledge, etc.
Meituan
Launched no-touch take
out service

11. Learning from SARS – we expect that economy will bounce back
quickly after the epidemic
11Source: State Statistics Bureau
2000-2019 China GDP Growth Rate by Quarter 2000-2019 China Retail Growth Rate by Quarter
The impact of GDP growth decline was
concentrated during SARS outbreak (2003 Q2) with
recovery over the rest of year
Consumer spending on retail sank during SARS with
recovery thereafter

12. 12
Sources: The Economist; China Skinny
Estimation for FY2020 GDP growth rate in four
scenarios, following 6.1% for FY2019
Overall economic impact from 2019nCoV will depends on outbreak
end time
The interconnectivity between China and rest
of the world is far deeper than during SARS.
Optimistic
5.7%
End Feb, 25% possibility
Baseline
5.4%
End Mar, 50% possibility
Pessimistic
4.5%
End Jun, 20% possibility
Nightmare
<4.5%
End Feb, 5% possibility
2003-SARS 2019nCoV
Trade share
(% of global)
5% >12%
Trips
(Chinese travelers)
17 Million 150 Million
Overseas Students 100,000 700,000

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