Amid a global public health crisis and a slowly recovering economy, people might expect a decline in consumption willingness in the Chinese market. But Chinese people actually show greater enthusiasm in consumption in some sectors. But for better or for worse, COVID-19 has affected their consumption habits.
Yesterday was Qixi Festival, commonly referred to as Chinese Valentine’s Day. It’s based on a romantic legend about a weaver girl and a cowherd, celebrating their meeting each year. Their love was not allowed, thus they were banned from seeing each other and banished to opposite sides of the Milky Way. Once a year, on the 7th day of the 7th lunar month, a flock of magpies would form a bridge to reunite the lovers for one day.
As 2020 has been so unordinary, the data indicates that some consumers are making up for lackluster Valentine’s Day on Feb. 14, when China was still grappling with COVID-19.
This year, Qixi advertisements were all over the street – jewelry sellers, luxury brands, restaurants, food retailers – all offering Qixi discount packages. Several e-commerce platforms were plastered withs Qixi advertisement, saying “big name brands join the Qixi Festival, offering limited-time discounts. Come and check! ”
Chen Yong, a 29-year-old internet industry employee, said she didn’t have a desire to buy anything even though these brands are offering significant discounts.
“The pandemic has made me avoid unnecessary consumption,” Chen said. “I used to go on dates on Qixi, but today I prefer to eat at home which helps me save money and also I didn’t want to go to crowded places for safety reasons.”
But other consumers said the pandemic didn’t affect their Qixi consumption.
Wu Xufei, a 26-year-old film animator living in Beijing, said he felt the pandemic had almost gone and life was getting back to normal. “I didn’t buy lots of things in stores during pandemic. So it’s an opportunity for me to go out and shop.”
Zhang Jie, senior associate of international investment banking and broking firm VSA Capital Shanghai branch, said many of her friends between 25 and 30 years old have started to look at the holiday discounts and promotions more rationally.
“Perhaps it’s because of the pandemic this year, everyone is holding their wallets tight to avoid unnecessary expenses,” Zhang said. “What’s more, e-commerce has developed rapidly in the past 7-8 years, and everyone can compare prices through multiple channels. Discounts for Double Eleven and 618 will generally be greater, diverting a large part of the purchasing power.”
Wu said he and his girlfriend went to Guomao, Beijing’s central business district, to celebrate Qixi. He said he saw peoplewaiting in long lines at almost every restaurant.
They chose a Taiwanese restaurant but were told that a lot of specialty dishes had been sold out.
“We had prepared more than twice the usual amount of dishes in advance,” said the restaurant’s waiter. “But today is Qixi and we have a lot of customers. Despite our preparations, many dishes were still sold out.”
A little disappointed, they left the restaurant and entered a nearby restaurant featuring Huai Yang cuisine.
But they were told again that some dishes were sold out. “Roast duck sold out at around 7 p.m., and some desserts also sold out,” the waiter said. “I think today’s turnover is one-third more compared to the past few days. Business is much better than expected.”
A few restaurants reported that they expected to see an increase in turnover because of Qixi, but they did not count on the festival as their catalyst, as their business had already returned to pre-pandemic levels.
To try to pull the economy back to the pre-pandemic levels, enterprises are giving out vouchers and offering discounts to attract customers all over the nation.
On the day of the Qixi Festival, hotpot giant Haidilao planned a “love confession event” in offline stores in mainland China. More than 6,000 electronic screens will circulate those love confessions; Shanghai Disney Resort not only brought back their fireworks show, but also launched Mickey and Minnie’s couple dolls Tuesday; Chongqing Happy Valley even launched a special night ticket for Qixi Festival for 77 yuan per person. People can also visit Maya Beach Water Park for free on Qixi Day.
“The impact of the pandemic is enormous,” said Liu Yejin, economics professor at Capital University of Economics and Business. “Enterprises will definitely seize the opportunity to promote products with greater efforts than before.”
But these short-term promotions’ impact on the overall economy is limited, according to Zhang Lin, a Beijing-based independent economy commentator. “In economics, the amount of consumption depends on the long-term income level and expectations, and short-term consumption stimulus is difficult to stimulate the economy.”
Liu said that short-term consumption has a little effect on overall economic growth, “but in the long run, we need to change the tax system and basic public services.”
“Don’t count on this kind of consumption stimulus because ordinary Chinese are overwhelmed by housing, education, and medical expenses, and domestic consumption is weak,” Liu said. “The proportion of consumption in China’s GDP is relatively low.”
China’s Private Consumption accounted for 38.8 % of its nominal GDP in December 2019, while Japan’s Private Consumption accounted for 53.7 % of its nominal GDP in June 2020, and US private consumption accounted for 66.9% of its nominal GDP in June 2020, according to financial data and insights provider CEIC Data.
Hotels & Travel
Wu and his girlfriend were checking love hotels last night but all the rooms they wanted were already booked.
“People started ordering rooms one or two months in advance,” said the front desk staff of the love hotel in northern Beijing. “At this time, the number of orders feels almost the same as last year, maybe more than last year as people are eager to spend a night out.”
According to “2020 Qixi Romantic Economy Report” released by AutoNavi Map, the number of hotel reservations had been rising in the past two weeks, an increase of nearly 300% year-on-year.
The report also showed that hotels in various places ushered in the peak of occupancy on the Qixi Festival. Couples in first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen are more willing to spend the day in the hotel, and bookings have increased by 30% compared with usual days.
Couples also like to spend their special day out. According to “2020 Qixi Tourism Consumption Trend Report” released by travel agency TravelGo, the number of domestic air tickets on the platform increased significantly in the week before Qixi. Since Aug. 16, the number of domestic air tickets search on the platform has increased significantly. Among them, the number of searches on Aug. 19 increased by nearly 300% compared with a week ago.
“As the pandemic situation gets better, people’s long-suppressed tourism consumption demand begins to be released, and the popularity of domestic tourism will gradually recover,” said Cheng Chaogong, chief researcher of TravelGo Research Institute.
“The demand for outbound travel has been replaced by more frequent domestic and short-term travel. It is believed that this wave of travel and entertainment will reach its peak again in the coming Mid-Autumn Festival and National Day Golden Week.”
Other festival must-haves
During the week of Qixi, the frequency of valentine’s gift-related search keywords increased 280%, of which “gift”, “chocolate” and “gift girlfriend/boyfriend” were among the most popular, according to JD Big Data Research Institute.
Other festival necessities also saw an increase in sales. According to JD, the sales of chocolates and candies increased by about 30% year-on-year before Qixi, and the sales of gift boxes increased by about 280% year-on-year.
JD data also shows that ahead of Qixi, home goods, outdoor and luxury products, among other categories saw sales increase by about 20-30%. Jewelry and handbags were among the most popular imported products.
Flowers have always been a hot gift choice among lovers, and Qixi also affects the flower industry. People who are in long-distance relationships choose to deliver flowers to their lovers via e-commerce platforms. According to data from JD, the week before Qixi, the number of intercity orders for flowers across the country rose 33% year on year.
But not all floral shops were happy with their orders.
“The number of flower orders on Qixi Festival has dropped by nearly half compared with last year,” said the Xu Zhuang, the owner of Yin Xiang Flower, a flower shop in southeastern Beijing. “It may be because the economic situation is not so good so people are unwilling to spend money now.”
Xu said their purchase price has risen, one rose by about two yuan, and the selling price has also risen a little.
Cui Rongxia, a grower at the flower base of Zhao Xian Rose Town in northern Shandong Province, said the flower business for this year’s Qixi Festival is not even as good as this year’s Valentine’s Day in February, local news reported.
Cui’s family has planted five acres of flowers, mainly roses, Frangipani and other varieties, and they supply flowers to sales outlets in North China and East China.
Cui said this summer was particularly rainy, and the flower greenhouses of local growers were flooded. Not only was the number of surviving flowers very small, but the flower size was generally small.
“In previous years, the shed price of 20 roses was about 5 to 6 yuan, and now the shed price of roses has risen to 27 yuan. Although the selling price is higher than in previous years, the initial purchase of flower seedlings, fertilizers, packaging materials and other expenses are excluded. After working hard for half a year, almost every grower is still at a loss.”
Kunming Dounan flower market, the largest floral market in Asia, has become the “barometer” of national flower trading volume and prices.
According to Wang Yanyan, the head of media of Dounan flower market, the overall order volume of Kunming Dounan flower market has increased compared with normal non-holidays due to the arrival of Qixi Festival; compared with last year, the overall transaction turnover is similar, but the transaction volume is less as the current flower supply can only reach 70% to 80% of the previous year.
“Because of the heavy rain this year, the growth of some flowers was delayed and others died,” Wang said.
Dounan Flower Market was established in 1998 in southwest Yunnan Province. It has become the largest flower trading center in Asia and the second-largest in the world. In 2019, the annual transaction volume of the market exceeded 10 billion yuan. About 60% of fresh cut flowers in Yunnan Province and flowers from neighboring countries and provinces are traded here every day. The market export flowers to more than 50 countries and regions.
After Wu and his girlfriend finished dinner, they stepped out of the shopping mall and planned to head home. He opened Didi Chuxing, a mobile transportation platform, which showed that their car would arrive in 20 to 30 minutes. He said the wait time was much longer than usual.
Li Min, Didi’s vice president, wrote on WeChat that he predicted that traffic would start entering the peak period around 4 p.m. during the Qixi Festival, and reach the peak at 6 p.m.
According to the prediction of the Didi Data Science Department, the number of online ride-hailing calls will rise by 40%, and the overall order volume may exceed 50 million.
Didi Chuxing Wednesday announced that Didi’s global daily orders exceeded 50 million for the first time on Qixi. Didi claims that the current number of online car-hailing orders has exceeded the same period last year.
Cheng Wei, CEO of Didi, said on his personal WeChat that the increase in travel data reflects the recovery of consumption and economic recovery.
Wu and his girlfriend headed home at the end of the day. “It was nice to go out and celebrate Qixi with my girlfriend this year. And for future festivals, I feel like my wallet will be completely empty.”