Some rejoicing is in order as China lifted lockdowns for second and third-tier cities with zero COVID cases. People immediately went back to their favourite restaurants and stores in celebration of being able to, once again, move freely outdoors.
When it comes to shopping for something more substantial, the mood isn’t all that great. This is due to the long lockdowns, the prevailing uncertainty, fluctuating economy, and firing streaks of some tech giants, among other reasons.
On the other hand, the pandemic has also sparked the growth of a brand-new market: the “Stay-at-Home” Economy.
The population confined to their homes coped in their own way, exercising and purchasing fitness products and smart home gadgets; working from home with new office furniture and doing so while the industrial sector struggles with supply chain management and rising raw material costs.
So what is the “Stay-at-Home” Economy like in China? And will it continue to exist now that China is easing pandemic restrictions?
China’s “Stay-at-Home” Economy – Rising markets
While other industries such as hospitality and F&B dwindled, the pandemic gave rise to a new kind of economy—-the “Stay-at-Home” Economy which originated due to the rising number of COVID cases in previous years. Chinese people have had to shift their behaviour when it comes to consumption and new kinds of consumer behaviour started to pop up. Here are a number of “Stay-at-Home” Economy markets that have started to gain popularity:
The “Work from Home” market
Working from home did not only become the new norm in China but all over the world as well. In fact, during the beginning of the pandemic, Western companies looked to China for guidance on how to implement the hybrid or work-from-home models. Not to mention, China’s big advantage in this area was its strong mobile internet infrastructure which enabled lots of companies to move to online work. A country with a weaker infrastructure couldn’t have done this.
After cities like Beijing and Shanghai started implementing home office measures, the search for “home office” on Xiaohongshu gathered more than 760,000 related notes. Many Chinese office workers were looking for products that could help them turn sections of their homes into mini personal offices.
These products include better computers, office chairs, video conferencing equipment, etc. China’s video conference equipment market even reached 14.82 billion RMB ($2.2 billion) in 2021.
The online grocery market
Online food sales significantly increased as a result of the “Stay-at-Home Economy.” Grocery shopping can be made online using a number of platforms, including e-commerce marketplaces, social media platforms, restaurant ordering and delivery apps, and exclusive O2O shopping apps.
Almost all of these channels rely on funding and technology from massive e-commerce and IT companies like Alibaba, JD.com, Meituan, and Tencent. For a number of reasons, China’s e-commerce and internet behemoths are making investments in the retail grocery market.
According to PWC China, China’s online food sales surged by 32.7% YoY in the first three months of 2020, despite the country’s overall e-commerce sales growth of only 5.9% and a 19% decline in retail expenditure.
The smart home market
People at home started looking into purchasing smart home and entertainment devices during the pandemic, driving the “Stay-at-Home” Economy forward. Such devices include electronic locks, home security devices and virtual reality equipment.
Smart home technology has evolved in recent years due to the rapid development of new technologies such as the Internet of Things (IoT), artificial intelligence, and 5G. China’s market has demonstrated to have the biggest potential as the world’s demand rises.
In recent years, IoT devices are becoming more powerful and smarter, and their form factors are shrinking. Enhancements in communication protocols are delivering greater range and greater energy efficiency, and consumers are adding more connected devices to their homes. All of this means the possibility of realising more complex functional combinations, where multiple devices can work together seamlessly and intelligently.
According to the China Business Industry Research Institute, the scale of China’s smart home market has increased from 260.85 billion RMB ($38.66 billion) to 514.47 billion RMB ($76.24 billion) from 2016 to 2020 with an average annual compound growth rate of 18.51%.
The home fitness market
With nationwide lockdowns came the closure of fitness centres and sports interest classes. The Chinese were forced to come up with ways to stay fit during the pandemic and this led to a rise in the purchases of exercise equipment. People were also worried about living an inactive lifestyle at home and decided to start actively taking care of their health.
More young people were opting for at-home workouts as the pandemic spread because the internet has made regimens, fitness gurus, and sports stars more accessible than ever. Millions have made it a daily ritual to tune into Liu Genghong’s livestreams. The 49-year-old musician, who was born in Taiwan, recently rose to fame online because of his entertaining fitness livestreams on Douyin. Olympic sprinter Su Bingtian, who has 4.7 million followers on Douyin, regularly shares brief videos of at-home workouts like squats and high knee exercises.
Over half of the 234 participants in a small-scale survey by CGTN exercise at home on a regular basis, and over one-third of participants exercise every day or at least three times each week. The pandemic, time savings, and cost savings were listed by respondents as the three main benefits of working out at home.
Will the “Stay-at-Home” Economy thrive or fade away?
The “Stay-at-Home” Economy has become the new normal. Indoor consumption has risen in China due to the pandemic and consumers have realised just how self-sufficient one can be when isolated especially with today’s e-commerce and advanced digitalisation.
With big data and new technologies having developed throughout the years, digitalisation is continuing to empower all aspects of one’s life. With a goal of 640 million 5G connections by the end of 2022, China’s digitalisation is only being sped up.
With this in mind, sectors such as e-commerce, item deliveries and communication can all be accessed in the comfort of a consumer’s home. This ‘new’ mindset and lifestyle will not go away immediately. In fact, the market size of emerging markets during the pandemic is foreseen to thrive in the years to come.