Tips Published at 13 August 2020

Six lessons we can draw from Chinese businesses during the pandemic

On June 9th 2020 we invited ChinaTalk's Ed Sander to share to share six lessons on the way Chinese businesses handled the COVID-19 crisis.

Want to watch the video? Find the recording below.  

These six lessons that are drawn from what has happened in China over the past six months can be very valuable for businesses and entrepreneurs. Although some lessons are comparable to what is done in the Netherlands, the developments in China have happened at a much higher speed. This article summarizes Ed’s six lessons which are relevant for every entrepreneur and allows us to understand the best practices to deal with the COVID-19 crisis in China and beyond.

Lesson #1 Digital acceleration

Businesses need to be ready to speed up the digitization of their businesses. In China we saw examples of this in the way that work collaboration swiftly moved online through apps like DingTalk, Tencent Meeting and WeChat Work. Another example is a shift from offline retail to online retail; e-commerce and home delivery of groceries.

Lesson #2 Crises can result in new market segments and target groups

With more people staying indoors than going to shopping malls, the entire retail business collapsed, corresponding to a 20% drop in growth. However, while the total retail market in 2020 decreased by 13.5% compared to 2019, online retail sales continued to increase. Particularly grocery sales were booming and went up by 37%, for instance the online groceries provider Hema (Freshippo) by Alibaba, doubled its sales during the pandemic. Their customer base also became more diverse and included more target groups as everyone started using ordering services, such as the older generation, which is generally not tech savvy.

Lesson #3 Willingness to be Flexible & Change Fast

A number of companies have been negatively affected by the pandemic, such as Didi, which is the Chinese version of Uber. They had very few customers since people generally stayed at home and were afraid of going into taxis. Didi adapted and began using its pool of drivers to provide home delivery of items like groceries.

A flexible approach was also taken by Hema, which was dealing with a severe staff shortage due to a large increase in demand. In order to keep up with the high demand, Hema hired redundant restaurant staff that took care of their delivery services. This was beneficial to restaurants too as they could not provide work as they had to close down.

Lesson #4 Importance of Digital Infrastructure

China was able to adjust very quickly to the new circumstances due to some big tech companies in China. Providers like WeChat and AliPay offer ‘Super Apps’ which you can use to chat, but also to buy your groceries, train tickets or to rent a bicycle. During the COVID-19 outbreak such Super Apps responded to the demand and added features such as health tests and statistics about the outbreak. In the West we do not have any app which is comparable, which might make it more troublesome for us to swiftly adjust to new situations.   

Lesson #5 Adopt live-streaming

As people no longer went into shopping malls and physical shopping rarely took place, retail shops found new ways to display and showcase their products. For example, the online shopping website Tao Bao enabled the service for shops to livestream their services and products, for customers to see what the product is about and ask questions. This not only happened in the B2C market but also on the B2B market, such as an online version of the Canton Fair and Yiwu, China’s largest wholesale market.

Lesson #6 Looking east

When it comes to technological innovations we are used to look at what is happening in the United States, mostly Silicon Valley. Whilst at the same time, there are rapid developments in China. It is important not to reject Chinese innovations and technology just because they are Chinese. One of such technologies is using a QR code to see the menu of a restaurant and order without being in contact with the waiter. Although it looks extremely innovative, China has been using this technology since 2011.

Doing business in China 

Things can go very fast in China, they are good and maybe better in key areas of research and innovation than the West. We have a lot to learn from that and we should keep an eye on these developments. Are you curious to learn more? ChinaTalk can help you as it focusses on knowledge sharing and transmission about China.

Do you want to know more about doing business in the Greater Bay Area and/or do you want to get to know the local Dutch network? Do not hesitate to contact the Benelux Chamber of Commerce PRD in Guangzhou, which will help you with the next steps!

Learn more about our NL Business Hub in Gaungzhou here