COVID-19 EDITION #5
Havas Group China 1 April 28th 2020 In this edition
1. COVID-19 situation update 2. Immediate consumption impact 3. Media consumption impact 4. Economic outlook 5. Outlook for key categories 6. Media market implications 7. POV & recommendation
2 More daily life positive picture, this one would have been for the peak not for now
COVID-19 situation update
3 Everyday step by step Chinese are discovering and shaping the new normality, different than expected
50%+ 900M Top 1 43% traffic in 77% of Chinese are planning for concern of Chinese is: are optimistic in the recovered stores May 1 holiday traveling not knowing how long it will last China’s economic fast recovery Week of Apr 6th, 2020 Apr 22nd , 2020 Mar 30th, 2020 Mar 30th, 2020
Sources: CHINA COMMERCE ASSOCIATION FOR GENERAL MERCHANDISE , Tencent news, McKinsey 4 Chinese are discovering and shaping the new normality
• With continuing imported cases, local infections slightly go up again, but within small scale and certain areas (Beijing, Heilongjiang, Guangzhou, etc.). Until Apr 26st , the national existing infected cases dropped to 801 from the peak ~60,000 in Mid-February, 15 provinces have reported 0 cases. • Chinese are getting used to a new normality. Less worrying about the virus, start to enjoy daily life again but in the meantime doing everything they can for protection. Wearing masks, washing hands, and keeping social distance have become the daily must. • Until mid Apr, China was to 90%-95% back to work - supermarket 96%, farmer’s market 97%, shopping malls 90%. 77% of stores recovered 50%+ traffic in the week of Apr 6, 16% increase vs. a week ago. • Popular restaurants are again lining up, even bars/clubs are packed with people on weekend night, most are still requiring “green health codes” and temperature checks. • 65.8% of tourist sites have reopened until QingMing Festival, a 21.5% increase versus the week before. Tourist sites and parks imposed daily traffic limitation and required reservations. Usually tickets of popular parks would be sold out before early afternoon on weekends. May 1 holiday is expected to see domestic 900M travelers, twice as Qingming holiday. Indoor tourist attractions and cinemas remain closed.
sources：Dingxiangyisheng, Nielson 5 Chinese are discovering and shaping the new normality
• In the heavy industry, pick-ups in the steel market, construction activity and crude processing have been noted. Coal power plants and oil refiners are operating at near 2019 levels. • China’s drivers have returned to the roads in greater numbers than this time last year as social distancing encourages more people to use their own cars instead of public transportation. Drivers are still avoiding non-essential trips. Car sharing services still have precaution measures in place. • 17 provinces have announced the school reopening times. While due to the unclearness of COVID-19, some colleges extended reopen time again. Some schools are having reopen drills to ensure the safety.
Sources: China skinny 6 Consumption impact
7 After the daily enjoyment consumption rise, higher price purchases see light steps of recovery, many categories are further recovering
Phase Cancel or reduce Unchanged or limited Increase
• Big purchases see first step of recovery: real • Personal care products • Epidemic related products: estates, cars, luxury products rejuvenated masks, household cleaning, in Mar-Apr compared to Feb. medicine grow stable Phase 2 • Domestic travel is recovering, but it is • Food market overall shift to more Stabilization fresh food especially for vegie Feb 9 -End of the outbreak mainly the short distance travel or local (probably in mid of the year) visits and protein, less dining out • International travel keep postponed • Online shopping through live • Dining out is reenergizing after the hard hit streaming keep booming
• Entertainment, especially OOH • Major appliances, • Big family purchase categories without activities like cinema, outdoor. consumer electronics, urgency: cars, furniture etc. • Travel liquor, etc. • Online entertainment • Health related categories, • Luxury: overseas buying Phase 3 • Financial investment including healthy food, gym high decrease, Post outbreak - Recovery • Kitchen appliances domestically to • Pet category compensate • Community shopping • Apparel • Outdoor gear
Sources: desk research and social listening 8 Key developments during the end of stabilization phase
9 Consumption of daily food enjoyment, shopping and day trips have surged in recent weeks as policy-driven stimulus kicked in
A glance of Over 17 provinces and cities governments have given out coupons which worth 5 billion yuan, some cities have China driven consumption to 10+ times value of coupons issued
Hangzhou Zhengzhou
303 million coupons 14.27 million coupons Shopping malls redeemed, generated redeemed, generated 3.25 billion sales until 187 million sales until Tourist 2020/4/14 2020/4/18 attractions
Restaurants
Sources: Xinjingbao 10 People are more willing to do outdoor activities, but mainly focused on local visits, even during QingMing Festival
65.8% of tourist sites have reopened until QingMing Festival, 21.5% increase than a week ago
people went traveling during Local visitors contribution significantly 432.5M increase vs. last year same period Qingming holiday
QingMing festival travel place contribution 2020 QingMing Festival Local visitor : nonlocal visitor = 65:35 12.0% Natural site 9.5% Zoo 2019 QingMing Festival 47.2% Local visitor : nonlocal visitor = 45:55 12.1% Park Theme park Others 19.2% *Picture - Shanghai Gucun park on Apr 12
Sources: meituan 11 China’s retail sales are recovering, though fashion-related sectors take longer time to recover • In March China’s retail sales of consumer goods recorded 26,450 billion yuan (YOY-15.8%), though up from YOY 20.5% decrease in the first two months this year, according to a release by the NBS. • Meanwhile, fashion-related sectors from department stores to apparel e- commerce were still behind the curve. • In Q1 2020, retail sales in department stores saw a decrease of 34.9% compared to that of last year, while those of specialty stores dropped by 24.7% and brand boutiques by 28.7%. • In terms of e-commerce, the sales of the apparel category also dropped by 15.1% in in Q1, whereas food increased by 32.7% and daily necessities saw an increase of 10%.
Based on Nielsen’s research, the COVID-19 impact on retail industry during 2020 CNY, has shown polarization in performance Decrease: 42% retail companies state sales have decreased YOY, and 29% terribly dropped down. Increase: 44% retail companies say their sales have increased, besides, 28% companies have increased obviously
Source: https://jingdaily.com/chinas-retail-sales-recovering-though-fashion-related-sectors-remain-behind/ 12 Nielsen, 5th Mar, 2020 Consumers shop more offline again. Store traffic and sales are increasing week by week, but slowly
% of store/mall traffic recovery % of store/mall sales recovery
2% 3% recover 100% 2% recover 100% 2% 6% 77% of stores 1% recover 90% 2% recover 90% 2% 75% of stores recovered 50%+ recovered 50%+ sales, 10% 8% recover 80% 3% traffic, 16% increase recover 80% 6% 12% increase vs. a vs. a week ago week ago 10% 15% recover 70% 8% recover 70% 6% 24% 31% recover 60% 18% recover 60% 23% 26% 17% recover 50% 29% recover 50% 24% 9% 8% recover 40% 23% recover 40% 19% 13% 17% recover 30% or below 16% recover 30% or below 17%
Week of Apr 13 Week of Apr 6 Week of Apr 13 Week of Apr 6
Sources: CHINA COMMERCE ASSOCIATION FOR GENERAL MERCHANDISE 13 Particularly, outdoor outlets show good traffic, driven by more young people than families
“The weather is good on weekends, outdoor outlet is suitable for friends to hangout, it’s more safe, can enjoy the good weather, eat ice creams, and there are lots of sales promotions.” --- Belle 27 y.o. from Shanghai
Shanghai outlet on April 12th People lined up for shopping Enjoying the good weather while walking around
Sources: market visit and interview 14 Restaurants are getting back to business but the recovery needs deals/news to attract more consumers
Do you think it is safe to return to a Good deals/discounts or providing something new restaurant/bar now? (Apr 11-12) could be the trigger to attract more consumers
5.15% 20% 75% of people Yes think it is safe to go to Maybe No restaurant/bar now 74.85%
But 58% of people are still preparing most of their meals at home, as people are in the habit of cooking at home and won’t change immediately
Sources: Nomfluence 15 Overall, we see the China market is recovering but the rebound happens slowly
1 2 3 4 The uncertainty of Not always sure People focus more on People have built up economy restrains them whether it is safe to go practical needs than habits of EC purchase, from spending out or not shopping for pleasure cooking at home, home entertainment, etc. It takes time to change
Sources: Havas interview and analysis 16 Innovation and agility help regain growth 55% Keep concerns about the COVID-19 situation
Mar 20th, 2020
Sources: Ipsos; Cosmose; GWI 17 Higher speed to market and higher usage of digital opportunities, mainly demonstrated by Chinese brands
Market share & growth rate (Jan-Feb) Reasons behind
1. Chinese brands are more agile for product supply GR 27% during COVID-19, quickly recovered production and -5.8% Chinese brand distribution, especially for the necessities International brand 73% 2. China government is launching policies to facilitate GR -3.8% Chinese brands (i.e. Guangzhou plan to incubate 1000 local star brands, 10 live streaming organization, etc.) Perfect Diary case Chinese cosmetic brand achieved 3. The booming EC and Live streaming make more local ￥100M monthly sales on Tmall brands get close to consumers store amid COVID-19, and become 4. People preference – according to GFK study, 65% the second favorite brand by post- Chinese prefer Chinese brands and will continue to 00 generation, benefiting from the buy products manufactured locally, especially for continuous social investment young people who are the main consumption driver during COVID-19
Sources: Nielson; GFK 18 Businesses in the hardly hit hospitality industry launch new services
We see some businesses (restaurants, shops, etc.) have closed permanently affected by COVID-19, the surviving ones are looking for new ways to get through the crisis
Hotel – discount + new business Restaurant – even fine dining (i.e. breakfast monthly package) restaurant starts food delivery
Luxury hotel promotions Marriott breakfast monthly package only cost ￥588 Fine dining restaurant Mr & Mrs Bund starts food delivery
Sources: Hotel official website, eleme 19 Hospitality scene has not fully recovered yet, restaurants feel the economic impact
Hakkasan Shanghai permanently closes amid COVID-19 Compared with other countries, the restaurants and dining scenes in China are now picking up again as the spread of coronavirus is halted. Hakkasan Shanghai was one of the first to reopen in early February and had been actively promoting the restaurant. However, as coronavirus concerns persist, many shopping malls are shortening their opening hours to close before 9 pm. As a long-established fine dining brand in Shanghai, many citizens were shocked by its abrupt closure. In a statement, the group claimed “the impact of COVID-19 on our global operations has forced us to evaluate the viability of our venues and make a number of prudent yet difficult business decisions to reduce our footprint. To preserve the long-term stability of our business, we plan to permanently close Hakkasan Shanghai effective Monday 13 April.”
https://hakkasan.com/shanghai/ 20 Live streaming for selling products of hardly hit businesses for the good cause
Affected by COVID-19, business of Wuhan and remote area farmers are suffering dead stocks. By selling via live streaming, products usually would be sold out within seconds. And watching live-streaming has becomes something unique for people’s night lives. Therefore, Different live streaming platforms and influencers are holding specific themes to help Wuhan and farmers get through this difficult time.
3 Top influencers held Wuhan-themed charity livestreams to help Pinduoduo live streaming to support farmers and Wuhan brands sell products, Jiaqi Li sold 160K packages of Wuhan agriculture recovery, sold 3000kg litchi honey through noodles within 2.5 hours one live streaming
Viya Jiaqi Li Yonghao Luo
Sources: Sina news 21 Some outlooks for the post-outbreak recovery phase
22 Most consumers will spend their money more rationally after COVID-19: looking for good quality & lower prices
What will be your consumption mindset after COVID-19? 1. Overall, consumers will be more restrained on future consumption given the unclear economy, especially for Total 30% 55% 15% 41-50yrs consumers who are taking the major family responsibilities 20 and below 37% 49% 14% 2. Young people are relatively inclined to a carpe diem life 21-30 31% 58% 11% style, keep enjoying life when they can
31-40 31% 52% 17% 3. We see China market is stratified. On one hand, Chinese
41-50 16% 61% 22% consumers are paying more attention to prices, seeking higher value and better deals. On the other hand, they 51-60 27% 45% 27% are also experiencing consumption upgrading, focusing more on products’ quality and its RTB, rather than social 61 and above 100% needs. It’s about price downgrading, quality upgrading, consumption desire downgrading, consumption mindset Carpe diem Cut down spending Remain unchanged upgrading
Sources: Tuotaishangyanshe 23 Higher potential for community businesses
Community business is the business circle that takes less than 15 min walk from home, provides convenient groceries, daily use products and services. It plays an important role during COVID-19 as it’s in close proximity to consumers when they need to buy daily necessities Community shops contribution to total offline retail business Offline community business – shift to more necessities Community business proportion Food & beverage 35%-60% Increased importance Living facility(convenient store, etc.) 15%-30% during 35% 45% Children & retail 10%-20% COVID-19
Online community business – become more digitalized
2019 2020 Feb During COVID-19, Community online group buys provide groceries everyday, people order in community WeChat group, property management team deliver the food to home directly. It can be further accelerated after COVID-19 Community businesses have more accurate and loyal traffic, and one community usually would have similar consumers Case regarding their consumption behavior given the similar Longhu property cooperated with education/income, hence easier to build up community pizzahut to provide pizza delivery, the groups, such as children group, mom group, dance group, etc. first day orders surpassed that of the best selling day of last year
Sources: shangyedichanzhi 24 Booming Pet economy, as source of comfort, driven by EC purchase
China's agriculture ministry released a draft classifying pets as non-livestock. During the pandemic, some owners abandoned their pets - fearing that they'd spread the virus - most of China's pet owners treat their furry friends nicely, as they are the source of comfort and companionship, with all kinds of products and even entertainment
The category is digitally savvy in China
100 400% 90% of owners bought pet products online million growth of families premium 375% growth from live streaming in Feb have pets imported pet food 41% Pet owners ¾ of the pet owners are <40 yrs took dogs to Best beauty salon Perfect Diary casted Swedish fashion selling 50% China’s top beauty retailer H&M has category in Tmall Online annual influencer Jiaqi Li’s puppy launched a line of global is cat food growth for pet during last year -- Never to promote its dog fashion to tap health double 11 collaboration with into the trend. supplements Discovery Channel
Sources: China skinny 25 The upcoming holidays/shopping festivals in May & June are expected to witness further rebound in consumption
May & June have multiple holidays/shopping festivals, from where we expect consumer spending to increase sharply
Domestic travelling restrictions will keep consumers in their hometowns
• Mother’s day • Food festival • 520 • Taobao 6.6 sales day • Father’s day • T-mall mid year sale
Sources: BCG 26 Media consumption impact
27 TV ratings and reach declined in March
In March ratings saw a clear downward trend Also TV reach has declined, especially in Tier1&2 cities.
12 Mar VS Feb 90 Tier1：-24% 87.7 11 Tier2：-28% 86.7 85 Others：-30% 84.1 83.6 79.8 10 10.2 80 9.5 79.8 77.8 78 9 76.7 9.2 75 8 7.3 70 7 7.2 7.2 6.96.5 6.5 65 6 60 5
4 55
3 50 Jan Feb Mar Jan Feb Mar Tier1 Tier2 Others Tier1 Tier2 Others
Source: Infosys, Target:P18-45, Period:2020/01/01 – 2020/3/31, Timeslot: All Day Tier1 including（BJ、SH、GZ、 SZ）,Tier2 including almost Provincial capital 28 However ratings keep to be significantly higher than 2019
• Influenced by COVID-19, TV YOY ratings TVR% +33% increased by 33% in March 2020. 8 7.1 7 • In March TV attracted high attentions and 6 has been a very influential media 5.3 touchpoint. 5
4
3
2
1
0 Mar 2019 5.3 2020 7.1
Source: Infosys, Target:P18-45, Period:2021903/01 – 2019/03/31，&2020/03/01-2020/03/31, Timeslot: All Day Market: 57 Markets 29 General news and Gaming apps daily active usage are in decline since the peak in February, but both remain a much higher level than 2019 2020 General News Apps User Behavior 2020 Gaming Apps User Behavior Unit: Unit: mins Unit: Mil Unit: mins Mil 78.9 60.5 76.7 76.7 400 72.5 80.0 56.4 54.8 60.0 70.2 500 51.6 350 70.0 309 46.9 295 294 291 400 50.0 300 60.0 400 372 384 380 344 249 40.0 250 50.0 300 30.0 200 40.0 200 150 30.0 20.0 100 20.0 100 10.0 50 10.0
0 0.0 0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 12th) 12th)
Average DAU Scale Average Use Time Average DAU Scale Average Use Time
Source: iResearch, period: 2019-2020.04.12 30 Total Social active usage and use time are back to 2019 average. While WeChat, Weibo and Red win, QQ sees a decline in usage vs. last year
2020 Social Networking Apps User Behavior 2020 Top 5 Social Apps by DAU Scale Unit: Mil 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 12th) Unit: Unit: 912 99.9 mins Mil 97.4 911 915 100.0 896 912 92.5 90.3 92.4 1400 1267 1288 90.0 1220 1241 1250 1200 80.0 70.0 1000 60.0 800 50.0 332 344 600 40.0 325 328 324 30.0 222 400 206 216 215 182 20.0 200 10.0 16 14 15 14 14 13 14 15 15 15 0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 WeChat QQ Weibo Baidu Tieba LRB Apr(till 12th) Average DAU Scale Average Use Time
Source: iResearch, period: 2019-2020.04.12 31 OTV apps usage continues to decrease in April, but remains at higher level vs. 2019 2020 Online Video Apps User Behavior 2020 Top 5 Online Video Apps by DAU 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 12th)
Unit: Unit: Unit: Mil Mil 132.0 mins 205 192 123.4 183 118.1 176 179 175 500 112.1 114.0 464 120.0 167 444 158 164 401 418 153 400 365 100.0
80.0 107101 300 91 83 60.0 78 200 52 40.0 46 41 32 38 100 24 26 26 26 20.0 22
0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 iQIYI Tencent Video Youku Mango TV Bilibili Apr(till 12th) Average DAU scale Average use time
Source: iResearch, period: 2019-2020.04.12 32 However Short video continues its steady growth on use time, while DAU scale decreases slightly, as life gets back to normal 2020 Short Video Apps User Behavior 2020 Top 5 Short Video Apps by DAU Scale Unit: 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 12th) Unit: Unit: Mil 285 280 Mil 282 mins 254 900 58.3 59.5 60 60.0 800 51.5 211 700 50.0 600 39.0 153 499 40.0 138 465 462 141 140 500 430 456 123 400 30.0
300 20.0 55 58 57 56 52 46 50 53 49 47 200 36 35 36 35 35 10.0 100 0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Douyin Kwai Watermelon Video Douyin Volcano Haokan Video Apr(till Edition 12th)
Average DAU scale Average use time
Source: iResearch, period: 2019-2020.04.12 33 Navigation apps usage rebounds and use time increased significantly as people are getting more and more active
2020 Navigation Apps User Behavior 2020 Top 2 Navigation Apps by DAU Scale
2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 12th)
Unit: Unit: Unit: Mil mins Mil 24.9 300 25.0 91 81 83 20.1 81 19.5 19.0 250 20.0 74 200 12.8 15.0 141 44 150 127 133 129 44 43 40 115 10.0 35 100
50 5.0 5 5 5 5 5 0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 AutoNavi Baidu Map Tencent Map Apr(till 12th) Average DAU Scale Average Use Time
Source: iResearch, period: 2019-2020.4.12 34 EC apps usage continues to increase, especially Taobao sees a significant increase since February 2020 E-commerce Apps User Behavior 2020 Top 5 E-commerce Apps Unit: by DAU Scale Mil Unit: 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 12th) Unit: 306 Mil mins 300 17.9 279275 281 500 16.7 16.4 16.3 16.9 18.0 253 450 250 400 414 414 16.0 376 400 363 14.0 350 200 12.0 300 10.0 150 250 8.0 200 89 6.0 100 838182 150 73 4.0 100 50 3741373739 18 50 2.0 1618 1818 1010 9 1111 0 0.0 0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till Taobao Pinduoduo JD.com Xiaomi Mall Tmall 12th) Average DAU Scale Average Use Time
Source: iResearch, period: 2019.01.01-2020.03.22 35 As people are back to work, food delivery apps DAU scale rebounds, with an increase on time consumption 2020 Food Delivery & Recipe Apps User 2020 Top 5 Food Delivery & Recipe Apps Unit: Behavior Mil by DAU Scale
Unit: Unit: 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(til 12th) mins 12.6 12.5 Mil 18.1 12.0 11.411.7 16.2 18.0 35 16.0 14.0 30 12.8 14.0 11.5 25 23 23 23 12.0 21 22 20 10.0 8.0 15 6.0 10 2.72.82.52.62.7 4.0 1.71.81.71.92.0 1.21.1 5 2.0 1.01.0 1.1 0.90.80.90.80.7 0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Dianping Ele.me Meituan Xiachufang Douguo Food Apr(till 12th) Average DAU Scale Average Use Time
Source: iResearch, period: 2019-2020.04.12 36 Online education apps usage drops as some regions re-opened schools but still remains on a much higher level than last year 2020 Education Apps User Behavior 2020 Top 5 Education Apps Unit: Unit: Mil by DAU Scale Unit: mins Mil 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apri(til 12th) 32.8 120 30.8 31.1 17 16 27.9 27.3 30.0 15 100 94 14 91 88 25.0 77 80 73 11 10 11 20.0 9 10 8 60 15.0 6 6 5 6 6 40 5 5 10.0 4 4 4 4 4 3 3 3 20 5.0
0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr Zuoyebang Xuexi Qiangguo Youdao Dictionary Kuaiduizuoye Xiaoyuansouti (till 12th)
Average DAU Scale Average Use Time
Source: iResearch, period: 2019-2020.04.12 37 Zuoyebang is widely adopted by students and their parents in lower-tier cities Age distribution 16.7 Mil Average DAU (2020 Mar) 33.9 mins/day Avg. use time per user No.1 in Online edu apps Zuoyebang Users VS All Internet Users by DAU scale TIRE 1 TIER 2 TIRE 3 TIER 4 7 out of 10 kids use Zuoyebang in China
Source: iResearch, period: 2020.03; Zueyebang website 38 Economic outlook
39 China Q1 GDP and retail consumption plunged more than expected. Retail recovery starts in March, but slowly
GDP growth rate slumped to -6.8%, the first time China Q1 retail market growth slumped to -19%, The Chinese economy is slowly recovering from negative growth since 1992 when China started while it is slowing down the decline in Mar. Covid-19, closing gap with 2019 to record GDP
China GDP Growth Rate Retail Market YOY Growth Rate China Economic Activity Index
6.8% 6.7% 6.5% 6.4% 6.4% 6.2% 6.0% 6.0% 9.6%8.9%9.0%8.3%8.4%8.5%7.6%7.8%
-15.8% -6.8% -20.5%
2020 Q1 retail consumption -19%
Sources: National Bureau of Statistics; WIND; EntGroup; FT research 40 To stimulate retail consumption more than 40 local governments have issued 5 billions RMB worth of vouchers
• Participants: Wenzhou, Zhengzhou, Hangzhou, Wuhan, Shenzhen, Nanjing, Jining, Ningbo, Shaoxing and more; • Offline retail business is expected to benefit from local governments’ distribution of vouchers. Statistics have shown positive results (on the right); • Vouchers target certain types of consumptions: food & beverage, shopping mall, culture and sports, tourism, electronics and more, depending on local policy; • Most vouchers are in electronic format and being distributed via online platforms, including WeChat Pay, Alipay, Meituan App, and more; • Citizens either request and receive them directly or register Distributed Redeemed Value City Generated Value (RMB) Multiple and participate in online voucher lottery system; Value (RMB) (RMB) th 187 million • Starting from April 19 , Wuhan Government started to Zhengzhou 50 million 14.27 million 13.10x distribute 2.3 billions RMB worth of vouchers (￥500 (2020/04/18) 3.25 billion Hangzhou 1.68 billion 303 million 10.73x millions RMB by government and 1.8 billions RMB by (2020/04/14) participated brands). Some publicly available statistics on voucher program performance
Sources: Xinjing Newspaper, Tencent News, Qianjiang Newspaper, Yingxiang Wang 41 Remarkably even at the end of March, consumer confidence remains stable; with moderate worry about unemployment
People who are afraid of People who are afraid of Vs. 2019 Vs. 2019 company personnel changes salary changes decrease 2020 Q1 Q1 Q4 decrease
Consumer 101.8 -2.3 -1.3 18% 22% confidence index 49% Employment 112.3 -2.1 -2.0 41% confidence index
27% 23%
2020 Mar 2020 Feb
Unemployed% 5.9% 6.2% Are you afraid of company adjusting personnel Are you afraid your salary will be adjusted? structure? Phase I 2/14-2/19 Phase II 2/24-3/23
Sources: Sina news 42 Companies urgently further revolutionize their supply chains, to prevent business leaving China
Retailers are learning from COVID-19 that modern supply chains must now be optimized and managed remotely. But few businesses — or even countries — are currently moving in this direction. China, however, is a proactive digital country that enables businesses to experiment with digitally-run supply chains, and it’s further revolutionizing in 3 ways:
1. 3-D product design – not only cut weeks off the supply chain digital product development, but it can also be done remotely; eliminates the need for fitting models 2. Cloud computing, artificial intelligence, and Big Data - AI’s ability to derive insights and make recommendations from vast amounts of big data will have dramatic implications for how supply chains operate in 10 years 3. Virtual reality - China’s VR market is predicted to reach US $7.9 billion by 2021, and the “Don’t Touch” supply chain of the future requires VR to drive innovation
Sources: Jingdaily 43 Meanwhile, at Government level “new infrastructure” investment come in place to stimulate the economy growth as well
China is seeking more targeted investments in projects that facilitate innovation and improve backward areas in economic and social development. The total “new infrastructure” expect to reach RMB 1 trillion in 2020 according to China Sinolink Securities
The country will accelerate the construction of new infrastructure such as 5G networks and data centers. A total of 25 provincial-level regions have put new infrastructure projects in their government work reports.
7 areas of “new infrastructure” • 5G base station development • New energy car charging station • Big data center • Artificial intelligence • Industrial internet • ultra-high-voltage power facilities • Inter-city transport
Sources: Jingdaily 44 Outlook for key categories
45 Travel & Tourism
46 International travel gets more restricted
Italy, France, Germany, Singapore, New Only in 27 countries, including Japan, South Korea, Zealand and other countries have currently Laos, Cambodia, the United Kingdom, Iceland, barred from foreigners due to COVID-19. Bosnia and Herzegovina, Belarus and Mexico, European Commission in favor of foreigners are allowed to enter but must comply prolonging inbound travel restrictions until with their entry requirements. Mid-May.
Source: https://contents.ctrip.com/huodong/prtemplate/index/PrTemplatePb3opG?popup=close&from_native_page=1&s_guid=94708fbe-f1c4-418a-b450- 47 c517342ea8c5&from=singlemessage, CGTN With the improving situation in China, domestic tourism industry will gradually recover first, followed by short-haul overseas travel
• After the COVID-19, the tourism industry will go through three phases: warming-up phase, recovery and rebound phase. • Currently, domestic tourism is still in the initial warming-up phase, not yet fully recovered. Nationwide, no full recovery is expected until early July. The rebound for short-haul overseas travel, could happen during summer and towards the National holidays in October, but will depend on the situations in China and in those countries overseas. General trend chart of tourism recovery 92 72 100 Long overseas trip recovery 50 Note: 50 cents is the key node of the recovery index for travel industry. Currently, the recovery Warming-up phase Recovery phase Rebound phase index of 40 destinations in China has exceeded 50. Tour around Overall domestic travel Domestic rebound and short overseas peri-urban areas recovery first trip rebound(e.g. Destinations in South- East Asia, Japan, Singapore etc.)
End of Mar In early Jul Sep-Oct Dec (Summer holiday) (National holiday)
Source: “Travel watcher”《Y2020 Destination recovery index report 》, South China Morning Post, Analysys, MFW 48 Safety is a top requirement, still limiting domestic travel plans
What Will Motivate Chinese to Travel in 2020
Guaranteed Safety of Group Tours and Attactions Info that Internet Users in China will use to Consider resuming Travel after COVID-19 Travel Plans Optimized for Annual Leave Zero new confirmed and suspected cases overseas
Travel Agency Product Promotions
Government notice/official announcement Discount on Attraction Tickets
Quality Experiences & Activities Expert advice/recommendation
Discounts on Airfare and Hotels
All enterprises resume normal operations Simplified Visa Requirements
0% 5% 10% 15% 20% 25%
Source: China Tourism Academy; Ipsos 49 Tomb-sweeping Day (Qingming) boosted recovery of domestic tourism
No. of travelers during Qingming The major scenic spots were very popular 43.25 million Short-distance trips and road trips are the main choices
Crowded • Tourists prefer to travel for 2-3 days and road trips during Qingming holiday. attractions • The upcoming “Labor Day” (5-day holiday), is expected to witness the next travel peak.
• As of April 9th , 3500 scenic sites have reopened to the public and the tickets can be booked online • Popular scenic spots have recovered completely. • 20,000 tourists visited Huangshan Mountain per day during the Qingming festival.
Source: China Tourism Academy, CGTN 50 In April Online travel apps active usage remains low, but has stabilized
2020 Online Travel Apps User Behavior 2020 Top 5 Online Travel Apps by DAU Scale 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Apr(till 12th)
Unit: Unit: Mil mins Unit: 9.5 Mil 30 9.0 10.0 8 9.0 8 25 24 7.9 7 7.0 7.1 8.0 20 7.0 20 17 5 5 17 16 6.0 5 5 4 5 4 15 5.0 4 4.0 3 3 3 3 10 3.0 1 1 1 1 1 1 5 2.0 1 1 1 1 1.0 0 0.0 2019 avg. 2020 Jan 2020 Feb 2020 Mar 2020 Ctrip Qunar Fliggy LY.com MaFengWo Apr(till 12th) Average DAU Scale Average Use Time
Source: iResearch, period: 2019-2020.04.12 51 Since Qingming holiday OTA platforms have started recouping the business for domestic tourism
Ctrip Fliggy Search for “road trips/drives" in On Fliggy, train tickets and tier 1 cities on Mafengwo The tourist attractions tickets sales on scenic spots tickets booked for Ctrip.com rose by 114% MOM in the Increased Qingming holiday increased by week before the Qingming Festival. Increased 132.8％ YOY more than 100% over the 85.7％ YOY previous week. Increased 51.2％ YOY
Qyer Qunar
BJ SH GZ Amid new-found ‘liberty’ and pent- Qunar online searches for the up demand, travel products(e.g. upcoming Labour Day holiday Hotel vouchers) are selling well. soared 76% this week “Road trips/ drives” keyword heat，in the week before compared to a week ago. the Qingming festival
Source: China Tourism Academy, CGTN, MFW 52 OTA platforms also use themed activities to encourage overseas travels 与世界「箱」遇
Case : “Meet the world” by X 52 foreign tourism bureaus • Mafengwo launched the campaign“与世界「箱」遇” in 1. Click on the icon 2.Click buttons to 3.Click to 4. Sharing Campaign collect fridge magnets conjunction with 52 foreign tourism mini site to select the fridge share page magnets of the places travelled bureaus (e.g. Visit California). • It not only allows travelers to feel more care and warmth from around the world during the outbreak, but also allows users to explore their dream destinations around the world while remaining in China. • Campaign period: Mar13 -19th (7days)
• Good performance: • Impression: 124,989,487 • Click: 1,382,894 Greetings from overseas tourism administrations and destination • UV: 1.23 mil+ info are presented in the videos or • Engagement: 0.66 mil + pictures
Source: https://m.mafengwo.cn/mbrand/fridgemagnetsv1/index.html?user=undefined&from=singlemessage#/ 53 Some scenic sites opted for online promotions via 5G livestreaming, video platforms and VR during the closure Wuhan university organized ten-days live broadcast to Live broadcast of Forbidden City tour racks up millions of views help people enjoy beautiful Sakura in spring • The live broadcast aims to enable audiences to feel the beauty of spring and • Cherry blossoms fully bloomed in Wuhan University. Since the architecture in the museum and learn more about traditional Chinese campus is not open to the public due to epidemic control culture. During Apr 5-6 it ran three two-hour slots on online platforms regulations, the University is sharing the amazing views via the including Xinhua net, People's Daily, Douyin and Tencent News. internet 5G livestreaming from 10 am to 4 pm every day until • It racked up over 9.96 millions of views on Douyin and 34.92 millions of March 25. views on Xinhua.com. • Garnered over 32.5 millions views. • On April 5, the day of the first live broadcast of Forbidden City, the Baidu index of "Forbidden City " shot up nearly 10 times. Baidu index
Source: ZOL, China.com, The Paper, Xinhua news 54 Zhejiang provincial government provided Campaign Summary strong local tourism support • With epidemic winding down and the demand for tourism picking up, the Chinese government and OTA platform Ctrip are both moving to spur the hospitality industry’s recovery. • Minyun,a vice mayor of Huzhou and Ctrip Chairman James Liang held a livestreaming sales event on Apr 2. Mayor himself held the livestreaming to promote local travel products/tickets on Ctrip, which • Ctrip promoted discounted tourism products in Huzhou, becomes a popular trend to show the strong government support. Zhejiang Province. And the government joined the broadcast to promote additional discounts from the city government to boost consumption. Result • The livestream attracted 1.2 million viewers • Generated transactions valued at 26.9 million yuan (US$3.84 million) within an hour (The products sold were room vouchers from well-known local hotels). Key Takeaways • This is a successful test of the government-enterprise cooperation model. The government and OTA platform introduced events to boost tourism and consumption. • Therefore, this campaign achieved a win-win results.
55 FMCG
56 FMCG sales decreased by 6.7% in Q1 in China
Total FMCG market began recovering 7 weeks (in the week of 13th March) after new infection cases eased. Younger consumers and West region consumers were more resilient during this period. Further recovery is anticipated though the pattern of this recovery varies by sector. The Food category dropped 7.7% year on year, as the confectionery and beverage sectors suffered substantial losses during CNY and lockdown period. Against the backdrop of a declining FMCG market, the household products sector has seen a value increase of 7.4%.
Source: https://www.kantarworldpanel.com/cn-en/news/V-shape-or-U-shape-Path-to-Recovery-for-FMCG-post-COVID-19 57 New opportunities arise for supermarket retailers driven by COVID-19
Shopping malls and supermarkets: a) Accelerated the industry layout of supplier and digitalization of storage, platforms and logistics; b) Spread business by overall channels development and O2O integration.
Convenience stores: a) Increase awareness for target audience and complete service of offline store and delivery home
Grocery stores: a) Cooperation's with local suppliers and transforming to e-commerce operation
58 Supermarket retailers who offer fast and efficient delivery services were able to grow client bases despite the loss of physical traffic Challenged by the unprecedented loss of physical shopper traffic, modern trade retailers strived to utilize delivery services to supply fresh foods and groceries. Those retailers who were able to offer fast and efficient delivery services were even able to grow their shoppers despite the disruption caused by COVID-19. • Amongst the top players, Sun Art maintained a steady position Share of Market 2019Q1 2020Q1 Difference thanks to its strong integration with the Taoxianda platform under SUN ART GROUP 8.3 8.3 - Alibaba. AUCHAN 1.2 1.0 • RT-mart also actively leveraged community group buy apps as well as RT-MART 7.2 7.3 its own delivery platform “Youxian’ to maintain its service during Q1. VANGUARD GROUP 7.0 6.6 • Yonghui maintained a staggering growth of 9.8% in the first quarter, VANGUARD 3.9 3.5 driven by its efficiency in fresh foods supplies and recent expansion WAL-MART GROUP 5.1 4.8 to smaller ‘mini’ formats to build advantage in proximity. YONGHUI GROUP 4.2 4.8 • At the same time, local giants such as Wumart and Bubugao SUNING GROUP 3.2 2.7 continue to grow faster than total market, thanks to their well- CARREFOUR 2.8 2.3 managed supply capabilities and membership building as a result of BAILIAN GROUP 2.4 2.4 - regional focus. WSL GROUP 2.3 1.9 • Regional retailers are also rapidly adopting livestream-based WU-MART GROUP 2.3 2.4 platforms to attract shoppers while consumers desire to shop in an SPAR GROUP 1.5 1.4 interactive way. BUBUGAO GROUP 1.4 1.6
Source: 2020 CTR Market Research 59 Hey Tea introduces crossover coops Campaign Summary • Hey Tea is China’s bubble tea behemoth. Its brand value for self-help during epidemic period embraces inspiration, coolness, design and zen and their TA are mainly post-80s,-90s and -00s generations. • As the epidemic has devastating blow to the restaurant industry, Hey Tea launched a series of crossover cooperation to boost sales. In Q1 in total they partnered with 6 brands from cultural product, apparel, FMCG, EC and commodity industries. • In addition Hey Tea launched contactless delivery and corporate group meals to deal with the low store traffic. Result • Hey Tea is recovering and its takeaway orders are back to normal. • According to YiMagazine, Hey Tea is about to complete a new round of financing, the post-investment valuation may Hey Tea X Ming Hey Tea X Yili exceed 16 billion yuan. Hey Tea X Warrior Dynasty· Ying Chou Yousuanru 2020.1 • The price of each Hey Tea’s product has increased for 2-3 2020.1 2020.2 yuan. Key Takeaways • Hey Tea takes advantage of Hema’s EC channel, and their delivery system to make up their limited offline sales. • By using the “crazy crossover cooperation” strategy, Hey Tea not only drove its online sales but also brought new consumers to the brand. Hey Tea X Hey Tea X Cornetto Hey Tea X Hema Corkcicle 2020.3 2020.4 2020.3
60 Since Mid-March commercial traffic has been recovering in Tier1 cities, but strict controls remain in place in Beijing and Guangzhou
Commercial District Traffic Recovery in Different Cities
90% 84.16%
80% 76.12% 74.51% 74.17% 72.36% 70% 64.17%
60% 52.31% 50%
40%
30%
20%
10%
0% Hangzhou Shenzhen Chengdu Shanghai Nanjing Guangzhou Beijing
Recovery Rate = Traffic of specific Commercial Districts 2020 (3.23-3.29) divided by Traffic of specific Commercial Districts 2020 (1.6-1.12)
Sources: Getui Dashuju (Getui Big Data) 61 Luxury and Fashion
62 Some consumers are back in the mood for luxury, temporarily more into buying goods over experiences
From ownership to experience, and back again “Experiential luxury”—think high-end hotels, resorts, cruises, and restaurants—has been one of the most dynamic and fast-growing components of the luxury sector. Millennials (born during 1980–95) have spent over the last few years more and more on experiences and “Instagrammable moments” sometimes over possessing luxury good. Baby Hermes open a new store in Louis Vuitton China offline boomers (born during 1946–64), are moving in this Guangzhou on Apr 11, achieved store sales increased direction as well, after luxury products accumulation 19,000,000 RMB 50% in first 3 weeks of over the years. sales on the opening day Apr. compared to last year While the positive momentum of experiential luxury same period will persist, it will slow down in the short term as consumers temporarily revert to buying goods over experiences.
Sources: Jingdaily, Ladymax 63 During the COVID-19 crisis in China luxury brands used four digital marketing tactics that worked
Sales Associate-driven Interactive Social Ads Boundary-pushing VR WeChat pop-ups
#pradaacronyms campaign on Douyin
LV WeChat pop-up store Product-driven Calvin Klein virtual exhibition on Tmall. livestreaming
KOL Yvonne Ching hosts the Burberry Tmall livestream session.
Source: jingdaily.com 64 Automotive
65 In March car sales increased sharply vs Feb, but far below last year
Unit:000’ Monthly car sales in China 3,000
2,500
2,000
1,500
1,000
500
- 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 1,430 • Auto sales in China plunged an annual 43.3% in March, as the world's biggest auto market struggles to get into gear following a prolonged demand slump that has been exacerbated by the coronavirus outbreak. • The number of new energy vehicles (NEVs) sold - excluding those from U.S. electric vehicle maker Tesla Inc - fell for the ninth straight month to 53,000 units, three times that of February. • CAAM also said a survey of 204 auto manufacturing bases showed a production resumption rate of 99.5% following closures aimed at stemming the spread of the novel coronavirus. It said 86% of workers have returned to work.
Source: China Association Of Automobile Manufacturers (CAAM), China Passenger Car Association (CPCA) 66 Renault stops making petrol cars in China, shifting sales to only electric cars
• A slowdown in Chinese automotive sales, which is expected to worsen this year due to the coronavirus crisis, has heaped pressure on carmakers that were already struggling to establish a big presence in China, the world’s biggest vehicle market. • As a result French automaker Renault SA is ditching its main passenger car business in China following poor sales at the loss- making venture with Dongfeng Motor Group. • Renault, which entered the Dongfeng joint venture in 2013 and began producing gas-powered cars under the tie-up in Wuhan three years later, is one of the few global carmakers to exit a major project in China in recent years. • Renault said it would focus on its light commercial vehicle business with Brilliance China Automotive Holdings. That venture plans to roll out five new models before 2023 and is planning to export cars to other markets. Another focus is electric vehicles, which will be built by its venture with Jiangling Motors Corporation Group.
Source: https://www.reuters.com/article/us-renault-m-a-dongfeng/renault-quits-its-main-china-venture-after-weak-sales- 67 idUSKCN21W0HB SAIC Motor’s Q1 sales tumble 55.7% from the previous year
SAIC Motor saw its first-quarter (Q1) sales slump 55.7% from a year ago to 679,028 units with most of its subsidiaries hit by the coronavirus-caused downturn as well. In March, the Chinese biggest automaker encountered a 58.6% plunge over the previous year. The total sales (231,455 units) achieved a tremendous rebound compared to 47,365 units sold in February. SGWM announced a few days ago it has set aside 1 billion RMB to subsidize consumers’ new-car purchase in response to China’s encouragement to boost automobile shopping. Under the new project, dealers of Baojun brand will offer buyers across China subsidy of up to RMB10,000 per car.
Source: Gasgoo news 68 Leveraging social and KOL to drive awareness for offline store event and gamification with social mechanism at the event #万象更新
Dec.2019 - Jan.2020 打卡视频中含有大象元素 @GITI佳通轮胎 参与抽奖
Hefei
Guangzhou Beijing
KOLs to enlarge event awareness Audiences post Create topic on TikTok (Hefei, Guangzhou, Beijing, Shenzhen, short video @Giti Prize Shanghai) 佳通轮胎
Source: GITI official account EV car brands turn to live stream events to boost sales
• Beyond production issues, EV brands are struggling to sell their cars. As a result, EV brands have moved the battlefield from offline stores to the virtual world in a bid to attract customers’ attention. • Nio's content is various, essentially moving leisure activities from the offline to online. Nio has presented dozens of different reality shows in real time. From makeup tutorials to simple coffee brewing tips, Nio’s sales staff are constantly seeking interesting topics for their potential customers. • Tesla’s official Douyin account consistently posts swanky, yet less focused, content that ranges from videos of the Cybertruck and Roadstar 2 to goofy skits. The company’s default policy is that let its local stores decide what content to post. Tesla has yet to designate a person to develop a central content strategy.
Source: https://technode.com/2020/04/22/tesla-and-nio-try-ev-livestreams-to-sell-cars-amid-outbreak 70 Healthcare
71 COVID-19 is accelerating a transformation in the healthcare market
Positive Negative
Medication • Increase demands for medications to prevent and treat • The drug sales in hospital and physical drugstores has COVID-19 decreased • Focus on vaccine development • Innovative drugs, the academic promotion activities of new • Online medical service developed drugs are pending and the drive demands is slowing down • Short • The implementation of hierarchical medical service system Blocked recruitment of patients in clinical research may affect term is accelerating and primary medical institutions played an the progress of new drug market important role in curation and prevention • The number of non emergency patients and patients with optional treatment in medical institutions is greatly reduced • Consumer demands for online drug retail channels affected by the epidemic situation are increasing rapidly • Traffic disruption caused by the epidemic affects the normal operation of pharmaceutical distribution enterprises Drug retail • Promoting the construction of Internet hospital and Long the reform of existing medical system term • The public demands for commercial health insurance will increase
Source: Bain & Company report ‘The impact of the epidemic on China’s economy, retail, automobile enterprise and medical industry 72 The user number of internet hospitals and online consultation platforms have substantially increased Platform
Ping An Good Doctor Chunyu doctor
900% New users 30% Number of patients who get Internet Number of therapy patients who get Active users 800% Internet therapy 100%
DXY ❖ Sequential growth Number of number 135% patients who get Internet therapy 215% Active users
Source: Bain & Company report ‘The impact of the epidemic on China’s economy, retail, automobile enterprise and medical industry 73 More HCPs want to build their IPs among patients and public to increase patient attachment
More HCPs want to build their IP among Most HCPs are willing patients and public to increase patient to build reputation compliance and their reputation among patients and public
Willing to spend time HCPs are trying to become a to interact with patient online 31% famous IPs online 5h/week
HCPs had tried to become 31% famous IPs online, but they didn’t insist.
Dr. Nanshan Zhong
Source: IQVIA report 74 While at the same time Chinese peoples’ mindset is shifting from treatment to prevention Patient Health supplies become…. Expenses on nutrition and health care increase dramatically
Drug sales 700%
Healthcare products sales Protein powder, vitamins, comprehensive 500% “The most effective nutrients and other nutritious products are promoted on Jindong Homepage drug is human VC sales immunity“ 237% —Huashan hospital-Zhang Wenhong
Source: https://mp.weixin.qq.com/s/g1GFRsRrWOZpb1FmexQ-fA 75 Media market implications
76 Overall market ad spend dropped significantly due to COVID-19
• In Feb 2020, the total actual* Ad market in China achieved RMB 25 billion; -38% YOY. • YTD Feb 2020, the total actual* Ad market reached RMB 67 billion, which is -25% YOY • The main reasons for the decrease are COVID-19 outbreak and the economic environment
Month by month comparison YTD vs YTD comparison 60,000 150,000
49,562 50,000 130,000 - 38% - 25% 40,874 40,000 110,000 104,309
89,832 30,000 90,000 25,479
20,000 70,000 67,348
10,000 50,000 2018 Feb 2019 Feb 2020 Feb YTD 2018 YTD 2019 YTD 2020
Source: ADP (TV, Radio, Newspaper, Magazine, Cinema), CODC (OOH), Iresearch (Digital – PC & Mobile) 2018-2020 Note: excluding media spending on social and search; discounts are estimated based on Havas methodology 77 The usual CNY related drop in ad spend in February was accelerated by COVID-19 in 2020
2020 2019 2018 60,000
50,000 Jan-Feb ’20 VS’19=-38%
40,000
30,000
20,000
10,000
0 1 2 3 4 5 6 7 8 9 10 11 12
Source: ADP (TV, Radio, Newspaper, Magazine, Cinema), CODC (OOH), Iresearch (Digital – PC & Mobile) 2018-2020 Note: excluding media spending on social and search; discounts are estimated based on Havas methodology 78 Market trend depends strongly on the category
“Personal Items”, “Consumer Electronics” and “IT Product & Service” ad spend experienced 2-digital growth rate, while most other categories cut their spending significantly during the peak of the coronavirus outbreak.
30.0% 23.2% 25.3% 20.0% 10.0% 6.4% 4.2% 0.0% -10.0% -1.4% -3.6% -6.8% -7.7% -20.0% -16.7% -19.6% -30.0% -22.3% -26.5% -28.9% -40.0% -31.8% -50.0% -45.2%
Source: ADP (TV, Radio, Newspaper, Magazine, Cinema), CODC (OOH), Iresearch (Digital – PC & Mobile) 2018-2020 Note: excluding media spending on social and search; discounts are estimated based on Havas methodology 79 The change in demand and supply also led to changes in cost and inventory for some media types
• Digital cost increased due to 8% inflation in OTV & 15% inflation in OTT. • Although TV shows the positive trend in view time, cost keeps the same. Also the price of other traditional media are basically unchanged. • Uncertainty for cinema inventory as theatres remain closed
16% Offline 15% Online 14% 12% 10% 8% 8% 6% 4% 2% 0% 0% 0% 0% 0% 0% 0% 0% 0% TV Outdoor Cinema Radio Magazine OTV OTT Social Search Mobile display
Source: Refer to the net cost of TOP 3-5 Media vendors in each media type 80 POV / Recommendations
81 Recommendation on overall marcom strategy
1. Focus on products/services out of your portfolio or brand message that overcome some barriers to enjoy daily life: • Small scale enjoyment to daily life: indulgence food & beverage, OOH activities, domestic travel, home decoration, sports and accessible priced apparel. • Overcome barriers of concern, like unhealthy lifestyles and financial insecurity. • 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 messages as usual.
82 82 Recommendation on overall marcom strategy:
2. Timely and constantly update your roadmap to recoup your business. According to the latest developments in your category: • Every week china retail footfall increases, even when it is step by step, while the e-commerce penetration and transactions keep at all time high level. O2O campaigns are helpful. • We see consumption to rebound now for those categories that cater enjoying daily life, those with a supply chain that has not internationally been effected. • A large group of consumers still has good spending power and saved extra money over the last 2 months, their mindset is more towards spending more everyday. • At the same time groups of consumers, especially SME related consumers who are hit the hardest see heavily decreasing spending power. • The government implements policies to boost domestic consumption show good impulses.
83 Recommendation on overall marcom strategy
3. Be ready for the post-Coronavirus period which is coming close now, preempt with more tactical campaigns but keep branding investment and messaging going : • Many brands started and will increase promotions to recoup sales loss and launch postponed or soft launched products from the last few months. • Digital amplification through livestream and social commerce keep on showing higher results than before. • However keep brand consistency in your tactical campaigns, to maintain additional brand pull effect for a long post period to come. You can not build your long term recoup on activations only.
4. There are more opportunities now than before in China to resonate on collective benefits: • Support local economy, domestic production and communities get more sympathy. • We see that national pride resonance in your messaging keeps being appreciated, especially by younger audiences.
84 Recommendation on media strategy
1. Tailor your media strategies speedily for the stabilization stage in which we are now, and for the post outbreak stage soon to come: Phase Digital TV Outdoor
Focus on digital media as it will remain their primary Drop in spending. Focus outdoor Phase 2 source of consumption. Daytime ratings have declined and media concentrated commuting Stabilization OTV, social and news content will occupy most evening prime-time ratings will hold up routes, residential Media / lift Media Feb 9 -End of the outbreak consumers' time and in BCDs
On average return to normal while higher usage for Phase 3 some platforms and formats maintains like short Gradually to the original usage pattern, Return to normal Post outbreak - Recovery video, social commerce and life stream while prime time still more important (except cinema) . Higher inflation rates for these platforms 2. Keep using new digital formats (like short video, life stream, social commerce) and new platforms that have risen during the outbreak, they have been proven more meaningful media to consumers now. 3. Lock premium digital (incl. OTT and OTV) and OOH resources for the post outbreak period. Create some bandwidth and leeway beyond standard formats and requirements to reserve and book premium resources. As many advertiser are expected to launch campaigns delayed by COVID-19 shortly, premium inventory will be in high demand.
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 85 the real-time epidemic status from Jan 20,2020. Which almost fully catch the Chinese audience’s attention. Recouping business and CREATIVE PUBLISHING brand growth in China NATIONAL/LOCAL SEARCH MOBILE need a fully integrated STRATEGY MUSIC approach with OUTDOOR
VIDEO & AUDIO high speed to market. NATIONAL/LOCAL GEO-LOCATION
E-COMMERCE GAMING Within Havas Village we CRM can efficiently mobilize the ENTERTAINMENT INTEGRATIONS
SOCIAL MEDIA team you need tomorrow. DATA STRATEGY
INNOVATION
PERFORMANCE MEDIA
SPONSORSHIPS
EXPERIENTIAL SPORTS MARKETING MARKETING BRANDED CONTENT
86 Including dedicated health specialists from Havas Health & You
Structure Key clients + 120 DEDICATED STAFF 70+ in Shanghai 40+ in Beijing + 30 MEDICAL EXPERTS + 20 STRATEGY PLANNERS
Scope
Association Creative & Patient Strategic Medical Medical PR & Digital & Data programs/ Production education Planning Events campaigns
87 SHANGHAI 11/F Novel Building 887 Huaihai Zhong Road Shanghai 200020 +86 21 3397 8666
BEIJING 1006, 10th Floor, China Youth Plaza, 19 Dongsanhuan North Road, Chaoyang District, Beijing 100020 +86 10 5923 2791
GUANGZHOU Room 07, 16/F CTF Finance Centre, No 6 Zhujiang Road East, Tianhe District Guangzhou 510130 +86 20 3877 3282