Economic network

Harnessing China’s Holiday Consumption Potential

February 3, 2022

BEIJING – The Chinese people are preparing to welcome the third Lunar New Year since the outbreak of the COVID-19 pandemic, which will once again be “abnormal” in more ways than one.

To be sure, China’s overall consumption and economic data in 2021 was much better than expected, with total consumer goods retail sales at 44.1 trillion yuan ($7.04 trillion), in up 12.5% ​​year on year and significantly higher than 2019, but sporadic clusters of infections mean muted celebrations and cautious consumption.

In a world deeply shaken by the new coronavirus, the Chinese economy stood out in 2021 because China managed to largely contain the pandemic. But despite all the positives, the pandemic has affected economic activities and consumer behaviors.

Consumption is inevitable for the sustainable and healthy development of any economy, especially the Chinese economy. In China, final consumption expenditure contributed 85.3% to GDP growth in the fourth quarter, the cumulative value for the whole year being 65.4%. Which means that consumption growth is the main driver of China’s economic growth, and “holiday consumption” is, to some extent, the “top priority” in some areas and cases.

Just days before the Spring Festival, the National Development and Reform Commission issued the “Notice on Promoting Consumption in the Near Future”, indicating that concerted efforts should be made to stimulate consumption. in 10 areas, including catering, online shopping and ice and snow sports.

Businesses should therefore seek to achieve their growth targets in the future by making full use of available opportunities and keeping in mind the government’s plan to boost holiday consumption. For starters, governments at the local level should take effective action to prevent COVID-19 infections while increasing spending to boost economic vitality. For this, however, local governments must develop precise and targeted anti-pandemic measures.

Businesses will struggle to recover from the impacts of the pandemic if they take the one-size-fits-all approach, but must strictly follow COVID-19 protocols, including requiring every customer to scan the health QR code. This will help them determine a customer’s health status and whether they have been in contact with someone who is COVID-19 positive and, if so, report the issue immediately to health authorities, to reduce risk. transmission.

In addition, departments should provide businesses with some sort of guidance on new consumer features and how to boost sales amid the pandemic, including through online retail and membership. an online platform.

Total retail sales of consumer goods increased by 7.09% in 2021 compared to 2019, while online consumption of physical goods increased by 26.8%, showing the resilience and business advantages of the online business. It is therefore important that local governments guide businesses to access online platforms, provide them with suggestions on business models and help businesses familiarize themselves with the local business environment.

Yet companies must also make efforts on their own to integrate into the online economy and expand their reach – for example, they could increase inventories of goods immune to pandemic shocks. As for travel agencies and other tourism-related businesses, they should consider venturing into various areas such as organizing city tours now that restrictions have been imposed on inter-city and inter-provincial travel.

Ministries and enterprises should also make more efforts to improve the supply, in order to create more favorable conditions for consumption. For example, to ensure supply, governments at different levels should reduce interventions in normal production and commercial activities. In particular, governments could consider issuing consumer coupons that local residents could use to purchase consumer goods during the Spring Festival and other holidays.

Businesses, for their part, must realize that infections can break out anywhere and at any time, so they must be prepared for sudden emergencies and seize the opportunities created by advertising to increase their revenue. and their benefits.

Governments, businesses and consumers have all accumulated reams of experience in terms of running society, producing and operating – and consumption patterns – over the two years of the pandemic, including the holidays. and Golden Week festivals, which they can analyze to find ways to increase consumption.

China’s economy has remained stable and maintained its sustained growth momentum despite the huge impact of the pandemic. Hopefully the pandemic will eventually die down with winter. Consumption of services, which has remained stagnant during the pandemic, will also explode in the spring.

Concrete and sustained efforts by both governments and businesses will help make consumption the new engine of growth.