Since China’s reopening in late 2022, the Chinese people – from the look of things on the surface – have moved on from the pandemic.
Most people in China, including some staff in food and beverage (F&B) outlets and restaurants, are no longer wearing masks. Public notifications about social distancing and mask-wearing are fading. But interestingly the hygiene-conscious, who have been promoting the use of serving chopsticks while labelling the use of personal chopsticks for shared dishes as bad habit, are finally getting their voices heard as Chinese society steps up good hygiene practises after Covid-19.
In all the banquets we attended, we used serving chopsticks to pick food for ourselves and one another. That was not the case five years ago, when many Chinese were still using personal chopsticks, instead of shared chopsticks, to get food from the shared dish. In terms of public health, people in China are now more concerned about the Influenza A virus and shingles, both of which are making their seasonal rounds among the general public.
In terms of on-the-ground sentiments, the pandemic may have prompted some among the public to assess how the outbreak was handled from various angles. Covid-19 took its toll on lives and livelihoods; the public experienced constant lockdowns and social restrictions implemented from 2020 to end-2022 followed by a sudden re-opening. Looking ahead, a strong relationship between society and government will be needed in order for productivity and growth to improve.
Technological advancements
In China, the Covid-19 pandemic has accelerated technological development, especially in the area of robotics and facial recognition. The usage of robots in everyday life in China has become the norm. For example, delivery staff would put the items to be delivered into a robot, which does the tail-end delivery within an apartment. When doing its errand, the robot can press the lift using Wi-Fi and ask fellow passengers to give way. Once at the customer’s house, it will call the recipient via telephone for the pickup.
There are other intriguing technological innovations in China that are now commercialised thanks to the pandemic. The lifts in the airport had hologram buttons, which enable users to key in their destinated floor number using holographic images. Such hologram buttons prevented lift passengers from touching potentially contaminated surfaces during the pandemic.
Moreover, there are numerous high-tech vending machines across Chinese cities that use facial recognition technology, which allows a purchaser to pay for an item by scanning his or her face. For instance, to buy a drink from these new-generation vending machines, one only needs to stand in front of the interface screen to initiate the facial recognition, which upon a successful transaction will drop the chosen drink into the dispensing outlet. This is done without the need for cash or the use of any payment app on a smartphone.
Changing consumption patterns
We went to China a week before and during the Labour Day Golden Week, which took place from 29 April to 3 May 2023, and it was no surprise that the streets were filled with people. Queues were very long at tourist attractions (mostly brimming with domestic tourists) and restaurants were unprecedently packed. Post Covid-19, ‘revenge’ or pent-up F&B-related spending in China was alive and well, especially at multigenerational family gatherings and banquets in restaurant private rooms.
Plastic surgeries are also gaining popularity in China. Many people, especially females, under 35 years of age have had aesthetic surgeries, much to my surprise. An estimated 1.05 million people in China underwent plastic surgeries in 2020, according to a recent report by online statistics platform Statista, which is forecasting the annual growth of medical aesthetics market size in China to grow 17.5% on a year-on-year basis in 2023. This trend is giving rise to an increase in the number of specialised plastic surgery hospitals in China.
Many young Chinese consumers tend to be picky and follow trends. In the age of social media, these consumers do not spend much but want to be ‘seen’ – taking photos of themselves at ‘Internet-famous’ stores and posting them on social media platforms.
An example of a ‘Internet-famous’ store is that of Chinese beauty retailer Harmay, whose high-end cosmetics and beauty products are becoming increasingly popular with younger, well-heeled consumers in China. Harmay is among the large number of home-grown Chinese retailers that are targeting savvy young domestic consumers, with the widespread use of social media marketing campaigns and online influencers.
Another consumption trend in China is the spending shift from material things to experiences – a pattern that is becoming increasingly prevalent with young families, who are willing to splurge on life-enriching experiences with their children.
High costs and toils of family raising in China
Raising children and managing a household in China is much more difficult than in Singapore, in my view. On the whole, children in China can only be sent to preschool at three-years-old and only for half a day, but the cost is twice as much as that of a Singapore’s preschool after currency conversion. The irony is that Singapore’s GDP per capita is more than six times that of China.
Primary schools in China are no longer full days. Domestic helpers are very expensive to hire, costing as much as a middle to upper middle class mother’s full-time salary. Many young Chinese families have no choice but to enlist the help of the kids’ grandparents and send their children to enrichment classes, which double as childcare. The issues of high cost and inconvenience in raising families need to be solved in order for China to improve its birth rate, productivity, and long-term consumption growth.
Overall, we were very impressed with what we saw and experienced during our recent trip to China, which has progressed significantly in terms of technological advancement and the quality of goods and services (mainly F&B and auto/transportation). Rapid advancement and modernisation are prevalent not just in major cities but in a tier-three city like Yinchuan, which is developing amazingly fast.
However, life is seemingly tough for most people grappling with the high cost of living (especially those with young children) and the demanding work environment, which may not be very encouraging for long-term consumption growth.
Zhuo’er Xu is an equity analyst at Nikko Asset Management. The views expressed above should not be taken as investment advice.