At the end of last year, brands had relatively low expectations of China’s economy, but as the rest of the world continues to deal with the challenges of COVID-19, the country’s modest recovery, driven by digital channels, looks like a relative bright spot and might be one of the only growth markets in 2020, according to Totem Research.

In a Research for WARC article, Chris Baker of Totem Media suggests that while China’s economy is still nowhere near full strength, “there is a growing sense of optimism and revitalisation”.

The effects of COVID-19 in China are well documented – consumers’ rapid shift from luxuries to essentials, brands’ response of cutting costs (including adspend) and activating new channels – but as the crisis recedes, “attention is shifting back towards ‘nice-to-have’ products and activities”.

Totem anticipates positive consumer sentiment during the early days of recovery will drive an initial wave of spending to satisfy some pent-up demand. “However, the medium-term prospects are less clear and will depend partially on positive global outcomes. Moving forward, consumers will continue to be cautious about over-spending.”

Brands, meanwhile, will push further and faster down the digital route that was so crucial during the shutdown, which saw many consumers start new digital routines or, in some cases, have their first attempts at new technologies.

For more details, including category-specific recommendations, read Chris Bakers article in full here: Reframing 2020 as China springs back from COVID-19.

A survey by Totem found that, for the upcoming quarter, most brands will be spending below original 2020 plans (and some global brands are apparently asking their China offices to withhold spending to cover expected losses in their home market).

“For brands still spending, there will be a greater priority given to building further digital infrastructure: digital communications, advertising and e-commerce to fuel growth,” says Baker.

So, the priorities are the essential e-commerce channels, such as Tmall and JD, and core communications hubs, such as WeChat and Weibo. Douyin and other short-video channels, popularised during the ‘shelter-in-place’ period, also stand to benefit with advertisers. (Douyin owner ByteDance is looking to hire 10,000 new employees globally, according to the Financial Times.)

“Livestreaming, social engagement and e-commerce will be seen as an important hedge against future risks of offline collapses,” he adds.

Sourced from WARC, Financial Times