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© CompassList

The lockdown in China has reshaped how people work and live. Some of the changes may be short-term, but others probably have become a part of life

Sequoia Capital recently described the coronavirus (Covid-19) pandemic as the “black swan” of 2020 and the world should brace ourselves for turbulence and be prepared for the scenarios that could play out. Indeed, drastic actions were taken in China to prevent the virus from spreading. 

Neighborhoods across the nation were locked down, allowing residents to come out only once every two or three days. The beginning of the spring school semester in mid-February was delayed and students are still studying from home. Many businesses, from tech companies to local restaurants and shops, were temporarily shut down, with employees working from home or taking a long break.

The coronavirus has caused, and will continue to cause, havoc on the economy. The World Bank warned this week that China's economy might not grow at all in 2020, for the first time in 44 years. Meanwhile, the massive lockdown is like a nationwide social experiment, as people are forced to switch activities from offline to online. During the last two months, there were many changes to the way people lived and worked, including the birth of online workout sessions, cloud clubbing and selling houses online. 

Now that the worst is over in China and many restrictions are being lifted, we can examine what new opportunities this public health crisis has brought to the tech scene in China and, more importantly, which businesses may continue to thrive in the longer term. 

Demand for WFH online tools

Remote working has been growing slowly in China, with a penetration rate of less than 1%. Only 4.9m workers worked remotely in 2018, compared to 3.6m in 2014.  However, the lockdown to battle the coronavirus outbreak changed everything. 

As the pandemic escalated during the Spring Festival, the most important holiday season in China, people from mega cities, who had traveled back to their hometown, were trapped there. For others, it was impossible to return to work as businesses were suspended. Remote working became mainstream. 

With about 300m employees from over 18m companies working from home within one week of the end of the Spring Festival holiday, demand for team collaboration tools, such as, Alibaba's DingTalk, Tencent's WeChat Work and ByteDance's Lark surged. 

Many newcomers, including social commerce upstart Pinduoduo and search engine giant Baidu, tapped into the trillion-renminbi market by opening up their internal collaboration tools, Knock and Baidu Hi respectively, to the public.

Demand for other lesser known online working tools also increased. Esign, an e-contract startup, disclosed that its usage was 10 times more during the first three days after the end of the Spring Festival holiday. Its product was not only used to sign business deals, but also letters of commitment and special contracts designed by the government for containment of the outbreak. Shimo Docs, a cloud-based office solution platform also saw a fivefold increase in new users during the period.

“People didn’t realize the value of work-from-home tools in vertical sections because the market wasn’t cultivated. Now, everybody felt the pain due to the outbreak. They see their value more clearly and adopt them more willingly,” said Xie Xin, Vice-President at ByteDance, who is also in charge of its enterprise IM product, Lark. 

Companies may stop remote working once it is safe for staff to return to offices, but employees used to online work tools are likely to keep using them. For example, on March 23, even after many businesses returned to their regular work practices, Alibaba's enterprise communication tool DingTalk hit a milestone, recording 20m meetings attended by 100m people on its platform.

On the other hand, although users may want to keep collaborating with the use of online tools, usage rates may reduce once developers, who provided the tools free during the coronavirus outbreak, stop doing so and start to monetize. 

New habits and skills

Image: Shutterstock

When Xiachufang, an app providing recipes and cooking tips, including those shared by its users, experienced a surge in use on the third day of the Chinese New Year holiday, it thought its platform was being hacked. But the double-digit traffic growth was not malware; it was a spike in use brought about by closure of restaurants due to the coronavirus outbreak.

Used to ordering online food delivery, young Chinese found themselves faced with a new reality during the lockdown – cooking became a needed skill set for survival. Sharing pictures of cooked food became a new social media trend, even if it only provided a temporary distraction to relieve anxiety. 

Young Chinese faced a new reality during the lockdown: cooking became a needed skill set

The trend also presented opportunities to fresh food e-commerce startups. Those who could not or were afraid to go to a supermarket turned to online shopping to buy fresh ingredients. Fresh food e-commerce in China, which was already growing at over 40% annually since 2014, was boosted by the coronavirus outbreak. 

During the Spring Festival holiday, daily active users of all fresh food e-commerce apps in China grew 107% from a year ago. The sales of JD Daojia, one of the top online grocery and delivery platforms, grew 470% compared to the same period last year.

The new users were not only young people who had just started learning how to cook but also middle aged persons and seniors who had previously shopped at wet markets. According to data from Alibaba Local Services Company, online orders from people born between 1960 and 1970 quadrupled during this period. 

“After seeing me pick up fresh food at the apartment building's gate, my neighbor, a middle-aged woman, started to buy online too. Although she had doubts about it at first, now she finds it very convenient, as sellers even clean the vegetables for you in advance,“ said a young man surnamed Li. 

With the change of habits among both young people and seniors, the fresh food e-commerce companies are likely to keep many of its new customers.

e-learning boom

Online education received a huge boost as schools started to close, but the fierce competition that followed was unprecedented. Teachers from schools and offline institutions that were closed had to start teaching online to their students. But big tech companies soon joined the fray. 

Alipay, Alibaba's online payments platform, offered over 1,000 courses for free. ByteDance also teamed up with 50 education institutions to provide elementary and middle school students with free access to online courses. 

The participation of big players made the life of many online education startups tougher. “With bigger institutions all going online, if you don’t provide the courses for free, you will lose your users,” said a person working in the field.

Notwithstanding the boom, some users had mixed feelings about e-learning. Parents were grateful that their kids could receive education at home for free, but they were also worried that their children spent prolonged periods staring at a digital device, potentially causing eyesight problems. 

Parents were also concerned that some students may be unable to concentrate as they do so in school and some kids said the school environment helped them study better. “[Online education] is less interactive and typing is too much trouble for me,”said school boy, Xin Hao.

Zhu Yu from an online education startup estimated that at least 50%–60% of students or 50m K12 users, used some sort of online education during the coronavirus outbreak and the penetration rate is likely to keep increasing. 

But some others are not so optimistic and worry that it might be just a short-term boom which would disappear after schools reopen.  “After the outbreak ends, most would still go back to offline training,” said another professional in the industry.

It's better to have reasonable expectations and focus on refining products to better understand user needs

Medtechs popular, for how long?

Online medtech platforms also experienced a surge in demand. During the early stages of he outbreak, many online medtech platforms that provided access to human doctors saw sharp spikes in traffic. 

WeDoctor claims that about 116m users had visited its platform by February 25. Another medtech, DXY.cn, which also provides online consultations, saw a month-on-month increase of 215% in user numbers. Over half of the new users wanted to know about the coronavirus. 

"Free consultation amid the outbreak not only attracted more users but also exposed [medtechs] to many healthy people who are likely to become their users in the future,” said analyst Chen Qiaoshan from the consulting firm, Analysys International. 

However, others believe it is not easy to keep the traffic. "The health industry is different. Every link in the process [of online medical services], namely, consultation, prescription, online payments and medicine delivery, could affect whether the users would be retained or not," said Zhang Songqi from WeDoctor. 

DXY.cn founder Li Tiantian admitted that although the coronavirus crisis helped in user education, it doesn’t mean the turning point has arrived. “It's better to have reasonable expectations and focus on refining products to better understand user needs,” said Li.

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Edited by S. Mani, Wang Xiao'e

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