China sees boom in “homebody economy”
China is seeing a boom in its “homebody economy” amid the COVID-19 epidemic, as new forms of business such as online shopping, food delivery, online education, and working from home have seen explosive growth since the outbreak.
Related enterprises have also witnessed significant profit increases. “During the epidemic, the demand for meal replacement products has exploded, causing a temporary shortage of products such as bread, cakes and potato chips,” said Zhang Xuewu, president of Yanjin Shop Food Co., Ltd. in central China’s Hunan province.
Zhang expected the company to realize a net profit of 125 to 130 million yuan in the first half of the year, almost double that of a year ago.
The number of users of telecommuting tools such as DingTalk and Tencent Meeting, and online education software including Baidu Netdisk and Yuanfudao has spiked, while online food platforms such as Dingdong, Hema and Pinduoduo have witnessed notable trading volumes. In addition, the market values of Chinese internet giants including Alibaba, Tencent, and JD.com have hit record highs.
Published performance forecasts for the first half of the year recorded a surge in the profits of listed companies related to the homebody economy. For example, the net profits of Sanquan Food, one of China’s leading frozen food companies, is expected to see a staggering year-on-year growth of 390 to 420 percent, while that of Bear Electric Appliance Co., Ltd. which sells small home appliances, will see growth hit 80 to 110 percent. The net profit of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. is expected to rise 35.5 to 45.2 percent.
According to statistics from the General Administration of Customs, exports of products related to the homebody economy also grew rapidly in the first half of the year despite the sharp contraction in international trade, with that of notebook computers and mobile phones increasing 9.1 and 0.2 percent, respectively.
It’s not surprising that the homebody economy has gained steam, according to some experts and insiders, as some enterprises have made preparations and responded to market changes brought about by the sudden epidemic.
“We had seen a trend of the ‘stay-at-home lifestyle’, so we adjusted our products and launched new ones, invested huge amounts of money in building an unmanned factory, which has been proven to be a unique strength amid the epidemic. We have also promoted vigorous development of e-commerce in recent years,” said Zhang, noting that he is expecting his company to reap huge profits.
In fact, the epidemic has sped up the development of the homebody economy in China and forced enterprises to accelerate their digital transformation.
Many entrepreneurs believe that the homebody economy trend is mainly being seen in the e-commerce sector. New products and services have greatly improved consumers’ shopping experience and cater to young people’s consumption habits. To them, the booming homebody economy is an inevitable trend.
The homebody economy will continue to flourish thanks to China’s progress in information technology and people’s universal access to it, as well as innovation in business models, said Li Yongjian, an expert with the Chinese Academy of Social Sciences.
“New business opportunities will emerge after the epidemic,” said Chen Chunhua, a professor at Peking University who specializes in research of enterprises, adding that sectors such as online entertainment, games, education, telecommuting, the integration of online and offline retail, logistics and communities services, smart city and comprehensive health care services will also see sound development opportunities.