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Live Report:China Coronavirus Impact Analysis
2022-12-08 16:28:08

Please note that all the charts are live. 

Below comments are published on Dec 5 2022 based on:

- China Payment (offline) data up to Nov 27 2022

- Tmall/JD/Douyin/Kuaishou/China Logistics data up to Nov 21 2022

 

Key Takeaways

·        Overall offline sectors remain weak in Nov MTD (Nov 1-27), Housing sector continuing to underperform the most, as rising Covid cases and strict policies weigh on consumer spending.

·        However, partial improvement is expected in Dec vs. Nov as key regions like Guangzhou, Shenzhen, Beijing, Shanghai, and Chengdu started to ease policy in early Dec by no longer requiring negative test proof when going to venues such as shopping malls and restaurants.

·        CITS Hainan DFS improves y/y in Nov MTD driven by 1) new Haikou Int’l DFS store, 2) local gov’t consumption voucher in late Oct, and 3) Double 11 promotion, although spending fades exiting Nov likely due to hangover effect and increasing Covid cases in Hainan Island.

·        Both offline and online spending on Int'l Luxury continue to be weak in Nov. Most luxury players struggle, but Hermes continues to be resilient.

·        Overall ecommerce platforms suffer during Double 11 (Oct + Nov MTD) from higher order return rate due to logistic disruption and shipment delay.

  • JD/Tmall/Douyin paid GMV (net of return/cancellation) stagnate or soften vs. 3Q, with most severe deceleration in JD.
  • JD loses shares to PDD and live streaming ecommerce mainly in home appliances/consumer electronics sectors as these rising ecommerce platforms offer 1) more aggressive discount, especially through PDD’s 10b subsidy channel, and 2) more interactive marketing through live streaming promotions.
  • Kwai Shop retains healthy growth momentum since Sep, partially thanks to 1) its series of sector-specific promotions and 2) the rapidly growing Kwai Brands (mostly tier-2 brands).
  • Douyin Shop y/y further normalizes partly due to the high-base last year.

·        Covid related medicines/medical equipment sales surge exiting Nov as cases rise.

·        Home Appliances y/y sales on Tmall/JD/DY/KS slows down due to hangover from a strong 3Q and shift to PDD’s 10b subsidy channel.

·        Express Shipment volume y/y decelerates in Nov MTD (Nov 1-21) dragged down by 1) disappointing Double 11 online sales, and 2) Covid logistics disruption, although the latter is expected to alleviate in Dec on the back of gov’t support.

 

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