The COVID-19 novel coronavirus is proving to be a far more tenacious adversary than the world first realised. It is highly infectious and widespread quarantine seems to be the only effective method of containing it’s spread. Unfortunately, the consequences of such measures means that consumption has seen a huge decline over the past two months.
For example, over the Lunar New Year holidays, restaurants, hotels, amusement parks, museums, theatres, and the like should have been filled to the brim all throughout Asia. This is generally a peak period for the region. The COVID-19 outbreak all but ensured that countless meetings, forums, and outings are postponed or outright cancelled.
One of the very few silver linings in all this mayhem is that the digital economy has been playing a key role in stabilising consumption and the macro economy. With brick and mortar stores being avoided by almost the entirety of the consumer base, online commerce has partially compensated.
Take for example the F&B industry in China. During the outbreak, up to 40 percent of restaurants have worked hard to expand their online take-out options and availability, with a large number of these restaurants not offering such options before.
They were able to make this transition thanks to a robust infrastructure network that enables online purchase, delivery management, and mobile payment.
Without a doubt, online businesses have also suffered as a result of COVID-19. However, the flexibility and ability of online commerce to minimise physical contact has allowed businesses such as restaurants to stay afloat, whereas offline business is becoming ever more dismal by the day.
Statistics from across other industries are showing similar results. Amusement parks, museums, and theatres, have all seen up to a 90 percent decrease in their business, if not more. At the same time, viewership of online movies, TV shows and short videos has experienced exponential growth, while online education has witnessed growth of upwards of 300 per cent.
SMEs in particular have been hit hard by the COVID-19 outbreak. In China, many SMEs still rely on offline physical business, with only a few of them offering online options. Fewer still provide goods and services purely through online means.
According to a survey conducted by Ant Financial, Alibaba’s financial arm, over 70 percent of SMEs in China are struggling. While this number may not be exact, the risks could be systemic if over half of SMEs are struggling to survive.
SMEs make up the majority of private enterprises in China and contribute 60 percent of the GDP and 80 percent of urban employment. As such, both the Chinese government and large private firms have been scrambling to implement measures that will help said SMEs survive.