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Blessing in disguise: How coronavirus is helping China’s tech sector

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The novel coronavirus –now named COVID-19– that surfaced a few weeks ago has now seen cases in several countries around the world. The fear over the spread of the new coronavirus has led millions of people in China to remain at home.

Given China’s role in the global supply chain, businesses both in China and abroad have felt the impact of this unfortunate event. The situation has put pressure on some of the more obvious sectors such as retail, travel and tourism, hospitality as well as the service industry.

But the question is: are all industries negatively impacted by the outbreak? And what trends will surface from this?

Gamification

As unfortunate as this global catastrophe is, some sectors seem to have been benefitting from the recent outbreak. As recent data has shown, the gaming and streaming industries have been some of the major beneficiaries. As most people in China in the past few weeks found themselves restricted indoors, gaming and video streaming apps popularity further rose. The most popular among them being Tencent’s Honor of Kings.

According to Japanese investment company Nomura, the mobile game that has around 60-70 million daily active users on average surpassed 100 million DAU over the Chinese New Year Holidays. Another one of Tencent’s popular titles, Game for Peace, generated revenue between US$28.7 million to US$71.5 million on the eve of the Chinese New Year alone, as reported by securities firm Sinolink Securities.

The fact that some video game publishers including the likes of NetEase, Tencent Games, and Kingsoft extended the promotions on their games until February 10 goes to show that the significant impact the outbreak has had on their bottom lines and their desire to retain these users. Given that schools and universities across the country will remain closed until the end of the month, we can expect this momentum to continue.

Also Read: Keep calm and remain communicative: Startup founders share how they cope with coronavirus crisis

Remote rules

In addition, even though several educational institutions and companies have closed down, there still remain several more who have begun teaching and working remotely, giving a push to remote office apps such as Alibaba’s DingTalk, Tencent’s WeChat Work, ByteDance’s Lark and Huawei’s WeLink.

Though one of the most technologically advanced countries in the world, if not the most, China has so far lagged much of the world in permitting telecommuting till now. But as data suggests, this may be fast-changing.

According to a statement published on Weibo, employees from more than 10 million corporations began working from home on DingTalk, with the number of users on the app exceeding a whopping 200 million users on February 3 as reported by 36Kr.

Earlier this week, DingTalk announced that more than 50 million students and 600,000 teachers used the live-streaming feature on DingTalk to hold online classes.

In order to keep up with the competition, WeChat Work, the enterprise communication app from Tencent also released a set of new features aimed at facilitating remote work including online meetings for up to 300 people and live streaming.

Remote office apps such as Slack and Microsoft Teams have been highly successful in the west. In China, since telecommuting or remote work has not really been popular so far, we have not seen any significant numbers coming in from Chinese remote office apps until now.

Also Read: Coronavirus is driving the world into an economic slump. How to cope up?

The world’s largest work-from-home experiment currently going on in China has the potential to drive the use of such applications further.

E-commerce boom

China already leads the world in terms of e-commerce but given the current state, Chinese online sellers are also on the more generous side of the aisle with regards to the impact they have felt. As more people are stuck at home in China waiting out the outbreak, delivery and e-commerce companies have seen a surge in contactless delivery and online grocery shopping.

As reported on CNBC, a delivery guy for JD.com who would deliver about 140 to 150 packages per apartment complex on a typical day previously, now delivers more than 200 packages a day at present. JD’s sales of fresh products increased by more than 300 per cent compared to the 10 days of Chinese New Year from the previous year, selling 15,000 tons of fresh products.

Furthermore, its affiliate Dada, which delivers for Walmart and other grocery chains, also reported a quadrupling in its sales compared to the previous year. And while it can be argued that rising sales could be a result of maturity in online grocery shopping from YOY basis, it is very likely that the current crisis has brought more users to these online platforms.

In the midst of the crises, what we are currently witnessing is a new way technology is being used in China like never before with some of China’s biggest tech companies leading the way.

Live streaming and online teaching existed but not at the scale it is being used now or potentially in the days to come. Remote work apps existed but only now have companies started leveraging them.

Chinese kids being homeschooled through live streaming has suddenly opened up an entirely new possibility in online education that was so far used only to supplement offline teaching. Furthermore, more people buying fresh produce and groceries online would further highlight the significance of the New Retail (Retail 2.0) concept popularised by Alibaba in China.

Also read: Keep calm and remain communicative: Startup founders share how they cope with coronavirus crisis

The coronavirus has undoubtedly changed the way of life for many people all over the country, altering consumption pattern among other things and providing a boost for the tech industry. Crisis brings risk but also brings opportunity.

Several tech companies in China have managed to seize this opportunity so far and as this health risk prolongs further, the need to innovate will grow further.

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Image credit: Macau Photo Agency on Unsplash

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