ZWC Insight | Mr. Jason Jiang’s Sharing on How Organizations can Maintain “Immunity” During the Epidemic
February 20, 2020

“Never let a crisis go to waste. On the positive side, it allows us to stop and think about how to regain company’s awareness of rationality and its fundamental nature.”

——Mr. Jason Jiang, Founder & Chairman of Focus Media

At the beginning of spring of 2020, the sudden outbreak of epidemic had an unprecedented severe impact on the entire Chinese economy, which strikes fear into enterprises day by day. This is an epoch of “Returning to Origin”.

ZWC recommends a live streaming themed at “How Should Enterprises Survive in the face of Sudden Epidemic” fronted by Mr. Jason Jiang, who founded Focus Media during the SARS outbreak and led it to become the first media business to be listed on stock exchange of China. During the live streaming, Mr. Jason Jiang shared his views with portfolios of ZWC and businesses in various scales on the changes in consumer behaviour how can enterprises turn crisis into opportunities and how to develop the core thinking skills of anti-fragile capability.

 

Key points

After the eventual cessation of the epidemic, there will be a realization that people’s concern on the long-term economic problems is the real “epidemic”.

– The key point that can lead enterprises to victory in this epidemic is “branding”.

– Confronted with the epidemic leading to closed offline channels, the digitalization of enterprises is the key anti-fragile capability.

– The pattern of consumption and propensity to consume will change after this epidemic, bringing about further polarization of the consumer markets.

 

What are the biggest challenges in 2020?

I believe this is a temporary Black Swan event. Aside from Hubei, which needs a few months to recover, it is probable that the rest of the cities in China will be back on their feet as early as the end of February or even March where we expect the epidemic to subside. When the dust settles, people’s concern on the long-term economic problems will begin to move beyond the epidemic.

Since 2019, the Chinese business community and the economic community have entered a period of flu, which is highly contagious. The background of the flu is that two dividends in 2019 no longer exist. One is demographic dividend, which has become demographic anxiety. According to the current birth trend, China may only have 700 or 800 million people with aging population after 25 years.

The other is the traffic dividend, which has become traffic anxiety. The population and duration of mobile Internet users have reached the limits. There will be no increase. The development of the mobile Internet has entered the second half, and the cost of traffic will continue to rise.

As competition in China has stabilized into a form of a stock game, two specific characteristics will emerge.

The first characteristic is the constant innovation and constant imitation (by competitors).

Chinese are highly innovative, with the highest number of patents in the world every year. Moreover, Chinese have stronger imitative ability. Once something innovative becomes successful, a peaceful blue ocean will become a red blood bath in a very short time where the hungry sharks (imitators) are trying to attack (grabbing a share of the market).

This causes the time window allotted to be first in the market via innovation to be a short three to six-month period, not lasting for more than a year. After which, homogenization occurs inevitably, especially in the consumer market arena.

Due to the lack of increment in the stock game, the increasingly homogenized market brings the second characteristic: Most enterprises would drive prices and down to sell more products.

Many people originally thought that they could take the lead in reducing the price to promote sales. As a result, everyone scrambled to reduce the price, just like being infected. Price wars and traffic wars lead to thinner margins, and even large losses, which represent the epidemics in the business community.

For the pneumonia outbreak in Wuhan, enterprises suffered a lot of losses and poor performance. After the epidemic, there might even be a scenario where unutilized inventories get dumped into the market at fire-sale irrational prices.

I think that is the lingering anxiety and fear for many entrepreneurs. Yet at the same time I do see the strong becoming stronger. The true industry out-performers, in terms of revenue and profits, are always the big brands.

 

What actions should enterprises take after the epidemic?

Here is the answer: After the epidemic subsides, the majority of large enterprises and brands would be accelerating their expansion efforts instead of remaining stalled.

The number of confirmed cases in non-Hubei areas of the country in recent days has dropped to more than 200 per day, and the inflection point is almost approaching. Economic magazines have used data patterns from SARS as reference to estimate that the time when the newly confirmed cases in non-Hubei areas in China hits zero or close to zero will be February 24 to 26.

On the surface, the epidemic has impacted most local enterprises adversely where a large number of enterprises are fighting just to subsist, and many enterprises would not be able survive in a few more months. But what are the leading enterprises doing? They are eager to seize the opportunity and expand their share at the expense of their weaker competitors.

So if we think about it rationally, China is the largest consumer market in the world. Will this consumption scale change due to the epidemic? Absolutely, the answer is no, because the market size is out there. The key factors one must consider is if his/her company is going to outperform the market or be eliminated where one has one’s market share increased or decreased.

An example of this philosophy is the leading green tea brand of China, Green Bamboo Leaf. Due to the epidemic, a regular convention event where the green tea convention held every spring was cancelled. Seizing the opportunity, Green Bamboo Leaf proceeded to launch a new marketing campaign for promotion in the week after next, aiming to tell consumers that Green Bamboo Leaf is made of selected pre-Qingming tea buds on Mount Emei with the height of 600 to 1500 meters. Grasping the time for pre-Qingming tea every year, the company carries out mass promotion.

In fact, everyone who has experienced SARS knows that this is an extraordinary period. Drinking more green tea made of pre-Qingming tea bus on the high mountains is anti-oxidant, and it also has antiseptic and anti-inflammatory benefits.

Fortune favors the bold, hence one must capitalize on such events to create business opportunities for oneself.

I am of the opinion that this epidemic would be soon over. The impact of the epidemic on enterprises is different. The overall strategic and competitive rhythm will also change, especially when the leaders of leading enterprises would expend all efforts to widen the gap between their rival by snapping up the void created by the market exit of other competitors. While at the same time, the innovative non-incumbents who are able to differentiate their product and services and have sufficient cash reserves will covertly try to overtake the incumbents.

My biggest take-away in my recent conversations with the heads of several leading enterprises, is that they aren’t worried about this crisis and “economic winter” which will weed out the weaker players in the market. A common thread in their view is that they hope that this would create strategic space for them to expand their market share and to increase the brand concentration degree significantly, while small companies will die out.

In all competitive markets, there will always be ambitious companies that will take the early lead, grab the market share by being one step ahead of their rivals, further establishing their brands to take pole position.

The best entrepreneurs are die-hard optimists. In an emerging market with many players, there will be some people who will emerge from the pack as winners. These winners win because of their intelligence, in addition to their sheer grit and determination.

I would like to share that in 2003, during Focus Media’s first year of operations, we were hit by the SARS Epidemic. After investing 50M RMB which was a hard fought accumulation of 10 years of sweat and toil, the company kept burning nearly all the cash for expenses in five months, without any income.

During the early stages of SARS, I was advised by others that I should limit my growth plans. However, I could not heed that advice as I believe the crisis presented a unique opportunity and trend.

China was undergoing massive urbanization where many tall buildings were being built in the cities. What is the one thing they all have in common? An elevator. You need elevators for these buildings to work. Hence elevator is the infrastructure of urbanization. I seized the opportunity to be a pioneer in the advertising space focusing on elevator-ads when there was none in the world, and I believed that it would be a success.

Also, I saw a great opportunity. Having been in the advertising industry for a decade, I found that advertising was an anti-human industry, because no one would like to see ads.

When you watched television programmes or when you were consuming content on your mobile phones for over 10 hours a day in the past 20 days, you were bombarded by thousands of advertisements. But how many advertisements and its messages can you recall? Consumers aren’t actively looking out for advertisements, they are looking for content.

I asked myself when would consumers be paying attention to advertisements and I realized that consumers would only be looking at advertisements when they are in lifts. Advertisements kill boredom and embarrassment during the elevator rides.

I went all in with my own investment of 50M RMB, leaving no room for retreat. We labored day and night, often burning the midnight oil until we finally attracted the attention of Softbank, an investment institution opposite to us in the same building.

In May 2003, SoftBank invested in Focus Media and subsequently, the SARS episode finally came to an end. Focus Media ushered in the golden age of China’s boom, covering 80% of China’s high-quality buildings in one fell swoop, becoming China’s second largest media group.

The lesson for Focus Media from SARS is that the crisis is always an opportunity for the ambitious. Every crisis is a chance to change the market.

 

Who will be the winner in the epidemic of economy in the future?

The answer is brand. In the last 40 years of commercial war in China, there have been mainly three significant changes.

Forty years ago, the economy was in short supply. The Cantonese made the most money in processing and compensation trades. They were known for their production capabilities and prowess at research and development. Everything can be made and imitated, so the richest man was in Guangdong at that time.

In the latter years, Zhejiang businessmen became increasingly capable. Mr. Zong Qinghou from the province became the richest man in China. He could sell and distribute bottled water and Nutri-Express to millions of outlets and thousands of households in China. Thus, distribution channel becomes paramount and he who controls it becomes the king.

After more than 10 years, online retail companies such as Tmall and JD.com emerged. The possibility that consumers are unable to buy the product of a certain brand becomes very small. Nearly everything is available on Tmall, JD.com and Taobao.

What are the factors that influence consumer decision-making in this situation? You will find that the advantages of the channel side, numerous outlets and large coverage, are not as important as before, where the power has shifted to producers especially as China’s economy grew into a surplus economy.

In an economy enjoying surplus production means that consumers are faced with multiple choices for buying bottled water or car. Due to the wide availability of choices, the era of consumer is king has arrived.

The key to success at this time is to win the hearts and minds of your customers.

Every brand must answer a question in the minds of consumers. That is to say, you have to differentiate your brand from your peers’, bolstering the chances of consumers choosing you over others with proper reasons.

The real battle is to obtain mindshare of your target consumers. How do you gain an edge over your competitors in the consumer’s mind?

In the era of surplus economy and consumer sovereignty, what is the competitiveness of enterprises? It’s brand recognition, because you have the recognition before you choose it. You and your competitors must form the differentiation that is best for you and build the so-called brand recognition advantage.

A common refrain I hear from fellow business people is that “My product’s quality is one if not the best, why am I not selling more?”

Although you have made good products, managed the cost and arranged the channels, you still can’t sell them, because you only pay attention to what matters inside the enterprise, while the real consumption decision is outside, in the mind of the consumer.

If the superiority of your product cannot be transformed into the cognitive advantage among consumers, you just can’t sell it. When you do not have a brand recognition that is different from competitors in the minds of consumers, then you are caught in a price war, a promotion war, and a traffic war, which is only a matter of time.

As most enterprises are impatient for results, what can bring them results immediately? They often resort to sale events or marketing promotions to get quick results. Therefore, they carry out activities as soon as the sale is not good, and then the products could not be sold without promotions. As enterprises conduct more and more sale events or marketing promotions, this becomes a negative cycle where consumers become immune to such tactics, profits being lower and lower.

There are enterprises that like to engage in traffic, short videos, live broadcasts, and Internet celebrities to promote their products. Every live broadcast is a sales event where products are sold at cut-throat prices. This is a short term strategy which is akin to the consumption of Viagra. One might feel euphoria after a short period of climax, and the recovery period would be a toll on the body in the long term. Pull marketing and promoting sales are effective in the short term, but they cannot help in long-term business development goals.

Many people claim that traffic is the essence of all business, and I think that winning brands is the root of business. Traffic is just the result of brand winning.

Why does Taobao have such high traffic volume? Its customers think it’s close to omnipotent. Why does Tmall have such high traffic? Its consumers love that many brands host their flagship stores on the platform. Why does JD have such high traffic volume? Its consumers love that its products are authentic and its speedy delivery. Consumers order in the morning and the product would be delivered in the afternoon. The self-operated logistics makes the delivery in the infected area available.

Why does Suning have such high traffic? It’s because of the idea of buying appliances only in Suning, together with its online and offline sales volume ranking the first. The company has 100,000 service engineers.

Why does Vipshop have such high traffic? Because it is a sales sites that attracts a certain calibre of luxury labels. High traffic is the result of the brand’s mindshare. We must avoid putting the cart before the horse.

If you are looking to exude an honourable status, you buy a Mercedes. If you are seeking fun in driving, you buy a BMW. If you want to buy the world’s safest car, you get a Volvo. When you want to buy and sell used cars? You use Guazi’s second-handcars, where you avoid the costs of unnecessary middlemen.

This is a result of years of conditioning by these brands where they become interwoven into consumers’ sub-consciousness. Good brands become accepted standards and become enmeshed in consumers’ communal consciousness which in turn influence their buying behaviour.

Only when brand and mindshare are deeply entrenched in the public’s consciousness, which is the inexhaustible and free traffic, can brand power increase the conversion rate of traffic, and can brand potential bring the product’s premium power.

The core lesson in breaking through in a saturated market environment lies in product innovation and brand building. After product innovation, there will also be a large number of imitators, turning the blue sea into the red sea, so it is important to build a moat through brand building to seize the mindshare of your consumers.

Many people think that branding has no effect but increases costs. This is because they have not found the switch to consumers’ minds. A good brand strategy not only reflects the advantages of your product, but also the major difference between your and competing products. The pain points of consumer demand can therefore attract attention and resonate with consumers.

For example, Wanglaoji Herbal Tea was only a regional product and it has been sold for 100 or 200 million yuan for many years.

I went to Shanghai to research, and found that Shanghai people felt that herbal tea was mostly tea leftover overnight. When I went to Beijing to investigate, Beijing people thought that herbal tea was a tea that would cause stomach pain. It seemed impossible to sell it nationwide with such regional negative assumptions, but later it was positioned as an ailment to internal heat with their slogan “Afraid of internal heat? Just have a Wanglaoji”. The company carried out the saturation attack in the market. With such a marketing strategy it has since garnered 1.2 billion yuan in the first year, 2.5 billion yuan in the second year, and 25 billion yuan a year later.

This is especially remarkable in market where Coca-Cola’s annual revenue was 10 billion yuan and where that of Nongfu Spring, a local mineral water company, was 17 billion yuan, while WangLaoji surpassed them both with 25 billion yuan. How does WangLaoji do that? The key ingredient is that the company is able to find the switch of consumer mind.

Last year, the Small Yellow Package of ChaCha focused on selling daily nuts with Focus Media, and where they realize that what consumers are looking for is freshness in their nuts. If the freshness is not in place, it will have an oily taste which is unsavoury to Chinese consumers. It is with this insight that they are able to attract attention and unlock this untapped market.

ChaCha is only able to do this because it invested in technology that helps keep their nuts fresh, so that they were able to win the prestigious National Science and Technology Progress Award. The slogan that “For buying daily nuts, choose ChaCha” comes into being.

This advertisement was mainly put forward on the platforms of Focus Media, and sales volumes largely increased in January and February.

In October last year, Liuliumei rebranded their slogan, “Craving for sour, eat Liuliumei, full of natural organic acids.” After it was launched in the provincial capital, when people saw the advertisement at the entrance of the elevator, they would crave something sour. As the Chinese idiom goes, “To quench thirst by looking at plums”.

In October, due to the elevator advertisements, Liuliumei were sold out before the Spring Festival.

The key is to find out what makes the consumers change their mind.

In the past, everyone regarded brand advertising as costly. When the market was not doing well, they would cut down on their advertisement budget. The problem lies in that the advertising is not good. The essence of advertising is making profits. If not, you’re doing it wrong.

Many people believe that branding is not as important as aggressive sales strategies in securing market share. Of course, brand advertising needs to transform from quantitative change to qualitative change. Branding is a long term strategy that yields results in a month or two, or even stretching from six months to a year.

For example, during the live broadcast last week, Mr. Xie Weishan, chairman of Kmind Consulting, highlighted the case of how Bosideng rebranded itself as the best-selling down jacket expert in the world with the slogan “Experts on down jackets for 42 years, selling worldwide in 72 countries” in 2018.

In the first month when the new ads were pushed up, the Baidu index was rising but the sales weren’t. Sales rose in the second month, and the third month was even more overwhelming.

In five months of the year, sales exceeded 10 billion yuan due to the good foundation laid by Bosideng and consumers perception of the brand. It was only for a while that the brand was aging, promotions were carried out, and the brand image was damaged.

After repositioning, the brand, with the help of international designers, was able to market its product at a price that was 30% higher. In addition, the company embarked on aggressive advertisement of 500 million yuan. As down jackets have a very strong seasonality, when product innovation and advertising are pushed up, the sales quickly explode. Now Bosideng is a well-deserved representative of national fashion.

However, there are also many cases where rebranding doesn’t take effect so quickly, because the turning point between quantity change and qualitative change is different. Before the turning point is reached, there is often an increase in public awareness, but the sales effect is not obvious yet. When the turning point is reached, there will be a significant sales spillover effect.

For example, under the guidance of Mr. Xie Weishan, the rebranding of Feihe as more suitable for Chinese babies, emphasizing the unique advantages of Feihe, which has more than 50 years of research and development, catering specially to the Chinese babies. It has also established itself as an international brand, arousing attention and resonance from users.

However, the advertising campaign continued for eight months before it began to show results. The sales volume increased slightly in the first year, but rose from more than 4 billion yuan to 7.9 billion yuan, and then 11.2 billion yuan in the next three years. By 2019, it had already been the leading brand in the Chinese milk powder market.

Therefore, not every enterprise can uphold a brand, except for those with really good products. Once when you find the brand’s differentiated value, seize the window of opportunity, complemented by investments in continual communication, and continue to invest in the optimization of channels and user operations, companies can come to the strategic inflection points, with increased sales and price.

I hope this epidemic will let everyone stop to think about the situation carefully.

“Never let a crisis go to waste”. This sudden epidemic has made us more conscious, fundamentally changing the way we work, live and think. Enterprises’ cognition must return to common sense and basics, considering what you have, what you want, what you can give up, and what the core of your long-term business goal is.

Brand power brings immunity to businesses. Brands are assets, but intangible assets are often overlooked in daily operations. After the epidemic, it was found that branding is insurance, and in crises, it is life-saving, and it determines your success or failure.

 

In the face of the sudden epidemic, what are the key anti-fragility capabilities of enterprises?

The answer is digitalization of enterprises. Let’s review the emergence of SARS in 2003, which promoted the surge of online shopping. Taobao and JD.com both rose during SARS and pushed the wave of e-commerce in the entire consumer market.

This epidemic has once again spearheaded the development of e-commerce, especially in the field of fresh food. The popularity of Suning vegetable farms, Daily Fresh, Ding Dong, and Hema Fresh has increased sharply overnight. Some people even set the alarm clock every day to scramble for ordering food online.

At the same time, online medical treatments such as Good Doctor Online, Ping An Good Doctor, and Weiyi Internet Hospital have all witnessed explosive growth; online education such as Yuanfudao and Xueersi Online School has also grown exponentially, and is rapidly gaining popularity.

Online digitalization is an inevitable trend in all walks of life in China. This epidemic has once again given us a deep understanding of an advertisement of IBM 20 years ago: Either e-commerce or no business.

The same is true for Focus Media. If the epidemic happened two years ago and Focus was still in its original mode of operation, we would have been caught off guard within a month of the epidemic.

As Luo Zhenyu said, “You like the good times, but the reality is that the river is flowing fast and furious.” In an uncertain environment full of Black Swan events, staying in your comfort zone with the original mode will lead to your downfall.

Taking Focus Media as an example, China’s media market has undergone fundamental changes since 2015. The development of traditional media has continued to slow down during the four years from 2015 to 2018, while the elevator promotion of Focus Media and the Internet have continued to rise.

Since 2015, the Internet viewing time has exceeded the total time spent on traditional TV.

The TV viewing rate among the urban population is declining. News and information have been taken over by Weibo and WeChat, and consumers are drawn more to the content than the advertisements when they see selected news on the mobile phones.

From the perspective of entertainment programmes, most of the mainstream crowd have switched to watching online videos from traditional TV programmes, but most of the urban consumers have bought VIP membership to watch online videos, which removes advertisements.

As the majority don’t watch tv and video services require paid subscriptions to forgo advertisements, there lies a challenge for the consumers to “insert key phrase”. How should we reach the mainstream crowd through these channels? How should we attract consumers?

The value of Focus Media is highlighted during this period, because it covers hundreds of thousands of office buildings and apartment buildings, and it covers the mainstream population of 310 million cities with the most spending power and exposure every day. In the closed elevator scenario that they must pass through every day, they are exposed to theses high-frequency and mandatory ads.

Advertisers often have the best choice when they have no choice. Focus Media’s advertising revenue in 2018 reached 15.5 billion yuan, which is almost equal to the sum of China’s top three mainstream TV channels.

However, this is the advantage of Focus Media’s original model: How to use the Internet and big data to achieve online distribution, data reflow, effect evaluation, and accurate placement?

After Alibaba’s investment of 15 billion shares in Focus Media in 2018, Focus Media has launched future-oriented digital transformation and exploration. Focus Media is becoming the world’s leading digital offline media company.

From the earliest plug-in card play to the cloud online push, when a large number of communities were closed in this epidemic, Focus Media pushed cloud advertising without interruption. Last year, most screens were included in the Internet of Things. We can remotely monitor the screen’s playback status online, so that the playback of advertisements is uninterrupted. In this year’s Olympic Games, we will also open the Olympic gold medal list to broadcast live reports of Chinese players online!

At the same time, from the broadcast across the city to the big data analysis of each building, our smart screens will be deployed accordingly.

For example, in the first-tier cities, the BMW 7 Series can choose the real estate of more than 100,000 yuan, the BMW 5 Series can choose the real estate of 70,000-100,000 yuan, and the BMW 3 Series can choose the real estate of 40,000-70,000 yuan.

For example, interior design companies, building materials and home appliances can choose the one that has just been delivered or has been delivered for more than 8 years according to the age of the building.

For example, you can also choose a building based on the surrounding area of the terminal.

During the epidemic, we accurately focused on the area around 3 kilometers of more than 200 Xibei stores providing food delivery services, with the advertisement that “Xibei takeaway is trustworthy”, because Xibei takeaway is definitely the benchmark in the industry. Regardless of the various designs of thermal insulation and leakage prevention, they also launched the takeaway relief card, for the whole period of temperature monitoring and tracking management for chefs, food service staff and courier staff in special periods, telling everyone to order Xibei takeaway without going out, because Xibei provides a trustworthy meal.

Through search data and e-commerce data, we can also analyze what consumption categories different buildings are interested in, such as which buildings are for tourism, and which buildings pay attention to wealth management, and car purchase. We have more than 200 dimensions of interest tags.

We also communicate with Alibaba’s back-end to realize data backflow, so unlike other offline media, every launch on Focus Media is not only once, but also returns back to Tmall databank. It is the accumulation of digital assets of customer brand, which is not available in all offline media.

Only Focus Media and Tmall databank are connected. Customers can see how many people are exposed by the launch of Focus Media at the databank on Tmall’s back office, as well as how many of these people have taken interest in the ads. Consumer behavior is monitored, such as additional purchases, followers, collections, etc., to see how many purchases were made amongst the total number in the promotions on June 18 and November 11.

This was previously unimaginable for offline media. In the past two years, Alibaba has empowered Focus Media to carry out digital transformation, allowing Focus Media to achieve the upgrade of the original model, and greatly enhance the competitiveness of differentiation.

After this epidemic, we will launch two services later this year.

The first is the creative test optimization system. It is designed to test the audience ’s interest in advertising ideas by monitoring people ’s eye attention and help advertisers choose optimized versions of advertising ideas.

The second is the customer self-service purchase system. All building selections, payment, delivery and monitoring are completed online. We need to be prepared, in case one day the Black Swan event strikes again, when customers can’t go to the office building and can’t go to work, they can cooperate with Focus Media at home.

The environment is always that of uncertainty, and your confidence should be in your own competitiveness and resilience.

 

How will consumers respond when the epidemic is over?

The answer is accelerated secondary differentiation. After the consumer endures the epidemic, the consumption structure and tendency will change. Small businesses are struggling, the general public’s disposable income level has fallen, and the general public will be more cautious in consumption. They will postpone the decision-making of non-essential spending, and for what must be done, people will spend money on products that are more secure, more deterministic, and more trustworthy. In a nutshell, it is those products where the brand trust and security are better.

Your brand should strive to be the “default option” in the mind of consumers, to become a standard, a common sense, and an unthinking choice in the subconscious.

In terms of the capable white-collar elite, the 300 million mainstream middle class in the city, I think the consumption will rebound, but consumption will show the “three loves, three fears, and three shortages” I said before: Love beauty, love fun and love health; fear aging, fear death and fear loneliness; short of love, short of mood and short of excitement.

Their consumer psychology is to exclude the products of low price, which is highly characterized by: Psychological satisfaction from quality brands, personality representation of brands over necessity or desire, trendiness over necessity, and the shifted emphasis on the delivery of psychological comfort of merchandise on top of functionality.

With that said, innovations from brands should start with the innovations on solving problems to the meaning of living. They should extend from the mere usage of products to the enjoyment of lifestyle, from mass consumption to personalization, and most importantly from the pursuit of material satisfaction to the pursuit of happiness.

This signifies the emergence of neosophisticates and artisan craftsmanship, a restless pursuit of delicately skilful production and quality that are representative of embracing a better lifestyle and higher standard of beauty. It is also representative of a pursuit of a healthier lifestyle where, work and life, career and family are in balanced harmony.

So what is the driving force behind such consumption upgrade in China?

First, the self-gratification need from the rising middle class emerged after years of hard work. I can still recall Didi’s early ads placement on the platforms of Focus Media, and it goes like “If you have always worked hard, at least rest for a while in the car. Striving for a better life, you can do better today.’’

Second, it is the desire to be a better self. Do you have to eat seafood and abalone when you become rich? On the contrary, it is rather common to see rich people enjoy a lifestyle where they consume healthy food like fruits and veggies daily, with the fast diet once a month, followed by a early morning routine of themselves jogging or doing yoga. And of course, a morning read on IGetGet (the Chinese version of Quora) and participation in the Fan Deng reading club are not to be missed on their track of becoming a better self, making everything possible step towards self-actualization.

After the epidemic, it would be surprising to see a polarization in consumption patterns among different Chinese consumer groups. The mass consumer would be more list-type in consumption whereas the middle class would become more impulse-driven. Mass consumer would become more convergent whereas middle class consumers would aspire for quality consumption. Mass consumers would consume more on functionalities whereas the middle class would be more aesthetic, healthy and delicate driven in consumption.

Having this picture in mind, the innovation of new businesses would then be centred on high quality and spiritual aspiration: How to enrich the sense of being, representation, happiness and trendiness among the middle class consumers.

Currently, China already has a 250 million middle class population and it is expected to reach 500 million by 2025. This population of middle class would then have exceeded the total population of the United States. The implication of this for aspiring brands is how they can pinpoint accurately and influence this group of mainstream consuming group, for that they would be the opinion leaders and the trendsetter of the China consumer market, and for that they would define brands and lead trends.

Looking at this epidemic after five years, we would find that it would mark a watershed moment for the Chinese economy.

The consumer market will accelerate its secondary differentiation, and enterprises will also accelerate the differentiation.

For those mid-low end brands who still want to outcompete their competitors in price wars, it would not be surprising to see their profits plunge and increasing difficulty to operate in coming years. On the contrary, those who shall triumph in the new economy, shall be those who target the 400 million people with middle income and above, and aspire to differentiate themselves with artisan craftsmanship and innovation. They would be the ones who can seize the opportunity to popularize the brands, leading trend, setting the price and standard, and at last dominating the market.