Wei Jianguo: It is now the best time for a “new consumption revolution”
Wei Jianguo, Vice Chairman of China Center for International Economic Exchanges
During his investigation on the prevention and control of the new coronavirus pandemic in Beijing on February 10, General Secretary Xi Jinping emphasized that we must have a master plan for promoting economic and social development during these difficult times, and ensure stabilization in different aspects. Especially, we need to stabilize household consumption, develop online consumption and expand consumption on healthcare. His remark gives a clear direction for stimulating domestic demand and developing consumption for the consumer market.
The pandemic has made a great impact on various industries, especially catering, tourism and transportation. However, I think the difficulties in China’s consumption environment are only temporary. We have the demand for consumption and people has the ability to consume, all we need is time. I believe that the consumer market will be restored when the pandemic is over.
History proves that a great invention will not only bring the emergence of new industries, but also the reform of market structure. The further expansion of consumption has become an urgent task of China amid the pandemic.
At present, the breakthrough in implementing a “new consumption revolution” lies in the concept of consumption. We should understand that retail e-commerce can no longer reply on the dividend created by a large number of consumers. The new concept of consumption is to turn the people, not the commodity into the medium.
During the first five months of 2018, the total retail sales in China declined significantly, while online retail increased by 30%. Some people say that this is because of the large flow effect of e-commerce platforms, but I think the fundamental reason is that e-commerce platforms have changed the business model from commodity-based to people-based. The development of e-commerce has reduced intermediate links, lowered logistic cost and expanded its market coverage to the rural area.
Although the human business has gone through thousands of years, it has never completely changed the business model with commodities as its core. Now, we have changed the business model to people-oriented, which will help us to develop the consumer economy, improve customer service and truly establish a new concept of social consumption.
In order to promote the new consumption revolution, consensus needs to be reached in the following five aspects.
First, we must improve consumer services to an unprecedented level.
Consumption is the communication between people and is about competition in service quality. China has become the world’s second-largest consumer market and soon it will become the largest one. In 2019, China’s consumer market reached US$ 1.6 trillion while the US reached $1.9 trillion. China’s consumer market has huge potential. However, all development goals are pointless if we cannot raise the service quality to a certain level.
The standard of service quality should be more inclined to small-scale, diversified and personalized, so that more small and medium-sized enterprises can take part in promoting consumption.
Second, improving market consumption is a top priority.
China has done a lot of work in establishing a large market and remarkable results have been achieved. Although the current pandemic has caused some difficulties in the construction of a large market, this is only temporary. The mega commodity circulation and services brought by the large market will be the key to the consumer market’s future. Therefore, local governments should not develop a non-transparent and isolated consumer market.
Third, consumption channels must be expanded and hassle-free services should be offered to consumers.
Regardless of the type of consumption, the sales network should be expanded as wide as possible. 24-hour convenience stores and small supermarkets should be established. Online consumption should try to attract middle-aged and elderly people, and healthy consumption should be offered to more blue-collar workers.
There has always been a controversy, saying that e-commerce is a huge challenge and threat to the real economy. Nonetheless, I think that the development of e-commerce has promoted the real economy. E-commerce cannot develop on its own but together with entities, logistics and services. Such kind of integrated development has become the trend of the consumer market. Improving consumption alone is not good enough, we also need to deliver great service to the doorstep of consumers.
Fourth, the new consumption revolution needs to be combined with blockchain, cloud computing, big data, intelligence, logistics and financial services in the future.
Consumption will directly affect the sales of means of production, drive the development of production, the real economy, small and medium-sized enterprises, and the central and western markets.
Last but not least, more emphasis should be placed on green consumption, low-carbon consumption and healthy consumption.
China is at a critical moment of supply-side reform and consumption is an important entry point for the supply-side reform. The coronavirus pandemic will actually help us to implement a new consumption revolution, which will not only increase daily consumption but also increase industrial consumption and production. If we can grasp the opportunity to create a new consumption revolution, China will not only be able to solve the difficulties and challenges brought by the coronavirus pandemic, but also allow China to play a greater role in enhancing its consumption capacity, which will eventually lead to a revolution in the global consumer market.