Almost two decades ago, a deadly respiratory disease with flu-like symptoms swept across China, infecting more than 5,000 and killing almost 350 by July 2003.
When an employee at a fledging business-to-business (B2B) marketplace in Hangzhou showed symptoms in May 2003, the office was locked down and all 400 staff ordered to stay home as a safety precaution.
It threatened to spell the end of the four-year-old start-up but instead, the Sars epidemic of 2002 and 2003 became a “watershed moment” for Alibaba Group Holding, the parent company of the South China Morning Post.
The company pushed ahead with plans that month to launch Taobao, a consumer-facing shopping site. Employees brought their work home, and even family members pitched in, answering customer calls that had been redirected to residential numbers, according to Alizila, Alibaba’s news site.
Taobao was a success, helping Alibaba defeat eBay-backed EachNet, and eventually became one of the world’s largest e-commerce platforms.
Today, Alibaba is worth almost US$573 billion and its e-commerce platforms, including Taobao, processed a record 268.4 billion yuan (US$38.4 billion) in transactions during its 24-hour Singles’ Day promotion on November 11 last year.
The e-commerce giant is not the only one that rose from relative obscurity during the Sars crisis.
JD.com, then called JD Multimedia, was an offline operation selling disc drives and CD burners in Beijing when Sars hit, sending its customers away and forcing founder Richard Liu Qiangdong to take his business online.
Getting buyers online was hard at first, but after an online CD forum's administrator endorsed the store, business became good enough by 2004 for Liu to close his physical store and focus on the e-commerce site, which would eventually become China’s second biggest after Taobao.
Both Alibaba and JD.com, initially ignored by larger competitors such as eBay, came out on top in the following years by targeting the domestic audience.
Alibaba made Taobao look like a local bazaar, while JD.com stood out by offering speedy delivery via its self-built logistics infrastructure, as investor and adviser Duncan Clark wrote in his book Alibaba: The House That Jack Ma Built.
It seems possible that history could repeat itself during the current coronavirus outbreak: with companies having their employees work remotely and millions of Chinese confined to their homes because of lockdowns and quarantine measures, some tech companies have seen a huge jump in users, presenting ripe opportunities for expansion.
“This [coronavirus outbreak] could be a trigger to further digitalise Chinese society, and the tremendous momentum of online businesses has once again surfaced,” said Sun Mengzi, a senior analyst at consulting firm Analysys.
“After the epidemic, the vast majority of companies, even manufacturers and other companies in the heavy industries that are not easy to move online will consider digitalisation.”
Experts we spoke to identified several areas that could spawn new tech breakthroughs during the outbreak.
Schools in China have remained closed since the Lunar New Year holiday, and the new semester began last month with online classes.
More than 50 million students across 30 provinces attended classes on DingTalk, Alibaba’s enterprise messaging app, on the first day of the semester on February 10.
Private education provider TAL Education said its online courses had more than 500 million views in the first two weeks of the new semester, while JD.com said that sales of student tablets nearly doubled between February 2 and 11, a week before the semester started.
The outbreak is accelerating growth in an already booming e-learning industry: China’s online education market grew 25.7 per cent year-on-year in 2018 to 251.7 billion yuan (US$35.9 billion), according to iResearch Consulting Group, and the previous forecast of annual growth of between 16 per cent to 24 per cent in the subsequent three to five years may now need to be revised upwards.
“As users flood online [education] platforms, these companies can experiment in a way they could not imagine before,” Sun said. “But after the outbreak, whether they can keep users on their platforms depends on [the quality of] their products and services.”
Online classroom service provider EEO’s platform, ClassIn, used to host about 200,000 students daily before the epidemic but now sees an average of two million students a day.
EEO founder and chief executive Song Junbo said this was an opportunity to cultivate user habits on a large scale and increase the supply of quality educational resources, as more teachers are being trained to conduct their classes online.
However, he estimated about 80 per cent of the new traffic gained during the epidemic would drop off after the outbreak.
“Online [education] cannot replace offline education just like WeChat cannot replace cafes,” Song said. “Both online and offline education services are competing for students’ time, which is limited. So after the outbreak, offline education services will still play a major part in the market.”
Another area that has seen rapid expansion during the outbreak is grocery deliveries, with more consumers avoiding shopping outside and choosing to cook for themselves to minimise contact with food couriers and exposure to potentially contaminated food.
On-demand local services giant Meituan Dianping said sales of raw food products such as vegetables, meat and seafood tripled between January 19 and February 19, while Alibaba-owned food delivery service Ele.me saw grocery orders nearly double between January 21 and February 8 from the same period a month earlier.
Sales on JD.com-backed grocery delivery JD Daojia also nearly quadrupled between the first 10 days of the Lunar New Year holiday, which started on January 24.
“People are gradually moving from offline shopping to online and the habit won’t disappear when the epidemic is over,” said Zhong Zhenshan, IDC’s vice-president of emerging technology research. “This will have a very positive impact on the whole e-commerce industry.”
The number of daily active users for online grocery deliveries was 7.8 million in early January before the outbreak, according to a report published by Questmobile.
This number reached 10 million during the Lunar New Year holiday and jumped to 12 million by early February, just a month later.
Demand for online workplace services has also soared, as employees in China gradually resume work after the Lunar New Year holiday.
“For most companies, they have no other choice [but to move online]. However, this also brings a ‘spring season’ for a lot of [remote working service] suppliers,” Sun said. “Once enterprise clients’ usage habit [of operating online] is cultivated, it’s much harder for them to move offline compared with individual consumers.”
To meet greater demand from companies during the outbreak, Tencent Meeting, a video conference service launched by Chinese gaming giant Tencent Holdings last December, has added 100,000 cloud hosts to expand its capacity from January 29 to February 6.
DingTalk recorded a 356 per cent increase in downloads from both iPhone and Android smartphones in mainland China from February 2 to February 29 compared with January 5 to February 1, while WeChat Work and Lark from ByteDance saw a 171 and 650 per cent increase respectively during the same period, according to mobile research firm App Annie.
Over six million companies have used DingTalk for remote working after it launched a “remote office” function for free with features including video conferencing, live streaming for over 300 participants as well as online document-editing and approval.
WeLink, Huawei’s previously internal collaboration platform which opened up to government and enterprise clients last December, has signed up hundreds of thousands of government and enterprise clients, including 6,000 hospitals since January 25. WeLink now has more than 1 million daily active users.
Analysts predict that the long term development of China’s 5G mobile services industry will accelerate, as the outbreak has seen a surge in multiple applications which require faster internet connection and low latency, such as live streaming and teleconferencing.
“In the short term, we’ve seen some [5G roll-out] projects postponed during the epidemic, which is inevitable,” IDC’s Zhong said.
“But after this, we’ll see changes in people’s living and working habits, which will bring higher demand for the telecoms network. And this will lead to a faster development of China’s 5G market and 5G’s application in the enterprise market.”
If the outbreak is under control by April, there will not be much impact on this year’s 5G development in China, according to Yang Guang, director of Strategy Analytics’s service provider group.
He said that China should be able to meet industry estimates of installing 600,000 to 800,000 base stations by this year in that case.
“Due to the impact of the epidemic, the demand for 5G in specialised industries – such as emergency [management], medical, security and remote working services – may increase significantly. This may push 5G to enter the industrial market faster and help expand its market space,” Yang added.
A new super app?
Online businesses in areas such as grocery delivery and e-learning face the challenge of keeping users after the epidemic, according to Analysys’ Sun. “They have more users now but their O2O (online-to-offline) business model means they still need to depend on offline services.”
But for now, rising demand in the areas above driven by the circumstances caused by the outbreak has given tech companies a ready user base to explore new areas, and helped accelerate a move towards becoming more like ubiquitous super app WeChat, which allows users to chat, play mobile games, shop, make online payments and even invest from one platform.
News aggregator Jinri Toutiao, operated by TikTok owner ByteDance, recently introduced access to local services, including grocery, food and drug delivery, in partnership with third parties.
Food delivery app Meituan announced on Friday that it would start offering books from 72 bookstores in Beijing on its platform as soon as next week. Sales on its grocery delivery service, Meituan Maicai, were also two to three times higher than usual in Beijing during the Lunar New Year public holiday, even as its riders say food delivery orders have fallen.
Independent internet analyst Ge Jia, however, argues that these apps lack social interactivity, which is key to WeChat's success.
“WeChat is in essence the only super app, because it enables social connection,” said Ge, who has been watching the industry for two decades.
“Jinri Toutiao is a content distributor, so it can go further in the areas of publication, advertising and knowledge-sharing, but not so much social media or shopping. Meituan can expand its local services, but other areas such as gaming will be quite off the track,” Ge said.
“They don't have a very big chance of becoming super apps, but they'll grow relatively large in their own niche areas.”
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