Editor’s note: This post on tech and the coronavirus crisis originally appeared in our members’ only weekly newsletter. Sign up so you don’t miss the next one. Additional contributions by Emma Lee and Lavender Au.
It’s been a rough week in China. An epidemic like the coronavirus outbreak currently centered on Wuhan would have been a challenge any time. But an epidemic emerging just as millions were traveling home for the Chinese New Year complicated both containment and efforts to move much-needed supplies.
At TechNode, we’re safe, and remaining calm but cautious. The Chinese public has largely heeded calls to avoid visiting relatives—an essential part of the new year in normal times. These are not normal times.
The holiday was extended to keep people at home. Across China, it appears, every housing compound or village has a manned checkpoint challenging visitors. In some cases, visitors can pass after a temperature check; in others, they turn all outsiders away. As of Monday morning, authorities appear to be intensifying calls for residents to stay inside both in the quarantine area and across China.
Last time China faced a similar challenge—SARS—the Chinese tech scene was in its infancy. What does the coronavirus mean for tech? And what does tech mean for public health?
Bottom line: Whether you’re in China or overseas, stay calm, wash your hands regularly, and avoid crowds if there are reports of infections in your area. An extended disruption will have lasting effects on the Chinese economy. Depressed spending could be the last straw for businesses that struggled through capital winter. On the other hand, emerging online services like telemedicine and online education could see pickup as users—and especially school-aged children—are stuck at home.
Markets down: Share prices are down in Asian markets. The holiday extension means much of the Chinese economy remains shut down, as companies kept offices closed. The whole city of Wuhan, and much of the surrounding region, is under indefinite quarantine, removing a supply chain lynchpin and emerging tech hub.
So much for capital spring? As this year began, the tech majors went on a fundraising flurry driven by buoyant share prices, suggesting the end was in sight for the sector’s long capital winter. If capital scarcity returns, the position of already-struggling companies like social e-commerce platform Xiaohongshu and, especially, travel site Mafengwo only gets worse. TechNode contributor Michael Norris says the hardest hit could be travel-oriented companies like Meituan and US-listed Trip.com.
“I am less worried about the impact on China’s tech giants, and more worried about small and medium enterprises,” says Norris. “Things were already looking grim, and this latest public health crisis will dent business confidence.”
A SARS moment for online services? When e-commerce was getting started in China in 2003, the SARS crisis provided a turning point for adoption. People avoided shops and public places, and they turned to Taobao. Today, e-commerce is entrenched, but a new generation of online services are on the threshold of acceptance.
- Healthtech is the obvious winner: Ping’an, Alibaba, and JD all have telemedicine projects; company sources told TechNode that they saw heavy use this week.
- Online education: Companies like VIPKID have struggled to gain a foothold as user acquisition costs outstrip revenue. Many Chinese children would normally spend most of their holiday at private test prep courses and tutoring; with those shut down, edtech has a window of opportunity.
- Film: Cinema operators fear that coronavirus-prompted experiments in direct-to-streaming may herald the future, says TechNode correspondent Wei Sheng. Studios pulled plans for holiday premieres and sent films directly to streaming services. Bytedance released Comedy sequel “Lost In Russia” for free, while iQiyi and Tencent released HK remake “Enter the Fat Dragon” today.
AI finds applications: AI companies have been some of the most active corporate citizens in virus response, says TechNode correspondent Chris Udemans. Companies have scrambled to make their technology available to applications ranging from biotech to public health.
- Baidu has made RNA-folding algorithm LinearFold available.
- Alibaba has offered free access to AI computing tools.
- Qihoo 360, working with a company called NoSugarTech, has created an AI-driven public app that helps users identify whether they shared a train with someone infected.
As TechNode returns to work, we’ll be taking a look at some of these efforts in depth.
The biggest threat to privacy—gossipy officials: The epidemic also stress-tested emerging systems of online surveillance. It exposed a gaping hole: organizational culture. Across China, officials texted their friends and relatives sensitive information (in Chinese) about suspected and confirmed cases of coronavirus, including names, ID numbers, and CCTV footage. Badly implemented firewalls are one problem. But no amount of tech can solve privacy if users don’t understand or care what it means to keep data private.
Deliveries are working outside quarantine zone: From tier one megapolises to small towns, we’ve seen e-commerce and delivery services mostly return to normal. “The fact that so many people can get access to food, water, medications, and other essentials during a time of unpredictable demand is a testament to how sophisticated firms like Alibaba, JD, and Meituan have become,” says contributor Elliot Zaagman.
“For all the hype around drones, AI, and automation, it is still real people who make this possible,” said Zaagman. Many low-paid delivery drivers forewent holiday travel to keep parcels moving. But urban centers are still relatively empty—with cities like Beijing restricting inbound travel, white collar workers returning over the next few weeks may prompt labor shortages at companies that rely on mass low-end jobs.
Popular N95 and other face masks have been in short supply both online and in stores, with e-commerce merchants promising delivery in weeks at best.
It’s another story in Hubei, however, says correspondent Lavender Au, under quarantine in the city of Shiyan. With private vehicles banned, the small city is relying on brick and mortar. Markets have remained fully stocked and surgical masks have been on the shelves in pharmacies. Disinfectant, however, has been out of stock for most of a week.
Wei Sheng had masks delivered to his sister in Wuhan itself, but an order for his parents in a smaller satellite city has been held up for days.
Social media spread awareness—and rumor: In the days leading up to the holiday, official media played down reports of the epidemic, making social media the prime vector for information. It certainly got the word out—face masks were sold out in central Shanghai on Jan. 21, and much of China spent the holiday glued to their feeds. But it’s also carried misinformation, encouraging ineffective precautions like gargling salt water. Tencent has set up a fact-checking website (in Chinese) to respond to some of these rumors.
But a huge market isn’t on Douyin: Social media has its limits: on Jan. 21, nearly every young person in Shanghai wore a mask, while more vulnerable middle aged and older people mostly didn’t. Much early commentary was about the difficulty of persuading parents to take the virus seriously. Memes tried to reach this audience with masks Photoshopped onto images of Buddhas and Mao-era propaganda.
The power of traditional media: What actually got traction with the older and rural audience was the oldest of Chinese old media: official state news broadcasts, red banners (“To eat with others is to seek death. To visit relatives is to do harm to them.”), and shoe leather—many villages sent people out banging gongs and chanting rhymed slogans in dialect about staying home. To an older generation, this is what authority looks like—and it got people to take action.
There’s a lesson here for marketers about over-relying on new media. Pinduoduo proved that there’s money to be made online in older and more rural markets. If you want to reach this market, it may pay to look beyond the smartphone.