Faculty & Research

Insights

As the Covid-19 outbreak continues to spread worldwide and batter consumers’confidence, professor Peng Siqing calls for efforts to focus on and build up the confidence of businesspeople, which will, in turn, stabilize employment and boost consumption.

Peng, marketing professor with Peking University's Guanghua School of Management, stresses that the Consumer Confidence Index involves people’s feelings towards the current situations and their expectations for the future. During the outbreak, consumption is depressed, supply restricted and prices go up,making people less satisfied with the present situation. With no end in sight, uncertainty abounds and people are prone to pessimism.

It is reported that the consumer industry in China has been hardest hit and will face business contraction and cash flow pressure in the first half of 2020. To top it off, many businesses are seasonal and will not be able to make up for the losses later. It is a huge contrast with the astounding spending power showcased by Chinese consumers before the outbreak.

HYPER-CONNECTION, LOW STABILITY

According to Peng, consumers normally tend to be more realistic and less emotional, and a combination of stable economy, stable income and stable employment are enough to maintain their confidence. However, in a time of crisis,they are prone to emotional reactions to emergencies and abnormalities. In addition to supply and prices, the stability of public emotions will also affect their spending decisions.

In a culture that traditionally values collectivism, individual Chinese people’s motives, emotions and self-evaluations are closely interrelated with social relations and interactions. A 2019 report reveals that the definition of a good life for many Chinese people not only means the quality of individual life but also includes a harmonious family, good life for friends and relatives and a safe and sound society. In some areas, they factor in society and country even more than their individual situations.

“In the Internet era, we should pay special attention to the compounding effect social-networking has on Chinese people’s relations with others, especially the potential emotional storm it can induce,” Peng said, adding that the activity of spending is already interweaved with social-networking.

Peng noted that this kind of “hyper-connection” increases people’s influences on each other but does not necessarily bring them together across different classes and groups, and their values and acts might differ greatly.

Meanwhile, in an age of VUCA ( volatility, uncertainty, complexity and ambiguity ), people’s self-knowledge also tends to be more fragmented and ambiguous. They are prone to fantasies and desires to change themselves, lacking a strong and stable sense of self.

As a result, people’s psychological state and behavior become less stable and prone to exterior influences, and the outbreak of covid-19 is like a burning match suddenly ignited a pond of social-networking gasoline.

SUPPORT FOR THE VULNERABLE

In order to stabilize emotions, efforts should be made to boost a sense of control, a sense of connection and a sense of dignity.

People need accurate, comprehensive information as well as confidence in their society’s governance and professional capacity to regain control. It also helps to learn more about human beings’ battles with diseases in the past.

A possibility of infection deals a heavy blow to people’s sense of connection as social distancing is recommended and even compulsory. It is imperative to arouse sympathy, kindness, altruism and a sense of unity in people to rekindle this connection. Asthe disease messes up people’s normal life and makes them feel helpless, seeking ways to help others might help oneself recover a sense of dignity during the process.

According to Peng, timely and continuous support should be lent to vulnerable groups who are especially prone to the impact of the outbreak but not able to mitigate harms by themselves. These people include covid-19 patients and their families ( potential discrimination ), people from epidemic areas ( in particular, Wuhan, the city in the center of China’s outbreak ), those not wearing masks ( banned from public transport in some regions ), entrepreneurs whose businesses are on the verge of collapse, and employees who might lose their jobs.

Peng highlighted businesspeople, in particular, calling for efforts to stabilize their confidence. “If their confidence is weakened, it will trigger a chain reaction that will also drag down employment and induce an emotional storm that will further batter public confidence and ruin future expectations.”

According to Peng, only after taking care of all these vulnerable groups can China maintain a relatively positive level of public emotion, which will, in turn, strengthen the campaign against the virus as well as the belief that the country’s economy will eventually get back on track.

© 2019 Guanghua School of Management Peking University