👛 Shanghai’s nightlife bounces back with lingering pain | Following the yuan

The recovery of China's consumer spending will be long and uneven, and the nightlife sector is just a small part of it that reflects a larger story.

Writer’s note 📝:

I’m publishing this piece a little later than I should but the principle stands: China’s consumer spending won’t bounce back immediately when there’s lingering insecurity from the pandemic and from the economic downturn. We should keep an eye on how much they are spending & what they are spending on.

In late March, on one of the most popular streets crowded by bars and clubs in Shanghai, 25-year-old Joy Zhou witnessed me drinking from a funnel as someone poured hard liquor from the upper floor of On The Road Store 公路商店 in central Shanghai. She was sipping on a cocktail made out of frozen pears from the northeast. She said she would like to go out more.

A year ago, she spent most of her nights in lockdown worried about her husband at a shabby makeshift hospital, aka fangcang, and the rest of the nights reading Covid-related news and horror stories. Last year, Shanghai entered a two-month lockdown under the zero-Covid policy and ordered 25 million of its citizens to stay at home. 

Read about Joy’s husband’s experience here [Chinese]. Image: Reimagine Lab

In the days when food security was an issue, and people died either due to limited medical resources or zero-Covid restrictions, business activities were secondary, economic goals were secondary.

During the pandemic, ‘night economy’, an umbrella term trumped by cities including Shanghai, Beijing, and Chongqing right before Covid hit, was in a pickle. Night economy encompasses activities including eating, drinking, entertainment, and nightlife from 7 pm to 6 am and carries the mission to “expand domestic needs, encourage spending and create jobs”, as Shanghai’s guideline said. Now we are in the post-Covid era, will it achieve its full potential?

Night cinema for shoppers at Green Escape St. (a night market) in Shanghai in 2021. Image: Jiemian

Maybe not immediately. For one, people are still reeling with painful memories — like how Joy’s husband had to set up his own bed with a high fever after spending almost 10 hours on an aimless bus, those who committed suicide because of pain and shortage of medical resources, how a corgi was beaten to death — there were too many. A recently published study funded by NYU Shanghai showed that during lockdown, the prevalence of depression, anxiety and suicidal ideation was 26.1%, 20.1%, and 3.8% among 3230 participants. 

They may have kept the habits from three years of constant lockdowns, which include drinking from a home bar, according to Sala, a 30-something advertiser at a Big Tech company. They may feel that they enjoy being at home more, as Joy said. As for me, when I go out, I go hard on pre-game drinks to be economical.

Business-wise, despite state media including Guangming Daily’s firm claim of a comeback that “reflects the vitality of economic development” with no timely data in the piece, a rebound has not happened across the board in terms of sectors/brands after easing zero-Covid restrictions in December. What we see in public companies’ performance and guidance is that luxury brands are selling well, but those that cater to the middle class and the working class are still flagging.

China doesn’t keep a tally of the night economy yet. And when we look at other public data for Shanghai as an example, it’s clear that people are eager to spend but it’s uncertain whether that’s sustainable. Shanghai’s social retail sales value bounced back and exceeded pre-pandemic levels but its residents are actually earning less than the same period last year. (Stats from the municipal tax bureau shows that individual income tax in 2023 Q1 reduced ~8.2% to ~70 billion yuan).

“We all expected a big bang return to being busy, but it's been much slower than expected,” said Dada’s founder Michael Ohlsson, who owns the nightlife venue with two other outposts in Beijing and Kunming, in late March. “I’ve been touring all over the country in the past 2 months, and nightlife is still on a gradual rebound everywhere.”

Dada Shanghai re-opened during the pandemic. The founder Michael Ohlsson said the biz was coming back slower than expected. Image: Timeout

He added that the slow bounceback may be a combination of factors including a Covid wave after opening, the Chinese New Year holiday, consumers’ cutdown on nightlife spending, and lifestyle changes from the last 3 years, like getting up at 7 am every day to do a Covid swab test. 

China's night economy has grown rapidly since 2016 and was expected to exceed 40 trillion yuan (US$5.82 billion) in 2022, according to data from domestic market research firm iiMedia Research.

This is the only data I can find, and with the upward trend, I can’t help but wonder whether it truly reflects consumer sentiment about nightlife, given that it also counts their online spending at night. There’s no reason why the market size wouldn’t go up with the expanded coverage area.

I hope I’m wrong, and I hope there is more to look forward to.

Sala, the Big Tech advertiser, said going out in Shanghai under zero-Covid was a mixed feeling of “being sneaky and cathartic”, as he mostly used others’ green health codes to avoid being caught by the surveillance system, he said. 

Now, he goes out clubbing almost every week after zero-Covid was lifted and looks forward to the return of foreign talents. 

On Mar. 20, China's Ministry of Culture and Tourism resumed the processing and approval of foreign-related commercial performances. China also began to issue visitor visas for foreign nationals on March 14, after three years of stoppage. 

Ohlsson believes that this could kickstart newfound interest in going out after three years of only domestic DJs and bands. “If we talk again in a couple of months, it'll be a different story,” he said.

Back at On the Road Store, we were drinking and chatting by the curb while two masked policemen came over and stood in front of it. We didn’t know why, but I had a tingling feeling that quickly came and left, and I knew I’d feel like this for a while. 

A business rebound takes time, and so is the return of a sense of security. 🔚

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