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June 26, 2020

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Shopping vouchers set to drive festival consumption

THE Dragon Boat Festival is usually a good time for retail and entertainment. But this year, the auspicious holiday has been weighed down by the COVID-19 pandemic.

To counter the impact, local governments have been issuing coupons to stimulate consumption.

One of many who took advantage of this scheme was a woman surnamed Chen, who bought some take-out food from a street vendor worth 64 yuan (US$9), but only paid 34 yuan by using a coupon.

“This is my last coupon, I have already used all of them. I think it’s a good deal with the discounts,” she said.

The coupon Chen used was issued by Tencent’s WeChat. When consumers pay through WeChat, the discount will be automatically deducted.

Similar services are also provided by Alipay, the e-payment app of tech giant Alibaba, and e-commerce platforms such as JD.

Shen Jianguang, vice president of JD and chief economist of JD Digits, said digital platforms improved the efficiency of coupons.

“You cannot give vouchers to shops, one by one, it is very costly and also impossible. But by a huge platform like JD, then you can enable hundreds of thousands of shops to gain access to this platform. And consumers can also use the electronic vouchers in a very efficient way,” Shen said.

Coupons issued by local governments around China range from a few hundred thousand to tens of billions of yuan. In Beijing, coupons come from multiple parties: the government, e-platforms, and enterprises. In early June, the Beijing authority announced that it would offer coupons worth 12.2 billion yuan.

Consumers also need to pay a certain amount of their own money when using coupons. This, according to Shen, was more ideal than cash handouts.

“I also noticed in other countries, the government tends to give cash, they call it a subsidy to residents, but in China, a lot of local governments prefer to use consumer vouchers,” Chen said.

“As an economist, I can say consumer vouchers are more useful in boosting demand. People like saving.

“If you give them money, people use it to save to put into the bank. Especially during an economic downturn, people’s precautionary saving needs are rising.”




 

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