A teacher (center) instructs trainees at a skills training center in Meishan, Southwest China's Sichuan Province, on January 13. Photo: CNSphoto

The outbreak of novel coronavirus pneumonia (COVID-19) has halted China's booming domestic service industry due to labor shortages and declining demand, yet the sector will recover rapidly once the epidemic is contained, industry insiders told the Global Times.

Workers in the domestic service sector include household cleaners, nannies, nurses caring for the elderly, and home maintenance workers. Workers in the sector have had their hands tied since the outbreak of the virus, which has killed more than 1,300 people so far.

"About one-third of the labor force in the domestic service sector was estimated to have returned to their posts after the Lantern Festival [which fell on February 8 this year]," said Chen Xiaohua, CEO of 58 Home, one of China's leading platforms helping people connect online with offline home services.

58 Home is owned by China's Craigslist equivalent 58.com Inc.

Chen told the Global Times in a recent interview that the epidemic's impact on the domestic service industry has been quite obvious, bringing it to a nearly stagnant state.

"Orders placed online usually peak after the Lantern Festival, when most workers return to their posts in major cities and consumer demand that could not be met during the Spring Festival holidays is fulfilled," Chen said.

However, in 2020, that standard was interrupted. 

Li, a 28-year-old white-collar worker in Beijing, has a maid who helps with household chores for two weeks at a time. "But my maid is now trapped in her hometown in Northeast China and cannot come back to Beijing," Li said.

"Even if she was back, I would not call her to my home given the current serious epidemic situation," Li noted.

Another Beijing-based woman surnamed Yan, who gave birth to a child in January, told the Global Times that she had booked a postnatal nanny - or yuesao in Chinese - before the outbreak of the coronavirus last month, and "luckily the nanny stayed with us the whole holiday, otherwise it would be difficult for me and my family to manage so many things." 

According to Yan's observation, some new mothers around her have canceled postnatal nanny services regardless of whether they are at home or at a nursing center.

Apart from the shortage of workers and plummeting demand, some administrative measures have also posed difficulties for the domestic service sector.

In order to reduce potential risks of cross-infection, some apartment buildings have implemented closed management systems - only residents with relevant certificates are allowed to enter freely, which restricts domestic workers from entering customers' homes."If the epidemic cannot be contained in the short term, big firms with sufficient cash flow are more likely to survive compared to medium-sized or small business. The latter might reduce human costs via large-scale layoffs," Neil Wang, president of consultancy Frost & Sullivan in China, told the Global Times.

Challenges or crises are usually companioned by potential opportunities. "Despite scarce orders, service providers could take advantage of the gap to make adjustments like shifting work online - from customer recruitment and interviewing nannies to final transactions - in a bid to present newly upgraded services to the market after the coronavirus is contained," Wang suggested.

Chen echoed that suggestion, saying the epidemic has pushed firms to innovate, accelerating their pace of transformation from offline to online. "We have been monitoring the development of the epidemic. For the moment, we will control our cash flow to ensure that the company will survive despite the impact. Meanwhile, we will explore online business," said Chen, who is treating the moment as a good opportunity to obtain potential labor and customers via the internet.

There were about 30 million people working in the sector in 2019, with 26.02 million the previous year, data showed.

Inelastic demand

The domestic service sector has played an important role in boosting employment, implementing targeted poverty alleviation measures and ensuring people's livelihoods.

Once the epidemic is fully contained, it is expected that surging demand will push the sector to recover rapidly, analysts said.

The industry has maintained a strong momentum in recent years alongside the country's aging population and the implementation of the comprehensive two-child policy. 

The growing middle class with more disposable income is more willing to pay for professional domestic services.

"Some families rely on external help when it comes to babysitting a child or caring for the elderly, so consumption in this regard is necessary," said Wang Jun, chief economist at Zhengzhou-based Zhongyuan Bank.

Wang told the Global Times that the niche market has been massively hit due to the virus in the short term, yet that should not cause too much concern given the inelastic demand.

The domestic service sector shows remarkable growth potential. It grew by an annual compound rate of 21.6 percent from 2013-17, when the sector's revenues hit 419.76 billion yuan ($60.14 billion), and it is expected to reach 959.96 billion yuan in 2022, according to an industry report by Frost & Sullivan.

The State Council, China's cabinet, last year issued a document on developing the country's domestic service sector, aiming to promote the sector's quality and market capacity. Measures should be taken to ensure the health of workers, maintain a well-functioning credit system and properly regulate and standardize services in the industry, the document said.

It is expected that the epidemic will reshuffle the sector. Large-scale players will remain while small-scale providers will gradually raise their investments in building quality and brands for future development, according to Neil Wang.

"Both the services providers and consumers will pay much more attention to hygiene and health after experiencing this public health crisis, and professional training in this regard should be strengthened in the future," said Li Changan, a professor at the University of International Business and Economics' School of Public Administration.