Credit: Visual China

BEIJING, August 21 (TMTPost) - Ask someone to recall 2023 many years later, and most people would say: the weather was bad.

In Beijing, the continuous high temperature of 40 degrees Celsius at the end of June confused some old Beijingers. Is this still the city I grew up in? The recent continuous heavy rain in the city also reminded many of the big rain on July 21 many years ago.

High temperature and heavy rain can be summarized by a term: extreme weather. Extreme weather not only affects the daily life of ordinary people, but also impacts the business operations of enterprises. Generally speaking, high temperatures are a double-edged sword for business activities.

Common sense tells us that high temperatures will lead to hot sales of items ranging from air conditioners to sunscreen clothing and even ice cream. At the Intime Department Store in Hefei National High-tech Industry Development Zone, sales of some brand sunscreen clothing have increased by about 60% compared to last year, and the first batch of products from many brands has been sold out.

Due to the unbearable heat, many people, especially the elderly, come to department stores to escape the summer heat, resulting in an unexpected increase in foot traffic for department stores. Due to the weather conditions, many people delay their dinner time, leading to a bustling night market. “A famous beer index in the U.S. proves a strong correlation between temperature and beer sales,” said Feng Xue, the CEO of commercial meteorological service company Huafeng-AccuWeather (Beijing) Co., Ltd.

However, from a long-term and overall economic perspective, economic and business activities should pay more attention to averting risks associated with extreme weather. In a recent survey where multiple companies were asked about their coping approaches to extreme weather, most companies stated that they did not have any specific approaches or have never paid attention to such issues. However, the recent flooding of a book warehouse in Zhuozhou, Hebei province, should prompt people to reevaluate this issue.

Credit: Visual China

Extreme Weather: Most People Are Unprepared

Li, a delivery man for Ele.me, the online food delivery and local life service platform of e-commerce gaint Alibaba Group, delivers food in the Huixin West Street area, which is home to more than 100 of their partner merchants. One day in early July, Li learned during a meeting at the station that a delivery man at their station had completed over 100 orders the day before, which surprised him. Normally, receiving 60-70 orders in a day is considered normal.

At that time, Beijing was experiencing a heatwave. Food delivery men typically work for at least 8 hours a day, but they can be flexible with their schedules. Many choose to sleep in the afternoon and come out to deliver orders during the peak hours in the morning and evening to avoid the heat. Due to the high temperatures, there was a remarkable rise in orders for cold drinks and ice cream. According to data from Ele.me, in the week leading up to the Dragon Boat Festival that fell June 22 this year, orders for alcohol and groceries on their platform had a significant month-on-month increase. Particularly in provinces such as Ningxia, Guizhou, Gansu, Henan, and Anhui, orders for drinks and ice cream from supermarkets grew by more than 40% compared to the previous month. In cities like Yinchuan and Zunyi, orders for drinks jumped by around 2 times month on month.

Li did not completely avoid working during peak hours. In order to minimize the impact of the high temperatures, he wore the sun protection clothing and cooling arm sleeves provided by Ele.me. He also brought with himself heatstroke prevention medicines. He prepared two different-sized food delivery boxes, placing the frozen food in the one in front of the scooter and the regular food in the larger one at the back.

He was stunned that someone in the same city and under the same weather conditions could deliver over 100 orders in a day. Can the body handle it? According to his manager, the only secret of the man was that he drank 7 bottles of water a day.

Li is from Henan province. As an ordinary worker, he cannot understand why the weather is abnormal. He only heard from people in his hometown that many cities in Henan also experienced high temperatures during the same period.

What’s unusual about this heatwave is that China’s northern area seems to be hotter than the southern area. For example, people in the southwestern Chinese city of Chongqing, a city famous for its heat in the summer, jokingly suggested people from Beijing to come to their city to escape the heat.

High temperatures always bring joy to some and sorrow to others. The owner of a well-known convenience store brand in the central region has observed a phenomenon: for every increase of 1 degree Celsius in temperature, the average daily sales of their stores can increase by 80-100 yuan.

However, the CEO of a food company is worried. In the past, the main way to transport food in summer was by train, because of the large volume and relatively reasonable cost of railway transportation. However, they need to find more refrigerated trucks this year. The CEO also said that they have not considered adjusting the structure of the entire logistics because they don’t know if this high temperature weather will become a norm.

For large enterprises, the cold chain is a very important link. JD.com stated that ice product sales have increased by about four times since the beginning of this summer. Based on years of experience in major promotions and peak sales periods, the company’s cold chain made sufficient preparations for ice products in advance this year. Packaging schemes with different timeliness are provided based on the size of the gift box and the temperature of the shipping location. With the help of intelligent algorithms, the warehouse is prompted to perform ice packing operations in a timely manner to ensure temperature control.

However, this does not mean that China's cold chain logistics industry will benefit. In fact, China's cold chain logistics is still in a situation where "everyone knows it is important, but no one in the industry has achieved profitability." At a logistics entrepreneur summit recently, a cold chain company owner self-deprecatingly said that his competitor is not another cold chain company, but traditional cooling measures.

When it comes to abnormal climate, people are often resigned. Defaulting on contracts and even suffering business losses caused by climate change can be considered force majeure under the law.

In fact, from international experience, using meteorology to assist in business decision-making is an important capability for many multinational companies. For them, meteorological information is one of the important business intelligence contents. In the retail industry, the site selection and operational decisions of giants like 7-Eleven all reference local meteorological information. In the logistics industry, many international logistics giants are long-term purchasers of commercial meteorological services.

According to rough statistics, there are hundreds of companies that can provide commercial meteorological services in China. However, most companies keep a low profile and are not known to the outside world.

The Neglected Commercial Meteorology Industry

"A few years ago, we wanted to draw attention to our industry, but later we found it impossible, and we might as well focus on our own affairs," Feng said.

When I was sitting in the office of Huafeng-AccuWeather in Beijing, the city had just experienced a thunderstorm during a break from the heatwave. At that time, there was still half a month before the devastating flood reached Zhuozhou, Hebei province. Feng pointed outside the window and told me that their technology could accurately indicate the water volume of this rain every minute, but no one would need it.

For ordinary people, it has become a habit to check the weather forecast. There may be some regional differences in demand for the forecast. For example, weather forecasts for southern cities in China also include predictions of changes in air pressure, while northern cities in the country have almost no such demand.

According to official introduction, Huafeng-AccuWeather was jointly established by Huafeng Media Group, a wholly owned subsidiary of the China Meteorological Administration, and AccuWeather, a leading global weather and digital media company. The joint venture, founded in Beijing in 2015, provides professional and accurate meteorological services for TMT, IoT, AI and other industries.

Huafeng-AccuWeather stated that they provide weather information for "over 90% of Android phone users." Nevertheless, based on international experience, it is often large companies that truly need in-depth commercial meteorological services. In the consumer sector, the retail chain industry and logistics industry are among the major receivers of commercial meteorological services.

For example, in the U.S., where tornadoes occur frequently, commercial meteorological services often help with the country’s railway transportation. Based on the forecasts from meteorological departments, when a tornado occurs in an area, it is best to suspend all ground activities for two hours. However, accurate meteorological services can inform railway companies that a certain line only needs to be suspended for 40 minutes, without the need for a two-hour halt.

In the case of U.S. retail giant Walmart, commercial meteorological intelligence is also given unprecedented attention. According to Feng, in the decision-making process of Walmart’s commercial site selection, commercial meteorological service companies can provide decision-making advice based on weather information. In other words, Walmart allows commercial meteorological companies to participate in their site selection decisions.

But why hasn't commercial meteorological intelligence received much attention in China? Feng believes that the primary reason is that various business competition levels resulted in different standards of commercial efficiency in different countries.

For example, why does 7-Eleven value commercial meteorological services? First, convenience stores have a high enough density in the Japanese market and are considered as commercial infrastructure. Moreover, the convenience store market in Japan is highly concentrated among a few major players who divide the market. The fierce competition forces these giants to enhance their competitive edges. Therefore, commercial meteorological intelligence becomes a way to boost their competitive strength.

Feng divides the degree of customer demand into strong demand and weak demand. As for the logistics industry, it should belong to the strong demand industry. “However, if we bring the example of the tornado mentioned earlier to China, some customers may say, ‘It’s okay, we don't need to rush. We can suspend operations for three hours, and safety comes first’,” said Feng.

Therefore, in the Chinese market, the demands of customers need to be analyzed on a case-by-case basis. In fact, many internet platforms and logistics express companies are also users of Huafeng-AccuWeather services. However, they have different reasons for using the services. If a company has a relatively large fleet of air cargo aircraft or a large-scale unmanned aerial vehicle project, their demand for commercial meteorological services will be more urgent. Relatively speaking, companies that provide air transportation are more interested in commercial meteorological services than those that provide land transportation.

In the retail industry, many large companies use commercial meteorological information to assist in their business decision-making. However, many companies only purchase data and do not ask commercial meteorological companies for advice. “They believe that their site selection model is the company's core trade secret," said Feng. Thus, many commercial meteorological companies need to choose between two paths in terms of their positioning: whether to sell data or to sell services.

Feng, who has been in the industry for many years, insists that commercial meteorological service companies should "sell services," as simply selling data will only lead to unhealthy competition in the industry. However, providing services and having customers accept them requires society to truly recognize the value of commercial meteorological services. Feng admits that this requires quite a long process of market education.

Nowadays, the value of commercial meteorological services is self-evident. For example, a well-known down jacket giant in China is a customer of Huafeng-AccuWeather. They need the commercial meteorological service company to provide reference opinions to determine whether the winter will be warm, so they can stock up accordingly. For commodities with long supply chain cycles like down jackets, meteorological information is an important decision-making basis.

With an increasing number of extreme weather events this year, the company has received more inquiries and service intentions. However, Feng specifically requested that his employees should not "show off" in their social media platforms. There are two considerations for this. The first reason is to avoid misunderstandings; secondly, he knows that meteorological services are like "walking on thin ice," as human technology continues to be eclipsed by nature.

For example, this year started with high temperatures, followed by heavy rainfall. These seemingly isolated weather phenomena have finally reached a consensus in the academic community in the second quarter of this year: El Niño will occur this year. El Niño, according to the usual explanation, “can be divided into the El Niño phenomenon and the El Niño event. El Niño phenomenon is a climate phenomenon that occurs when tropical Pacific sea temperatures abnormally warm, causing global climate changes. However, this state must last for more than three months to be recognized as a true El Niño event."

Feng frankly admits that even today, human understanding of El Niño is still very limited, which is the limitation of natural science.

This brings up a question. How accurate can the forecasts be? In fact, according to the overall prediction level, the most accurate weather forecasts in China are still provided by the National Meteorological Administration, but it is still impossible to be 100% accurate. The services provided by commercial meteorological companies can offer services that are more granular, but it is also not possible to be 100% accurate.

Another question is, what measures should a company take when a commercial meteorological service company makes weather forecasts that are unfavorable to its business activities? If a decision is made erroneously, who should bear the responsibility? In terms of functionality, commercial meteorological services are similar to many commercial consultations, but the difference is that the information or advice provided by commercial meteorological service companies often requires the recipient to make decisions and provide feedback quickly. And the benefits or losses brought by these decisions are immediate.

Therefore, Feng pointed out that it generally requires a relatively long cooperation period for companies accepting or procuring commercial meteorological information services to realize the value of them. In addition, cooperation from employees at all levels at the companies receiving the services is also vitally important.

As a veteran in the meteorological services industry, Feng has always believed in its value. With the development of business, the increasingly fierce market competition, and the progress of science and technology, more Chinese enterprises will eventually become frequent customers in the industry, just like Walmart and 7-Eleven.