Thanks to what is possibly the defining event of the decade ahead, our world is at a watershed moment. It is especially poignant for businesses worldwide, which are undergoing a COVID-19-driven renaissance of sorts. Almost every facet of business is being scrutinized and re-evaluated, causing us to rethink the current ways of working.
This is perhaps exemplified no better than through the simple handshake, which has long been considered an integral custom in business and workplace culture. Amid many self-distancing and isolation measures that have been enacted to reduce the risk of infection, Anthony Fauci, the lead infectious-disease expert in the United States, has sternly cautioned that “we may never shake hands again”. In time, other less-intrusive business rituals such as bowing may take the place of the handshake, and the phrase “We’ll shake on it” may become defunct and an archaic remnant of a world that we can never return to.
COVID-19 is the canary in the coal mine for globalization and a stark warning against the perils of having excessively lean and tight supply chains with few or no buffers. Globalized businesses, which once highly sought cost and scale efficiencies in cross-border operations, have suddenly become highly vulnerable in an unprecedented time of crisis and disruption.
This is especially true for many financial hubs and entrepots, such as Hong Kong or Singapore, that rose up on the tide of global trade and foreign direct investment growth. Developing countries rich with natural resources, spurred on by the promise of greater economic integration over the past two decades, will also find themselves in a predicament as more countries start to onshore their vital businesses and industries.
We have already seen digital transformation and remote working become the new normal. Now more than ever, international companies need to review, restructure and adapt their operations to meet the demands of a rapidly evolving business environment
While it is understandable for many countries to isolate both economically and geographically in the short term, in the longer term, less economic integration will result in a devolution of businesses within their economies. It will mean larger and less-efficient warehouses, longer production times and, more crucially, higher prices. Technology, infrastructure and industry expertise — business commodities that grow exponentially with more economic integration — will also stagnate.
Hong Kong’s businesses face challenging times ahead; however, collaboration — not isolation — is the way forward. Though business leaders cannot control the circumstances they are in, they are in control of how they respond.
We have already seen digital transformation and remote working become the new normal. Now more than ever, international companies need to review, restructure and adapt their operations to meet the demands of a rapidly evolving business environment. Some ways that they could do this include:
Conducting a self-assessment: Since the World Health Organization declared COVID-19 a global pandemic, businesses in impacted industries, such as aviation, tourism and food-and-beverage, have had to deal with new challenges on a grand scale, with many being placed on life support. For other industries to survive, they will need to do a stringent self-assessment of whether they can adapt to constantly changing and uncertain circumstances. Are they prepared to restructure their business over the next two months? Are they prepared to reduce growth activities for the remainder of the year? Are they prepared to strike the optimal balance of preserving cash flow and strategic investment to take advantage of a future recovery?
Drastic operational changes are emerging, and at any given moment, companies may need to reduce staffing costs immediately, enforce force majeure clauses in contracts, meet new compliance and reporting requirements, relocate operations to alternative markets, identify new business opportunities, and allocate resources to less-affected markets.
Knowing is half the battle, and by conducting an honest self-assessment, businesses will be better positioned to take further actions accordingly.
De-risk and diversify supply chains: International businesses have been gradually shifting toward alternative markets over the past two years to fulfill manufacturing and sourcing needs amid the US-China trade dispute. Indeed, the geopolitically charged global trade environment has long exposed supply chain strategies that rely on one market. However, COVID-19 has suddenly flipped the switch on, illuminating the eminent risks of single-market dependency.
If there’s anything to be learned from the current pandemic, it’s that effective offshoring and outsourcing strategies can help companies rebalance single-market dependencies and diversify assets and operations across markets. Diversification protects a company’s bottom line against unforeseen events, and companies with international operations in multiple markets can agilely respond to disruptions in one market or region by seamlessly transferring operations to another.
For Hong Kong, which is often touted as the gateway for Western businesses into China, this is a significant risk factor. The Chinese mainland’s economy has experienced immense productivity slumps since the start of the year amid global restrictions on travel and trade. With the mainland being Hong Kong’s largest trading partner by far, businesses in the port city will need to once again reconsider their options for trade and supply chain management.
Collaborate with third-party specialists: In the corporate landscape, many businesses will find themselves inadequately prepared for the challenges presented by COVID-19, be it through business continuity planning, operational streamlining, finance, payroll management, offshoring, outsourcing or risk management.
Many businesses, especially small and midsize enterprises that don’t have the resources or resolve of larger companies, may need to look beyond themselves for help. Third-party partners and business expansion specialists can help to provide essential services and perform a wide range of operational restructuring activities to raise resiliency against COVID-19 challenges.
These services range from full-service implementation of solutions and digital technologies that can streamline core functions to outsourcing administrative alternatives in the event that front-line managers are affected. Hiring a skilled expert who knows each market that a business operates in will properly mitigate risks, stave off potential disaster and save money in the long term.
Blurring of corporate and personal spaces: We may have to accept that the “world’s greatest work-from-home experiment” may no longer be an optional experiment but a workable reality in the near future. Home offices will become a more-common and central feature for many employees. We will probably not see business events and conventions for some time, but in their place will be a surge in online webinars and digestible video content.
Personal health data may be streamlined and institutionalized. For instance, your identification documents may come with a feature that allows companies to review your medical information and data ahead of an essential business trip.
Businesses will need to learn to implement and use technology that will not only help employee engagement and communication in such a distant setting but also be more acutely aware of what they can do to mitigate a foreseeable drop in productivity. Many businesses that have traditionally been ingrained with a culture of long working hours and presenteeism will have to adapt or risk failure.
The world is hard at work to eradicate COVID-19 but we will live in the specter of these stricter measures for some time — if not permanently. The world that we once knew is gone. However, amid the uncertainty also lies opportunity for businesses to survive and thrive.
The author is the group head of communication at a business expansion specialist firm.
The views do not necessarily reflect those of China Daily.