Many firms are inevitably in survival mode right now: they’re battening down their hatches, furloughing staff and focusing their efforts on their most important customers.
But that’s unlikely to be a successful survival strategy if your most important customers – and the markets they’re in – are in lockdown because of the coronavirus. Retail, hospitality, recruitment and many other sectors have come to an almost-complete standstill because of the pandemic.
So, what should companies do?
One of the answers could well be to look to the regions that have been affected less by the pandemic, or have already come through the worst of it. And East Asia – specifically mainland China, Taiwan and South Korea – is exactly one of those.
In China, zero new deaths from COVID-19 were reported in early April for the first time since the outbreak. Businesses are returning to work, factories are restarting production and the country is on the move again, with all internal travel restrictions having been lifted.
In Taiwan and South Korea, the governments managed to get a handle on the outbreak from the outset. And, while practices such as social distancing are still encouraged, their economies have not been impacted to the extent of those in the west.
What are the opportunities?
Many pundits are predicting China’s economy will bounce back faster and stronger than western ones. There are already signs of pent-up consumer demand being released and driving sales of all manner of goods and services.
The months of lockdown have also inevitably taken their toll on Chinese companies’ internal development programmes, forcing many to seek external solutions to catch up lost ground. This has created big opportunities for western companies which can supply ‘missing components’ – such as advanced hardware or software – to enable Chinese developers to complete their projects. And we’ve helped some of our clients to do lucrative deals to fill precisely these kinds of gaps.
At the same time, lockdowns across Europe and the United States and strict international travel restrictions have reduced competition by deterring many western companies from targeting new export opportunities, leaving an ‘open door’ for those who are ready and able to overcome the challenges.
And there are supply chain opportunities, too. The economic slowdown in the west has reduced the demand for Chinese-made goods, making it easier for western companies to secure new supply sources – where previously they were operating at capacity – and more competitive prices on a whole range of products.
What are the challenges?
There are still challenges to be tackled — not least the international travel restrictions which mean western companies can’t visit these countries. Or, if they can, they’re required to self-quarantine for 14 days.
But this shouldn’t deter would-be sellers and buyers. While technology can’t entirely replace face-to-face human interaction, improvements in video conferencing have made it much easier to communicate remotely with companies in Asia.
And, for essential human interaction, organisations like ours which have teams on the ground can play a vital role for western firms – acting as their local representatives to undertake due diligence, find new customers and partners and negotiate deals.
So, should you do it?
Exports to Asia won’t be the answer for every western business impacted by the coronavirus. But it may be for many.
As China, Korea and the rest of the region pull through the COVID-19 crisis, demand for the most advanced products and technologies – many of which exist only in the west – is growing robustly, with many big opportunities to be had.
And with western markets for many businesses temporarily shutting down, your best bet to survive — and perhaps even grow — may well be to devote your attention for the next few months at East Asia.