Session Summary - “How businesses can ‘ride out the storm’ amid the coronavirus crisis?"

Session Summary - “How businesses can ‘ride out the storm’ amid the coronavirus crisis?"

Recently, there has been a surge in coronavirus inflections across the globe. While Hong Kong and Tokyo witnessed a renewed surge in local transmission recently, the US has seen more than 50,000 new COVID-19 cases per day continuously. In view of signs that another wave of COVID-19 inflections may soon begin, social distancing and border control measures have been tightened again, slowing down the pace of economic recovery. In face of the ever-changing pandemic situation, what innovative strategies can corporations and international enterprises adopt under such a challenging business environment?

To understand how different business sectors can be well prepared for a post-COVID World", China Daily Asia Leadership Roundtable organized a virtual roundtable with prominent speakers Mr. Calvin CHOI, chairman of the Board and CEO, AMTD Group; Mr. Dar WONG, vice president, ASEAN-China Commerce Association; Dr. Daniel YIP, chairman, Federation of Hong Kong Industries; and Mr. Pana JANVIROJ, executive director, Asia News Network. Below are some of the key points they during the event:

How has the manufacturing industry in Hong Kong been affected by the coronavirus crisis?

Daniel YIP: The manufacturing industry has experienced the worst April. Many clients cancelled or delayed their orders, which in turn are affecting the cash flow and workers’ income. During a survey conducted by the Federation of Hong Kong Industries in late June, 40 percent of our members said they had a slight rebound in the number of orders compared to that in April. It is the toughest year for the economy of Hong Kong as the city has been experiencing a “perfect storm” from a pandemic of an unprecedented scale, as well as the escalating trade skirmish between the world’s two largest economies.

What is the effect of the so-called US sanctions on Hong Kong?

Daniel YIP: Eighty percent of the polled members of the Federation of Hong Kong Industries believe that the effect of the US sanctions on the SAR remains small and negligible. Ninety-nine percent of Hong Kong’s total exports to the US are, in fact, re-exports from the Chinese mainland and subject to the US tariffs. There’s a growing tendency by the US to tighten its grip on shipments of crucial technology to Hong Kong over the past four years, leading to a 75 percent plunge in exports of high-tech products to the SAR.

The faster the governments act to curb the outbreak, the faster the recovery.

Dar WONG: Asian countries have all done a relatively good job. When their governments implement social distancing policies to contain the spread of the virus, residents tend to follow. Hong Kong, Singapore and South Korea should recover faster in Asia as the size of their population is small.

What is your forecast regarding the global economic recovery?

Dar WONG: With no let-up in sight in the coronavirus pandemic, the global economy is likely to take another two to three years to recover. After next year, there will be a huge correction on the global basis. The recovery will only come, probably, in 2022. In a post-COVID-19 world, most of the companies will be recovering, while the fastest one with high growth should be any companies that embrace the high-tech gadgets or involve 5G or satellite connectivity.

Pana JANVIROJ: Regarding the outlook of Thai economy, the development of the energy sector will be L-shaped in the next five to seven years. The outlook of the oil industry is rather pessimistic. The development of tourism industry, meanwhile, will be W-shaped. Although the recovery of the tourism industry will be quick one, it will still be affected repeatedly by the pandemic. For the insurance industry, the recovery will be V-shaped. If people want to invest in Thailand, they can reduce the investment in gold and commodities.

The coronavirus crisis can be seen as a path to reinvention and market diversification.

Daniel YIP: For years, Hong Kong’s economy has been known for its over-reliance on pillar sectors such as finance and logistics. However, a mature economy should have different aspects of a flourishing business. The crisis presents a good opportunity for Hong Kong to take a sober look at overdue industrial reinvention.

What are the main things behind reinventing Hong Kong industries?

Daniel YIP: Many high value-added manufacturing processes, such as marketing, intellectual property creation and production process engineering, can be done in the SAR. Then our final manufacturing place can be set on the Chinese mainland, in ASEAN (the Association of Southeast Asian Nations) or in Hong Kong. We want to make more people realize that industry is not dying in Hong Kong through reinvention.

What is your recommendation for businesses to survive in the post-pandemic era?

Calvin CHOI: The current pandemic is also seen as testifying to or a stress-test scenario for any company’s fundamental business model. So, we should all be innovative and open-minded about transformation. It will be very important to aggregate networks of resources. Now in this world, I think it’s really about partnership approach and ecosystem building instead of a single approach. It’s the moment we need to see more unity and more joint forces. Meaningful partnership and stronger model of collaboration will be something we expect to see.

Daniel YIP: Local manufacturers should start to explore the vast, resilient mainland market and the ASEAN markets, as the region has overtaken the US and Europe to become the Chinese mainland’s top trading partner in the first half of this year. Had the manufacturers diversified their markets and focused on the mainland market long before the crisis, I think, they would have fared much better than their counterparts who merely rely on a single market like the US.

Dar WONG: People need to embrace the transformation into a new working style and business model. Given the worldwide travel restrictions, they need to move their businesses online to avoid being hit hard again in a similar crisis in the future. It’s really a good time for businesses to ponder how to maintain or even increase productivity with decreasing cost, especially regarding manpower, by adopting industry 4.0 concept – embracing big data collection, artificial intelligence, cloud storage and analytics.

What is your advice for investors?

Dar WONG: As a global markets specialist with 30 years’ experience, I advise investors to focus on three sectors in the present circumstances — the biomedical and healthcare industry, the 5G-technology sector and waste management.

Calvin CHOI: On an overall basis, since the acquisition of PolicyPal, my company’s gross written premium has grown over 11 times this year during the COVID-19 pandemic, compared to last year. Thus, I am very bullish on the potential of digitalizing power in Asia and around the globe. If entrepreneurs find the right angle and the right opportunity to plan for the longer-term development, it's still a good time to invest now.