By Dor Barak of PTL Group
At the time of publication, the Coronavirus crisis in China has begun to lift and business conditions are creeping back to some kind of normality.
Nonetheless, the spread of the virus over recent weeks has shaken the fabric of business proceedings both in China and the wider world. Against this backdrop of lockdown, the companies that have fared best have been the ones that have applied imagination and pragmatism in their proceedings. Those that have been well informed, quick and bolstered by partners have continually outperformed their slow, cumbersome and all too conservative counterparts.
There have been some great examples of business ingenuity. Staff at one retail company with no work to do became delivery drivers for a restaurant chain swamped by orders for home delivery. Other retailers with closed doors have turned to livestream video selling and achieved their best ever sales results. All over China, there are similar stories.
But the use of imagination to overcome such adversity still needs to be grounded in good business practice. Retention has been, and will continue to be one of the key determining factors for business stability. Be it staff, partners, clients or even workspaces, it is crucial to nurture relationships and ensure fulfilment in these areas whilst China’s commercial environment reawakens.
Keep up the communication
This is a time of great sensitivity and upheaval for the people of China, and there needs to be constant, emphatic communication with staff. It is important to understand any difficulties they might be facing and to work together to address them. Equally, it is vital to bolster contact with stakeholders and other third parties who will help carry business forward whether they are buyers or suppliers. It is natural anyway for people to want to be informed, but in China, it is now more important than ever in gaining understanding and earning cooperation.
The companies that have fared best have been the ones that have applied imagination and pragmatism in their proceedings
Take an operational audit
However, to truly be able to react to change requires a sound business footing. It is why a sense check and operational audit, in which all key functions are evaluated for performance and durability, is so useful. The assessment process should be as objective as possible in order to paint a clear picture of the true preparedness of a company, its weaknesses and strengths. For this reason, it is worth considering appointing a qualified third party. Crisis or no crisis, for some companies, regular overviews are their single most effective performance improvement activity, particularly for managements that are largely unfamiliar with China.
Keep up to date with new laws and regulations
Also, fundamental to being prepared for the return to more normal business conditions will be staying up to date with the changes to trading laws and regulations. Some regions in China are already easing back into work, but new rules for business apply, and information on them should be obtained either from regulatory experts or sources within government.
There can be no ambiguity in understanding business regulations relating to the virus, and how they should be interpreted. Not only are breaches likely to be met by draconian responses from local authorities, but corporate reputations will also be at stake. Any company seen to bypass rules relating to the virus is likely to hold bleak prospects upon the return to business as usual.
Prepare for a backlog
Another important reason for legal preparation is the huge logistical backlog that has developed. Companies without the right paperwork may find themselves as the flawed link in a chain, or be unable to supply buyers. Good preparation will prevent legal problems, and those in doubt should seek professional advice. The same applies to changes in regulation to payments, taxes and employment.
At the moment it may not be physically possible to move goods into place and get them ready for distribution, but the provision to make them readily available for when the time comes should be made. For example, companies involved in import or export will inevitably find log jams at sea and airports, but dedicated agents know the quickest way in and out of China, and can advise on how to move goods across the country in the fastest way.
Some areas of business have been particularly hard hit by the virus. Bricks and mortar retailers are one case, and some have switched to increased innovation in online selling. Social e-commerce and live streaming sales were already very significant revenue drivers in China, but their importance has escalated hugely, and in a country in which creative ideas become the mainstream in a matter of days, it is important that retailers continue to innovate and seek new ways of serving consumers effectively.
Ultimately, it is people who will bring companies out of the present situation, and whether it is employees, agents or partners, businesses dealing with China need to operate with care and understanding in order to both weather this storm and be prepared for the day it subsides.
China will bounce back from the virus, and it is crucial to be ready for when it does. Lessons learnt in these difficult times should be stored and remembered because there is a chance something similar will happen again. The main takeaway from the ongoing issues around the virus is one that will serve companies well regardless of trading climate, and that is the need to create corporate agility and adaptability. China remains a fast-changing business environment that rewards flexibility and punishes the rigid; an economy where the fast will eat the slow rather than the big eating the small.