Last week, AmCham China hosted a successful webinar discussing how our member companies are dealing with the COVID-19 situation. We were honored to be joined by an incredible panel of guests from a variety of industries, with opening remarks from AmCham China’s Chairman, Greg Gilligan, and briefings from an impressive panel of speakers, including:
- Nick Marro, the Global Trade Lead at the Economist Intelligence Unit
- Kent Kedl, Partner and Head, Greater China and North Asia, Control Risks
- Zhang Yifei, GM of Beijing, Control Risks
- Michelle Zhang, Head of HR, Pfizer China and Head of AmCham China’s HR Forum
- Michael Hart, Chairman, AmCham China Tianjin Chapter Executive Committee
Marro started the briefing by breaking down the Economist Intelligence Unit’s (EIU) economic growth scenarios. He highlighted the changing nature of the situation, discussing the likelihood of multiple scenarios and the economic impacts of each based on the EIU’s research into historical comparisons with the SARS outbreak and current data.
The EIU forecasts with an estimated 50% chance that the virus epidemic in China will be under control by the end of March. However, in this scenario they have downgraded their previous China 2020 GDP forecast from 5.9% to 5.4%. Alternative scenarios depend largely on when the virus is controlled, and Marro emphasized that companies should have plans in place for a variety of scenarios. However, companies should also prepare for the risk that the official growth number (particularly for the first quarter) may overstate the actual level of real activity in the economy. As a result, business conditions will likely be weaker than China’s headline economic figures might suggest.
The EIU’s GDP downgrades extend across Asia, with tourism and supply chain disruptions having major impacts on economies throughout the APAC region.
While the virus containment is the top priority of the government, the resumption of work and dealing with supply chain disruptions is underway. Recovery in business activity has been staggered. Industrial activity is resuming with strong government policy support, but industry is not close to full capacity. With industry so reliant on migrant workers and an estimated one-third of migrant workers yet to return, capacity restraints will persist until they are able to get back to work.
Marro concluded by advising that companies plan for all possibilities and understand the challenges associated with production and investment delays, compliance issues, supply chain disruptions, and government policies.
Planning was also a focus of Kent Kedl’s briefing, as he started with a quote from the boxer Mike Tyson: “Everybody has a plan until they get punched in the face.”
An overlooked aspect of the COVID-19 situation stems from too much available information, or an “infodemic” as Kedl put it. Companies, he said, should coordinate closely with HQ and look at how local authorities are responding to better understand what information can be trusted. Echoing Marro’s advice, Kedl suggested that companies should plan for everything and to react to scenarios according to planning, rather than relying on news reports.
The epidemic has impacted businesses, and will continue to do so, according to Kedl, as he discussed a timeline of how to manage through a crisis, with companies needing to be ready, to respond based on planning, and then to focus on the recovery. Once the epidemic ends, he said, companies must think about the future growth opportunities of the market, rather than about simply getting back to work. Some key questions to ask about market recovery:
- What will the market look like?
- What new risks will present themselves?
- How has the crisis impacted competitors?
- Which parts of the market will recover first?
Demonstrating duty-of-care for employees and the community was a point that Kedl and Michelle Zhang, the head of HR at Pfizer China and head of AmCham China’s HR forum, both emphasized. Zhang highlighted the importance of Pfizer’s BCCP, their crisis management team, whose three main objectives of the crisis management team are to ensure employees’ health and safety, support customers to overcome difficulties, and to minimize the disruption to business operations.
Pfizer responded quickly to news of the virus outbreak, purchasing masks for their 800 Hubei-based colleagues in mid-January. Medical insurance updates were implemented for all employees and family members of employees on January 22nd, and the company announced a “work from home” policy on January 26th, before the government’s implementation of a similar policy. Pfizer’s crisis management team helped them stay a step ahead of the epidemic and has boosted employee and customer confidence in Pfizer. How a company responds and cares for employees reinforces the company culture, Zhang said, and while the COVID-19 situation certainly brings challenges, with the correct measures in place, a crisis can also bring opportunities.
Michael Hart, the Chairman of AmCham China’s Tianjin Chapter, presented a unique perspective of the COVID-19 epidemic from Tianjin. While much of China is showing a resumption of activity, labor data on February 21st showed that only 16.5% of Tianjin’s workforce had returned. While resumption of activity and getting back to work are important, Hart advised that it is important to not get frustrated and to consider the challenges facing national and local governments. Though things have certainly been disrupted, governments have had to prioritize, Hart said, and members should consider how food supplies and services such as garbage removal have continued.
Individuals are impacted on many levels of enforcement, with people dealing with national, city, district, apartment, and office building policies. Considering all of the policies and the various impacts to society, Hart stated that it would be helpful for AmCham China members to share their feedback with AmCham China to help local governments understand what individuals are dealing with and in some cases how the various requirements imposed on individuals are conflicting or overlapping. While it is important that businesses reopen, health and safety is the top priority, but the government also needs to realize that just allowing a company to reopen doesn’t mean they will be fully effective and back to normal immediately.
Michael Hart, the Chairman of AmCham China’s Tianjin Chapter, presented a unique perspective of the COVID-19 epidemic from Tianjin. While much of China is showing a resumption of activity, labor data on February 21st showed that only 16.5% of Tianjin’s workforce had returned. While resumption of activity and getting back to work are important, Hart advised that it is important to not get frustrated and to consider the challenges facing national and local governments. Though things have certainly been disrupted, governments have had to prioritize, Hart said, and members should consider how food supplies and services such as garbage removal have continued.
Individuals are impacted on many levels of enforcement, with people dealing with national, city, district, apartment, and office building policies. Considering all of the policies and the various impacts to society, Hart stated that it would be helpful for AmCham China members to share their feedback with AmCham China to help local governments understand what individuals are dealing with. While it is important that businesses reopen, health and safety is the top priority, and being open does not necessarily mean that a company is effective.
Al Beebe, AmCham China’s president, gave closing words of encouragement to participants, highlighting AmCham China’s dedication to providing timely, valuable, and accurate information at this time. Upcoming webinars on various topics can be found at the events page here.