Post-Pandemic Asia: defining the “New Normal”
As economies across the world are slowly restarting, the size of the damage is becoming apparent. consultancy company McKinsey has calculated that global GDP will shrink somewhere between 4.9% and 6.2%. In the meanwhile, similar calculations are being made for Asia. The World Bank expects “only” a 0.5% GDP decrease for South-East Asia and “only” a 0.1% growth for China.
These figures are remarkable compared to the dramatic outlook in other regions. Asia obviously started from a better position than the EU or the US, having experienced consistent growth for many years. This pole position in the race to the “new normal” will have a positive impact on Asian competitiveness.
The resilient continent
Over the last 30 years, Asia has been struck with 3 financial crises: COVID-19, the GFC about a decade ago, and the Asian financial crisis in 1997. Regional economies however managed to achieve positive growth within 2 years from the crisis and maintain an important average annual overall growth over the entire 30-year period, whereas the US’ and the EU’s curves were a lot more flat.
Asian economies have to be more resilient, innovative and adaptive, regardless of financial crises, as they need to cater for change on an ongoing basis: urbanism, a rapid emergence of middle class, globalization and other parameters. These pre-requisites have forced Asian businesses to be adaptive and able to reinvent themselves. This will – again – create a competitive advantage post-covid.
In general, Asian political systems are very hands-on and interfere actively in societal behavior and industry. In times of crisis, power moves quickly upwards to regulatory levels; populations and business need to follow and execute regulations and are asked to contribute without complaining. A good example is the deployment of tracking applications for corona: China uses a color coded health-tracker and Hong Kong tracking people’s movements to enforce quarantines.
These are only a few examples of how more agile politics can improve crisis management. Asian governments have not only proven to be quick and focused, but also manage to get the industry sectors on board. Asian companies have taken great responsibilities to keep their employees on payroll. As a result, massive lay-offs, as seen in the US, have not happened.
Innovation and creativity
Not only have online platforms for meetings, education and e-commerce been successful in isolation times, Asia is accelerating digital models that go further than what we can observe in the West. Beer producer Tsingtao, for example, rather than shrinking its business during the crisis, has recruited 40.000 people to boost online sales via their own social networks. This not only solves potentially reduced in-store sales, but prepares the company for a next stage of digitization.
Automotive and mobility
Asia is showing once more its capability to solve multiple problems at the same time and deal with ad hoc issues by creating strategies that last beyond the crisis. When zooming in on the corporate fleet & mobility sector, Asia was never going to adopt the company car as massively as, e.g. Europe. Urban infrastructure is not ready for additional cars and people seem to prefer on-demand solutions.
The trend towards digital and on-demand, which is confirmed in the e-commerce business, is likely to be duplicated in the mobility industry. The personal car as a default solution is definitely not the way forward for Asia – and we’ll see the influence of this across the world.
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