On March 11, Amcham hosted a Webinar on ‘Planning Ahead and Positioning your Business for the Rebound And Thrive’. This is our third online and complimentary event under our COVID-19 series. Below are some of our key takeaways if you missed it.
Short term supply chain impact in China
- The initial impact of a complete supply shock in production, internal logistics were paralyzed from 10 days to 2 weeks, but things gradually got better.
- Different markets are differently impacted: health and hygiene are doing really well while small ticket items e.g. consumer goods are doing fine thanks to online retailers
How can manufacturing companies effectively respond to crisis and mitigate risks?
- Diversification of supply chains to different ASEAN markets
- Get the inventory levels covered for the next 2 quarters
Spill over long-term supply chain implications- a pendulum swing from global to de-global
- For businesses which have a crisis management team operated in a country, regional, and global level, they will be more prepared for the crisis in the future and there will be better coordination among different local authorities.
- In the past 20 years, manufacturing and supply chain have become more efficient in China which is not easy to replicate and to deglobalize (e.g. the chemical industry is very capital intensive which it’s hard to move it to deglobalize quickly, compared to the footwear and textile industry)
Key concerns the Hong Kong business community needs to tackle
- The main issue for traditional sectors like retail, financial services is cash flow.
- Strategies companies employ to mitigate cash flow risk include renegotiate payment, plan ahead for staffing cost, unpaid leave etc. For other industries- short run negotiating rents with landlord, assessing government rents, etc.
New opportunities: the use of automation
- Professional services: to diversify labor force, outsource labor to South Asia or ASEAN
- Office: an opportunity to reconfigure the operating model, introduction of robotics and automation on back end office operation, so that humans can focus on thought processing
Implications for global markets
- The initial fear of COVID-19 was a supply shock due to supply chain disruption in China
- As the spread of COVID-19 intensifies in North America and Europe, consumers demand will begin to hold up. But it will be offset by the Chinese market as it resumes production and consumption in the next 2-3 months.
Information about our speakers:
- Lennard Yong, Group Chief Executive Officer at Tricor Group
- Jon Penrice, President, Asia Pacific at The Dow Chemical Company
- Ben Simpfendorfer, Chief Executive Officer at Silk Road Associates (Moderator)