Our World’s Update – Monday, March 30th, 2020
We are monitoring 22 countries, 25 daily international information sources and six business sectors to keep up with what is going on in this ever-changing environment. Based on decades of international business experience, we believe it is critical to remember two famous British sayings:
“Keep Calm and Carry On”
“Keep Calm and Breathe Deeply”
A month ago, I gave a talk to a local California business group on what life was like in a locked down China. I sited the quarantine at home for over 40 days of our Beijing based managing director and his family. His 8-year-old daughter was kept inside for these 40+ days and was going to her international school online.
This event has changed how Chinese view working from home, as they did not see this as viable before. The result of millions going to offices, is a huge number of high-rise office buildings in big cities. However, now remote work is looking good. My daughter in Cincinnati has been trying to get her company to let her work from home for years. As of today, she has been told it is mandatory to work from home through April.
By the way, our Beijing managing director’s daughter will be back at school with her friends in April. Meanwhile, my 9-year-old granddaughter in Cincinnati is just beginning her own online education from her home.
Never have we seen a disruption like the one caused by Coronavirus in our history. As of this today, “OpenTable bookings at restaurants worldwide are down by over 80% from a month ago. Retail footfall is down 50-80%, depending on the country”, Financial Times, March 22, 2020. Other franchises where customers gather like gyms are 60-100% shut down. Burger King, Dairy Queen, KFC, McDonalds and Starbucks closed over 7,500 restaurants in China last month. Today. 90% of these restaurants are back open.
Our U.S. restaurant clients have closed almost all their units worldwide – expect for China and Korea soon as well. Our clients are almost all going to remote working, clearing out their large offices around the U.S. They have also put into place a no ‘over water’ travel policy for the next three months. We are lucky that our company has been virtual for years. Not just the six of us in the U.S. working remotely, but also the 30+ members of our team on the ground around the world.
One of the groups we are working with to become the Italy licensee for one of our U.S. restaurant brand clients, owns and operates almost 100 restaurants in Northern Italy. They are 100% shutdown with hundreds of employees impacted.
As a Diamond Medallion frequent flyer with 2.5 million miles on Delta, it was interesting to read that Delta Air Lines will emerge as a “smaller” carrier, following the Coronavirus crisis, warns chief financial officer Paul Jacobson, as the airline prepares to wind down the majority of its schedule by April. “We’re going to be smaller coming out of this,” he told employees during an internal webinar last week.
Rod Young, global chairman of Cartridge World and chairman of Sydney-based DC Strategy Group, said “the wild card in looking forward for the Asia Pacific region is the Coronavirus pandemic and this is written in the expectation that the response by China and the rest of the world will see the community and the economy recover some normality after a significant impact on global growth and consumer habits.”
Our company’s associate for Southeast Asia, Sean Ngo, CEO and co-founder of VF Franchise Consulting, Ho Chi Minh City, says “people in Asia took the Coronavirus issue much more seriously earlier than in the West, because of their SARs experience in 2003 and the region is expected to gradually recover in the next – three to six months. Countries in Southeast Asia closed all international flights, while only allowing for domestic travel. The main concern in countries like Vietnam, Singapore, Thailand and the Philippines is about the virus sneaking back into these countries from international visitors.”
An AmCham China webinar from Beijing late last week had the top China-based executives of four international companies explaining how they handled the coronavirus shutdown starting in late February. They said their order of priorities were: (1) their people; (2) their internal business; (3) their suppliers; and (4) their relationships with government regulators. Wisdom for us all in these times.
This immense disruption has slowed down new business development around the world. But it is also causing companies to evaluate their businesses, in order to fine tune operations and systems and better prepare for a brighter and stronger future.
Contact me directly at bedwards@edwardsglobal.com to learn how to protect and grow your brand in the current business climate.
The Coronavirus Impact on Doing Business in China Today – March 9, 2020
This blog is an update on the blog originally posted on February 26, 2020.
Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. Our company opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Needless to say, things right now are different than ever before.
As of February 20th, all flights from the US to China and most to Hong Kong were stopped and are expected to restart until at least May. Face to face business meetings stopped in February and have mot restarted as of the date of this blog. The Chinese are learning to work remotely.
Here are some recent headlines and articles that define what is going on in China as of this date:
The Chinese government is strongly encouraging businesses to start back up in Guangzhou and Shanghai. The quarantine restriction has also been loosened on these cities. But not as much in Beijing, where the central government is headquartered.
The U.S. Faegre Drinker law firm has a China office and sent out an email on March 6th that states ‘Most employers in China are slowly getting back to somewhat normal operations, with most employees gradually returning to offices and factories. There are several things that employers should know to maximize the speed with which they can return to normal operations and continue to work in the time of the coronavirus.” This timely information is at this link:
http://bit.ly/BacktoworkinChina
The CEO of a California company with two high tech factories in Eastern China says his staff both facilities are open again and staff is gradually coming back but have to go through a 14-day quarantine period before they can work.
The business volume index of China Logistics Prosperity Index (LPI) came in at 26.2 in February, down from 49.9 in January. Fung Business Intelligence 030420
“The Caixin/Markit services purchasing managers’ index (PMI) fell over 25 index points to 26.5 in February from 51.8 in January, with the figure adjusted for seasonal factors, including the Lunar New Year. The latest figure, the first reduction in business activity across China’s service sector since the survey began in November 2005, followed the larger-than-expected deterioration in the official and private sector manufacturing sector PMIs to all-time lows in February.” South China Morning Post (SCMP) 030420
“The value of China’s exports for January and February fell 17.2 per cent from the equivalent period of 2019 to US$292.45 billion, as virus-related production bottlenecks and the extended holiday reduced output. Imports, however, fell by only 4 per cent to US$299.54 billion, due in part to a spike in shipments of food and medical supplies.” South China Morning Post (SCMP) 030720
Manufacturing activity in China sunk in February to its lowest level since managers were first surveyed in 2004. Wall Street Journal. 030720
“Exports to the United States plunged 27.7% in January and February to $43 billion, worsening from December’s 12.5% decline. Imports of American goods crept up 2.5% to $17.6 billion, but China still recorded a $25.4 billion trade surplus with the United States. China’s global trade balance fell to a $7.1 billion deficit for the first two months of the year.” ABC News 030720
“China’s top eight ports, including Shenzhen and Shanghai, reported a nearly 20 per cent drop in container traffic in February from a year earlier, The eight ports account for over half of China’s trade in containers, suggesting that China’s trade last month also shrank by a fifth. SCMP 030520
“Starbucks® said the virus had reduced revenue expectations in its second-biggest market by at least $400 million for its current quarter. They expect same-store sales to drop 50% in its second quarter in China, as opposed to the 3% growth previously expected.” Wall Street Journal 030520
It appears that the majority of Burger King®, Dairy Queen®, KFC, McDonald’s® and Starbucks® stores in China have reopened except in Hubei province (Wuhan),
We daily keep our thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. Contact Bill Edwards directly at bedwards@edwardsglobal.com or on +1 949 224 3896
