EGS Biweekly Global Business Newsletter
Issue #3, Monday, May 4, 2020
By William (Bill) Edwards, CEO of Edwards Global Services, Inc. (EGS)
“It is not the strongest or the most intelligent who will survive but those who can best manage change”. Darwin
“Keep calm and carry on”
“When one door closes, another door opens”, Alexander Graham Bell
Introduction
The goal of this newsletter is to keep the reader up to date on the economic and business situation in key trading countries. We constantly monitor 30 countries, 25 daily international information sources and six business sectors to keep up with what is going on in this ever-changing environment. Our team on the ground covers 43 countries and provides us with updates about what is happening in their specific countries.
Please do not hesitate to send us your input and perspectives so that we can publish a balanced view about the world every other week. Our contact information is at the bottom of this newsletter. You may opt out from receiving this biweekly global business update email at the bottom of this email.
William Edwards is an executive with 46 years of international operations, development, executive and entrepreneurial experience. He has lived in China, the Czech Republic, Hong Kong, Indonesia, Iran, and Turkey. With experience in the franchise, oil and gas, information technology and management consulting sectors, he has directed projects on-site in Alaska, Asia, Europe and the Middle and Near East.
Founded in 2001, Edwards Global Services, Inc. takes U.S. businesses global and currently has activity in over 25 countries. Our U.S. Clients are all consumer-faced brands.
The Focus of This Issue
This newsletter issue focuses on what is happening in 29 countries that impact consumer spending. The theme of this issue can best be summed up by the following quote form the Financial Times on May 1, 2020: “Governments in Europe, the US, Australia and New Zealand have begun to ease the extraordinary stay-at-home orders that have helped contain the spread of Covid-19. But in most places, it will be anything but business-as-usual. Instead, the next few months are going to feel like an empty-chair economy, with new shift patterns at factories, half-full buses and trains, staggered opening hours and unusually roomy restaurants.”
Contact Tracing Apps Are Being Used in More than Two Dozen Countries
“At least 27 countries are using data from cellphone companies to track the movements of citizens, according to Eden Manovich, the advocacy director for Privacy International, which is keeping a record of surveillance programs. In South Korea, millions of people have signed up to use websites or apps that show how the virus is spreading. More than 2 million Australians quickly downloaded a coronavirus contact-tracing app that was released last Sunday.” The Washington Post, May 2, 2020
“Italy is preparing to join Germany in launching a Coved 19 contact-tracing mobile application that will avoid location tracking and a centralized database, opting for a standard created by technology companies Apple and Google that they regard as more privacy friendly. Switzerland and Austria also opted last week to use the US tech giants’ standards for their apps. However, France, the UK and Norway – one of the first European countries to launch its app – are all using a technology in which a central server holds data on who came into contact with an infected person.” Financial Times, April 30, 2020
“Singapore will from May 12th require all businesses to adopt a system that logs visitors to their premises using their smartphones, in the name of tracking COVID-19 cases.… Called “SafeEntry”, the service requires visitors to either scan a QR code or allow their phones to be scanned to record a barcode in the national e-services app. That scans are taken when visitors enter and exit premises.” A Register, May 4, 2020
International Travel Update
Delta recently announced that this month it will resume “certain international flights”. Most of these flights will be between North and South America and the company will reinstate flights to Canada.
“United will resume seven routes in June, with more to follow later in the summer assuming all goes to plan. The routes coming back in June are: Newark to Paris, Shanghai and Tokyo; and San Francisco to Beijing, Chengdu, Shanghai and Frankfurt.” Forbes, May 4, 2020
“Cathay Pacific looks to increase passenger flights in late June if coronavirus travel restrictions are eased. Carrier targets return of daily services to major Asian cities and more frequent long-haul services.” South China Morning Post, April 28, 2020
“South Korea says it has agreed with China to start facilitating some business travel between the two Asian neighbors, As China signaled initial success in containing its domestic coronavirus contagion, its officials have proposed efforts to facilitate essential travel with foreign counterparts from more than a dozen countries across the Asia-Pacific region and elsewhere.” Wall Street Journal, April 29, 2020.
“”If there is any country in the world with whom we can reconnect with first, undoubtedly that’s New Zealand,” Australian Prime Minister Scott Morrison said in a statement, according to CNN. “Our number one focus at the moment is making sure that both our countries are in the position where we’re domestically managing Covid-19 to a point where we can with confidence open borders,” New Zealand Prime Minister Jacinda Ardern said in a press conference last week.” Travel & Leisure, May 4, 2020
Argentina
“A national lockdown, originally imposed March 20, was extended to May 10 over the weekend. Now, the country says it will enact a complete ban on all flight sales to, from, or within Argentina until September 1.” CNN Traveler, April 28, 2020
“All frontiers with foreign countries will not open until September. Everybody is teleworking except for “essentials” – healthcare, security and food (supermarkets and small shops selling food). Banks opened only to pay retired people. Slowly opening 2nd tier of essentials including take-aways and messaging companies; private medical attention if emergency (dentists, labs, etc. Children, teen-agers and over 60 years are NOT allowed out. All Tourism and Attractions are out of the question i.e. Restaurants, Theatres, Football. Restaurants are trying to keep alive with take away services.” Diana Brandon, U.S. Commercial Services, Buenos Aires.
Australia
“With no definitive answer as to when restrictions will be further lifted, the federal government has urged pubs, gyms and retailers to prepare for reopening. The good news comes as Employment Minister Michaelia Cash called on businesses and retailers to create ‘COVID-safe workplaces,’ so they’re able to safely welcome customers when they’re give the ‘green light’.” News.com.au, May 2, 2020, courtesy of Jason Gehrke, Managing Director, The Franchise Advisory Centre, Brisbane.
“Australia is in lockdown but this will be loosened in next weeks and kids will be going back to school on day per week. All retail foodservice, fast food and restaurants and non-essential retail is closed. Several States have offered small business grants and low interest deferred payment loans ranging from $10,000 to $250,000. The federal government has provided a JobKeeper program to all businesses with turnover less than $1B that have lost more than 30% of turnover (50% for businesses with turnover over $1B) compared with normal historic trading. The program pays the business $1500 per fortnight per employee backdated from 1 March to 31 September.” Rod Young, Managing Director, DC Strategy Group, Sydney
Austria
“Austria will become the first country in the European Union to reopen shops of all sizes today, as well as hairdressers, nail salons and other services. In two weeks Austria will also reopen restaurants and its famed cafés—albeit with restrictions on customer numbers and opening hours, and strict rules on hygiene—and allow religious services to resume.” The Economist Expresso, April 30, 2020
Brazil
“Brazilian banks have so far postponed 22.2 billion reais ($3.91 billion) in debt installments due in the coming months, in a move to help consumers and companies amid the coronavirus outbreak, the country’s bank industry group said. In terms of new loan disbursements, large companies have taken out 101.5 billion reais while consumers took 36 billion reais, Febraban said.” Reuters, April 27, 2020
Canada
“The Canadian economy has contracted dramatically. Being a cooperative and polite country, social distancing is having a significant impact in “flattening the curve” of new infections and deaths. Canada is starting to reopen is businesses, schools and recreation areas. However, such openings are within the jurisdiction of the provinces and they have not all been affected the same. As a result, there is no uniformity in the timing and extent of the re-openings. Most franchise systems are either closed or operating on a very restrictive basis.” Ned Levitt, Partner, Dickinson Wright LLP
Mainland China: Beginning to get back to ‘normal’?
“China tourism numbers bounce back during Labour Day holiday: There were more than 50m tourism trips within the country on Friday and Saturday, according to figures cited by state media. That meant that two days into the five-day break, which ends on Tuesday, the number of journeys has overtaken the total over the three-day Qing Ming festival in early April. In Beijing, the Forbidden City was partially open for the first time since January 25. Last week, the Chinese capital announced that people arriving from most other parts of the country would no longer have to spend two weeks in quarantine. Beijing was still restricting access to cinemas and theatres, state media said on Sunday. Shanghai’s main tourist attractions received more than 1m visitors on Friday and Saturday combined, Xinhua said.” Financial Ties, May 4, 2020
“China signals coronavirus under control with resumption of parliament on May 22. Beijing announced the date for its long-delayed annual legislative session on Wednesday after the first disruption of China’s most important political event for decades, in a display of confidence that the new coronavirus outbreak is under control. As road traffic returns to normal across the country, the transport ministry on Tuesday said a nationwide waiver of highway tolls would end from next Wednesday. But restrictions on overseas arrivals at border checkpoints will remain in place.”, South China Morning Post, April 29, 2020
Costa Rica
“Costa Rica’s government said on Monday it will start reopening its economy and lifting some coronavirus-related social distancing measures from May 1st, as the number of active infections has declined for 11 consecutive days. Movie theaters, gyms and hair salons will be able to open again for business on Friday, but under reduced hours and strict rules on the number of clients allowed at any one time, said President Carlos Alvarado.” Reuters, April 27, 2020
Czech Republic
“The Czech government will allow cultural and sport events with up to 100 people to go ahead from May 11 as part of a next phase of relaxing restrictions imposed to combat the spread of the new coronavirus, officials said on Thursday. This will include cinema screenings, theatres performances and religious services, and comes sooner than the government had originally planned after it said the spread of the virus was now contained. Stores of up to 2,500 square metres reopened on Monday. From May 11, shopping malls and larger shops are also set to reopen, along with outdoor restaurants and pubs, hairdressers, and museums. The last phase is due on May 25 with restaurants, pubs and hotels returning to action.” Reuters, April 30, 2020
Dominican Republic
“The Dominican Republic Senate has passed an extension of the State of Emergency until May 17th, still limiting movement and retail business operations until that date. All resorts are closed due to the lack of flights from Europe and the U.S. All businesses are shut down except for those in the medical sector (clinicas y hospitales, drugstores), food service (supermarkets and colmados are open, but some restaurants and fast foods are only offering services via delivery). Retail stores and schools are closed.” Maria Elena Portorreal De Alonso, Trade Specialist, U.S. Commercial Service, Santo Domingo
France
“France announced an array of measures to begin easing a strict lockdown and reignite an economy battered by the coronavirus, with plans to reopen shops starting May 11 one of the first steps toward normalization. Philippe said French restaurants and cafes may be allowed to reopen from June 2, and pupils can start returning to school from May 11 but with strict rules. Public events of more than 5,000 people are outlawed until September and working from home is encouraged for at least three more weeks, he said. Beaches won’t reopen until at least June 1. Fortune, April 28, 2020
“This is expected to include a gradual reopening of schools, starting with primary classes, based on voluntary attendance and with reduced class sizes. The government is also expected to allow shops to reopen, encourage businesses to get back to work and lift restrictions on movement within the country. Restaurants, bars, hotels and sports centres, however, will stay shut for the time being.” The Economist Expresso, April 27, 2020
Germany
“Germany’s success in battling the coronavirus pandemic has drawn international attention. The main lessons: Fight the virus locally, and keep politics out of it. Germany’s campaign against the virus has largely been fought by regional authorities that created and policed social-distancing rules, worked with businesses to manage shutdowns and safety measures, and prepared the already-robust health-care infrastructure for the illness’s onslaught.” Wall Street Journal, May 1, 2020
“Stores of up to 800 square metres (8,600 square feet) were allowed to open again last week, along with car and bicycle dealers and bookstores, provided they adhere to strict social distancing and hygiene rules. Reuters, April 28, 2020
Greece
“The government was swift in reacting to the crisis early and as a result the situation has not been anything like Italy or Spain or countries with similar populations like Belgium and Netherlands. In fact Greece has been written up in the international press as a great success story. Yesterday there were no deaths for the first time in weeks and only 7 new confirmed cases. We have been teleworking since March 16 and on lockdown since March 23.” Keith Silver, Senior Commercial Officer, U.S. Commercial Service, Athens
Guatemala
“Guatemala closed borders and went under a strict curfew early in March. Curfew was much stricter early, now it is from 6pm to 6am. Only primary companies can open (banks, supermarkets) but with strict social distancing and every citizen must wear a mask or will get fined. Restaurants can only offer delivery. Some factories are open. Schools, universities, malls, shopping centers etc. are shutdown. Citizens cannot move from city to city. Congress approved three fiscal packages, totaling around 3.4 percent of the GDP.” Antonio Prieto, Senior Trade Specialist, Embassy of the United States of America, Guatemala City
India Totally Shut Down???
“On March 25, Prime Minister Narendra Modi imposed the world’s toughest lockdown—at the time it scored a perfect 100 on the University of Oxford’s lockdown stringency index—in an attempt to thwart the virus by essentially freezing 1.3 billion people in place. India’s shutdown includes transportation, manufacturing plants and almost all e-commerce. In many places, residents require passes to travel, or must show proof that they’re outside for an essential activity like buying groceries. Hundreds of thousands of migrant workers have sought shelter in temporary camps. On April 14, the federal government extended the lockdown to May 3.” Wall Street Journal, April 30, 2020
Ireland
”Allied Irish Banks has processed “well over” 40,000 payment breaks for its loan customers as it helps homeowners and businesses cope with the impact of the coronavirus, its chief executive said on Wednesday. Ireland’s retail banks agreed last month to implement loan repayment breaks of up to three months for those affected. The breaks agreed by AIB include 16,000 mortgages, 12,000 business loans and 12,000 for personal customers, CEO Colin Hunt said.” Reuters, April 29, 2020
Italy
“The country is relaxing its lockdown from Monday (May 4), when Italians will be able to exercise as long as they respect rules on maintaining physical distance. They will also be able to visit relatives – but not friends – within their region. However schools, cinemas and most shops will stay shut. Bars and restaurants are due to start allowing customers to sit at tables in June.” BBC, May 3, 2020
“Parks, factories and building sites will reopen, but schools will not restart classes until September. People will be allowed to move around their own regions – but not between different regions. Bars and restaurants will reopen for takeaway service from 4 May – not just delivery as now. Hairdressers, beauty salons, bars and restaurants are expected to reopen for dine-in service from 1 June. More retail shops will reopen on 18 May along with museums and libraries. Sports teams will also be able to hold group training from 18 May.” BBC.com, April 27, 2020
Kuwait
“Since March 11, non-Kuwaiti citizens were barred from entering Kuwait through the airport. Since March 14, the Kuwait International Airport has been closed until further notice to all inbound commercial flights except for arriving Kuwaiti citizens and their immediate relatives who are traveling with them. Cargo air traffic will continue to be permitted. A nationwide curfew from 4:00pm until 8:00am remains in effect. During Ramadan, food delivery services will be permitted to operate after curfew between 5:30pm and 11:30pm.” Talal Al Muhanna, General Manager & Co-Founder, Shiraa International for Projects Management, Kuwait
Malaysia
“Malaysia to reopen economy on May 4. Nearly all economic sectors to reopen, subject to conditions, says Prime Minister Muhyiddin Yassin, but controls to remain on social gatherings. Move is sign of focus switching to rescuing business and saving jobs. Social gatherings, however, would still be controlled, schools would remain shut and interstate travel remained banned.” South China Morning Post. May 1, 2020
New Zealand
“Some non-essential businesses, including food takeaways, health and education services will be allowed to reopen. But people are still expected to stay at home unless they are undertaking essential activities, such as buying groceries, working or exercising.” Financial times, April 27, 2020
Poland
Hotels will be reopened along with some cultural institutions (libraries, museums and art galleries), beginning on May 4. 1 person per 15 square meters, 6 feet between people, and face coverings are required. Shopping malls, hotels, building supply stores will reopen at the same time. Museums and libraries will reopen. On May 6, nurseries/preschools are permitted to reopen, but local government/owners will make the decision. Restaurants will remain open for takeaway. Alicja Drolet, Trade Specialist, U.S. Commercial Service, Warsaw
Singapore
“Singapore will let selected businesses reopen from May 12 in a cautious rollback of a two-month partial lockdown despite rising coronavirus infections among foreign workers. Businesses including food manufacturing, food retail outlets, laundry services, barbers and pet supplies will be permitted to reopen on May 12. Home-based businesses can also reopen. Small groups of students will be allowed back to school on May 19. ABC News, May 2, 2020
South Korea
“South Koreans were out in droves in the balmy spring weather on Thursday (April 30). Seoul’s Gimpo airport was crowded with happy passengers flying to the southern resort island of Jeju, public parks buzzed with picnicking families and shopping centres were alive with customers. It was the start of a long weekend, but that wasn’t all. Television footage shows the grounds of Seoul’s Chogye Temple full of believers wearing masks and praying under rows of lanterns to celebrate Buddha’s Birthday.” South China Morning Post, April 30, 2020
“Domestic air travel has had not been closed. People are travelling more within the country. However international is still pretty much shut down stage. Still requires a 2-week isolation for those coming from outside of the country.” Joe Joon, BrandMasters Korea
Spain
“On Saturday adults were able to exercise outdoors on Saturday for the first time in seven weeks. The lockdown was eased for children under 14 a week ago. On Monday masks will become compulsory on public transport and some small businesses such as hairdressers will open for individual customer appointments.” BBC May 4, 2020
According to various sources, the first phase of lifting the lockdown on business activity in Spain officially began today, May 4. It will allow restaurants to reopen for takeaway and gyms for individual training sessions, and also allow training for professional athletes.
Russia
Miratorg Agro-Industrial Holding is looking for premises in the center of Moscow for its fast-food chain restaurants, known as “Burgers & Fries” in English. Essentially it is going around making offers on good locations that are closed due to the COVID-19 pandemic. This is contrary to an agreement reached among many operators not to raid each other’s locations.” Paul Jones, Barrister, Solicitor and Trade Mark Agent, Jones & Co., Toronto.
“President Vladimir Putin extended the country’s lockdown measures for another two weeks, warning that the worst of the outbreak is still to come. The Russian president announced that he would be extending the country’s national lockdown, which had been set to expire Thursday, until May 11; He also directed his government to begin preparing guidelines for a “phased exit” and eventual reopening.” Forbes, April 28, 2020
Switzerland
“Swiss grandparents are told it’s SAFE to hug grandchildren if they are under ten because they don’t spread coronavirus. Public health officials in Switzerland have said that it is now safe for children under the age of ten to hug their grandparents. The relaxation of restrictions in the country comes after Swiss scientists concluded that grandparents are not at risk of catching Covid-19 from their young grandchildren as they do not have the ‘receptors’ targeted by the virus.” Daily Mail UK, April 28, 2020
“The Swiss government is pressing ahead with re-opening measures including for sporting events, shops, restaurants and museums, it said on Wednesday, even as it bans events with more than 1,000 people through. Border restrictions will also begin being eased from May 11 to allow families to reunite, officials said, while a “careful reopening” of restaurants will be permitted under strict conditions aimed at ensuring health and safety for guests and employees. Primary and secondary schools will be allowed to resume classes from May 11. Moreover, professional sports teams can resume play on June 8, although without spectators in attendance.” Reuters, April 29, 2020
Thailand
“The country is partially reducing the lockdown by reopening restaurants, cafes and markets from May 3. While the national ban on international travellers remains in place until May 30, Thailand is looking at how to resume tourism. Thailand is still under nationwide curfew between 10pm and 4am will remain until the state of emergency ends on May 31.” The Sun UK, April 30, 2020
“The IMF expects (Thailand) GDP to fall by 6.7% this year. The country’s two economic mainstays, tourism and trade, are suffering. Although a fiscal stimulus equivalent to 3% of GDP is under way, domestic demand is in a funk. Some 20m people have applied for state aid and a third of the workforce faces unemployment….the government has extended the state of emergency and lockdown measures until the end of May.” The Economist Expresso, April 28, 2020
United Arab Emirates
“Dubai announced a partial reduction in the restrictions on movement in the Emirate. The move, which coincided with the start of Ramadan, allows people to move freely for the first time since April 4 and also saw the reopening of malls, cafes and restaurants, under strict conditions.” Arabian Business, April 27, 2020
“With fever checks and masks, Dubai’s mega-mall reopens. For weeks, only the mall’s grocery stores and pharmacies carried on working, but the UAE has now allowed malls, restaurants and even hair salons to reopen under social distancing rules. Thermal cameras fixed to the ceiling around Dubai Mall record temperatures of passers-by. Children aged between three and 12, and people of over 60 or in higher risk groups for the respiratory disease are not allowed in. Protective masks are compulsory — with staff sporting them both in ready-to-wear stores as well as high-end European designer boutiques. The mall’s cinema, skating rink and large fountains, which in normal times attract thousands of tourists packed in for evening shows, remain closed.” Yahoo News, April 29, 2020
United Kingdom
“Many businesses are going through the process of thinking about what life post-Covid-19 could look like; this is especially true in the F&B sector where ambience, close physical presence, ‘buzz’ are all part of the dining out experience – and if people have to be socially distanced, wear masks etc., much of this is lost. In addition, of course, reducing restaurant capacity to meet social distancing requirements, could wreck the unit economic model. The impact runs all up the supply chain – some dairy farmers are having to pour their milk down the drain as a result of business lost because no-one is buying lattes currently!” Iain Martin, QFP, International Franchise Consultant, The Franchising Centre
“Costa Coffee is re-opening another 29 stores across the UK for deliveries and drive-throughs as all staff are given protective equipment (PPE).” Daily Mail, May 2, 2020
“McDonald’s To Reopen Some UK Stores in May. Fifteen stores will initially open from 13 May – for deliveries only – and will be operating a reduced menu, much like many of the company’s major rivals.” LAD Bible. May 1, 2020
“Huge Queue At First Burger King Drive-Thru To Reopen For Takeaways: The restaurant, in Havant, Hampshire, was the first to reopen in the UK after all fast food outlets closed in the wake of the UK’s lockdown restrictions, in response to the coronavirus pandemic. When it opened at midday, cars could be seen blocking the town’s roads, with people gagging to get at the stores meals.” LAD Bible, April 30, 2020
Vietnam
“The Asia Development Bank anticipates that if the pandemic is contained successfully within the next two or three months, Vietnam’s economic growth should rebound to 6.8% in 2020 and remain strong in the years thereafter. Every industry has been affected and the virus has significantly damaged industries in hospitality and tourism, transportation, food and beverages (F&B), retail, cinemas, and other entertainment. According to the Vietnam Tourism Advisory Council, the pandemic will result in an estimated loss of between $5.9 and $7 billion for the country’s tourism sector in the next three months.” Sean Ngo, CEO and Co-Founder of VF Franchise Consulting, Ho Chi Minh City
In Summary
We keep our thumb on pulse of the global business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. We will continue to update this global business blog every other Monday.
About US
Edwards Global Services, Inc. (EGS) provides a complete International solution for U.S. businesses Going Global. From initial global market research and country prioritization, to developing new international markets and providing operational support around the world. Our U.S. based executive team has living experience living and working in many countries. Our Associate network on the ground overseas covers 40+ countries. EGS is also known for our extensive country, cultural and sector research and publications, including the quarterly GlobalVue™ country ranking chart.
Find out more at: www.edwardsglobal.com
William Edwards, CFE, is CEO and Global Advisor to Chief Executives, of Edwards Global Services (EGS) which offers a complete international market research, operations and development solution for U.S. businesses. Contact Bill at bedwards@edwardsglobal.com or +1 949 224 3896.
“The EGS GlobalTeam™ 4/29/2020
Our U.S. based Team has living experience in 18 countries and working business experience in 60+ countries. Our GlobalTeam™ on the ground covering 40 countries provides international expertise, market research, management consulting and in-country operations support.
The EGS GlobalTeam™ provides:
In-country Compliance Audits & Controls – Regular visits to a U.S. company’s in-country units performing on-site inspections, with detailed reporting.
In-country Mystery Shopper – Personal visits to the brand’s local units, with a detailed report covering all aspects of the shopping experience.
In-country Emergency Solutions – An in-depth review of the local partner’s business operation with recommendations of options to restore profitability.
Country Market Research – Competitor analysis, political, regulatory and economic analysis
Feel free to reach out to Bill Edwards, CEO of Edwards Global Services, Inc., (EGS) to ask questions or share best practices at +1 949 375 1896 or bedwards@edwardsglobal.com.
Asia Biweekly Business Update Blog – 4/27/2020
(This is an update of our March 9, 2020 China Blog which now will cover Asia)
Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 45 years, including living in China, Hong Kong and Indonesia. EGS is currently helping U.S. brands enter Cambodia, Mainland China, Hong Kong, Indonesia, Korea, the Philippines and Thailand. Our U.S. Clients are all consumer-faced franchise brands.
The following are extracts from a variety of information sources and our Associates across Asia on consumer-focused issues during the COVID emergency.
Introduction
Mainland China and South Korea are seeing businesses starting to reopen. Singapore and Malaysia remain shut down. Indonesia and the Philippines are allowing restaurants to do takeaway and delivery only. Japan is mixed. Vietnam has done a good job controlling the virus and will soon allow businesses to reopen. Thailand will start reopening the week of May 4th. Ramadan, which lasts until May 23rd, is a challenge for businesses in Indonesia and Malaysia.
Asia General
“From coffee in Hong Kong to burgers in Malaysia and Ramadan in Singapore – here’s how Asia’s small businesses cope with Covid-19. Asia’s SMEs are rising to the challenges posed by the coronavirus by adapting their business models and focusing on the positives. Here are five case studies, taken from across the region, of how SMEs are adapting to the challenges posed by Covid-19 – and proving that even the smallest of businesses can have the biggest of hearts.” South China Morning Post, 4/25/2020
“In Indonesia, the world’s most populous Muslim country, hundreds of millions are unable to congregate during the holy month of Ramadan. Muslims in neighbouring Singapore and Malaysia are also having a more solemn Ramadan as Covid-19 social distancing rules are enforced.” South China Morning Post, April 24, 2020
https://bit.ly/MelancholyRamadan
Mainland China
“Co-founder of Microsoft Bill Gates announced that stores of the company in China had resumed their operations that may be a concrete example of how society may return to ‘business as usual.’ Microsoft already sent thousands of its workers back to China, where they would resume their posts and comply with precautionary measures to prevent the spread of the pandemic.” Business Times, April 24th, 2020
AmCham China has released the results of a second Flash Survey that evaluates the impact of the COVID-19 outbreak on its member companies. Almost 120 companies responded to the survey. Roughly half of the surveyed members say they are experiencing significant revenue declines, compared with 28% last month. 39% of companies report a drop in demand for their products, up 6 percentage points from last month. 60% (up 10 percentage points month-on-month) said 2020 revenues will decline anywhere between 10% and 50% or more if business cannot return to normal before August 30. Read the full AmCham China Quarterly report at this link:
https://bit.ly/AmChamChinaQuarterly
Indonesia
“Indonesia to ban air, sea travel to end-May: officials. Indonesia will temporarily ban domestic and international air and sea travel, with some exceptions, starting this week to prevent a further spread of the coronavirus, the transport ministry said in a statement on Friday. The announcement came as the holy month of Ramadan began in the world’s largest Muslim majority country, and the government has already banned citizens’ traditional annual exodus from the cities to the provinces during the holiday period.” Reuters, April 23, 2020
“With most schools and universities in Jakarta (Indonesia) shut down even before official rules on social distancing went into effect, the transition has been sudden and uncertain for many. With Large Scale Physical Distancing extended in Jakarta until at least May 22, schools will continue to function online. AmCham (Indonesia) held a special forum on the situation on Thursday, April 23, to look at the challenges for schools, students and parents.” Learn more about the conference findings at this link:
https://bit.ly/AmChamIndonesiaSchools
Japan
“In recent weeks, the number of covid-19 cases has increased, and Prime Minister Shinzo Abe has called for an 80 percent reduction in person-to-person contact. Yet, some pachinko parlors refuse to close. Earlier this month, Tokyo Governor Yuriko Koike included pachinko parlors, along with bars and clubs, in the establishments she was requesting shut down to reduce the spread of the novel coronavirus. Many pachinko parlors followed the request, but some did not.” Kotaru, April 23, 2020. See pictures the lack of social distancing at this link:
“Japan’s new economic stimulus package in response to the coronavirus pandemic is estimated to boost real gross domestic product by about 4.4%, Economy Minister Yasutoshi Nishimura said on Friday. Japan has boosted its new economic stimulus package to a record $1.1 trillion to expand cash payouts to its citizens, as the fallout from the coronavirus pandemic threatens to push the world’s third-largest economy deeper into recession.: Reuters, April 23, 2020
Malaysia
Malaysia has one of the highest COVID cases and death counts in Asia. Essentially all business is closed. A major challenge for the Ramadan period.
“The (Malaysian) Prime Minister announced that the MCO (movement control order) which was first imposed on March 18 to 31 and later continued with a second phase from April 1 to 14, and a third phase from April 15 to 28 – would be on for a further two weeks. The government, said the Prime Minister, was considering allowing more specified sectors and sub-sectors to resume operations but subject to strict conditions to ensure the people’s health and safety.” The Star, April 23, 2020
https://bit.ly/MalaysiaShutDownExtended
Philippines
In the Philippines, the almost total business lock down is slightly easing. Some Chili’s® and Denny’s® restaurants have reopened for takeaway and delivery. But local sources say the Manila government has issued passes, only one selected member of each household is permitted to go out for food, groceries and to pharmacies.
“The coronavirus outbreak will likely send the Philippine economy into its first annual contraction in more than two decades this year, before it pulls back up for a U-shaped recovery in 2021, the central bank governor said on Saturday. Key cities in the Philippines, among the fastest growing economies in Asia during the pre-pandemic period, are under strict quarantine measures since mid-March. Philippine gross domestic product would likely shrink by 0.2% in 2020 before bouncing back to about 7.7% as policy support measures gain traction, central bank Governor Benjamin Diokno said in a statement.” Reuters, April 25, 2020
Singapore
Singapore has been under a partial lockdown since April 7 that may be extended past May 4 due to the recent jump in coronavirus cases in migrant workers. Many businesses, especially F&B, are suffering and may have to close for business due to the Covid-19 pandemic. The Singapore government has come out with a S$60 billion (US$40+ billion) budget to help businesses, employers, employees, & citizens.
South Korea
Churches, bars, gyms, restaurants are starting to reopen. Travel is not doing well. 400 McDonald’s are open for drive through. From 900 new COVID cases on February 29th, there were 8 new cases on April 23rd. “Amid the rapid changes caused by COVID-19, there is optimistic recovery progress of American businesses in Korea. Many companies are adapting quickly and finding success in unexpected ways amid these times of uncertainty.” James Kim, Chairman and CEO of AmCham Korea. This link is to a CNBC interview with Mr. Kim:
https://www.youtube.com/watch?v=0l3oVv2wJYo&t=2s
Early in the coronavirus timeline, Korea created an app that kept track of infected people. It prohibited large gatherings and required virtual church services. Key was wide spread testing. They even had an election.
Thailand
AMCHAM Thailand had a Video Conference on April 22. Here are some of takeaways: The ban on sale of alcohol beverages has been extended until the end of the month (April 30) to discourage further social gatherings. All foreigners have been granted automatic visa extension for another 3 months until July 31. It is estimated that Thailand will end the year with just over 16 million international tourists, far below the 40 million goal. However, they have stated that tourism activities in Thailand could resume as early as May. AmCham Thailand members remain vastly positive toward the measures taken by the Thai government to curb the spread of Covid-19. See the full results are the link below:
Although the number of new COVID-19 cases in Thailand had a sharp drop to 15 cases on 26 April 2020, the state of emergency is extended another month to end on May 31, 2020. The Centre for Covid-19 Situation Administration (CCSA) issued the guideline of the preparation to reopen the businesses under the Covid-19 situation. High-risk business such as bars, pubs, entertainment venues will remain closed. Medium-risk business such as barber shops, spa, restaurants, department stores and shopping malls would be allowed to reopen gradually. All airports in Thailand are expected to resume their services on the 1st of May after they have closed temporary for a month.
The Thai Cabinet approved a stimulus package for soft loans to help businesses. For example, a 6-month debt moratorium on principal and interest for SMEs. “Seth” Sethaphong Phadungpisuth, CFE, Managing Director of Gnosis Company Limited, Thailand.
Vietnam
Sean Ngo, CEO of VF Franchise Consulting based in Ho Chi Minh City, reports on LinkedIn that Vietnam will be one of the first, if not the first country, in Southeast Asia to cautiously lift the lockdown. Social distancing, temperature checks at businesses, and better hygiene practices will not change. See the full US News report at the following link:
In Summary
We keep our thumb on pulse of the Asia business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. We will update this Asia business climate blog about every other week.
Feel free to reach out to Bill Edwards, CEO of Edwards Global Services, Inc., (EGS) to ask questions or share best practices at +1 949 375 1896 or bedwards@edwardsglobal.com.
“It is not the strongest or the most intelligent who will survive but those who can best manage change”. Darwin
China Blog Update – 4/13/20
(This is an update of our March 9, 2020 China Blog)
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. He has been the Master Franchisee for a U.S. franchise in China. EGS opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Our U.S. Clients are all consumer-faced franchise brands.
Needless to say, things right now are different than ever before. The following are extracts from a variety of information sources and our network inside China on consumer-focused issues post the Wuhan Event. This is bipartisan and does not reflect a point of view.
Employment
“The official urban unemployment rate of 6.2 per cent in February understates the true level of joblessness and doesn’t include China’s 280m migrant worker population, many of whom haven’t returned to work yet. Close to 500,000 small and medium-sized businesses, the heart of the economy, which were sidelined politically before the crisis, are reported to have failed in the first quarter alone., Financial Times, April 10, 2020
Consumers Trends
Burger King, Dairy Queen, KFC, McDonalds and Starbucks closed over 7,500 restaurants in China by the end of February. Today, over 90% of these restaurants are back open.
Our company’s Managing Director for Greater China based in China says, “the businesses of China have recovered about 60-90% depending on the region. We are still required to wear face masks everywhere and practice social distancing (which is not common in a densely-populated country). Domestic travel is still difficult because place to place travelers have to be quarantined back and forth. Retail, fitness and F&B businesses will need 3-6 months to return to normal levels as people still prefer to eat at home and order in as they did for more than 40 days in February and March. Schools and universities will not start up again until September for the new school year.
“Shopping malls and stores in China have quickly reopened as the government promotes a return to business as usual, only to see consumers stay home and keep their purse strings tight or shop online. Customer traffic is ‘less than half of usual levels’ said a worker at a Walmart store in a Shanghai suburb late last month. The government has in recent weeks highlighted a brisk recovery in business activity, touting efforts to contain the new coronavirus. Shopping centres and restaurants that had closed to stem the outbreak’s spread have rushed to reopen. About 80 per cent of restaurants and more than 90 per cent of commercial facilities have resumed business across China, according to the Ministry of Commerce. But consumers, increasingly wary of government pronouncements and state media, do not feel safe going about their business as usual” Extracts from an article by the Financial Times on April 11, 2020
Life does go on. Yum China Holdings, Inc.‘s newly-acquired controlling interest in the casual-dining brand Huang Ji Huang group, a simmer pot concept, and emerging fast-food restaurant San Fen Bao, to its portfolio. Founded in 2004 and headquartered in Beijing, Huang Ji Huang has over 640 restaurants in China and internationally. Following the acquisition, Yum China will establish a ‘Chinese dining business unit’ comprising three core Chinese dining brands: Little Sheep, East Dawning, and Huang Ji Huang. “Global Franchise’, April 8, 2020
Good news for Chinese small businesses. “Insurance companies in China are taking on an unusual mission: They are promising to cover business losses from the coronavirus pandemic, as hundreds of millions of people return to work, and the country tries to rev up its economic engine. Since February, dozens of Chinese property-and-casualty insurers have rolled out new policies or expanded existing ones to provide compensation when workers contract Covid-19, the respiratory disease caused by the new coronavirus. The insurance payouts would help companies that are forced to close temporarily if staffers fall sick, other employees have to be quarantined and business activities are disrupted. Some of the policies are provided free-of-charge by insurers, while others have low premiums that are subsidized by local governments. Many sellers of coronavirus-related coverage are state-owned insurers, which can likely fall back on state support in the event of major losses.” Wall Street Journal, April 10, 2020
Most Chinese factories are now back to operating at around 80% of capacity. Some are pushing 100%. Foxconn, the Taiwanese contract manufacturer which assembles the majority of Apple’s iPhones in China, says that with the help of tests for the virus and chest x-rays it has been able to get all its operations on the mainland back up and running with no risk to the health of its workers. In a call to investors on April 1st it reported that it was on target to provide Apple with all the 5g iPhones it needs for the launch of the device this autumn. Many of the measures that made China’s great reopening possible were boring-but-important changes to existing protocols; more hygiene measures, more separation between workers, and screening (companies in China and elsewhere are trying to get their hands on a lot of tests for sars-cov-2 infection). The Economist, April 8, 2020
“Chinese consumers are shopping again, in a timely boost for the beleaguered economy, as they regain some semblance of normal life after unprecedented lockdowns aimed at containing the coronavirus pandemic. Demand for travel, cosmetics, outdoor gear and food has surged in recent weeks as policy-driven stimulus kicked in, workers returned to offices and factories and the government started easing restrictions on people’s movement. Transport bookings rose more than 50 per cent, while hotel reservations increased by 60 per cent during the three-day tomb-sweeping Ching Ming Festival through April 6, according to Trip.com Group. Online retail orders have likewise boomed, according to e-commerce site Pinduoduo. South China Morning Post, April 8, 2020
Savills China Retail believes that China’s retail sector will fully recover by the second half of the year, once as the country has recouped from the COVID-19 pandemic, reported Retail News Asia. Entertainment centres, shopping malls, restaurants, and gyms that were affected by the government-mandated lockdown in late January are predicted to flourish post-coronavirus, as consumers cautiously retreat back to their old shopping habits. At present, shopping malls in Shanghai have 30 percent fewer shoppers compared to before the outbreak. However, starting today, malls will return to their regular operating hours, from 10 AM to 10 PM, and most retail tenants will reopen to the public. Since the reopening, some sources have already revealed long queues outside fashion stores in IAPM mall, as well as difficulty in finding parking slots and seats at coffee shops. Even though some restaurants have permanently closed due to the unaffordability of labour and rent costs during the outbreak, those who did survive were allowed to reopen as soon as they have reapplied.: Source: Property Guru Report, early April.
Car Sales
(Car) “quarterly sales declined 42% on year to 3.7 million vehicles, the government-backed China Association of Automobile Manufacturers said Friday. While demand started to return in March as China’s epidemic situation stabilized, sales for that month were still down 43% on year at 1.4 million vehicles. Sales had plunged 79% in February.
The rebound is already struggling to sustain its momentum. The increase in visits to dealerships trailed off in April, said Lin Huaibin, an analyst at IHS Markit, as Chinese consumers—their confidence still fragile—watched the virus ravaging the U.S. and Europe and realized the scale of the crisis facing the global economy. This fresh “demand shock” would cause auto sales to fall by about 14% this month from the same period a year earlier, Mr. Lin said, compared with a very weak April 2019, when sales fell 15% on year.
Government and Landlord Support
Just in from Deloitte: The Chinese central government has unveiled a raft of measures to support the market amid the novel coronavirus pneumonia outbreak. The support plan for SME’s mainly includes:
- Easing tax burden: on individuals and corporations
- Financial support: increase credit supply, reduce difficulty and cost of loan applications
- Stability of employment: delay collection of social insurance premium.
Also, property developers/landlords, including Wanda Group, China Resources, Poly Group, Country Garden, etc. have announced waiving rent for tenants for 1-2 month durations.
Travel
“United UAL Airlines could announce it will soon resume passenger flights to China, which is rebounding after strong measures brought the coronavirus outbreak under control. United would likely fly between San Francisco and Shanghai Pudong. Demand is increasing for United as business resumes in China and its U.S. corporate customers re-establish supply chains.” Forbes, April 10, 2020
But….” Hotel stay in Beijing only with negative corona test from April 12. In order to stay in a hotel in Beijing from April 12, guests will have to provide a negative result of a nucleic acid test that was taken within the last 7 days as well as national or Beijing health codes that show no abnormal status. China Legal Services, April 10, 2020
In Summary
We 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. We will update this China blog about every other week.
Feel free to reach out to Bill Edwards, CEO of Edwards Global Services, Inc., (EGS) to ask questions or share best practices at +1 949 375 1896 or bedwards@edwardsglobal.com.
“It is not the strongest or the most intelligent who will survive but those who can best manage change”. Darwin
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
