A new strain of coronavirus, COVID-19 has spread across the world, and the rising number of cases has greatly affected day-to-day life in a lot of countries. It’s not surprising that there’s a growing concern about how it could affect emerging markets.
Our experience and knowledge of doing business in emerging markets allows us to have insights on what businesses can expect to happen. The situation is changing and developing very quickly, so you should not act without closely examining everything.
Doing business abroad, especially during a crisis, presents unique challenges. By adapting to the current situation and planning ahead, it is possible to continue business activities.
Effects of the Coronavirus on the economy
According to Philipp Carlsson-Szlezak, Martin Reeves, and Paul Swartz in Harvard Business Review (HBR), COVID-19 will likely leave a mark in history in the same way similar events have in the past. HBR highlighted three areas in particular where COVID-19 would create a structural legacy.
- Microeconomic legacy. We should expect the adoption of new technologies and business models during a crisis such as this. For example, with governments advising their people to stay at home, services like education and training that would normally happen in person are now conducted online.
- Macroeconomic legacy. We can expect accelerated progress in more decentralized global value chains. The effects of the virus are pushing the value chain model to become more fragmented moving forward.
- Political legacy. How well different political systems can protect their people will have a great impact globally.
Business opportunities from the changing consumer behavior
While cities, and even countries, are on lockdown, you can expect a difference in consumer behavior. Even when things shift back to normal, the ways consumers have adapted may seep into regular life.
It would be best to take a look at how consumers are currently behaving and make changes based on your observations. At the same time, you should anticipate how consumers will integrate these changes into normal life.
Make your products and services (more) available online
Because people are staying home due to quarantines and lockdowns, many businesses had to be creative in coming up with ways to shift operations online. Not only has this allowed businesses to remain operational, it has also added a new dimension to working and doing business.
Invest in ways to serve your customers and clients effectively by upgrading facilities and tools for video conferencing. You can also use software for better communication with your consumers. Retailers should also set up or improve e-commerce operations. Selling online allows you to move product stocks even during a lockdown.
E-commerce also allows ease of access to consumers. Even without an ongoing global crisis, consumers living outside major cities in Indonesia and the Philippines, both archipelagos, and Vietnam which is spread long on the edge of a peninsula, were already having a tough time shopping. Making your products available online will allow you to tap into these markets and make shopping easier for them now and in the future.
With lockdowns and quarantines across the world, people are learning how to carry on with life online. Much like the e-commerce boom in China during the SARS outbreak in 2003, we can expect some lasting changes from current consumer behaviors.
Invest in better supply chains to reach a global customer base
It’s not just about adding a web dimension to your sales channels. You must also think about the cheapest and fastest way to get products to your customers. For example, you can simplify importation to certain countries by using a consignee as your importer of record.
You should also look into making your products available in more locations. Being in several markets is akin to diversifying your investments.
Using services like importer of record and employer of record can help get your foot in the door and you can double down on your investments once you’ve gained traction in that market. For example, sellers of electronic devices can use an importer of record to import shipments and store them with a local logistics partner. Then a remote sales force hired using an employer of record can sell your products for you.
Also, learn how to hire remote software developers using an employer of record.
Localize your product offerings
Companies operating in foreign markets often try to make their products more appealing by localizing their offerings. For example, McDonald’s offers menu items exclusive to a certain country or region, like fried chicken and rice in some Southeast Asian countries such as Indonesia and the Philippines.
You must observe your market more closely. Look at your products and services and see if they appeal to the tastes of your local consumers. Of course, this applies with or without a pandemic happening, but being locally relevant holds greater importance at a time when travel is largely limited.
Macroeconomic and political opportunities for companies
Invest in local value chains
Most people initially saw COVID-19 as a “China problem” before it spread to other countries. But difficulties in getting shipments from Chinese factories show that it would be a good idea to move manufacturing closer or to the exact markets in which you are operating.
Governments around the world have been trying to get companies to move production to their countries. Because you are providing jobs, sharing knowledge and technology, and making investments in their country, you can expect favorable treatment from regulators. Governments in emerging markets will be very receptive to new investments and could offer incentives such as tax breaks or even expedited permits.
Few companies are willing to invest more time and money into setting up local productions. But doing this can actually be beneficial to your business. Labor costs and qualifications are not such huge concerns anymore because of the automation of processes. Additionally, you will be able to save money because you will no longer pay for import tariffs.
Get in touch with us to discuss moving production and manufacturing to Southeast Asia. Connect with us through email, or by filling out the form below.
Enable your staff to work from wherever they choose to
Many countries have imposed lockdowns, limiting the movement of people. Travel restrictions have greatly impacted expats and digital nomads. It has now become nearly impossible to stay in a foreign country unless you have permanent residence or a local family.
But people still want to travel and live abroad. Case in point are the expats in Bali who are refusing to return to their home countries despite announcements from their respective governments. Setting up where your employees wish to stay is unrealistic. Instead, you can use an employer of record service to hire your employees and assist in obtaining relevant work permits for your staff.
Hire remotely anywhere in the world
Interest and opportunities for remote work have been growing in the last few years. With a large portion of the world’s workforce working from home for the first time, we can expect interest in working remotely to rise. Expand your talent pool globally by hiring remote staff.
By using an employer of record like Emerhub, you can immediately start hiring workers in emerging markets. An employer of record will hire people on your behalf so you won’t have to set up a company locally.
What Coronavirus Could Mean for the Global Economy by Philipp Carlsson-Szlezak , Martin Reeves and Paul Swartz