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Eight weeks into this new decade, we are all quickly becoming used to the daily news and advice about the global impact of the COVID-19 coronavirus. Undoubtedly, the news has influenced the entire Mainland China economy, with numerous social and economic implications for organisations, especially small-to-medium enterprises (SMEs), some of whom face a difficult year ahead.
Without wanting to play down the seriousness of the situation, it is not all bad news. According to first-hand reports from our clients, many remain cautiously optimistic about their business and hiring plans this year. Nobody will deny the impact from COVID-19, but companies in China are typically logical and objective in the face of adversity. While many acknowledge that in H1, business revenues may suffer, some express confidence in their ability to recoup earnings shortfalls over the rest of the year. In the long run, they remain confident in China’s economic fundamentals and long term potential.
Meanwhile, we can already see business opportunities presenting themselves, as some sectors and industries emerge as frontrunners for recovery. Based on surveys across our business and our clients, here is a look at some resilient sectors despite the fallout. We believe that in the near term, these sectors combined with agile decision making and action from government and businesses, will help to kickstart a wider recovery.
Already expected to grow in 2020, Healthcare and Life Sciences (HLS) is certainly a more buoyant sector. After the breakout of the virus, masks and many other types of protective equipment were in severe need. Many pharmaceuticals companies and institutions are working tirelessly to develop effective vaccines and innovative new drugs.
Preventing the outbreak has also seen an upside for telemedicine. Many online medical platforms, such as Ali Health, Tencent Health, and PingAn Doctor, responded quickly to provide free consultation services for patients. Data shows that in just a few days, these sites attracted hundreds of thousands of additional visits, and more than 100,000 participating doctors. Hospitals are increasingly seeking to leverage telemedicine to cope with increased demands: we see in the next two to three years, telemedicine will become a mainstream choice for many.
What’s more, people’s awareness of life and health issues has recently spiked. This will boost the potential of those selling medical equipment and medical supplies, as well as pharmaceutical industries, and should in turn stimulate domestic demand for health care products. Over time, the boom in demand for China’s healthcare industries should also create additional funding and investment, and a host of new job opportunities and hiring demand.
Contracting is currently playing a key role in providing flexible specialist workers to companies facing difficulties. Thanks to the Ali Group's Fresh Hema initiative, a new China-wide "employee-sharing" scheme helps to provide temporary jobs for those previously working in hard-hit sectors, such as hospitality, dining, movie theatres, department stores. The result is that contracting jobs have quickly become a hot topic on social media.
Michael Page’s Contracting team received several contracting consulting and hiring requests from companies in mid-February. According to feedback, some businesses needed to hire contactors to cover temp jobs during the period, as their employees couldn’t return to the office. Others were in need of HR or EA talent to deal with the extra demands of the healthcare and people-management situation for the next three-to-six months.
Other companies such as manufacturing companies needed factory directors with experience in managing production during outbreak conditions. Others still are more cautious about their future hiring, so instead they sought contractors over permanent hires for a few months, while the picture becomes clearer.
We foresee that Contracting hiring will enjoy a further spike in demand this year, and the concept of and perceived value of Contracting will gain further exposure.
Due to COVID-19, many people in China have been confined to their homes: resulting in a boom in demand for online businesses. Buying everything online has quickly become the best alternative to leaving your home, and its benefits are embraced by customers – with online shopping, education, remote working, and entertainment all showing a spike. Capital is also being actively invested in these areas right now.
In terms of online shopping, fresh food e-commerce is seeing an expansive growth. Within online entertainment, online games and live webcasts are popular, as witnessed by the comparison of the turnover of Tencent’s hit game ‘Honor of King’. In 2020, its turnover over Chinese New Year Eve was around RMB 2 billion – whereas over the whole of 2019, it made just RMB 1.3 billion.
This is a rich opportunity for companies to further realize the potential to drive their company’s digital transformation forward: and to prioritise the systemization of data, tools and processes to optimize working efficiency. If they work on it now, these companies can be ready to cope with the new demand, and be prepared to counteract any similar disruptions in future.
China’s stock market is a perfect measure of the market impact of COVID-19. Unsurprisingly, property management has been performing especially well. From Feb 3rd to February 17th for instance, 21 out of 23 property stocks rose, most of them by more than 20%.
Since the breakout of the virus, local governments have been instructing communities to check residents’ health conditions, sterilize houses, and stop outsiders from coming in. Some communities are coping well: for those who are facing difficulties in doing so, property management is a popular alternative. As such, many property management companies are hiring new workers and managers to cope with a rise in demand.
The breakout of the COVID-19 coronavirus reminds many of us in China that risks are everywhere, and that nothing is permanent in life. Many are using the downtime to turn their attention to updating their insurance coverage: certainly, the insurance space is expected to be a strong area.
“Each time, the rate of insurance coverage rises after the outbreak of a virus. It was true for the SARS situation, and COVID-19 this time,” Wang Xujin, the director of the Insurance department from Beijing Technology and Business University, was reported as saying recently.
The above are just some of the business opportunities we’ve observed. For others suffering more due to the crisis, we extend our empathy and partnership. Hopefully we can all use the short-term pause as a good opportunity to adjust the structures, digital preparedness and team training levels of our industries, allowing us to bounce back even stronger soon. This recent winter has of course hit many businesses, but we are confident that those who endure can bounce back even stronger when the spring comes.
If you would like to share with us your insights on current bright spots, or you have specific hiring requests, please contact us at any time.
