Can We Leverage China’s Comeback to Ride Out the Worst Recession in 90 Years? Strategies from 12 China Hands
Bad news first. This is worse than 2008, “much worse” according to the International Monetary Fund (IMF), which called it “A Crisis Like No Other, An Uncertain Recovery” in the World Economic Outlook Update released in June 2020. This is not just a global recession like in 2008, but more like the Great Depression that happened in 1930, explains Ray Dalio, arguably the world’s most successful investor. His comments are echoed by the IMF’s projections for global growth, which shows that for the first time since the Great Depression advanced economies, emerging markets and developing economies are all in recession. The vast majority of countries’ economies will shrink in 2020 with a global projection of -4.9%, and advanced economies are projected at -8%. Income per capita is expected to shrink in over 170 countries. Now for some good news. China is in many ways is already getting back on track after the economy shrinking by 6.8% in the first quarter compared to same period last year. While there is no doubt it will take a serious hit in 2020, from 6.1% last year to a projected 1.0% this year, that would make it only country on the list to still have positive growth in 2020. If IMF projections turn out to be accurate for 2021, China will have the strongest economy in the world in at 8.2%. In the shorter term (6-12 months), we are all likely to be challenged, in the longer term (1-3 years) things can be better than they ever have been, for some. This article builds upon on the premise “what doesn’t break you makes you stronger” in my previous article entitled ‘Could the Coronavirus make China Stronger than Ever? 10 Trends that Indicate it Will’ which has been shared over 1000 times with over 100,000 views on LinkedIn, has been sent around the internet from Facebook to WhatsApp groups to multiple WeChat accounts reposting it, and has been translated it into Chinese and French, and led to an interview on CGTN. The basic idea of the article is that while China’s economy will undoubtedly be hit hard at the beginning of this year, with some industries hit harder than others, China has the strongest macro-economic mechanisms in the world for preventing a severe economic slowdown. Now China has already returned to business and has contained the virus. The outbreak is but a small blip on China’s long-term development radar, and one that could actually accelerate China on its path towards becoming a fully developed nation by 2050 — China 2.0. Those individuals, companies and countries that hope to fare well over the next few years would be wise to leverage China’s comeback. So why does that matter to us as individuals and businesses? This article shares ten potential ways we can navigate our way through the next year, leveraging China to come out stronger that ever before. None of the below are quick fixes, all will take investment of time, energy and probably money. Right now is a time to take a moment (and ideally longer) to think very seriously about the direction you have been going and if that is still the best direction for you during and post COVID. The world has changed, the economy has changed, politics have changed, businesses have changed, so if we stay the same, many of the ways we have done things are likely to become irrelevant soon if they aren’t already, and that’s a good thing, because it will force us to change too. Now is the time to reinvent yourself and your business, to question everything, to go back to base principles, to identify and operate by your core values. The world will not be stable any time soon, but you can be. What can we do as Individuals and Businesses? I’ve been interviewing “China Hands” on their personal stories to learn how they have managed to play their hands right in the China market. I have chosen ten of those interviews for this article which are relevant to supporting you in this COVID context. You can click on the images below to find a link to the interview on Youtube, or for those in China on Bilibili the Chinese video platform, as well as a link to podcast if you prefer audio. Welcome to Season 2 of the Your China Dream Video Interview Series – enjoy! Strategy 1 – Build Bridges to China (by helping Chinese companies expand) Not only has China come back online, but many of its tech giants have actually been fuelled by the Coronavirus as people have gotten more used to using online services during lockdown. Alibaba, whose B2C E-commerce Platform Taobao was essentially born out of the 2003 SARS epidemic, hasn’t done as well as tech companies that are more digitalized like Tencent (for gaming and WeChat) or Bytedance (Douyin & TikTok short video apps) during COVID, but regardless has found ways to survive. Sales grew 22% in the three months to 31 March, despite virus-related restrictions, and sales in the firm’s cloud computing division jumped 58%. Certainly Alibaba has been hit hard by COVID in other business areas, particularly those dependent on the physical rather than digital economy, but now that business is back in China, on the longer term trajectory this matters little. In Alibaba’s quarterly earning press release, Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group, says, “Alibaba achieved the historic milestone of US$1 trillion in GMV across our digital economy this fiscal year. Our overall business continued to experience strong growth, with a total annual active consumer base of 960 million globally, despite concluding the fiscal year with a quarter impacted by the economic effects of the COVID-19 pandemic.” The company also predicted that sales for its next fiscal year could increase more than 25% from 2020. Alibaba is aggressively pushing to expand right now, with their strategic goals for the next five years, consistent with their mission “to make it easy to do business anywhere”: These five-year goals are guide posts that will help Alibaba achieve its vision for 2036 to: The Alibaba e-commerce ecosystem