MILAN, Mar. 16 (Class Editori) - Are there any lessons that Chinese companies, the first ones which had to cope with coronavirus, can teach to the European and in particular to the Italian ones? BCG thinks so, and it has collected some of them in an analysis, which has been released in these days and signed by the Chief economist Philipp Carllson-Szleak, among the others. Therefore, seven “lessons learned” which can be useful in these hours have been listed.
1. Looking forward and constantly redefining efforts. Crisis usually follow an unpredictable path: the initial uncertainty is replaced by discovery, then planning, recovery strategy and finally learning. This process must be fast and leaded by the CEO, in order to avoid to remain stuck in the obstacles of the domestic red tape. In China, some companies which have quicker recovered have looked forward and foreseen these changes. Master Kong (instant drinks) has reconsidered dynamics on a daily basis and redefined priorities. It has anticipated hoarding and stock-out, shifting the focus from offline channels and large-retail sector to O2O (online-to-offline), e-commerce and smaller stores. Its supply chain recovered by 50% few weeks after the epidemic and it has managed to provide stocks in 60% of the stores which have been reopened in this period (three times more compared to some competitors)
2. Proactively creating clarity and security for the employees. During a crisis, confusion is worsened by a plenty of information and fake news. Employees can not adopt new working methods if they can not rely on clear elements and a general direction. Some companies have offered a guide and a proactive support to their employees. Supor (cooking utensils) has released specific guidelines and operative procedures for its employees: from instructions aimed at limiting exposition during lunch time to emergency plans for any unexpected situation. Cosmo Lady (underwear and lingerie) has launched a program in order to increase sales through WeChat, enlisting employees as testimonials on the e-commerce channels.
3. Reconsidering roles. In the most affected companies, such as restaurants, employees have not been able to perform their normal tasks. Instead of dismissing, some companies have assigned new roles to their employees or they have temporarily “borrowed” them to other companies. Facing a strong drop in revenues, more than 40 restaurants, hotels and movie theatres let go a major part of their workforce. Lin Qingxuan (cosmetics), which has been forced to close 40% of its stores, has turned more than 100 beauty consultants working in Ambassador stores into online influencers. Sales have increased by 200% compared to the previous 12 months.
4. Turning adversity into opportunity. While in China the crisis has greatly affected traditional sectors, the demand has increased in some specific areas, among which the teaching online platforms. Kuaishou- a video platform with a worth of $28 billion- has taken advantage of this, by promoting online training courses in order to compensate for the schools’ and universities’ closings. The company, in collaboration with the Ministry of Education, has opened a national online cloud classroom and provided specific products for students.
5. Identifying new needs. Apart from rebalancing the product portfolio, the new customers’ needs create interesting innovation opportunities. Many companies focus on defensive drives when they are threatened by the crisis, but some of them have innovated by using emerging opportunities. The insurance sector is known as a conservative one, but in order to respond to the crisis, Ant Financial has added a free coverage for viruses. On February, the company has increased by 30% the income coming from health insurance compared to January.
6. Looking for new consumption habits. It is possible that some changes will persist over the crisis and that some sectors will re-emerge. Thanks to SARS crisis (2002), Chinese e-commerce has been accelerated. It is too early to assess which new habits will last during the medium-long term but we cannot exclude a growth in the online education field, a transformation in providing medical assistance and an increase in B2B digital channels. Many Chinese companies are already planning these changes. For example, one of the major Chinese confectionery industry has sped up the efforts of digital transformation and completely deleted the offline S. Valentine campaigns and other promotional activities, by reinvesting resources in digital marketing and WeChat programmes.
7. Getting ready for a quick recovery. Only six weeks after the epidemic outbreak, China is recording signs of recovery. The circulation of people and goods is restarting as well as confidence. The recovery plan must start while the reaction to the crisis is still going on. One of the main Chinese travel agencies has focused on the long-term challenges in response to the short-term activities’ fall. Instead of reducing the work force, it has encouraged employees to use time in order to update internal systems, improve proficiencies and design new products and services, to be ready to take advantage of the recovery.
(Source:Class Editori)
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