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Hong Kong (CNN Business) – For most of this year, China has been living seven weeks into the future.
The world’s second largest economy was the first to be affected by the coronavirus outbreak, which forced it to stop travel, close shops and theme parks, require people to wear face masks, and encourage people to apply social distancing.
Now the country is gradually reopening. And as the rest of the world prepares to do the same, companies that were forced to respond to the outbreak in China first are using their early experiences to form a plan for other regions.
Corporate responses in China have become a focal point for Wall Street analysts in recent months, as global brands like Nike, Starbucks and Disney share their experiences in the country on calls with investors and credit their teams there to guide them through the crisis.
Nike, for example, recently said it was “seeing the other side of the crisis in China” and that it has learned best practices that could be transferred elsewhere. And when Volkswagen reopened its giant plant in Wolfsburg, Germany this week, it cited its experience of resuming business at 32 of its 33 factories in China.
The new strategies companies are introducing will not bring life back to normal, according to business leaders and experts. Instead, they say the crisis could permanently change the way we work, shop, and manage our businesses.
“This is the new normal,” said Alain Benichou, CEO of IBM China. “There are a lot of wake up calls we’re working on right now.”
Here’s a look at how the future of business has changed, and how China is giving us a preview.
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The way we work
For Despina Katsikakis, the average workplace is already starting to look very different.
Katsikakis, a London-based partner focused on innovation and emerging practices at commercial real estate firm Cushman & Wakefield, has been advising companies around the world for return to work.
In China, the company has already helped move more than a million workers to offices. In Katsikakis’s opinion, the crisis has rapidly advanced the future of work in more than a decade.
The company hopes to capitalize on that change, starting with a visual guide for its customers called the “Six Feet Office”. The concept, a “living laboratory” at Cushman & Wakefield’s Amsterdam office, was based on its findings from China and other comments from workers and customers around the world.
Prototype of the “Two Meters Office” of the real estate firm Cushman & Wakefield.
“It is a prototype that is basically there to inspire people to think of solutions, about how to put social distancing into play, how to properly prepare the building and really push people into different behaviors,” said Katsikakis.
In this new normal, the desks are, as expected, two meters apart. Health officials around the world have for months advised people to keep this distance from each other to prevent the spread of the virus.
Workers are instructed to walk “one way only” clockwise throughout the office to avoid passing side by side and potentially spreading more germs. Katsikakis said the guide was based on consultations with health care experts, who shared how doctors moved in hospitals.
One of the most important conclusions the company has drawn from China, he said, is that “we must ensure that we are confident that we will return to a healthy environment.”
In the coming years, she imagines sensors replacing most of the shared surfaces we used to touch. Instead of swiping your entry pass to enter, for example, you can face a facial recognition camera or extract a QR code on your phone.
Companies are also expected to invest more in office air filtration systems to reduce pollutants (Volkswagen, for example, has set its air conditioning units to the max in Wolfsburg). Some may even install plexiglass sneeze guards on desks, Katsikakis said. To avoid contaminating surfaces, the company suggests placing a pad of paper on your workstation and replacing it daily.
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Since the presentation of the prototype of the “Office at two meters”, the company has been inundated with consultations every day, if not “every hour,” the partner joked. “We have been conducting daily briefings with some of our largest global clients to help them and their real estate teams see how they can take these ideas and how we can jointly create with them.”
Although the concept requires more space, it does not necessarily mean that having an office will be more expensive. If there is one thing the situation has shown, it is that remote work is effective, and it is largely here to stay, Katsikakis said. That means fewer people will use the same space than before the pandemic.
The way we communicate at work has also changed. The boom in demand for business software, like Microsoft Teams, “is unprecedented,” said Jared Spataro, corporate vice president, Microsoft 365.
He said Thursday that the messaging and video conferencing program now has 75 million daily users, a 70% increase from last month.
“We have a time machine as countries like China and South Korea have returned to work and school, and the use of equipment continues to grow,” Spataro told CNN Business.
The way we buy
In some ways, now is the perfect time for brands to pick up new customers and forge lasting connections, said Deborah Weinswig, executive director of Coresight Research, a research and consulting firm that focuses on retail and technology.
While millions of people are locked up at home, they are forced to create new routines and lifestyles, she noted.
“They always say it takes 21 days to change a habit,” Weinswig said. “We are changing our shopping habits, and some of them will be quite sticky.”
Nike, for example, has pivoted so well that “it could change the curve that [está] in the coming years, “he said. (Coresight previously worked on research projects for Nike.)
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A pedestrian in front of a Nike store in Shanghai in March.
While the company was promoting online shopping before the outbreak, Weinswig said the business “really accelerated” in recent months. The sportswear giant reported strong gains in March, in part because it was quick to accelerate its online business in China. Digital sales in China increased more than 30% in the last quarter, while weekly active users for its activity apps soared 80%, CEO John Donahoe told investors.
The company’s flagship app was crucial to its success. The platform launched in China during this period and encouraged users to exercise from home through a virtual “training club”, according to Coresight. Weinswig noted that the app was free, which was “critical” for users.
The company also launched more products online, including limited edition sneakers like Air Jordans.
Speed was also crucial. Nike competes in a crowded space, but it was one of the first brands to target customers who stayed home, Weinswig noted.
“They adapted very quickly,” he said.
How we manage our supply chains
The pandemic can also force a reinvention of the global supply chain.
Generally, consumer goods supply chains are “designed to prioritize efficiency over flexibility and resilience,” wrote John Knapp, partner and managing director of the Boston Consulting Group, in a recent blog post.
But in recent months, “shortages of critical raw materials and supplies, along with the specter of increased worker absenteeism, have exposed the underlying risks,” he said.
That is forcing companies to rethink how they ship their products.
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“The things we used to take for granted no longer exist,” said William Ma, director of Kerry Logistics, a Hong Kong-based company that helps companies around the world manage their supply chains.
“Right now, we can see all of these disruptions across almost every segment of the cargo movement in and out of China. Or when entering Europe, I can’t get the truck to cross the border. “
Before the outbreak, companies planned “day” outages, Ma added. Now, they are seeing “weeks.”
Products being inspected at a foreign trade warehouse in Jiangsu province, China in March.
One company that hopes to save the day is IBM. The technology giant, which offers an artificial intelligence-based supply chain management program, says it has seen a “significant” jump in demand as more customers look for predictive models against the next crisis. The company declined to share specific numbers.
The pandemic was “a wake-up call” for many companies, said Benichou, the chief executive of IBM in China.
“What we want [hacer] it is clearly helping with the problems we have discovered with the covid-19. Supply chain optimization, which we have just discovered, so we must address that. ”
Even governments are participating in the act. Last month, Japan announced a plan to help companies shift their production back home, said Andrew Staples, global editorial director for the Corporate Network of The Economist. The network is an advisory service of the Intelligence Unit of The Economist, which provides resources for senior business leaders.
“I think that will continue,” he said.
The outbreak also exposed cracks in the supply chain that most companies didn’t even know about, according to IBM researchers.
The company recently discovered that 90% of Fortune 1000 companies had secondary suppliers in Wuhan, the central Chinese city where the outbreak began, but “many had little or no interaction with them,” said Jonathan Wright, an IBM executive, in a company webcast last month.
At the same time, it may be too early for companies to confront this problem, Ma said.
He noted that rebuilding supply chains takes a lot of capital and time, two things that most companies are lacking at the moment.
“More important to them is cash growth. If their things cannot be sold, they cannot pay their suppliers, the suppliers cannot pay their sellers, “he said. “[Nosotros] we just want to get through this as soon as possible. ”
