What can China teach about recovery from Covid-19
Chinese companies had a plan and stuck to it.
Consumers are going back to the shops in China.
China was the first to suffer from the new virus and the first to impose measures aimed at protecting citizens and businesses. Some experts in the West believe there are many things China can teach about the path to recovery.
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Demand in China has come back relatively quickly but there wasn’t an immediate bounce back. Thomas O’Connor,senior director analyst with the Gartner Supply Chain practice, explains for The Logistics Point there was a V-curved, but not all the way. ‘We are not seeing businesses coming back to their sales’ forecasts for 2020,’ he continues. How big the recovery will be depends on the product category.
According to data from China, companies there have managed to recover at least to 80% of the trading levels they had before the virus. Advantage will have those who can start manufacturing faster and more effectively. This will, for the most part, depend on the budget's abilities. What reopening will look like is hard to tell. It is expected that the market could see some acquisitions and merging, as well as collapses.
In Europe countries like Germany, who started to reopen in the end of April, have initially recorded weak sales. O’Connor believes it will take time before we see any significant recovery, as consumers are careful about costs and too much social interaction.
Chinese consumers needed at least four weeks to feel safe and start returning to some pre-Covid habits. Because of that companies will have to rethink the way they integrate sales channels and existing inventory, that is piling up everywhere. Garner’s expert expects to see less risks being taken in terms of new product introduction.
‘It comes as no surprise ecommerce will win out of this,’ O’Connor says. For different retailers this could lead to store closures or implementing strategies to expand online and Click & Collect services.
Low price retailers will get an additional boost. Latest insights from China show consumers are price conscious. Similar impacts may be anticipated in Europe and the USA. Chineses businesses are coming up with recovery forecasts to try and plan step by step their way out of the crisis. They look at how sales perform and based on that decide how many employees to bring back to work.