In a post-pandemic economy, Asian businesses will think smaller and safer, with worrying implications for many workers

Asia’s business leaders now start almost every discussion by talking about digital transformation
Human labour is a business risk, given the possibility of a future outbreak. Factories may become more automated, with fewer workers

Colleen K. Howe

Published: 9:30am, 20 May 2020

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If you’re an office worker using Zoom while working from home, you’re part of a speeded-up Covid-19-induced technological revolution.

Buyers of electrical grid transformers are conducting quality testing remotely via cameras and sensors. Doctors are making diagnoses via video. Employees are swiping QR codes on their mobile phones to confirm their health status and gain access to office buildings.

These are only a few of the changes since borders closed across the world and 60 per cent of global gross domestic product went into lockdown – changes that would be stunning at any other time.

With over 300,000 people having lost their lives amid the pandemic and a downturn that rivals the Great Depression, talk about business can seem crass or unfeeling. But the economic devastation resulting from the response to Covid-19 makes it all the more important to look at how the corporate landscape will shape life in what is likely to be a dramatically altered post-pandemic world.

It is becoming something of a cliché to say the post-Covid-19 economy will be a digital one – but it is nonetheless true. What has become clear through discussions with members of the Asia Business Council is how sweeping that transformation will be.

Members comprise some 70 chairmen and CEOs of leading companies in 17 economies throughout the region – not the tech unicorns, but for the most part the conglomerates that make up the bread and butter of the Asian economy, from private equity funds to pineapple producers.

They control companies valued at nearly US$3 trillion and directly employ about three million workers. They see fundamental, structural changes under way, ranging from a greater role for governments – and higher taxes – to much more rapid technological change. These business leaders now start almost every discussion by talking about the importance of digital transformation and automation.

Asia is uniquely able to capitalise on this shift. We saw this in the initial response to the crisis due to a mixture of advanced technology, nimble public-private sector partnerships and flexible attitudes toward data use. Asian companies sprang into action: in Taiwan, telecom firms sent free text message alerts to the public warning of crowds or new Covid-19 cases.

Why East Asia is managing Covid-19 better than the West

Singapore’s state investment company spearheaded an initiative to convert empty buildings into quarantine centres. South Korea is building a platform that uses bank data to find and isolate Covid-19 cases.

Firms in China and South Korea were already global leaders in e-commerce and digital payments. Now even traditional firms in sectors like spirits are seizing opportunities to collaborate with tech giants and reach customers through smartphone apps. Tech giants like Alibaba are redoubling their courtship of the tens of millions of potential customers not yet online and in the digital economy.

Just as the severe acute respiratory syndrome outbreak arguably spurred the development of e-commerce in China, new industries will spring up. Perhaps soon governments and even corporations will hire armies of contact tracing specialists.

But the process of creative destruction is a painful one. Our members are deeply concerned about how to manage this transition. More jobs will be lost than will be created for a long time. Human labour is now considered a business risk as the possibility of a future outbreak remains ever-present.

Some say that, combined with the uncertainty around the future of global supply chains, it could prompt a shift away from large factories towards smaller and more automated regional facilities with many fewer workers.

Why Covid-19 won’t weaken China’s role in global supply chain

Even traditional industries like food and beverage may be heading in a similar direction, says a CEO who thinks soft skills like face-to-face sales could become a lost art in the new digital economy. He is looking to hire digital marketers and wondering what to do with his traditional sales force. Industries such as retail may be permanently pruned.

Asia may have the technology to play a leading part in the digital and automation revolutions, but it might not have the needed social safety net. In Europe, some governments have paid many of their workers to stay at home for weeks. Asia’s population cannot afford to stay in lockdown.

The Asia Business Council wrote about the need for a new social contract in a recent report on Japan, where the ageing population will make the social security system unviable. The pandemic presents a broader opportunity throughout the region, especially in better-off economies like Hong Kong, to pioneer a fairer society and a new social contract.

Citizens have had to make unprecedented sacrifices in the name of combating the pandemic and they deserve economic security, adequate health care, gender equality and more help for working families.

Government stimulus payments and small-business aid are a start. But what about individuals who, through no fault of their own, find themselves unemployed? This list could be expanded to ultimately provide protections for victims of future climate-related disasters, for example.

Global collaboration needs to be expanded too, to extend aid not only domestically but to neighbouring countries that are struggling with the pandemic. Businesses can help fill in the gaps where government aid falls short.

The pandemic and its aftermath will force Hong Kong to rethink its role in the global economy as the world turns inward. As a city with one of the world’s highest costs of living, it will also have to reconsider how to stay competitive as companies across the world wake up to the fact that knowledge work can be done from anywhere. And all this comes at a time when Hong Kong is facing its biggest political crisis in decades.

Hong Kong has done well so far. We have averted the huge casualties from Covid-19 seen elsewhere. The world is looking to Hong Kong and its East Asian neighbours to see what lessons can be learned, and that will raise the region’s profile in trade and investment. But the public health challenge may be only the beginning of the changes to come.

Colleen Howe is program associate at the Asia Business Council

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