Businesses, in particular SMEs (small and medium enterprises), need to revamp and remodel strategies as well as strengthen market presence to stay relevant.
The Covid-19 pandemic and the economic and travel restrictions that followed have created turmoil and disrupted business and trading patterns throughout the globe, leaving a trail of calamity within business, economic and financial ecosystems. And the worst is not over. As we continue to experience the effects of the pandemic, the situation is expected to deteriorate given that China, the world’s second largest economy, is now looking inward, and understandably so, in efforts to sustain the growth of its own export market.
China’s exporters have been left in a predicament due to global trade disruptions caused by the decline in purchasing power, increased unemployment, and disruptions to transport and logistic chains abroad. The country’s Commerce Minister, Zhong Shan, told reporters at a briefing on May 24, 2020, “when there is no light in the West, there is light in the East”. In fact, the inward focus comes from China’s top echelons, with Industry and Information Technology Minister Miao Wei saying that China aims to “rapidly activate domestic demand” to make up for the external shortfall.
Unfortunately, such a move could cause upheavals among companies dependent on China for trade. China’s exports in 2018 and 2019 stood at US$2.1tril (RM9.16tril) in both years. If you took just 50% of that and assumed the remaining 50% of the trade volume will be focused inward, then China’s imports could be reduced significantly. This would affect all of China’s trading partners abroad, including Malaysia.
Given this impending issue, local businesses must now re-strategise, revamp and remodel based on the global shift in consumer markets and trade. Business remodelling involves reviewing business strategies, operating protocols and communication with stakeholders, and realigning financial considerations, and so forth. These are basic elements towards building and strengthening resilience amidst a changing business ecosystem.
Businesses should take cognisance of the following:
Internal protocols – Areas that need to be considered as part of the change management process include implementing structural changes; revisiting business models to improve/facilitate cash flow; installing innovative and state-of-the-art technologies; digitalising work functions to facilitate operations; incorporating risk assessment and management profiles; analysing value chain propositions (procurement and supply); enhancing stakeholder communications so informed decisions can be made; establishing a financial structure and plan. The change in trading and consumer patterns will be important to companies charting and realigning new business models.
New global markets – Identify new markets abroad. India and the African continent could be forerunners and an option to look at. Other countries could include those in Asean, and not forgetting the domestic market itself! Collaborate with the Malaysia External Trade Development Corporation (Matrade) by engaging in Matrade’s e-trade programme. SMEs can benefit from the export promotions, exporter development, market intelligence and so forth.
Market presence and reputation – It is important for products or services offered by companies to stand out in the busy and cluttered market. And having a strong market reputation would help businesses gain the edge over the competition. Reputation is reflected by the organisation’s disposition and its leadership and brand. So how an organisation and its leadership or brand is perceived in the market can help determine its growth as well as secure a niche space in the market.
These considerations are among some of the key factors to ensure growth and sustainability. We must remember that business is not what it used to be. Today, the business landscape has changed – the goal posts have definitely moved. Fundamentals in global supply value chains have changed and digitalisation has made a strong impressions in our work processes, including the manner in which we communicate.
With these changes, it would be difficult not to incorporate new developments into business protocols. This is the new normal. Moving forward, we need to change and adapt to the new business ecosystem.
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