A Glimpse of Chinese Companies Adapting and Innovating under COVID-19
As new confirmed cases of COVID-19 in China begin to dwindle and businesses gradually return back to work, the impact and effects of the outbreak are still being felt nationwide. Cheung Kong Graduate School of Business’ (CKGSB) Business Conditions Index (BCI), a set of forward-looking, diffusion indices that takes 50 as its threshold, registered at 37.3 in February 2020. An index value above 50 means that the variable that the index measures is expected to increase, while an index value below 50 means that the variable is expected to fall. With an 18.9 drop from 56.2 the month before, this drop signals a greatly worsened sentiment on China’s macro economy. In these uncertain times, Chinese companies’ survival and existence were truly put to the test. An interview with some of our alumni companies showed that many chose to adapt and innovate in the hopes to weather through these difficult times.
Embracing new market demands
When markets and demand change, it is crucial to pinpoint these new demands and adapt accordingly in order for companies to survive. ITLaser, a laser equipment production company led by CKGSB METI program student Jiang Lijun, decided to temporarily transform part of its production line to produce masks to meet the skyrocketing demand for this product. “We have an excellent mechanical automation team. It only took us 15 days to develop mask production lines from scratch and start mass production.” Changgentang Lithiasis Medical Technology Company, a CKGSB Chuang Community alumnus company, set up a telemedicine team to fight COVID-19 soon after the epidemic broke out, and has served nearly 600 patients online to date. Another alumnus-led company, software and info-tech service provider iSoftStone—built a big data system within 24 hours for the Wuhan government to track the location and flow of people in Wuhan who had traveled to other parts of China during the Spring Festival.
From offline to online
When brick-and-mortar stores were locked down and people were discouraged from social activities due to the outbreak, businesses began to adapt and transition to online platforms. For companies whose ecosystems were deeply engrained with the Internet the impact was mild, but for others e-commerce became a haven.
Mia.com, an online mother and baby product site led by CKGSB alumna Liu Nan, for example, was not heavily impacted by the outbreak as a result of its strong supply chain and e-commerce business model. But other traditional sectors were increasingly turning to online platforms for opportunities. After the outbreak, Teasure, a chain of Chinese tea shops headed by CKGSB Chuang Community student Liu Fang, quickly adjusted and adapted its business model by leveraging new online media platforms such as Tiktok and working with food delivery companies to deliver their drinks. Similarly, CKGSB EMBA alumna Fan Yu led her company Nawa Life to shift fitness classes online in light of the epidemic, attracting millions of potential users.
In the face of COVID-19, companies are proactively embracing and working with these challenges. “For companies to live through difficult times there is no other way than to innovate and adapt to change.” Dr. Zhu Rui, Professor of Marketing at CKGSB, said, “But of course companies need to accumulate in advance hardcore technological strengths, brand awareness and the ability to dig out and pinpoint changing market demands.”