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A quartet of Asia’s most successful business leaders shared lessons from their post-pandemic reopening with members of the Fortune CEO Initiative yesterday. My takeaways:
1) Digital transformation is accelerating everywhere.
“During the pandemic, all the brick and mortars moved to online, and all of them turned to online sales, not as an option, but as a necessity…This pandemic enhanced people’s online shopping habit and expanded their options from clothing and electronics to daily necessities like food and groceries…….Every single brick and mortar store has become a forward warehouse or forward kitchen to fulfill and deliver online orders.”
–Alibaba CEO Daniel Zhang
“Customers are very ready to order on their mobile phones…double what it used to be. Mom and pop shops, hair salons, everybody is going for digitization.”
–Yum China CEO Joey Wat
“You see the acceleration of digitization happening tremendously, especially with SMEs. Southeast Asia is probably ten years behind China in digitization, but Covid accelerated everything.”
–Grab CEO Anthony Tan
2) Travel is suffering.
“In Japan, our e-commerce business is up 50%, our travel business is down 90%.”
–Rakuten CEO Hiroshi Mikitani
“Our business in transportation hubs…of course those businesses are still struggling to recover.”
3) Cleanliness is the new differentiator.
“Companies with good credibility on health and safety and food safety are viewed more positively.”
“Contactless deliveries, making sure there are partitions, masks…if you stand out as a brand of safety and hygiene–here is how you can differentiate.”
4) Cash is over.
“Cash is almost gone for the vast majority of Chinese citizens….People are very, very cautious about cash exchanges.”
“People kind of hesitate to touch physical coins and bills, and the government will try to encourage people to use digital payment in stimulating consumption.”
“Touching cash is considered dirty and it might actually spread the virus. In the Philippines we have made every ride only cashless. These are tough decisions, because cash is still king in Southeast Asia.”
5) Workers’ buy-in and welfare are crucial.
“I made it mandatory for everyone to join our morning hallo and at the end of our day what I call our afternoon hallo… The other thing is I started to do a lecture to all the new people who are joining our company, 30 minutes every day…[In a virtual all-company meeting] people started to participate and get more engaged than when doing it physically.”
“When Yum China made the decision about what to do back to January, we made a clear decision that whatever decision we do we need to look after our employees first, customers, our community and then our environment. All are important…Social responsibility matters a lot…For many companies, including our company, [the task] this year is to build a brand. It’s not about making money, but hopefully we can build a brand and help shareholders make money for the next 100 years.”
More news below.
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here.
Inditex, the world's largest fashion group, has reported a quarterly loss for the first time. That's despite a 50% jump in online sales during its Q1. The Zara owner's net loss ran to $465 million for February through April, and Inditex blamed the coronavirus panemic. In May, the company said, its store sales halved. CNBC
A new KPMG report predicts beneficial economic effects from the spread of 5G, but not a huge boost to the revenues generated by wireless carriers. The consultants forecast that just 7% of spending from the introduction of 5G would go to connectivity—bad news for carriers that have already been struggling to charge consumers more for the super-fast mobile technology. Fortune
President Trump's advisers and allies reportedly had to talk him out of firing Defense Secretary Mark Esper last week, after Esper expressed opposition to the idea of using active-duty troops to quell protests in the U.S. Esper is already the fourth defense secretary in this, Trump's first term. According to this Journal piece, he was preparing to resign over the protest disagreement, but his own aides and advisers talked him down. Wall Street Journal
The OECD has warned that the coronavirus recession will leave deeper scars on rich nations' economies than any peacetime recession in the last century. The organization said there will probably be a quick bounce back, but living standards won't return to pre-pandemic levels in the next few years. OECD chief economist Laurence Boone: "Most people see a V-shaped recovery, but we think it’s going to stop half way…By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments." Financial Times
AROUND THE WATER COOLER
The assassination of former Swedish Prime Minister Olof Palme some 34 years ago has finally been solved, according to Swedish prosecutors, who say the evidence points to a "witness" of the shooting, Stig Engström. Engstrom killed himself in 2000. Palme's murder on a busy street was one of the greatest mysteries of modern times, with various theories involving South Africa, India and the Kurdish militant group PKK. BBC
The United Arab Emirates is losing a lot of foreign workers at the moment, partly due to a precarious lack of benefits and state support in these hard times, and the loss of high earners will have particularly painful effects on places like Dubai. Stratfor analyst Ryan Bohl: "An exodus of middle class residents could create a death spiral for the economy. Sectors that relied on those professionals and their families such as restaurants, luxury goods, schools and clinics will all suffer as people leave. Without government support, those services could then lay off people who would then leave the country and create more waves of exodus." Bloomberg
The insurance industry is poised to pay for most of the losses incurred by businesses that were affected by incidences of looting and arson during the George Floyd protests. But many smaller businesses aren't sufficiently insured, and may struggle to reopen their doors—resulting in a lack of services for disadvantaged communities. And the reason they aren't insured may come down to the insurance industry's tendency to discriminate against poorer neighborhoods. Fortune
How best to counter vaccine skepticism when a COVID-19 vaccine makes its appearance? According to the Sabin-Aspen Vaccine Science & Policy Group's Harvey V. Fineberg and Shirley M. Tilghman, the answer lies in a "deepened partnership between immunization programs and social media to advance vaccination acceptance in communities around the world." Fortune
This edition of CEO Daily was edited by David Meyer.