Government is in the thick of recovery – everywhere
Trying to figure out what to do next is not just the preserve of companies feeling the pain of the COVID-19 crisis; it is also that of government. Shalini Raste, Consulting Director at OCO Global, explains.
“If there are two things we are talking about consistently they are: how do we go digital, and how do we build resilient supply chains,” says Raste.
Commenting on the first point, she explains that we are not talking about the tech sector doing more tech or professional services e-enabling administrative processes: we are talking about big manufacturing, food processing and sectors that we have always associated with being very manual, finally adopting a digital-first approach to manufacture and production.
There is going to be a huge step-change for traditionally manual sectors given that we have become afraid of being physically close, and we now know what happens when manufacturing and distribution are seemingly unresponsive to need.
Arguably, supply chains have never been more worrying, but Raste comments that the evolution of supply chains had started pre-virus. With trade wars brewing between the US and China, supply chain resilience was top of many companies’ agendas if China formed part of their manufacturing equation.
“China Plus One is already being used as a strategy to diversify some manufacturing out of China,” says Raste. “Mostly a US phenomenon, companies practising China Plus One undertake most of their Asian operations in China but move some of it outside China while keeping it nearby, in locations like Vietnam, India, Thailand, Indonesia and Malaysia.”
It is impossible to extract geo-politics, trade deals and tariffs from the shape of recovery. “China aside, Brexit is bound to have a significant impact on future UK business, its export markets, supply chains and the way companies will grow,” she comments.
So what should governments look out for in terms of the future shape of economies? Foreign direct investment has been a traditional means of attracting high-growth companies into a target country to boost its economy and generate jobs. Surely COVID-19 has left that in tatters?
“When the virus struck, that seemed the case,” she concedes, “but governments very quickly got behind planning for recovery and needed information to work with.” That is where OCO Global came in. It is working closely with parts of the UK Government and US states to imagine where growth might come. It supplies intelligence and tools to governments and companies internationally to help them invest and grow.
So where are the opportunities? Diagnostics are high on everyone’s list of priorities, she points out. “Global demand will result in 13% growth for the diagnostics sector, as orders of testing kits will become as routine as purchasing paracetamol,” says Raste. “Look out for medical wearables this winter, including the snood mask, equipped with an antiviral coating and bracelets for early detection. Use of healthtech looks set to rise too.” And there will be plenty of business opportunity for mindfulness tools as we seek to quell our lock-down anxieties.
There will be a shift in the business of entertainment too, with the take-off of the Homebody Economy. “This is the surprising trend identified by the US Bureau of Labour Statistics: that millennials spend 70% more time at home than the general population. Homebody life, it seems, is now the norm.” And there will be a lot more e-commerce.
There will be a lot more tech around the future of work and school too, and, for on-site workers, prepare for the rise in robotics and drones. “Companies large and small are expanding how they use robots to increase social distancing and reduce the number of staff that have to physically come to work,” she says.
“In the first instance, look out for robot usage in high-risk tasks. For example, MTR Corp, the Hong Kong subway system, is using robots to disinfect rail cars. And Antwork, a drone company, is transporting medical supplies between hospitals and testing centres. This may expand to factories, fruit picking and even public transport.”
Security and transport are both going to be more onerous for the individual but create opportunities for business growth. The question will be: which of these horses should governments back and which companies will not only ride out the recession but create a new world economy?
“Governments face the difficult challenge over the next few months of deciding where to intervene; whom to help; and whom to allow to fail,” says Raste. “Deciding what steps to take is dependent on good data, company insight and imagination.”