Coronavirus Impact



After the occurrence of new crown pneumonia, many business school experts and scholars expressed various opinions and suggestions on this, most of them focused on resumption of work and internal coping strategies of enterprises. But I think it’s time to discuss the impact of New Coronary Pneumonia on globalization and China’s economic development. At the same time, it is time for enterprises and related parties to pay attention to this.

Today, new events and problems in the global village are emerging. For example, a month ago, we were very anxious about how to control the domestic epidemic, worrying about the fate of the country and the safety of individuals and families; now we are doing “reverse thinking”, that is, considering and handling resumption of work and school. At the same time, we are paying attention to how to prevent overseas epidemics.

Such a reversal phenomenon was really unimaginable and unpredictable in the past. Of course, the fact is that due to China’s special conditions, countries like China that quickly organize general mobilization, mobilize anti-epidemic materials, and build hospitals for treatment in a short period of time may have no second in the world.

I would like to point out that while praising the superiority of our system, we might as well think about what would happen to globalization and the Chinese economy if the epidemic spreads further abroad.

First, how to estimate the impact of the epidemic on the global economy and China’s economy?

For more than a month, due to the spread of the epidemic and the stringent prevention and control strategies adopted, the global manufacturing supply chain has broken, which directly affects manufacturing in the Asia-Pacific region and further affects other regional manufacturing industries such as North America and Europe. It can be seen that the breakdown of the manufacturing supply chain has led to the disruption of the international trade supply chain.

It is not difficult to find that only China in the world, after joining the global division of labor system, has become a huge “world factory”. Although Vietnam, India and other countries have joined, it cannot shake China’s “world factory” status. This has created a fait accompli or “stereocognitive effect”, that is, as long as a “world factory” such as China exists, the global supply chain and global trade chain will definitely operate normally and can be rest assured.

New Crown Pneumonia, the “black swan”, has broken the stable and balanced relationship of the global supply chain.

Recently, the Chinese parties and the Chinese manufacturing industry are working hard to alleviate the interruption of supply. However, the automobile manufacturing industry in Japan and South Korea still had to temporarily suspend production, which led to an urgent problem facing the industry and academia: how to effectively promote industrial development and business operations in the event of a supply chain disruption in the global manufacturing industry. However, I think this is not a long-term industrial development and enterprise management issue. Because China is working hard to control the epidemic, the problem of supply cuts in the manufacturing industry will be gradually resolved.

For relevant institutions, industrialists, and business operators in various countries who look at the above issues from a global perspective, the best response to such risks of uncertainty is that even if there are stable “world factories” and large economies, The premise still cannot forget the strategy of “don’t put eggs in a basket”.

Therefore, for North American and European companies, the solution is likely to be not only the transfer of foundry factories from mainland China to Southeast Asian countries such as Vietnam, but the establishment of foundry agencies in Mexico in North America and the eastern part of Europe to deal with China. Emergencies for OEM and export companies on raw materials and accessories. Theoretically, it can be called “the closest strategy of global supply chain layout”.

The next question may be even more abrupt: Suppose that some countries and regions outside the country have developed the epidemic more rapidly, and in terms of epidemic control, the level of China’s general mobilization of control and prevention cannot be reached, resulting in the epidemic situation in the host country and region becoming serious and appearing longer As a result, the OEMs and exporters that are now rapidly resuming production in China are likely to encounter: there is not enough demand for the raw materials and accessories to resume production.

Although such a result will not appear for the time being, as international organizations such as the World Health Organization are concerned, as long as there is community infection, large-scale epidemics will be difficult to stop, which will seriously affect the socio-economic development of many countries and regions in the world. Accordingly, it will also induce global economic recession and social unrest to varying degrees.

From this point of view, when assessing the impact of New Coronary Pneumonia on China’s economy, a global vision and consideration are needed. The above analysis and argumentation can enable us to step out of the limited thinking of returning to work and grasping production, comprehensively review the current and future periods, and think about how to reduce or avoid in the interdependent state of “you have me, you have me”. The dilemma that all parties in the global supply chain may encounter.

In addition, another new challenge may be waiting for us: if the global supply chain is disconnected and the prospects of companies on the chain are unclear, then we cannot just focus on how to help SMEs overcome the current difficulties, but we must consider where we may encounter The problem of shutting down and transferring regional enterprises, and the industries or enterprises in their regions seeking new paths to transform and upgrade.

What needs to be further considered here is how to get rid of the predicament of the industry and enterprises, seek economic recovery and development, and increase domestic private investment and consumption as soon as possible after the epidemic has reached an inflection point. For example, reducing barriers to entry to the industry, reforming unreasonable industry policies and management rules, and allowing private enterprises to participate in areas such as health care, safety and health.

Summarizing the above discussion, I want to emphasize that both global thinking and local action are indispensable. The biggest lesson this global epidemic has given to globalization and China’s economic and corporate management is that even though China has a unique “world factory” in the world, it also has a national mobilization organization mechanism in the face of an outbreak, but the world Other countries and regions do not have such prerequisites and institutional advantages, so we cannot ignore these countries’ and other regions and regions ’countermeasures or protective responses due to their lack of corresponding mechanisms and advantages. Therefore, the challenges and threats brought about by the sudden epidemic this time are not only “black swan” but also “grey rhino”.

Post time: Mar-10-2020
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