COVID19 –SURVIVAL IN AN ERA OF GLOBAL TURMOIL

 In 2019 we were talking more about how to deal with the uncertainty of the next ten years, but apart from the Sino-US trade dispute, we could not define what this topic was. A global pandemic of the Covid 19  is questioning our ignorance and contempt for nature. It also unveils the essence of the competition between the great powers in the context of economic globalization over the past decade, and the new multilateral trading system is emerging.  Healthcare restructuring becomes a national strategy for every country. The restructuring of the global industrial chain is underway. The value of cutting-edge technological innovation will be enhanced, but the risks will increase accordingly. The digitization will further transform the management  of business for a low margin. I want to share with you the above trends, and I hope we work together for the future.

After the outbreak, we will face a volatile and protectionist prevailing global market, similar to the warring States period 475 BC 221 BCin Chinese history. The new regional trade zones dominated by the United States, China, the European Union, and the United Kingdom respectively will formalize. The new rules will affect product sales, logistics, pricing, market access, culture, and value. Therefore, They also increase the complexity of market expansion and product costs.

  • Stephen Schwarzman, CEO of Blackstone Group, said during an interview by Yahoo financial in October 2019 that the central issue in the Sino-US trade dispute was the United States to change China’s system, which happened to be the fundamental guarantee of China’s development as an emerging economy. Europe has realized that it can not choose sides between China and the United States any longer. It is not its interest as the birthplace of modern industrial civilization in the history.
  • In 1999, the proportion of the global population living in extreme poverty was 28.65%. The number had fallen to 9.98 % by 2014. The decrease of the extreme poverty population means 1.2 billion people worldwide were out of poverty as a result of globalization. In terms of the export value to the GDP over the same period, China’s share varied between 20% and 40%, while the United States remained between 7% and 9%. Bilateral trades (including the number of bilateral trade agreements and total trade volume) of developing countries accounted for 60% of the global total, and developed countries were only about 30% of developing countries.
  • Developed-country-led rules set by the World Trade Organization (WTO) have gradually lost balance in the rise of emerging economies. The inability of developed countries to absorb the loss of value from their trade surpluses through other economic instruments has been a source of increased trade friction between developed and emerging economies in recent years. Bilateral or multiple trade agreements have been mainstreamed, particularly in the last five years.

After the outbreak, we will face a volatile and protectionist prevailing global market, similar to the warring States period (475 BC – 221 BC)in Chinese history. The new regional trade zones dominated by the United States, China, the European Union, and the United Kingdom respectively will formalize. The new rules will affect product sales, logistics, pricing, market access, culture, and value. Therefore, They also increase the complexity of market expansion and product costs.

From 2010 to 2019, it is a decade of rapid expansion of artificial intelligence(AI) and mobile internet in China’s healthcare market, and a golden decade of transformation of the patient conduct into consumer behavior. The continuous innovation of mobile healthcare or Internet healthcare in the traditional healthcare system has made patients more mature when dealing with health consumption. According to TMFOX survey: In the area that is densely populated and economically developed, approximate 43% of newly diagnosed patients will study related health conditions or diseases through the Internet or reference books before making a doctor appointment; about 12% of i patients who are prepared to see the doctor will make a tentative diagnosis through a virtual doctor on the Internet; about 8% of the patients will make comparison of the doctor’s diagnosis to confirm that the decision is reliable and the costs are reasonable.

We are saying goodbye to the consumer market before 2020 and gradually entering the minimalist era. Consumers will regard cheapness and convenience as the main factors in their purchase decision, and they will no longer be loyal to any brand and habits. Family-based health sports will become the main entertainment consumption.

The outbreak of the Covid19 lead the consensus cultivated over the past 30 years with technological innovation gives way to the individualists Maybe the individual never changes as we think they would.

The product’s market attributes, such as price , and convenience become the core of consumer concern. The social attributes of products will be diluted in the future.

We need to coexist with the virus for a long time in the future, aggregate mass entertainment will no longer be the first choice for consumers, and healthy sports and entertainment, including online and offline, in family units, will be developed.

In the future, families will be as cautious about their investments and cash flows as businesses do, and families will deal negatively with long-term investments (more than 12 months).

Case Study: Challenges of Primary Medical in ChinaThere is no doubt that the Covid19 has forced the reconstruction of health care systems to become a national strategy. The state- or state-capital-based public health care system will play a major role in the future. They will work with the private sector to extend the healthcare coverage to the  Point of Care (POC). China will be the pioneer and the largest market for future global health reform. Medical and health technology innovation will become a measure of national strength.

From 1949 to 1978, China’s population doubled, and life expectancy doubled – from 35 to 68- mainly because the rural cooperative medical model (Barefoot Doctor Model) pushed health education for all, disease prevention, and treatment of common diseases to the forefront of demand (rural). And the failure case of Suqian (a city of Jiangsu Province) privatized healthcare reform has left 5 million citizens without medical options (American model).

China has become the only country in the world to push the fight against epidemic disease and healthcare system reform at the same time:

2020- 2-14, China issued guidelines for the reform of the health care system.

2020-2-22, China issued opinions on the details of the implementation of the health care reform.

2020-4,  8 public medical institutions and health insurance participated in the construction of Internet hospitals in China.

As a large savings-based consumer country, with the promotion of China’s investment scale of 300 billion (RMB) per year, China will become the main market for health care in the future. At the same time, the strain of the epidemic on the global health system will prompt the landing of primary healthcare-based (POC) programs that began in 2015 (countries already in operation include Germany, Canada, the United States, and China).

Countries will implement national security controls on key biotechnology in the future. The competition for medical innovation talent and technology will become extremely hot.

Although the global industrial chain ecosystem takes time to complete the reorganization, the collaboration mechanism will be broken by the Covid19. Economies will re-engineer industrial collaboration systems along the lines of technology and industrial safety, which will undoubtedly either increase the cost of products or force firms into low-margin times.

Although most companies are reluctant to make changes to the existing industrial chain collaboration, regionalized logistics and production centers will no longer be just a matter of discussion but of when to start, according to Joe Zidle, the Chief Investment Officer of Blackstone group, in a client newsletter in April.

If the end user price of the product can not be increased effectively, the company will no longer be as generous to the industrial chain system as before. They will reduce the cost as much as possible and limit the profit space of raw materials, production, and logistics through large-scale procurement.

The proposition put forward by the epidemic situation to the managers of small and medium-sized enterprises is: in the future, what are the main elements that affect the operation safety? How can we reduce costs and increase efficiency? How to apply digital strategy to enhance the core competitiveness of businesses.

Although we have gradually adapted to the virtual (online) working environment during the epidemic period, there are two problems that have not been solved: one is the problem of communication; the other is the problem of trust and authorization. In the future, small and medium-sized businesses will gradually establish a business and decision system with blockchain technologies, which can visualize the efficiency of each process and can connect with external information and analysis tools to improve the decision making.In considering low profits, businesses are no longer willing to spend 3-5 years as in the past to do train the team. The talent strategy focus on how to improve the output of individuals. In the future, Digital software will be more effective in helping businesses to manage and maintain core resources. Digital assessment tools will help managers to objectively evaluate the cultivation of core competencies. Businesses will gradually modularize business functions and outsource non-core business functions.

The pessimist is right, and the optimist is successful. While we are optimistic, we should also think about the way forward. The year 2020 is a year of great change, and the first year we enter the new world together. Let us think objectively and move forward optimistically, carry the beginning of this new world on our shoulders, work together, and move forward together.


Authors

ANDY YU |Bio| Andy@tmfox.com

Mr. Yu founded TMFOX VENTURE PARTNERS in Shenzhen in 2009. He has been committed to building an innovative investment banking business platform that integrates incubation, acceleration, and investment to enhance the growth of high-tech companies, and has actively participated in it. To the construction of the science and technology service system of the Guangdong-Hong Kong-Macao Greater Bay Area Regional Government. In 2015, TMFOX’s virtual incubation model was promoted nationwide by the Policy Research Office of the State Council as a representative institution. In 2017, he cooperated with the School of Management and Engineering of Central University of Finance and Economics to set up an entrepreneurial innovation experimental class and acted as a technical innovation course tutor. In 2018, the experimental class became a demonstration project of university education reform by the Ministry of Education. In 2018, TMFOX’s professional virtual incubation system was established as the technology incubation industry standard by Guangdong Province. Mr. Yu has been working on North American healthcare research and collaborative implementation of project resources in China since 2015. Currently he focuses on managing Worldiscoveries (North American Medical College Alliance), UW (University of Washington) School of Life Technology, UBC (University of British Columbia) ) Collaborative R & D and technology marketization of medical schools.