The coronavirus pandemic shook the world throughout 2020 and very likely will remain a challenge that people, government and companies will have to deal with in 2021 and beyond.
From social distancing and masks to other public health adjustments, the impacts of the COVID-19 pandemic will shape the future of our societies and economies. Preparing for this reality will be key to business continuity.
This is especially the case for importing and exporting companies. The landscape of international trade may be forever altered after lockdowns of the early pandemic, which potentially may occur again in the future. To contend with these challenges while still managing a business, decision-makers will need to look ahead and develop a strategic plan for staying relevant and successful in a post-COVID world.
Here are some points to be aware of when planning.
Economic uncertainty will reign
The spread of the pandemic across the globe was a bit staggered, starting in Asia in late 2019 and spreading largely to Europe and North American in early 2020. But by the second quarter of 2020 (from April to June), the economic devastation caused by shutdowns, lockdowns and a massive drop in consumer demand were entrenched. In the second quarter:
- U.S. gross domestic product dropped by nearly 33%, the worst ever drop on record.
- India's economy shrank by almost 24%.
- Japan's GDP fell 27.8%, the largest decline after World War II.
However, not all the second quarter news was bad. China's economy grew 3.2%, a comparably slow pace of growth, but positive growth all the same.
While economic activity has resumed in many of the hardest-hit countries, the impacts of COVID-19 portend an era of economic uncertainty ahead. Economic conditions rapidly and significantly deteriorated as the pandemic took hold, something that can't be entirely ruled out in the future.
Many countries also leaned heavily into public spending and borrowing to support populations and businesses during the pandemic. The accrual of national debt could lead to austerity in the future, which would bring further uncertainty to the global economy, as well as the economies of those countries which do adopt such measures.
The lack of economic clarity means that businesses will need a strategic plan for different scenarios. For instance, organisations should gameplan for what a full recovery, middling recovery and return to GDP loss would mean for their operations.
New consumer preferences and industries will emerge
The pandemic decidedly shifted the way many consumers, businesses and markets behave. With most people confined to their homes, for instance, ecommerce was a major winner, as were communication solutions that facilitated remote work or video conferencing.
The takeaway for importing and exporting businesses is that consumer preferences and market demand can change quickly. Driving success amid uncertain times in many ways means meeting those emerging preferences and demands, like with the stay-at-home economy, which presents numerous opportunities to the businesses that are in a position to capitalise.
How can you position your business for success? A lot of this depends on paying attention to trends and getting feedback from your own customers. Anticipating a market need through analysis and data mining can help companies more effectively push new products to market, or otherwise innovate their services and product delivery to align with a market need.
Risk management will be a priority
One of the overarching lessons of COVID-19 is that things can change quickly. In a matter of weeks between the global spread of the virus and it being officially declared a worldwide pandemic, the world was upturned and businesses faced risks that were not present just a fortnight before.
Risk management planning is always important to business continuity, but in the wake of the pandemic will become a priority for businesses of all industries.
The scope of risk planning goes beyond just market risks, but also touches on the risks inherent in trading partner financials and care of duty obligations for employees who may be stuck in a lockdown.
Comprehensive risk analysis and planning is the only solution for safely moving forward with operation. And to do that your business will need deep and granular data on everything from trading partner financial history to physical safety risks. Conducting this level of risk management isn't easy, but it is entirely necessary.
Coface has solutions to protect your business
As the world begins to consider what a post-COVID reality looks like, your business stands to gain most by finding solutions that can both protect and grow your operations. Coface is a provider of those very solutions that can help you steady your company's ship and find success in the new normal. Our services range from trade credit insurance (TCI) to business information reports and can deliver your business with actionable insights and stability.
Contact us today for more information.