The COVID-19 pandemic is pushing China, as with countries around the world, towards a higher level of digitalization, transforming sectors like traditional retail, tourism, education, and other industries that mainly rely on offline operations. Boosted digitalization demand after the outbreak and people’s increasing dependence on technology have pushed Chinese tech firms to take on social responsibility in the fight against the epidemic. Comparatively, internet companies are more capable of leveraging their tech strengths to support pandemic prevention and control. Major tech firms in China such as Alibaba [BABA:US] have offered various information services and products to support front-line medical staff and to maintain the daily life of citizens. They are also providing small and medium-sized enterprises (SMEs) with multiple preferential policies and tech assistance to ease pressure caused by the pandemic.
Disrupted supply chains and halted manufacturing activities amid the COVID-19 pandemic in the first quarter have caused significant losses to the Chinese economy. Specifically, the severely hurt business environment could result in a supply shortage, defaulted orders, or deferred payments, which makes it a necessity for companies to improve supply chain management. Companies with effective and comprehensive crisis management mechanisms, consisting of information management, communication, decision-making, resource allocation, and other functions, can make quick responses under such unanticipated events and hence mitigate potential losses. These companies are also capable of avoiding wasting resources by implementing emergency measures. For instance, companies can perform employee temperature monitoring, procure facemasks, and transition to remote work to reduce economic losses brought by the health crisis and speed up operation restoration as soon as possible. Moreover, whether companies adopt a well-organized system for supply chain management amid the disruptions, how they take up social responsibility, as well as how they perform in helping the country recover from the disease outbreak will influence investors’ views on firms during post-pandemic recovery.
Tech firms need to cope with sudden market changes
China sees tech firms playing increasing roles in epidemic prevention and assisting in economic recovery in the post-pandemic period. For instance, Chinese e-commerce giant Alibaba, its affiliates as well as its public welfare foundations have donated a total of RMB3.356bn to support global epidemic prevention. Alibaba’s subsidiaries from medicine, finance, food delivery, e-commerce, and other industries have implemented multiple measures to support businesses and ensure the public’s normal life. (For more information on Alibaba, please see: How is Alibaba socially engaging in reducing the effects of the COVID-19 pandemic? ) Additionally, JD.com [JD:US] has quickly taken on social responsibility, spending over RMB1.5bn as of this April in donating medical equipment, stabilizing logistics routes, helping farmers sell products as well as subsidizing online sellers. Also, Chinese internet firm Tencent [0700:HK] has been leveraging its tech strengths in the anti-COVID-19 fight. In addition to an USD100m foundation to support the procurement and donation of medical supplies, it launched cloud service packages to assist global enterprises, medical institutions, and government agencies. The package included products for remote-working and online medical consultations. Tencent also offered subsidies to support cloud server purchases of companies and organizations.
In view of the pandemic, tech firms can consider how to incorporate ESG in their daily operations so that they can come up with better solutions when coping with sudden crises. This requires firms to build up and innovate on capabilities to quickly adapt to unexpected changes. Because the pandemic has lowered demand for offline consumption in the first quarter, the tech sector experienced high demand for digitalization services. For instance, to enable users to have a better video conferencing experience, Alibaba’s enterprise tool Ding Ding has been expanding the capability of its cloud servers. The surging need for remote learning and work caused Ding Ding’s users to exceed over 300m as of this March.
Moreover, the efficiency of major tech enterprises like Alibaba, Tencent and JD.com in allocating affiliates to combat against the global crisis also provides insights for other market players. To make informed decisions and effectively respond to sudden changes, companies need to strengthen their leadership in coordination and decision-making, so that firms can manage business operations reasonably and effectively.
Références :
https://www.alibabagroup.com/cn/news/article?news=p200319
https://www.ideacarbon.org/news_free/52862/
https://www.carbonvision.cn/archives/22849/1585.html
http://m.jrj.com.cn/rss/sohu/2020/2/4/28764500.shtml
http://www.xinhuanet.com/politics/2020-04/13/c_1125848915.htm
https://finance.sina.com.cn/esg/investment/2020-08-20/doc-iivhvpwy2132815.shtml
https://www.tencent.com/zh-cn/articles/2201014.html