Post-crisis China will focus on public health and welfare. Business should be prepared for a sea change
- In the wake of the Covid-19 epidemic, China will want to radically improve its public health system and better integrate it into its smart networks, even as society explores new ways of remote working
- Businesses can expect many radical new opportunities, especially in health care and distributed working technologies
As the humanitarian cost of the coronavirus epidemic mounts, economic casualties are also surfacing throughout China. More than 48 cities have issued lockdown policies, and businesses have had to repeatedly postpone the return to work following the Lunar New Year holiday.
At the top, the central government sets the national agenda, providing clear directions for the rest of the country. At the grass-roots level, fast-growing and highly dynamic entrepreneurs drive China’s growth and innovation.
In the middle, local governments compete and cooperate with each other to form regional clusters, while serving as the “glue” between the central government and grass-roots businesses.
The coronavirus crisis suggests that the three-layer model needs to broaden its scope beyond the economy, to other aspects of society, in particular welfare. Only a few proactive cities have played their role effectively in the model; most others lack the aspirations and willingness to grow with businesses and promote innovation.
After the crisis, the central government is likely to call for all localities to increase their focus on public agendas, not only on economic concerns but also in public health, and not only for top-echelon cities but also the less-developed, inland ones.
The trade war and epidemic are hitting the Chinese economy significantly. In the short term, the government will make major fixed-asset investments to boost the macroeconomy. But, in the long term, a post-crisis China will look different.
Future smart cities will be more intelligent in transport management, supply chain management, emergency and disaster forecasting and preparation, and information tracking.
For example, to substantively improve the health system, Chinese cities will not only need to track people’s movements but also identify potential infections (for instance, through monitoring body temperatures) and alert nearby hospitals.
New business models catering to the changing modes of interactions will also arise, particularly in sectors such as logistics, automation, distributed working, entertainment, retail and education.
The coronavirus crisis has created challenges and opportunities. In the near term, businesses operating in and with China will face more uncertainty on the manufacturing, supply chain and consumer fronts. In the medium to longer term, China is poised to reinvent itself and prioritise social welfare in its national agenda.
Governments and companies – whether state-owned, private or foreign – will collaborate across sectors to foster synergies, especially in areas such as smart cities and infrastructure. New consumer patterns, technological progress and commercial innovations will come along, further transforming the business landscape.
Edward Tse is founder and CEO of Gao Feng Advisory Company, a global strategy and management consulting firm with roots in Greater China
David Dodwell is on holiday