Tag Archive for: covid-19

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Globally, a new workplace trend is emerging — one that is digitally-driven, more empathetic in improving society, and more agile in customer needs. And the primary catalyst for this overnight shift? A pandemic.

In Malaysia, the nationwide Movement Control Order (MCO) to control the COVID-19 pandemic has resulted in a significant economic contraction. This is primarily due to the sharp decrease in demand for manufacturing and commodities.

As in many other ASEAN countries, the tourism sector, which contributes largely to the national GDP, has also been hit hard by the pandemic. The international border closure and stringent interstate travel ban mean that people are no longer travelling for non-essential reasons for the time being.

The Department of Statistic Malaysia reports that approximately 745,100 people were unemployed in July 2020

The Department of Statistic Malaysia reports that approximately 745,100 people were unemployed in July 2020. To weather the impact of this adversity, the Malaysian government has introduced several measures in April 2020 in regards to tax relief, wage subsidies and other economic stimulus packages.

It is, however, without a doubt that these government measures are a short-term one; hence, employees must adapt to the new post-COVID-19 hiring trend and demand if they want to remain competitive in the Malaysian job market.

This post explores the top industries that are likely to hire more in Malaysia, benefits of hiring post-COVID-19, top factors that will affect recruitment, the relevant skills needed, and the future of the workplace in Malaysia.

Which top industries will be hiring post-COVID-19?

While it is true that some industries are badly affected, there are top three industries that are experiencing a boom amid the pandemic.

They are:

  • Food retail

As more people become housebound, food retail is increasingly regarded as an essential frontline service. McKinsey reports that not only are consumers simply increasing their online spending on food and grocery, they are also looking for value-for-money products and puts food safety and locally-sourced food as their top priorities.

Therefore, food businesses are providing abundant employment opportunities to people who are currently out of work. The growing demand for delivery also requires them to pivot to digital means more than ever now. Whether finding more drivers or riders to deliver the products or more strategists to reshape their business in a new normal, food retail is the emerging winner to support the livelihoods for millions of people.

  • Health and Wellness

As COVID-19 is the most significant global healthcare crisis in a century, it is only logical to see people getting more health-conscious, thus fueling the wellness economy and health industry, in general.

From healthcare analyst to data scientist, the boom in this industry is evident through many openings in career websites. Beyond the simple precautions of wearing a mask and rigorous hand washing, consumers are now looking into the pursuit of physical, emotional, social, environmental, and spiritual well-being. The proliferation of on-demand healthy food delivery, online health consultation platforms and wellness apps prior to the pandemic will only get bigger now.

  • Information Technology

Being digitally-savvy is a prerequisite for businesses to survive in the pandemic. From machine learning adoption, website creation, to secure online payment, businesses will be restructuring their ecosystem with a focus on technology.

Hence, jobs such as software developers, robotic engineers and digital marketers are in high demand as businesses strive to comply with stringent social distancing measure, while ensuring a seamless and highly-personalised customer experience

What benefits companies get from hiring new staff post-COVID-19?

  • Top talents are in demand

While it is true that many companies resort to layoffs in an economic recession, there are visionary companies and long-term thinkers who go in a completely different direction and start hiring top candidates to fulfil mission-critical aspects of their businesses. Even if you are not being laid off, the time is prime for you to keep an eye out for career opportunities should you be looking to switch industries.

  • Deal with immense growth in demand for labour-intensive activities

As aforementioned, the digitalisation of many businesses and the containment measure of COVID-19 has led to the growth in demand for labour-intensive activities such as product delivery and food retail.

Even if automation and technological substitution take centre stage in this pandemic, they take time to mature. Businesses will still have to hire new staff to meet current customer demands.

What are the top factors that will affect hiring post-COVID-19?

  • Transformed hiring process

With the limited physical interaction, companies will have to adopt a virtual interview process which largely involves video interviews. As a result, HR professionals are finding it harder to decide as candidates could not display the appropriate body language online that plays an important role in hiring.

Due to widespread retrenchments, candidates might also face longer interview processes and need to compete for roles, as many companies still refrain from hiring.

  • New skills needed

The shifting consumer behaviour that we are seeing when the pandemic hit is set to be a permanent change; hence, businesses need to be more agile in catering to consumer needs. Upskilling and reskilling are needed for candidates to remain relevant in the post-COVID-19 job market.

What type of skills will be relevant post-COVID-19?

  •  Soft skills: Communication and Empathy

The work-from-home (WFH) phenomenon, also widely known as remote working, requires office professionals to develop stronger communication strategies and skill. Developing the right digital body language is crucial to get the right message across a specific virtual platform for effective leadership.

The best leaders in major organisations around the world also prioritise empathy and humanity when running a business. In a post-pandemic world, we are expected to learn from the pandemic and pay more attention to the environment as well as local communities in need of societal and economic support.

  • Customer Service

Following the significant spike in e-commerce sales, e-commerce is likely to outlast the pandemic. With it comes the expectation of stellar customer service, as the failure to ensure that will result in customer attrition.

Therefore, job seekers not only need to have the basic skills of communication and problem-solving, but they also need to realise the importance of a seamless customer experience. A multichannel approach where customers can conveniently switch devices and/or channels as they require or like will give customers the ultimate flexibility to engage with businesses.

  • Data Science and Computer Science

The boom in data-driven technologies can be seen simply from the couch in our living room: Netflix, which enjoyed immense popularity at the height of the pandemic.

Without doubt, data science and computer science are playing a key role in many businesses today. The COVID-19 research in many countries is also accelerated by big data to track viruses on a global basis and develop treatment procedures.

Moving beyond traditional means of reports and number crunching, data science and computer science help businesses develop platforms to assess risk, realign strategies, and make stronger decisions based on it.

  • Digital Marketing and Sales

With the onset of the pandemic, most brick-and-mortar stores and events moved to the virtual space to generate leads and drive sales. In contrast to traditional marketing, digital marketing takes place entirely online which is proven beneficial when a stringent physical distancing is in place.

With the enormous amount of data and handy analytics tools, businesses can gain insights and analyze performance to maximize return on investments and make informed decisions.

In Malaysia, there are several institutions that provide digital upskilling to ensure Malaysians succeed in the digital economy. For instance, Malaysian Digital Economy Corporation (MDEC) offers digital skills training and courses for people with different levels of education, and also partners with top employers to provide digital reskilling for employees. Meanwhile, 42KL offers a free peer-to-peer program for people who are interested to jumpstart their career as a software engineer. Other similar initiatives include Akademi General Assembly (GA), NEXT Academy and Forward School.

What will the future workplace look like?

Remote working, once a fringe business practice, has become a required necessity for the masses. To adapt efficiently, businesses start leveraging communication and collaboration tools such as Trello, Slack, and Zoom to optimize work-from-home (WFH) productivity. Despite that, KPMG Malaysia reports that the challenges remain in terms of substandard network issues, digital communication barriers and lack of technology readiness.

Apart from that, during times of economic downturn, automation rapidly displaces human work as human capital becomes expensive in a financially-constrained business. While that is inevitable, automation and machines only primarily focus on data processing, manual jobs and administrative tasks, while humans still have the upper hand in skills such as decision-making and strategizing.

Hence, in a post-COVID-19 reality, robots and humans are expected to be working alongside each other. Workers who choose to adapt and possess a hybrid of soft and hard skills, especially ones that are digitally-driven, will remain relevant in a post-pandemic Malaysian job market.

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Intro

A guide on remote internships for interns and employers in Singapore, Malaysia, Thailand, Australia, and China and the benefits that come with it.

Everywhere around the world, the COVID-19 pandemic has sent a large percentage of the total population to work and study from home. While the situation in some countries have changed for the better and people have gone back to resuming their daily lives with the ‘new normal’, most countries are still keeping their borders closed and have imposed an indefinite travel ban, making this a challenge for students keen on going for international internship programmes.

According to the Ivy Research Council, 89% of students pursuing a 2020 summer internship would prefer a remote internship over a canceled internship programme. As a result, an increasing number of employers with internship programmes across the world have opted to transition to remote internships, rather than cancelling or postponing their internship programmes.

What Is a Remote Internship?

Remote internships, also known as virtual internships, are unique in the sense the intern does not have to be in a physical office. Interns are interviewed and allowed to work from anywhere, including across states and countries. For example, the intern could be based at home in Singapore and is undergoing internship with a company in Malaysia, Thailand, Australia, or China.

Remote internship enables interns to work anywhere in the world

With the upcoming Industry 4.0, the increasing development of communication technologies, and new remote-working cultures, remote internships are the way forward at this age and time. All you need is a fully-functioning and stable internet connection, a reliable laptop or desktop computer, a webcam, headphones and a bold mindset and you are good to go.

While the working arrangements may be different, the timeline for remote internships is typically the same as collocated internships – 3 to 6 months, requiring 20 to 30 hours work per week.

Which Countries and Industries Offer Remote Internship?

Numerous countries have started to offer remote internships and this includes the world’s second-biggest economy – China. The country saw growth of 4.9% between the months of July and September, compared to the same quarter last year. Moreover, over the previous two decades, China saw an average economic growth rate of about 9%.

Chongqing’s rapid growth over the last 15 years has created remote internship opportunities for overseas students

In the city of Chongqing, located at Sichuan Province, the significant rise in its economy and rapid urbanization over the last 15 years has encouraged the rise in remote internship opportunities from entrepreneurial startups as well as larger well-known companies in a vast range of fields such as software engineering, accountancy, fashion, arts, and green technology.

As Chongqing rises to the 4th place among top 10 Chinese Cities by GDP in H1 2020, surpassing Guangzhou, Suzhou and Chengdu, the city’s rapid economic growth has created thriving business districts, with a diverse range of established companies including Apple, Deloitte, IBM, ZTE, Schlumberger, Schneider Electric, and ABB.

Already, the city attracts an ever-increasing number of career-minded young people from across China and around the world to gain professional experience through their remote internship programmes. With recent travel restrictions, there is no doubt that the numbers will increase.

Besides China, the same can be said with Singapore’s neighbouring countries – Malaysia, Thailand, and Australia. In those countries, remote internships are growing rapidly in popularity as a viable alternative for interns and employers since the start of the COVID-19 pandemic.

What are the Benefits of a Remote Internship?

Most of the benefits are similar to an in-person internship programmes such as gaining valuable work experience, developing and refining skills, and exploring the possibilities of a future career path. However, remote internships do offer unique benefits that cannot be obtained from traditional in-person internships.

Experience Remote Work

As more and more people in the workforce are encouraged and exposed to the idea to work remotely, landing a remote internship is a timely and smart move. Use this opportunity to gain valuable work experience and learn how to apply remote project management techniques, optimize on current resources, and utilize relevant software applications such as Microsoft Teams and Slack. Seize this moment to gain employability skills.

Reduced Costs

Going on an internship in another country can be challenging and costly for the intern as well as the employer. There is the air ticket fare, extra baggage, commuting expenses, accommodation rentals, and new equipment. With remote internship, cost-savings benefits include reduced traveling expenditures, lower or zero housing costs, and less office equipment expenses.

Greater Diversity and Global Perspective

Remote internship means you are no longer limited geographically. By removing location as a barrier for recruitment and employment, the pool of potential employers and interns open up significantly. You could have a team from Singapore, China, Australia, Malaysia and Thailand working on a project together. The diversity of ideas and backgrounds from people from all over the world create richer work environments and innovative outcomes.

Convenient Working Arrangements

Employers and interns typically find the flexible working package to be attractive. One such example is unlike a typical 9 to 5 office day internship programme, meetings can be done online and scheduled at a time that is convenient for everyone. There are no unnecessary disturbances and interruptions to the current workflow.

Increased Accountability, Productivity and Results

With clear deadlines, self-organization skills, self-discipline and time management skills, remote interns become more accountable when it comes to handling their own schedules and finishing tasks. Their productivity levels increase significantly and they produce better results. Furthermore, with the help of relevant task management software, a supervisor can now support and address the issues of many interns at one time, rather than 1 or 2 interns.

The COVID-19 pandemic has proved that working from home can be done efficiently and is still being done for many jobs and companies. Remote internships or virtual internships would not be any different. In fact, with the uncertain future that lies ahead, it is crucial for interns and employers to adapt to the situation. Even when the virus wanes, a remote internship programme is still a viable option.

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A SNEAK PEEK INTO THE FUTURE OF THE EMPLOYMENT MARKET IN SINGAPORE AND ITS NEARBY COUNTRIES; MUST HAVE SKILLS FOR YOUNG GRADUATES AND MID LEVEL MANAGERS

The future of work predictions for many businesses has arrived sooner than many expected. Most consulting firms like McKinsey and Deloitte already made projections towards the year 2030, and no one could have predicted with any level of certainty that a pandemic would restructure how work gets done. This post takes stock of the industries and companies that are likely to hire more in Singapore, the skills necessary for fresh graduates, how mid-level executives should approach reskilling, and what the future of the market holds for Singapore and other Asian countries with similar economic structures.

TOP HIRERS

A lot of businesses, companies, and industries have been affected by the Coronavirus pandemic. The labor market has not been spared from the harsh realities that the spread of COVID-19 has now ushered in. Many workers have lost and are still losing their jobs. Perhaps, a likely reason for how largely COVID-19 is affecting jobs in Singapore and neighbouring countries in the South Asia is as a result of these countries’ economic relations with China. CNBC, The Consumer News and Business Channel reports that Singapore is more vulnerable economically because her close trading partner, China, has not had it easy with the spread of the virus.

Already, the tourism and transports sectors are at its mortifying lowest ebb in Singapore and other countries of the world. People are not so likely to travel anymore and have been mandated either by government orders or a simple need to self-preserve, stay indoors, and to limit non-essential interactions to the barest minimum.

The government of Singapore, through its ministries have already taken steps to ensure that employees do not feel the full economic effect of the virus on businesses. As of 26 March 2020, the government set aside S$48.4 billion Resilience Budget to help businesses and households stay afloat while the pandemic persists. This is a Supplementary Budget that complements the Unity Budget presented on 18 February 2020.

Even with all of the government support, employees are still encouraged to look inwards and at the economy to find and create opportunities for themselves. Even as certain sectors have fallen apart as a result of the pandemic, there are businesses, companies, and industries that have recorded an increase in economic growth and market share. Employees should pitch their tents with these emerging winners from the global crisis. They are:

  • E-commerce

Statista reveals that 85% of Singapore’s population are avoiding crowded places. This means that stores, religious institutions, tourist centers, commercial hubs are simply in a flaccid state now. Even though establishments are not physically open, they have been able to conduct operations digitally. Statistics report that people in Singapore are spending more on online shopping. Therefore, large businesses with digital presence are getting bigger and will be looking at expanding their customer base. These stores will need more customer relations persons to handle their phone lines, more drivers to deliver products, and more content to engage their customers on social media.

  • Digital Media and Entertainment and Video Conferencing Services

Due to lockdown and social distancing measures, persons no longer have access to traditional means of entertainment. However, the demand for entertainment is sky-rocketing, thereby necessitating a shift to digital media. Social Media applications like WhatsApp, Facebook, and WeChat are recording increases in usage. As an example, Kantar Group, a reputable consulting firm, reports that Chinese social media apps like WeChat and Weibo are experiencing a 58% increase in usage.

The success of this social media applications has created job opportunities for content creators and digital marketers. Persons who are capable of creating compelling content and can help brands market their products digitally are being hired by businesses and companies to help them stay relevant.

  • Health and Wellness

Hospitals and pharmacies are swamped at the moment because there’s a surge in demand for medical services and pharmaceutical products. In the United States, huge pharmaceutical companies like Walgreens and CVS have opened about 70,000 new positions combined. Career websites in Singapore have openings for positions in pharmacies relating to data analysts, sales agents, sales promoters, and technicians, among others.

TOP NEEDED SKILLS FOR YOUNG GRADUATES

During challenging times , acquiring new skills is more relevant than self development for young graduates

A time like this is very instructive to perceptive fresh graduates. It underscores the importance of self-development to meet up with global trends. Developing skills is necessary to help graduates develop. Given the fact that the world is facing a different reality than one, it faced a couple of months back; newer skills are necessary to help young ones develop. Here are some of the skills a young graduate should possess:

  • Flexibility

Young graduates should learn to first adapt to current realities. The world is not as you want it to be. Or the way you think it should be. The world is the way it is. Therefore, learning as much as you can from other disciplines is a way to go in the future.

  • Tech Skills

Most businesses are beginning to discover that having a digital presence is essential. What has set successful businesses and failing businesses in the COVID era is their ability to leverage technology. Therefore, every organization is looking to get stronger as far as technological capacities go. Artificial Intelligence, Big Data, The Internet of Things, Augmented Reality are technologies that will only get accepted more in the future. It is time to get to learn about these technologies.

  • Data Analysis

Data is responsible for the success of many huge corporations today. Learning to analyze data to use it to help companies meet the needs of their clients is a valuable skill. Don’t sleep on it.

  • Critical Thinking

This simply means being informed. Young graduates will need to stay current as far as local and global affairs go. The market will favor those who can help companies in avoiding loopholes and helping them to stay strategically and globally relevant.

  • Digital and Coding skills

As companies are looking to transform digitally, the help of coders, programmers, and web developers will be needed. Coders are less likely to be out of jobs. Websites need them to run.

  • Emotional Intelligence

The ability to understand one’s emotions and those around him indicates a high EQ. Persons with high EQ are well balanced and productive individuals. Who does not want productive workers?

RESKILLING FOR MID LEVEL EXECUTIVES

McKinsey Global Institute estimates that as many as 375 million workers would have to acquire new skills or switch occupations. This indicates that all types of workers should start considering reskilling lest they get swept by the tide of change. The above skills identified for young graduates are just as crucial for mid-level executives if they want to remain relevant.

Customer relations, digital skills, coding, software programming, emotional intelligence, flexibility, digital marketing are skills all necessary to be globally relevant.

An important factor to consider when reskilling is identifying where the new destination is. An executive at a pharmaceutical company that is preparing to go digital must focus more on honing digital skills. He must start to pay attention to becoming aware of how these technologies work and what he might be able to contribute to help his organization use these technologies efficiently. Mid-level executives are suited for analyzing data as a result of their experience. They are better able to identify data that will get customers and clients closer.

Identify a new destination. Learn the skills necessary to succeed at this new destination. Set a period for getting these skills. Be relevant.

Workforce Singapore (WSG) is helping mid-level executives reskill and stay relevant in this difficult time. They have professional programs taught by career coaches to help persons gain these skills faster. Mycareersfuture (Singapore) also offers opportunities to persons in Singapore who are looking to start new jobs.

THE FUTURE WORKPLACE

Singapore is a developed country. By inference, the future of work in Singapore is consistent with globalization and big-tech bringing shifts in workplace culture. Artificial Intelligence is threatening to make complete automation a reality with the help of other technologies. Nonetheless, there is still one job too many for those who are willing to learn fast. A report by the World Economic Forum indicates that 75 million jobs may be displaced with complete automation but also that 133 million new jobs may also emerge.

The future has always been hard to ascertain. However, there are strong possibilities that should not be ignored. For instance, the concept of having traditional brick-and-mortar stores and offices seems to be overrated. Workers have been working remotely from home and have done so efficiently. It is expected that even after the virus, many companies will still choose to operate remotely.

Whatever the future brings, the workers who adapt will remain the most relevant. So, what to take away? Adapt.

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Change is the only constant in China. This is rule number one when thinking to enter or do business with this market. But in the year 2020 change got renamed into COVID 19. No matter how big or small you are, you could not but surrender to the traumatic experience of doing business in the world of the pandemic. Markets shivered, stock exchanges stood in shock and the job market stared in fear. It was time for another change.

Was COVID-19 a game changer for businesses all over the world? Absolutely yes. Yet, no adversity ever comes without a hint of opportunity and potential gain. Even in this situation businesses, management, staff, and employees are called to grow and grow dramatically.

RECRUITMENT IN CHINA ON THE MOVE

With the world on a standstill hiring new employees can be quite a struggle. In big cities such as Shanghai, Beijing, Chongqing finding a competitive workforce can be challenging even in good times. But this doesn’t mean your business has to suffer, it only needs to evolve.

In picture: Chongqing city view. In big cities such as Shanghai, Beijing, Chongqing, finding a competitive workforce can be challenging even in good times.

By focusing on the downsides of the pandemic, we lose valuable options and realities the world has set in front of us. Recruitment in China is changing again and trying to figure out what the best practices are now. Can this time of post-COVID era actually become a blessing for businesses and recruiting practices? Let’s take a look.

NO JOB FAIRS, NO PROBLEM

At this time of the year, employers would usually turn to the job fairs to find local talents. However, due to the pandemics, this practice is put on hold. At least offline. Luckily the magic of doing business in China, also means there has to be another solution to the problem. And the solution came fast. Job fairs shifted from offline to the online sphere and started a life of its own.  Benefits are multiple. First and foremost, your business is contributing to the prevention of spreading the virus by helping potential candidates to maintain social distance and avoid risk. Secondly, the costs of recruitment are significantly lower while at the same time the quality of the recruitment process is not jeopardized.

Furthermore, the government in China fully supports online hiring and motivates businesses to be less conservative when it comes to this option.

GOVERNMENTAL SUPPORT LOWERS COSTS OF HIRING

Good news for recruiters is the devotion of the government of China to mediate the consequences of the epidemics. They are ready to go the extra mile in the attempts to curb unemployment and prevent increase in the number of people who might be out of a job due to COVID-19. The goal of the Chinese government is to stabilize the job market in every possible way. Even if this means supporting nontraditional methods of recruiting such as online hiring platforms, or recognizing new job titles such as VR engineer or drone fixer.

In picture: People Assembly Hall in Chongqing. The Chinese government is taking strong counter cyclical measures such as extending grace periods, disbursing unemployment insurance, providing additional funds for the businesses at preferable conditions

At the same time, the government is taking strong counter cyclical measures, aiming to lower the survival pressure businesses face. Extending grace periods, disbursing unemployment insurance, providing additional funds for the businesses at preferable conditions, goes well in hand with new trends on the job market.

This is an opportunity to invest more in employees as the cost of hiring is going down. Comparing to the previous year when government policies increased labor costs per employee, this year and the post COVID era, brought a different picture. The government is trying to stimulate stabilizing the job market, by tax relief and lowering the social insurance costs. This is the opportunity to divert those means towards helping human capital to catch up with the changes. Investing more in the skills and flexibility of the employees is a necessary and wise approach in the challenging times.

OUT WITH THE OLD; IN WITH THE NEW

Post Covid-19, cost efficiency is a top company agenda

Adaptation is needed, and in the world of COVID-19, we are obliged to think rationally. This might even mean rethinking our established ways of doing business. When it comes to recruiting the time has come to think in a minimalistic way. Many businesses use this situation as a motive to reorganize the workload, cut extensive teams, or even lower the number of employees. For some, this will mean going online rather than having fixed in-office positions. Recruiting individual freelancers, contractors, or talents, will incur lower recruitment costs at no expense to the working quality. It is estimated that most of the businesses will not only go through reorganization but also that this reorganization will yield in new job openings, recognizing new demands and job definition and making both the company and the employees more flexible and resilient in the changing times.

GOING LOCAL

COVID-19 locked us down in one place, calling for finding solutions locally. This had also been the case with recruitment in China. We are called to look locally when looking for new talents or employees. In the time when hiring foreign employees and bringing then to China, has been virtually impossible, focus shifts to local job supply. This is a fantastic opportunity not only for the workforce but also for the recruiters because now they have to look for local talents to fill in open positions.

After the pandemic, Chinese companies are increasingly focusing on local talents search and reducing expatriates hiring

There has been extensive fear as to what is going to happen with estimated 600000 graduates who are entering the shaky job market in China. Their chances of finding suitable jobs in the time of business resizing and reorganization had been initially seen as meager. However, this might not have to be the case. As recruiters go online and are being stimulated to find local talents to fill in the demand this brings new chances for graduates looking to enter the job market.

OPPORTUNITY TO EVOLVE

In summary, though the situation is not easy for any participant on the job market, regardless of which side one is, supply and demand for quality workers will continue to exist and balance out in real life.

With enough flexibility and openness to thinking in new ways, businesses and recruiters can use the post-COVID era to reorganize their teams, find quality local talents and work hand in hand to make their companies more resilient to change. Sometimes the best policy can only be to bend with the wind and learn to adapt.

Recruiters and businesses need to work together closely to achieve win-win objectives, and to ensure that they are using every possible option to mediate the effects of the pandemics. Think flexible and think positive.

—End—

Images by Gerd Altmann from Pixabay

WiseNetAsia Knowledge Center
Copyright © 2020 WiseNet Asia Pte Ltd.  All Rights Reserved

21 Jun 2020

The continued protest in Hong Kong has taken a rather uneventful turn with violence causing numerous deaths and injuries. A spin-off of this is the severe damage that has not just been caused to individuals alone, but also businesses. In October 2019, a news article by the South China Main Post indicated that Hong Kong’s economy lost at least HK$2.8 billion in a very short period. The sectors mostly hit by these protests in Hong Kong are the hospitality sector, the retail sector, and the transport sector.

The protest in Hong Kong started in 15 March 2019, triggered by the introduction of the Fugitive Offenders amendment bill by the Hong Kong government.

The Protests in Hong Kong; its effects on the economy

Since June 2019, the Hong Kong Protest has remained on global news. The turmoil created by protests in Hong Kong is only bested by news of the COVID-19 pandemic in recent times. The protest in Hong Kong started in March 2019 to speak against an extradition bill that created an extradition treaty with Hong Kong and China. The bill has since been withdrawn, and replaced with a national security bill in May 2020 that sparked further outrage and protests.

The aftermath of a riot near a train station

At the rate at which the protest in Hong Kong is impacting the economy, some business owners are looking to pivoting away from present-day Hong Kong to establish a base somewhere else. Geographically and politically, too, Hong Kong shares closeness to Malaysia, Thailand, Singapore, Taiwan, and some other countries. Likely, businesses looking to move a base of their operations somewhere else will most probably be considering any of those countries.

Why is Singapore the pick of the bunch?

A new American Chamber of Commerce in Singapore (AmCham) survey released on 12 Sep 2019 indicated that among those companies considering to relocate, 91% of Hong Kong businesses aim to move to Singapore.

Through the following reasons, this post looks at why Singapore is the best alternative base for affected businesses in Hong Kong. We also make brief statistical comparisons between Singapore and other South-East Asian jurisdictions like Malaysia and Thailand.

  1. Ease of Doing Business

The Ease of Doing Business Report is prepared by the most qualified persons at the World Bank Group. This report goes through extensive research and evaluation to come up with a list that identifies the best places to do businesses in the world. Not just in Asia. Questions relating to tax, procedures for establishment, investor protection, electricity, contract enforcements are all considered thoroughly to come up with this list.

Through an era spanning 2007-2016, Singapore topped the Ease of Doing Business rankings. For ten consecutive years, Singapore was simply the prime choice for doing business as far as countries go. The conditions in Singapore make it very conducive for businesses to start-up and thrive. In recent times, Singapore is now ranked second on the Doing Business Report, with New Zealand the only country faring better in this area.

One example that shows why you should establish your business in Singapore is the registration process for new businesses. In Singapore, the entire registration process takes only a day to complete. The process is also easily completed digitally. However, in countries like Malaysia, registration of a company takes around two to three days.

It is important to note that the Doing Business report indicates that Hong Kong is in the third spot on the Ease of Doing Business Index. This means that the business conditions in Hong Kong and Singapore are already similar. It also means that businesses that have started in Hong Kong would find the same efficient service in Singapore and have an even better experience due to the economic unease brought about by the protest in Hong Kong. This is unlike in Malaysia and Thailand, who rank 12th and 21st, respectively, on the Ease of Doing Business Index.

Singapore is already looking like the best option. But more reasons make Singapore the right place to establish your business.

Political Stability

Political stability is a key factor in driving foreign direct investments (FDI) into an economy. With the protest in Hong Kong dragging on for over a year now, Hong Kong’s economy is regressing, and it doesn’t look like the situation will change soon. Unlike Hong Kong, Singapore is currently stable politically.  This state of affairs offers much-needed security to business owners looking to move away from the troubled state in Hong Kong.

Attractive Tax Policies

Singapore’s tax rates are one of the lightest in South East Asia and the world at large. In the World Economic Forum’s Global Competitiveness Report 2018, Singapore ranked 11th, while Malaysia ranked 81st in the total tax rate.

Additionally, Singapore has the lowest corporate income tax rate in the world at 0% to 17%. Although Thailand has a corporate tax rate of 20%, which is also one of the lowest in the world, it is still not as low as Singapore’s. An instance of Singapore’s generosity with tax policies is that for the first three years of taxable income, non-resident corporations are exempted from taxes.

Singapore Corporate Tax Rates. Source: IRAS Singapore

Another initiative by the Singaporean government to help the situation of taxes is the Double Taxation Avoidance Agreements, which protects Singaporean suppliers from incurring taxes on profits made overseas while paying tax locally.

Further comparison between Singapore and Thailand tax systems reveals that businesses in Singapore have an easier time making tax payments and filing returns.  For instance, Singapore businesses make five tax payments a year and spend only 82 hours a year filing taxes. Thailand businesses, however, make 22 tax payments a year and spend 264 hours a year filing taxes.

Foreign Investment

The Ease of Doing Business Report states that the government of Singapore offers incentives for foreign businesses to help make international trade easier. Open trade policy is common in Singapore with few barriers to external trade transactions. In 2014, the Global Enabling Trade Report ranked Singapore first because of its friendly trade regulations. In the same 2014 report, Thailand was ranked fifty-seventh.

Singapore’s USD2.4t asset management industry is one of the biggest beneficiaries of Hong Kong’s money outflow

Moreover, Singapore is attractive to foreign investors because it’s geographical location allows easy access to mainland China. China is the biggest market in the world. Hong Kong businesses already know this, and these businesses will be looking to continue to have access to Chinese consumers. This segues into Singapore being a better choice.

Singapore is also strategically located. It is close to the emerging markets of India and China. Singapore also has the best maritime industry in the world with amazing port structures. These make the transfer of large cargo easy.

Parting thoughts

Over the past ten years, Singapore has been constantly rated by world experts as an amazing destination for businesses to thrive. Hong Kong has been a close competitor with Singapore within the same time frame. But, with the recent protest in Hong-Kong, it has become necessary for businesses to move if they wish to sustain in a more stable business environment.

Moving is always better when the new destination is as good as the old one. With Singapore, the new destination is even better. Singapore is not just the best option in South East Asia. It is the best option in the world. World experts have asked all the smart and technical questions businesses ask. The answer leads to just one destination that could serve as an eco-chamber for the blossoming of start-ups and businesses generally—Singapore.

If you’re looking to move, Malaysia and Thailand are good options, but Singapore is by far, the better of both, and the best as other southeastern Asian countries pale in comparison to what Singapore has to offer. For business owners looking to pivot their businesses for global dominance in a fiercely competitive global market, they must begin to ask the right question— “why cope when you can thrive?”

 

—End—

 

 

 

This article was originally published by 中信出版集团 (ID:  citicpub)

A sudden pandemic and it’s continuous changes have evolved into a global public crisis. In addition to the capital market, which has been deeply affected, there is also an industry that has also experienced considerable fluctuations in this pandemic. It is — China’s manufacturing industry.

In this crisis, we are seeing two extreme sides of the Chinese manufacturing scenes.  On one hand, the manufacturing industry is showing the speed of China and the superb efficiency where an automobile factory turned into a mask factory.  On the other hand, massive delay in production leads to the departure of foreign funded factories and rising costs.   Also the uncertainties in production schedules has resulted in loss of orders.

According to reports, although the work resumption rate in Yangtze River Delta and Pearl River Delta has reached more than 90%, there is very little real work, especially for export-oriented industries, which are hardly receiving orders due to foreign pandemic conditions.

If there is a word that can describe the current situation of China’s manufacturing industry, it is ‘pressure’, and a tremendous amount of pressure!

But in times of trouble, there are opportunities.

How does a car factory turn into a mask factory in just 76 hours?

Due to the escalating pandemic spread, masks became a tight supply commodity. To meet the large demand for supply, many factories turned into mask factories. Automotive maker SAIC Wuling, not only manufactures the Wuling brand masks, but also goes one step further and invented mask production machines.

Automaker Wuling turn it’s auto factory into mask making factory to help ease a tight demand in market supply

Wuling brand mask packaging with the wordings ‘Whatever the people needs, Wuling will produce.’

Why are the car factories, diaper factories, mobile phone foundries, shoe factories, which are all seemingly unrelated yet are all able to switch to mask factories in just a few days?

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Wu Ling brand mask

Before answering this question, let’s look at a small example.

Prior to the pandemic, global mask production was 40 million, of which 20 million were produced in China, 10 million in South Korea, 5 million in Japan, and 5 million in other countries.

When the pandemic hit China, most factories were shut down due to the Spring Festival. Faced with a surge in demand, mask factories in South Korea and Japan should accelerate the production of masks, but in fact, the production of masks in Korea and Japan was also late. Why is that so?

This is because almost all the nasal bridge strips required for masks in the world are produced in the PRD region of China. Without a nasal bridge strip, a complete mask cannot be produced at all.

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Above: the nose bridge strip is almost only produced in China

There may be questions such as the since the nose bridge is such a simple accessory in the mask, therefore why can’t South Korea and Japan produce this?

But this is not the case, the reason is that the nose bridge strip is too simple and cheap.

Well, the logic behind doing business is to either sell at a high price to make a profit, or to take a small profit and sell more. The nose bridge strip is obviously the latter. And when it comes to volume, it depends on the market size. Which country in the world can scale with the Chinese market?

Therefore, Chinese nose bridge manufacturers can keep the prices extremely low and the market competitiveness is strong. Japan and South Korea can’t make money making nose bridge strips, and naturally they won’t do it.

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China ’s super-large scale has created a strong cost control capability, with a “cost black hole” effect, that is, those extremely basic parts may not be available in other countries, but it will certainly be available in China, and it is also the cheapest!

Masks, in many people’s perceptions, are products with little technical involvements, but the production of a mask ranges from the most upstream oil, to the separated polypropylene, spunbond, melt blown cloth, to the bridge of the nose and ear bands, to the sterilization rooms.  There are dozens of industrial chains involved in the process of making a mask.  Additionally, they need the support of logistics, plant, power and other infrastructure.

Behind a small mask is a huge modern industrial system. From upstream to downstream of mask production, this supply chain is complete in China.

On 2nd March 20202, the China News Network published a piece of news which says mask production in China broke it’s own record with 1 billion pieces produced per day.

Why, during the epidemic, almost any manufacturer can be transformed into a mask factory overnight, making the production capacity of masks soar in a short time to more than 100 million per day?

Speculations of a shift in China’s manufacturing industry, is this a false proposition?

Discussions about China’s manufacturing shift have been ongoing. For example, Samsung closed its Chinese factory and moved to Vietnam, Apple built a US $ 1 billion factory in India.  With media reports of similar news, it seems that many multinational companies are gradually shifting their supply chains from China to Southeast Asia.

After the pandemic, more and more voices are beginning to worry that China will lose its “world factory” status and companies will accelerate the relocation of factories overseas.

The U.S. Secretary of Commerce even said that the Chinese pandemic would help manufacturing return to the United States.

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So, in recent years, has China’s manufacturing industry migrated overseas (Southeast Asia, especially Vietnam or India) on a large scale? Is the status of Made in China no longer guaranteed?

In order to clarify these issues, in 2019, Mr Shi Zhan, Director of the Center for World Political Studies and the author of “Overflow” and “Pivot”, and his team conducted an in-depth research on Vietnam, visited local industrial parks, the Chinese Chamber of Commerce, and visited the local entrepreneurs, grassroots officials, scholars and also consulted Vietnamese economists.

From the perspective of Shi Zhan, the transfer of China’s manufacturing industry is actually a pseudo-proposition. Some manufacturers build their factories in South East Asia because of expansion and not a shift of business from China.

First of all, it must be acknowledged that a certain amount of production capacity has indeed gone to other countries. However, the transfer of this small number of factories did not begin in the last two years, nor did it begin during the pandemic period. In fact, this happened much earlier.

Because many upstream brands do not want to rely too much on a single factory, in simple terms, they don’t want to put all eggs in one basket. For manufacturers, this transfer is part of a long-term and reasonable strategy to increase efficiency and reduce risks.

After this pandemic, more foreign companies may want to averse the risk of focusing production solely in China, hence it is practical to spread production or related operations over multiple countries.

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Foxconn’s factory in India

This is a realistic problem that the Chinese manufacturing industry will face, but the impact may not be very significant because what can be transferred out are the first and second-tier contractors.  Operations that are further down the supply chain will be harder to transfer out.  Lower operations in the supply chain are more specialized and more dependent on the collaborative needs in the supply chain network.  They cannot be moved out unless the entire network is transferred out altogether.

Are there countries that can take over the entire network from China? In recent years, there has been a sudden rise of various manufacturing hubs across South East Asia. What about Vietnam?

In the first quarter of 2019, US imports from Vietnam soared 40% year-on-year, while Vietnam’s GDP grew by 7.9%.

In addition, Vietnam has ample population, cheap labor, ports, and low tariffs. It seems to be a good place to build factories and trade.

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But if we look deeper, we will find that Vietnam is still China’s largest import market. This means that most of the “Made in Vietnam” raw materials are not produced locally, but shipped from China.

For example, when producing a sofa in Vietnam, 90% of the leather material comes from Jiangsu, 80% of the sponge comes from China; more than 90% of the plywood used in the production of furniture comes from Linyi, Shandong; 60% of the hardware supporting the furniture comes from China, which are imported and processed into hardware locally in Vietnam.

Due to the inability of the Vietnamese industrial chain to be self-sufficient, during the pandemic period, most of the factory’s stocks of auxiliary materials were only enough for production in January. Previously, due to insufficient raw material inventory, 16,200 factories in Vietnam had suspended operations.

So why doesn’t Vietnam produce raw materials itself?

This is because it does not have heavy industry systems such as metallurgy, steel, chemicals, materials, and energy production. The heavy industry system consists of high investment, low profits, and a very long payback period. It is difficult to develop without the government massive capital investment and support.

From a micro perspective, Vietnam’s labor market is also very different from China’s.

The Chinese have become accustomed to large-scale population migration, and a large number of migrant workers have come to work in coastal areas from inland provinces. Vietnamese people are generally used to looking for work near their hometown, and not many people will move across to other provinces to work. In addition, compared to Chinese, Vietnamese are not very aggressive in the pursuit of career advancements.

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Samsung factory in Vietnam

Although Vietnam has a sufficient labour supply, human resources are still a problem due to the lack of high-quality workers.  Also, the productivity of Vietnamese workers are too low .

Although manufacturing seems to be prevailing, Vietnam has a huge gap with China in terms of population, economy, high-quality infrastructure, the scale of outstanding engineers, and the scale of qualified college students and skilled workers produced each year.

Some companies have moved back to China because of the poor quality and production efficiency of Vietnamese workers.

When asked “Is Vietnam likely to replace China’s World Factory status?”

Felix, Dean of the Institute of Economics and Policy of Hanoi, Vietnam, responded firmly:

“This is impossible! Vietnam is too small. The best we can do is to find Vietnam’s comparative advantage in our economic ties with China, embed ourselves in a suitable position, and take advantage of China’s tailwinds. “

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Therefore, the prosperity of Vietnam’s manufacturing industry is not driven by the outward migration of China’s manufacturing industry, but the external diffusion of China’s manufacturing industry, or “overflow”.

That is, China “outsourced” some of the assembly links in the supply chain to Vietnam, leaving domestic space to industries with higher added value.

The unparalleled supply chain system that supports China’s manufacturing industry

When it comes to China’s supply chain or industry chain, it’s actually not a chain, it would be more accurately referred to as a network. Only by truly understanding this network then can we understand Made in China.

The network, as its name implies, is a large network with multiple “nodes” that intertwined.

The strength of China’s supply chain network is not only due to its large scale, full range and fast logistics, but also because of many outstanding supplier companies in China, which can produce extremely high-quality parts and semi-finished products at lower costs.  These “intermediate products” are not only sufficient in China, they can also be exported to the world.

Today, more than 70% of global trade is semi-finished parts.

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In China, there are many small towns that we may not have heard of, but each are expert producers in certain fields.

These small towns are often the production bases of a certain product or an industry in the country or even the world. They are all nodes on the Chinese supply chain network. Thousands of nodes are linked together, forming a network like Lego blocks, and supporting the huge network of China’s supply chain.

  • Nearly 1/3 of the world’s guitars are produced in Weifang City, Shandong Province
  • Nearly one-third of the world’s and almost half of the country’s swimwear are from Xingcheng, Huludao City, Liaoning Province;
  • 1/3 of the national badminton and supplies to the world are produced in Jiangshan City, Quzhou, Zhejiang Province;
  • More than 85% of the country’s steel tape and more than half of the world’s steel tape measure are produced in Shaogang Town, Yucheng County, Shangqiu City, Henan Province;
  • More than 70% of the national and more than 40% of the world’s decorative oil paintings are produced in Shenzhen Dafen Oil Painting Village;
  • 70% of the world’s lighters are produced in Shaodong City, Hunan Province

The list can go on, there are too many things beyond our imagination.

Maybe you will doubt that these are low-tech products which are nothing great. But if you think about it, you can buy a 5 meter long steel tape measure for 3 or 4 yuan on Taobao. After removing the profit of each link, the production cost of the steel tape measure generally does not exceed 1 yuan.

The production of steel tape measure does not have any technical element to it, but the ability to control costs is not due to the “low technology” factor. The production of steel tape has a complete and mature supply chain system behind it, with an extremely powerful upstream and downstream supporting capabilities.  Thus, every step can be meticulously divided and interlinked to make the finished products

Without this supply chain system, steel tape measure can still be produced, but the cost cannot be controlled so low.

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Although now China’s labor and land costs are no longer so advantageous, these industries still have strong cost control capabilities.

In China, Apple’s supply chain is almost within a 24-hours driving distance; however, many parts of Foxconn’s factory in India still depend on shipments from China thousands of kilometres away. Therefore, although Foxconn is actively building factories overseas, 75% of its production capacity is still in the Mainland.  This strong competitiveness reflects the strength of the entire system.

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Foxconn’s factory in China

It is almost impossible to transfer out any of the manufacturing supply chain system, because no country or region in the world has sufficient production capacity and market volume to undertake the scale.

Therefore, Shi Zhan said, “Which country overseas has the pre-requisite market conditions to undertake such a large-scale supply chain network transfer? In an era of economic globalization, if you only transfer factories without the supply chain network, it will not constitute a substantial transfer.”

It is not difficult to transfer a factory, but it is not easy to transfer an entire manufacturing eco-system. The devastating impacts of this pandemic on China’s economy is unquestionable, but yet no other countries have gained the ability to take on China’s manufacturing network ecology.

In fact, in the long run, if China’s manufacturing industry wants to move up the value-added industrial chain, it is also necessary to transfer out part of the production links with high labor costs and low profits.

The pandemic has brought all industries across the country to a standstill. It is not easy for any industry to move from stagnation to recovery. The pandemic may have crushed out some businesses; however, market demand still exists and has not disappeared.

These collapsed companies still have their assets, equipment, skilled workers, engineers, and managers. As long as the demand is still there, these companies will be absorbed by the surviving companies, which will rebuild them to be even better than before.

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For businesses that have to shut down due to the pandemic, the entire process is very harsh.  Yet the collapse of some businesses doesn’t mean that China’s manufacturing industry has collapsed.

Under an ongoing pandemic, any information can affect our judgement.  To an individual, it is hard to judge something that is continuously changing, when the dust settled our judgement will be clear.