The Great Lockdown is not only shaking up health care systems worldwide, it is also causing a storm in the global economy. As 2020 is on track to be the worst economic downturn since the Great Depression, the Southeast Asian economy is expected to grow by 1 percent this year compared to 4.4 percent in 2019.
Aside from its sheer magnitude, the pandemic has changed the global landscape in unimaginable ways. For the first time, services like retail, travel, and hospitality are struggling to regain consumer demand.
In this new world of COVID-19, startups need bold strategies to pivot their business models if they want to survive and position themselves for long-term growth. They need to be agile to endure in the short-term, as well as forward-thinking enough to plan for when the economy ultimately recovers. One way to do this is to find more opportunities and resources beyond local borders.
Leveraging on internationalisation to build resilience and growth
During SG Innovation Community Day, an online event held by Enterprise Singapore, international speakers shared how startups can leverage global opportunities to build resilience and growth.
First, they cautioned against fear and panicking during the pandemic and advised startups to have an objective plan moving forward. “It is important to distinguish between the short-term and long-term impacts of the COVID-19 outbreak,” says Thomas Jeng, director of innovation and partnerships for APAC at 500 Startups.
There has been plenty of debate on the trajectory of the economic recovery. Will it be a quick bounce (V-shaped), a slow recovery (U-shaped), or a move towards an altered economy (L-shaped)? Whichever path the economic recovery takes, the crucial point to remember is that it will eventually bounce back. And startups need to be ready when it does.
In the meantime, it’s best to “aim for survival,” says Jojo Flores, the co-founder of GK-Plug and Play. He maintains the need to achieve “a certain level of financial stability” before going international. That means being sensitive to cost control and having a positive net cash flow--or at least balanced financial statements--to stay afloat during the crisis.
Once startups have established their footing financially, they can look to various global markets to grow and enhance their business operations. There are numerous possibilities for startups to explore, which include:
Flores adds that for smaller markets like Singapore or Indonesia, startups will eventually need to scale up and go out of the country to become a successful company.
Take the example of Snapask, a fast-rising, Hong Kong-based online learning platform that offers tutoring services and focuses on education technology. Today, Snapask is operating in eight countries with 300 million users, and they have recently secured US$35 million in funding from investors in Southeast Asia.
Startups should also leverage on digitalization, technology, and automation to simplify work processes, increase productivity, and reach out to new markets.
“Previously, local startups tended to enjoy local advantages. You have local cultural nuances on your side and a local team to get in front of investors and customers. But now, when we have a norm of such online meetings ... everyone is equally disadvantaged, and there’s a more levelled playing field for startups across different countries,” says Jeng.
If startups can navigate this new sales environment, it is a chance to expand into new markets that may not have been previously accessible.
Take stock of key sectors and post-COVID opportunities
The COVID-19 pandemic has had differential effects. “For sectors like telehealth and contact-tracing apps, they are clearly emerging winners in this crisis,” says Claus Karthe, CEO of German Entrepreneurship Asia.
But for service industries like retail, commercial real estate, and travel and hospitality, “there is a definite drop in sales.”
Understanding these varying effects helps startups to have a clearer picture of the recovery prospects of their industries and adjust their business strategies accordingly. Karthe advises startups to keep an eye on critical sectors and take advantage of opportunities when they arise.
Logistics and supply chain regionalization
Supply chains need to find new ways to serve customers around the world, as physical distancing and limited contact have become essential to safeguarding human health.
To minimize disruption, startups can take advantage of incentives to relocate the manufacturing of goods and pivot towards the regionalization of supply chains. Regionalization also helps startups reduce distribution costs and strengthen resilience against future supply disruptions.
And with the advent of Industry 4.0, startups should consider implementing smart manufacturing. By applying industrial robotics, artificial intelligence, and data-driven supply chain management, startups can lessen production time, identify process inefficiencies, and eliminate unplanned incidents.
Digital delivery of health care and education services
The health care and education industries are areas that are now seeing significant market opportunities. Both are shifting towards a digital model of delivering services.
Telehealth and telemedicine provide a myriad of remote health care and virtual care possibilities. In Singapore, patients can now connect with physicians via video calls, describe their symptoms, and receive a prescription for medication and treatment. This virtual interaction saves travel time, prevents further spread of disease, and eases the demand on health care systems.
Similarly, edtech can help to fill the current learning void in Southeast Asia and present a new virtual avenue for flexible and personalized learning. This is especially so for countries like Singapore, where consumers spend billions of dollars on private tuition and enrichment classes.
“I think there’s a lot of anxiety about sending kids back to school, in the way that they were before, in large groups and enclosed spaces. So, we’re likely to see edtech and new models for online education pick up in the longer term," says Jeng.
In the wake of the COVID-19 pandemic, the push for digital innovation in health care and education will become more evident. Startups can look into providing business solutions for these booming industries.
Growth of e-commerce platforms
The increasing reliance on online shopping has changed the way consumers purchase goods and retailers marketing strategies towards consumers.
According to the Global Web Index consumer market research, 46 percent of internet users will continue to shop online after the pandemic, and 27 percent of them will consult online reviews before purchasing in-store products.
No surprise, then, that brick-and-mortar giants are building their presence online. Inditex, one of the world’s biggest clothing retailers, invested US$3 billion to create a “fully integrated store and online model” over the next three years. In China, the “New Retail” model introduced by Alibaba co-founder Jack Ma tracks real-time shopping activities and interacts with targeted consumers to provide more immediate and enduring customer engagement.
Yiqun Bo, the CEO of DayDayUp, believes that the current situation presents a tremendous opportunity for e-commerce to grow in scale and for startups to revolutionize future consumer shopping experiences.
“If you are a technology-driven startup, and you are very confident about your product consumer brand, there will be huge opportunities. You should take advantage of the consumption trends and new retail platforms, and you may get some unbelievable results,” says Bo.
Global initiatives to help startups weather the storm
Startups can look to an array of initiatives and overseas networks to nurture and launch their companies onto the global stage.
The Global Innovation Alliance (GIA) gives startups a network to connect with overseas partners and tech communities in major innovation hubs and key demand markets. The GIA Acceleration Programme supports Singapore startups in venturing abroad and assists international startups looking to enter Asia.
COVID-19 may seem like a nightmare that everyone wants to wake up from and return to the world as we know it. But until a vaccine is developed and mass-produced, COVID-19 is here to stay. Startups need to find ways not just to survive, but also to grow.
Plenty of early-stage investors and accelerator programs in Southeast Asia and globally are ready to help startups thrive in new markets. With a determined mindset and a reliable support system, startups can build a better future in the post-COVID era.
Get started with exploring new opportunities in the Asia market for your startup or business today. Join us at the Singapore Week of Innovation and TeCHnology (SWITCH)--Asia’s leading innovation festival, December 7-11. Hear from the world’s leading industry experts, network, and build your business pipelines for 2021 at this digital event, held for 24 hours across 5 days.