The COVID-19 pandemic is now clearly impacting the entire world, with heavy and unpredictable consequences.

It is no longer just a Chinese issue. The problem has been ‘exported’. But let’s look at China first. The situation is changing 180 degrees these days!

The situation with your China suppliers

Chinese factories, on average, have been very busy in February and March. They have had to catch up on the initial delays induced by the lockdown of many areas in China.

But what about the coming months? Everybody is already expecting lower demand:

• In Europe, it is pretty clear. The French government just said they are expecting GDP to fall by 1% in 2020, and the situation probably won’t be better in Italy, Spain, and Germany.
• The economy will also suffer in the US and Canada. There is a clear stock market crash, and that’s what triggered the last recession (2008).

We are actually seeing importers cancel orders this week, or put all shipments on hold, even though they were pushing their suppliers hard to hurry up until last week.

It means orders will be lower this spring & summer than last year. Chinese factories will be less busy, and some of them will be desperate. They will be hungry for business.

They will be happy to get new projects, even if they consume quite a bit of engineering time. They will be more willing to produce samples and work on new product prototypes.

And, at the same time, some of them will be closer to bankruptcy than ever. Doing zero due diligence between an Alibaba search and a deposit transfer is a risky proposition, and it will become even riskier later this year.

The situation with your market

As I wrote above, demand is probably going down for a few months. Maybe for 1 year. Maybe longer (18 months?) — nobody knows.

Because of SARS in 2003, Hong Kong people changed some of their habits:

• Much more focus on cleanliness (toilet, drainage system…), with habits that have stuck for years
• More emphasis on outdoor sports (hiking, but also a lot of new marathoners)
• Always thinking of their of infection — for example, wearing a facial mask whenever one feels sick is seen positively

You can expect the same phenomenon, with some variations of course, on your market. Here are some examples:

• Online sales might shoot up. It has clearly been the case in China over the past 2 months, as people couldn’t go out easily. Why would it be different in other countries where an e-commerce logistical infrastructure is also quite mature? Probably. Selling your products on amazon.com, walmart.com, zalando.com, amazon.de, amazon.co.uk, amazon.fr, and others will make more sense. Having your own Shopify account and becoming more adept at online marketing, too.
• Consumers will look for health-related, and particularly, hygiene-related products. Can your product, or a variation of your product, be used for cleaning the floor, for killing bacteria, or for preventing drainage infections in an apartment? You might want to reposition it accordingly, as people may become very nervous and demand might shoot up.
• Consumers will also look for a way to make their own food at home. They will buy more bread making machines, pasta machines, and so on.
• Homeworkers will look for IT accessories such as external screens.
• Efforts will be made to make some “strategic” products in-country, or in close countries, rather than in China. However, I don’t expect this to be a very strong movement. I believe so because of the (amazing) lack of efforts made over the past month to start production lines of face masks in Europe…

You can play with Google Trends and look for other signs of changes to come. With a bit of luck, you can uncover an exploding market when it is still in its infancy and be among the first to target it!

The situation inside your company

Many of your employees might be working at home for the next few weeks. They will be less “busy” with meetings and all sorts of short-term requests on their time. They will be able to devote some attention to creative work or planning exercises.

If several employees took 1 hour a day to work on ” high important, low urgent” projects, would it move your business forward? Certainly.

Here are some ideas to jump-start a review of your current business, and pinpoint the 2-3 most important areas to focus on.

Look at your current products

• What is the feedback from customers/users? What are the most common sources of dissatisfaction? What are the most commonly requested extra features?
• Where is the competition? Where is it likely to be in 2 years?
• Any new needs from customers? For example, if your product can be tweaked to protect people against viruses or bacteria, there might be strong demand in the coming months and maybe for longer.

Look at your current sources of products/components.

Can you see:

• Any supplier that performed poorly and has been hurting your business?
• Any key product that is currently sourced from one supplier that is not particularly reliable?
• Any problem with a certain component that is not fixed in a satisfactory manner by the assembly factory? Do you need to take the matter in your own hands?

Look at short-term risks & opportunities

• Do you have enough cash in the bank to weather this storm? Is your break-even point low enough, and how to reduce it?
• Do you have access to an extra cash reserve in case a competitor ‘goes under’ and you can buy them out at a steep discount? Or if you can buy inventory at a high discount?

Look at opportunities in 2-5 years

• Have you identified unmet needs? Do you need to develop a new product?
• Any supplier needs to be replaced, or is any backup needed?
• Are you forced to “play defence” and focus all efforts on survival? Are you in a “launch new products or die” situation, or a “conserve cash and stay the course, or die” situation?
• Can you afford to “play offence” and take advantage of this exceptional situation and gain new customers / extra market share?

These are important questions because nearly every one of your competitors will wait and see. They will cut spending. They will be afraid. They won’t think of the future.

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There is an opportunity to think of new products, find and qualify suppliers who are motivated to help you develop or adapt these products, and have them on the market before anybody else. A few of our clients are thinking this way, and it makes a lot of sense to me. Many service providers, including our team, is going to have more time for new product developments in the coming months.

What do you think? Are you working on strategy, and playing offence (or defence)? Or are you too busy dealing with the day-to-day tactics?

If you have any questions or concerns, please feel free to leave a comment or contact me.