In the past two decades, China has served as the production hub for companies in multiple industries worldwide. However, the trade war with the US, rising labor costs, labor shortages, and the current COVID-19 pandemic may make it difficult for China to retain its position as the epicenter of manufacturing.
While some companies will change their base in China, they will not necessarily move out of all operations, as almost no other country offers the same favorable business environment as China. Therefore, most companies will move only part of the business to countries such as Vietnam, India, Thailand and Malaysia.
Companies can opt for the “China plus one” strategy with this, they can diversify supply chain risks and still take advantage of opportunities in the country.
By now you have heard of the Coronavirus.
The sad reality is that it is spreading rapidly and will continue to spread for a time.
No one really knows how many people will become infected (or sadly die), but it has caused the collapse of global stock markets, meaning that as a business (or even a trader) you will be affected.
And because my ad agency works with hundreds of companies in all major industries and we have 7 offices worldwide, we are already starting to see how marketing is impacting (I’ll share the data below).
So what does this mean for you?
Well, before we get into that, let me be clear on what sellers should NOT do.
Do not exploit the situation.
What I mean by this is that supplies are running low worldwide. From masks and toilet paper to hand sanitizer and other basic necessities … I see sellers who buy them and then resell them on eBay or post ads and sell them for 10-50 times the price.
This is not entrepreneurship and this is not marketing. I recommend that you avoid exploiting the Coronavirus situation to earn quick money.
Not only is it wrong, but it’s also very nearsighted. Sure, you can make money fast, but it won’t last … you’d better spend your time on anything that’s long-term.
So now that we get it out of the way, what does Coronavirus mean to vendors?
Companies are going to fight for a while
Even if the virus slows down rapidly as numbers have dwindled in China, companies are going to fight for more than a year because they will have to make up for their losses.
For example, in China, the virus caused retail sales to drop 20.5% and the unemployment rate rose to 6.2 in February.
When companies like Apple close their stores to help reduce the spread, it means less revenue and less profit. Sure, they can pay their employees during their temporary closure, but not all companies have their bank balance and most won’t be able to do the same.
From a conversion rate point of view, we also saw declines in most industries. Even the financial sector, which had large increases in traffic in traffic, fell in conversions.
People did not want to miss Coronavirus, political and financial information with turmoil, therefore news sites saw a good boost.
And with some sectors like travel, they are currently offering huge discounts, which is helping to offset some of their traffic declines. Overall, they are still seeing a great revenue hit.
If you are lucky enough to keep some cash during the recession, this is the best time to buy other companies. The ideals to buy are the media companies.
The more eyeballs you control, the more power you will have in the future. In addition, by controlling the eyeballs, it gives you the possibility to sell what you want in the future.
And as for your marketing, this is the time for you to double. Don’t be afraid when others are also afraid. Do what Warren Buffett does … be greedy when other people are afraid.
