Back to business as unusual
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A Seylan Bank mobile service truck which offers an ATM service, multi-channel customer support hotlines, Internet, and mobile banking platforms. Will this be the future in Sri Lanka?
Sri Lankan students who returned from China due to the outbreak of the coronavirus there, didn’t waste their time anyway, according to a few of them I know. They continued to attend their lectures, participated in tutorial classes, submitted the assignments and, received assessment results from their professors. Just like others, they were also locked up in their homes under curfew, but with modern “digital and delivery technology” they did all their study-related work online.
They might be going back to China, perhaps, sooner than we think. After they re-enter China, most probably, their health status would be monitored and, if required their contacts would be traced too. By whom? It is not by anyone else now, but by their own smartphones. Everybody carries a smartphone nowadays, and it is a device designed for multi-purposes much more than a phone to give a call to somebody or receive a call from somebody.
Digital technology
Smartphones would be equipped with technology to monitor the owner’s body temperature, blood pressure and other health complications, leave the emotions and feelings aside. It will have the ability to communicate with others’ smartphones as well, enabling it to trace someone’s past contacts later. For instance, if someone is infected with coronavirus or any other virus in the future, his or her smartphone would recognise it. Not only that, going through the past contacts it would trace from whom the virus entered his or her body.
These data will be transmitted to a central monitoring agency so that within a matter of minutes, if not seconds, health authorities know all about the potential health risks. Someone might ask the question whether there would be “a tradeoff between health and privacy”. This may be an irrelevant question in the near future. Much more than that, it would give the access to the relevant authorities to monitor even people’s social, economic, and political life, while some of these features are already embodied in the smartphone. And this technological capabilities would even move away from the smartphone, which is an external device, to an internal device such as a micro-chip planted inside the human body.
Well, I didn’t intend to go that far talking about fast-changing digital technology, but all these are realities that would cover the entire world and entire human race in the future paving the way to “one world” economy and polity. Digital technology will play a central role in the forthcoming economic recovery in the global business cycle.
My intention is to outline some important pre-conditions for going back to business after the coronavirus pandemic, and it is not about the business cycle. Many countries in the world still have to realise that it is not “business as usual” in the post-COVID era. A glimpse of what I discuss can be identified by looking at China’s recovery.
China’s quick recovery
China is already back to business. It is not necessarily because the outbreak of the coronavirus was first reported from China so that the country can also go back to business before others. It’s because China adopted measures to control it more as a “local issue” limited largely to Wuhan city than a “national issue” on the one hand. China has already established the digital and delivery technology to manage businesses even prior to the outbreak of the coronavirus problem on the other hand.
With 11 million inhabitants, Wuhan sub-provincial city is as large as half of Sri Lanka in terms of population, but less than 8 per cent of the land area of Sri Lanka. It is a rich modern city too with over US$20,000 per capita GDP.
Due to the coronavirus outbreak, Wuhan remained in lockdown for two and half months. The transport system was shut and even funerals for the dead were banned; Wuhan residents remained locked up in their homes. As the Chinese government was able to contain the spread of coronavirus preventing it to be a national issue, 77 per cent of the total number of deaths of over 3,300 in China were from Wuhan.
Finally, the threat of the spread of coronavirus was subdued and, the lockdown of Wuhan was lifted. This week people in Wuhan were back to work, the transport system resumed, shops were open, and vehicles and pedestrians were back on the streets.
It’s not new there
The new working environment is, in fact, not new in China though it looks new to many other countries in the world, including the Western countries. It is because China had already installed digital and delivery technologies on which their businesses, governance, and daily affairs have been running for years now.
Physical cash is already obsolete in urban China. People in mostly the urban sector have been systematically and rapidly doing away with notes and coins. As a result, they didn’t have paper notes and coins to wash with soap and dry in the sun, when the coronavirus hit Wuhan. The mobile phone that people carry has a digital wallet; just scan the app – WeChat or Alipay – and make the payment.
The companies had already established online delivery technology to place orders and delivery to home. While in some other countries, governments and the people struggle to put the delivery systems in place, people in lockdown cities were said to have their home deliveries within less than 20 minutes after placing the order.
It is not only placing the order by a consumer and getting it delivered to the door. The shops should also have established their inventory systems and the complex supply chains in order to ensure smooth running of the production and distribution without saying “no” to a single customer. Big distribution businesses like Alibaba had employed “artificial intelligence” enabled digital inventory systems linking manufacturers and suppliers building a complex distribution network. As soon as the Chinese urban sector went under lockdown, these distribution networks remained alive in order to ensure supplies to the households.
According to a special edition of Harvard Business Review (HBR) on “Coronavirus and Business”, China’s e-commerce penetration has reached 36.6 per cent of retail sales in 2019. About 71 per cent of Chinese consumers were engaging in online orders at some point, while 80 per cent of the transactions were through smartphones.
Interestingly, in spite of having the technology and infrastructure, the US and Europe have not yet come to the level of e-commerce as China has done so rapidly. Therefore, it is not only for the developing countries, but also for the traditional developed countries the emerging business platforms pose new challenges.
Back to protectionism
Although China was quick to come back to business, for many countries in the world it is still far away. Many of them were reluctant to compromise on its economic cost so that with mild restrictions they ended up with a messy national issue. As a result, the world economy is going to contract significantly, China would still escape from recording a negative growth rate. While dealing with the recessions, the countries will have to figure out doing business in a world which demands some degree of social distancing.
For many countries, going back to business might be a surprise, because they haven’t got used to new ways and means of doing business. Because they haven’t installed the necessary infrastructure as well as the norms and standards of the new business environment, they may have to focus first on changing the business environment with new parameters.
There is another way too. Some would argue that coronavirus is an unprecedented opportunity to go back to old “protectionism”. If it is the case, some countries may choose to strengthen their protectionist policy lines and to remain “poor” even though coronavirus is not a good argument for protectionism. I am sure, China would never choose to go back there, even if it has a “big” domestic market. It is because the prosperity of a country would be limited by the “size of the market” it chooses to cater to.
(The writer is a Professor of Economics at the University of Colombo and can be reached at
sirimal@econ.cmb.ac.lk).