The epidemic broke out unexpectedly, followed by a long holiday that had interrupted the plan of almost everyone in China. Life of the Chinese people seemed to be stopped by a sudden brake. The strong inertia, noise and unrealism were surprising.
The hardest should be for entrepreneurs who can’t leave home.
“We hope the epidemic pass quickly, but especially worry about the reality.” In the dialogue with iAsk, more than one entrepreneur expressed the similar concern.
The storm from the wings flapping by this black swan is much more influential than it was in 2003. But this is not necessarily entirely negative: crossing the stormy fiord would temper its wings and also give birth to a new start point after the inflection point.
China slows down, but entrepreneurs can’t retard their work
When you packed up and said goodbye to 2019, it was difficult for most people to imagine such a holiday.
The sudden outbreak, long-term home quarantine, and extended vacations, have made the time frozen, and the reality more illusory. Gradually, people adapted to this state and found their own way.
You may find that some people are spending boring days, and others are racing against time. What is very interesting on Wechat moments is that common employees enjoy their life, but most entrepreneurs are restless.
At the intersection of winter and spring, successful entrepreneurs are also in deep anxiety.
Mr. Jia Guolong, the Chairman of Xibei Catering which operates more than 400 restaurants in over 60 cities across the country, is one of them. In an interview, he said that almost all Xibei physical restaurants had been closed, while keeping 100 and more takeaway businesses running. During the Spring Festival, the estimated revenue loss would be RMB 700-800 million.
What worries Jia Guolong most is about the future. “More than 20,000 employees are stand by and the monthly expenditure is RMB 150 million. If the epidemic is not effectively controlled within a short period of time, the cash flow will not last for three months.”
As one of China’s top catering giants, so severe is the case. The challenges for the majority of SMEs are evident.
Under the aura of being a leader, entrepreneurs understand their own cold and warmth. In fact, they have been anxious for a long time. This Black Swan incident is only a catalyst, which has exacerbated certain reactions.
多家媒体报道，自2019年第三季度开始，“钱荒”就在一级市场蔓延；相关数据也显示，2019 年我国新经济领域共融资 3802 起，同比减少 46%，下滑程度超过往年水平，数量不到 2015 年的 4 成。
Some media reported that since the third quarter of 2019, the “cash crunch” has been aggravated in the primary market. Related data also shows that in 2019, China’s new economy sector has raised a total of 3802, with a year-on-year decline of 46%, which is greater than previous years. The volume is less than 40% of that in 2015.
(Data source: IT Juzi)
“The primary market is short of cash.” There are many reasons behind, but the startups immediately felt the pressure and responded. Under the “cash crunch”, the shadow of “layoffs” has always been there. The data shows that by December 6,327 companies were closed in 2019, the vast majority of which were startups.
Before the New Year arrived, many startups cancelled their year-end party, and cut year-end bonus. They took a sigh of relief, and were preparing to find their place next year.
The Spring Festival of the Gengzi Year arrives earlier, but it is not good for entrepreneurs.
At the end of the year, it was difficult to collect money. More spending happened and cash flow were increasingly tense; some businesses had to stop and wait for partners’ investment. In addition, employees were habitually changing jobs and the team was unstable.
The arrival of the novel coronavirus, the black swan, had become the last straw that crushed many startups. The entrepreneurs were trapped in the cage of time and space, and could merely do nothing.
(Image source: SlashGear)
In the conversations with iAsk, anxiety can be felt from every entity owner: manufacturers worry about labor shortage and export crisis; catering industry practitioners have not recovered from the Spring Festival season; transportation and tourism industry is almost stagnating. Everyone is worried about the loss of confidence in capital.
“How to feed the team?” “How to keep the business?” “How to survive?” Chinese entrepreneurs who had previously gone smoothly had to rethink about the basics of the company in 2020.
They are just like the pioneers of entrepreneurship that encountered the 2003 SARS crisis.
The dangers and opportunities for Chinese entrepreneurs in 2003
Reminiscing the history of time, China has undergone tremendous changes compared to 17 years ago.
The Internet is ubiquitous and deeply affects all aspects of economy and life. There is little intersection between online and offline, and the circle effect is obvious; the information is extremely developed and complex, with useful or useless information full of ears.
But the contemporary Chinese in 2020 should express thanks to 2003.
The outbreak of SARS has cost China a huge price, but has also brought China valuable experience and gains from modern public health methodologies at the time, such as the Xiaotangshan Model, which can help China to quickly pass the dangerous times of early 2020. The economic trends in 2003 can also inspire people to a certain extent.
(Construction site of Xiaotangshan / A Decade after SARS)
When we analyze the future of 2020 with the experience in 2003, we come to two conclusions:
Firstly, the epidemic will definitely impact China’s economy, which will last for a long period. Secondly, in the long run, it is not necessarily a bad thing.
In 2003, China’s annual GDP is RMB 13.74 trillion, of which the contribution rate of the primary industry is 3.1%, the secondary industry of 57.9%, the tertiary industry of 39%. China at the time was still an industrialized and late-emerged modernized country.
In such a structure, when SARS struck, the most impacted are those manufacturing-based industrial companies, state-owned enterprises, foreign cooperates, and private companies. They suffered from labor shortages, pending export orders, and serious damage on benefits.
However, the fragility of the tertiary industry is also undoubtedly revealed under emergencies. In 2003, the direct loss of domestic and foreign tourism industry is as high as 140 billion yuan. Aggravated by various indirect effects on the economy of tourism, catering, retail, and logistics, the total lose is about RMB 300 billion.
(SARS epidemic had a major impact on the consumer industry /
Source: Tianfeng Securities Research Institute)
After the Southeast Asian financial crisis in 2008, in order to avoid the middle-income trap, China started the transformation from industrial to service industries, and made industrial adjustments, by learning from the experience of advanced economies such as the United States, Japan, and South Korea. In 2014, it launched the “mess entrepreneurship and innovation” project, followed by accelerating transformations.
The GDP data released at the end of 2019 shows that, the current proportion of China’s tertiary industry’s added value is 53.3%, incredibly surpassing that of 17 years ago.
Without doubt, it means that the impact of the epidemic on the economy will far exceed that of SARS. The GDP growth rate this year will be lower than expected, which is basically a foregone conclusion. But is this a definite bad thing?
In the past economic transformation, China’s economy developed like walking on a thin ice: it must maintain growth while poking bubbles. In the past few years, the bubbles have mainly come from real estate, and now the Internet bubble has weighted more.
In the Internet environment, entrepreneurship seems so easy — three or five people come up with an idea and can start a company immediately.The sharing economy has reduced the cost of trial and error to the least. Entrepreneurship has quickly become a routine gambling.
The reason for the bubble is simple: everyone swarms into a field, using similar technology, copying ideas from each other, competing for traffic, until they get the favor of capital, before starting a new round of war of cash burning.
In the view of iAsk, it is a huge waste of resources. The winner who takes all is often the one with the most solid foundation, but it may not meet the real needs of a society. This is also the underlying logic of “giving on a needed basis”, raised by iAsk.
At the beginning of 2020, as soon as enthusiastic entrepreneurs set their sail, they encountered the black swan headwind.
It is similar to the scenario in 2003, when Mr. Chen Tianqiao’s Shengda Game company was slumped because the Internet cafe lost traffic; Mr. Liang Jianzhang’s Ctrip was on the edge of bankruptcy because of the sharp decline in orders; Mr. Yu Minhong’s New Oriental took loans from friends because the cash flow completely broke.
Of course, the best entrepreneurs persisted and got mature, such as Jack Ma and his Alibaba.
On May 6, 2003, a SARS case was confirmed at Alibaba. Subsequently, the entire company was in quarantine. Jack Ma had no choice but to organize the “online office”.
“Almost all conditions pointed Alibaba to a disastrous end: missing the peak of business development is a disaster. Employees had problems to work, which interrupted business processes. Most employees complained, which is a distraction. Jack Ma, the leader was also frustrated…” wrote by a financial writer, documenting this treasured time.
However, Jack Ma and Alibaba survived, stabilized the moral of the people by care and motivation. It also discovered the real needs of society — online shopping. Taobao was born in the quarantine period, and Alibaba was reborn after nirvana. Since then, the interior has become more solidarity, which formed Alibaba’s most powerful weapon.
Alibaba is becoming mature, and Jack Ma has also transferred from the role of an entrepreneur to a master of entrepreneurship. How about you?
How do an entrepreneur become a master of entrepreneurship?
Mr. Li Yanhong, CEO of Baidu pointed out, “Entrepreneurs are prone to taking risks by nature.” The old saying also goes, “Wealth and fortune are sought in adventure.” When a crisis comes, a qualified entrepreneur should not only see dangers, but also discover opportunities and be ecstatic.
As a fact, we can always find retrograde companies in this black swan incident. Some of them have identified social needs, such as Health-Care Bio, a biotechnology company based in Wuhan, told iAsk that their employees had overcome difficulties and worked overtime during the Spring Festival, to donate more than 10,000 free 2019 Novel Coronavirus (2019-nCoV) Nucleic Acid Detection Kits to Hubei’s medical institutions, which has contributed to the fight against the epidemic. Another example is the Xiao-i Robot Company, which produced Xiao-i Anti Epidemic Call Robert. Mr. Yuanhui, the Founder of Xiao-i Robot Company, said to iAsk that Xiao-i Robot was born in 2003, originally designed to meet the user’s various needs of home office and leisure chat in closed spaces. Seventeen years later, it happened to respond to the strong needs of society.
Some companies also fulfilled their social responsibilities, by means of donation, deep investment and “non-chaos” management. One example is Poetic Oriental Beauty. Mr. Yang Jian, the Founder of the company, told iAsk that Poetic Oriental Beauty is a labor-intensive company, working with more than 10,000 employees. Facing the epidemic, the first response is to accept the facts, conduct scientific management, and pass positive energy. This may not help the company to gain immediate benefits, but there will be gains after the epidemic.
In the dilemma of novel coronavirus, we have also taken positive actions. iAsk is currently working on the program “iAsk Leaders: Who Are Fighting the Epidemic”. Via donations and reports, we will stand by each other and overcome difficulties! iAsk has contacted nearly one hundred anti-epidemic hospitals across the country, and has called on a number of companies to donate relief supplies including respirators and medical masks to first-line hospitals in Wuhan, Huangshan and other places in need, to contribute to the fight against the epidemic.
In addition, during the special period of the epidemic, many companies are also responding quickly and contributing to the fight against the epidemic. New attempts are made by service providers. iAsk also hopes to provide innovative communication services accordingly, and work together with each other to realize the corporate responsibility and creative development in special times.
The real needs of a society are always changing. When everyone thinks that Internet innovation is coming to an end, spending five year only nurturing the group buying app Buy Together, the shimmering light of new needs and opportunities is emerging because of this crisis.
We have discovered the following trends:
First of all, a must trend is that there will be a new wave of consumption. People have accumulated long-term consumption desires, and under the ecological influence of “living in the present”, experience-type consumption such as tourism, shopping, entertainment will usher in a new consumption opportunity to upgrade.
Secondly, long-term indoor life will promote online and offline crowds to “break the circle”. In 2020, more elderly people will use Tik Tok and watch videos on Bilibili. Young people will learn square dance and cooking. The broken circle will bring new types of user groups, with new demands appeared, such as Internet social networking, e-commerce, and content products, specially targeted at the elderly group.
Furthermore, a small granular consumption model will gradually form, and the e-commerce consumer groups based on community will appear and become popular among the “new netizens”. Housewives who have developed consumption habits will enjoy this convenient and economic way of shopping.
Fourthly, there will be more free products of higher quality. Meticulously produced films such as Lost in Russia, will replace some bad-quality short videos in the market. Among major video platforms in China, a company such as “Netflixi” is likely to appear.
Fifthly, the hygienic habits of the Chinese people will have a large-scale and thorough upgrade, which will also create a market with huge business opportunities.
The final trend is in everyone’s vision. Online scenes will accelerate the speed to replace the offline business. In fact, pioneers such as Fresh Hema have started to predominate the market share. Online training, online office and other online services will also be greatly tapped.
(Online fresh food orders are surging during the epidemic.
Employees of many catering companies are temporarily working for Fresh Hema.)
Of course, not everyone who sees the trend can succeed. At least in recent years, there will be a continued caution on capital, which also means that after the epidemic, the “cash crunch” still exists.
Start-ups must step out of the comfort zone, say goodbye to childhood, and get mature themselves. Instead of blindly pursuing traffic and capital, they must discover the real needs of society, find the shimmer in the ashes, and more importantly, to persist.
This is the knack for mankind’s victory over the epidemic, and the essence of success.
(Classic game Plague Inc)
In human history, the epidemic has always been one of the biggest enemies.The black death, Spanish flu, smallpox, SARS, Ebola and 2019 novel coronavirus, have repeatedly forced humans into desperation, but ultimately the victory belongs to human.
On the outskirts of Derbyshire, England, there is a village called Eyam, which has closed traffic and ordinary scenery. But every August, large groups of tourists arrive.
This custom originated from a plague in the 17th century. In 1665, a plague broke out in the United Kingdom and thousands of people died in London. In the same year, hidden in a parcel of cloth, the plague started in the village of Eyam, and people were dying day by day.
Survival is a human instinct. The villagers of Eyam sought the parish priest Mompesson for guidance, whether to give up their home and travel to other places to survive. But to everyone’s surprise, the priest decided to stay because he would rather die of his own illness than spread the plague to the surrounding villages and towns.
Revered Mompesson admitted that if the villagers accepted his advice, it was likely that they had to face death. The only thing he could do was to stay with them. As long as he was still alive, he would go all out to turn the villagers undead. What was shocking is that the villagers decided to follow Revered Mompesson’s advice.
The tragic was staged in human history on June 24, 1666, when the village of Eyam was officially quarantined. When the plague disappeared in the autumn, the population of Eyam was reduced from 350 to 83, but the surrounding villages and towns were intact.
Human beings can survive and inherit so far. It is by intelligence and luck, but relies on more important qualities of love, persistence, and the spirit of never giving up.
The epidemic will eventually be over, and life will move forward. For Chinese startups, the comfort zone is the past. Their future will be more risky and difficult, but also more exciting and infinite.
On February 2, 2020, iAsk launched the programme “iAsk Leaders: Who Are Fighting the Epidemic”. By contacting with first-line anti-epidemic hospitals, we received lots of feedback of supplies demand. We called on enterprises with supplies resources to make direct donations and contributed to the fight against epidemic.
Since making the appeal, a list of enterprises have jointly assisted with the donation of relief supplies of respirators, medical masks to the front-line hospitals in Wuhan, Huangshan and other epidemic areas.
By far, members participating in the joint donation include Poetic Oriental Beauty, Xiao-i Robot, Health-Care Biology, Yunfu Investment Holding Co., Ltd. and Gloria Ai from iAsk.