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Now What? China-based CEOs on What Reopening Really Means

On April 2, Egon Zehnder virtually convened seven chief executives of Chinese subsidiaries of global multinationals. All of them are in the process of restarting their businesses, months after COVID-19 caused the country to shut entirely. What they are learning in real time is simultaneously sobering, hopeful, and above all, useful for other executives who are further behind on the timeline. Still, executives caution that their experience may not work everywhere.

Says one CEO: “I keep cautioning the world that you cannot just cut and paste China.”

What is the New Normal?

Even as companies begin to reopen their stores and plants, leaders admit that they have no idea just how different the demand changes and consumer patterns will be—not to mention whether there will be more than one wave of disease. “Consumer behaviors are changing,” declared one CEO of a restaurant company who has reopened nearly all of its locations. Another, who runs the China arm of a Western clothing retailer, said that only 10% of its stores are on the same trajectory they were previously—and the rest have varying levels of dropoff in demand. “The learning ahead for us is ‘just how many more stages are there?’ We’re trying to see some consistent patterns,” she said.

What is clear is that the way consumers buy—in person vs. online; what they value in an uncertain environment—is changing for the near term if not forever, and companies will need to be more flexible and responsive than they’ve ever been. Said one industrial products CEO: “The biggest challenge I see with the epidemic is that we are negotiating unknowns. My boss asked me for guidance. I said ‘I really don’t know.’”

Expect More Supply Chain Disruption

The global nature of the supply chain means that even though restrictions are easing within China, the lockdown elsewhere makes the disruptions continue. Said one chemical producer CEO: “Everyone else is closing borders, so we are not getting intermediate products.” Said another head of the Chinese unit of an industrial company: “For China, crisis management is largely over, but for the rest of APAC, we are still in phase one. The biggest challenge is the supply chain and logistics. How do we direct to the Chinese supply chain?” Others wonder whether the retreat to national borders may make move away from the China-centric supply chain a permanent one.
 

Leadership in the COVID-19 Crisis

How leaders and organizations are reacting to a new world.

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Focus on Calm, Purpose and Teamwork

As the crisis drags on, all of the leaders agreed on the importance of maintaining both calm and focus. In a normal time, those attributes are important. In a time like this one— especially as the adrenaline wears off—what leaders do and say is being looked to as a symbol more than ever before. “The only thing you can do is control how you respond,” says the leader of a large consumer products company in China. “This, too shall pass. The second thing is the leadership shadow we create. I want to worry about real things, like safety, and how to help people in our communities. Not just to appear calm, but to be calm. In my case, it’s really about positivity and optimism.”

That can only happen, one executive cautioned, by realizing that there’s no way that one leader can do everything on their own. “It’s about leading as a collective,” he said. “You gain a lot by having a real team of 30-50 people. No one person can manage this.” And the team needs to hear it more than you think, another executive said. “We have much more time together as a leadership team since we don’t travel as much. And we say thank you more. Appreciation is important.”

Reevaluate Talent

Other leaders noted that one positive byproduct of the crisis has been the natural emergence of some leaders—many of whom weren’t necessarily thought of as rising stars beforehand. “You see people in the team actually step up,” says the head of a chemical company’s China division. “Those are the leaders. You don’t tell them [what to do]; they just step out and get things done.” He said he is now including these leaders in new crossfunctional teams that are looking at new ways to work in the post COVID-19 era.

Be Ready to Act

As the emergency period comes to an end. Leaders of China-based businesses are increasingly focused on the future and what kinds of moves they can make to extend or gain advantage. “What is more important is to come out stronger,” one CEO of a consumer products company said. “We have to make this an opportunity to be a stronger business. How can we get more competitive, increase share, pivot more quickly and move money?” Another head of a global restaurant company said it is now time to focus on offense rather than defense. “We are asking for capital expenditures because we see opportunities,” she said. We want to accelerate restaurant openings, and we want to know when we are making an attack whether we have sufficient bullets at the back end.”

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