Business Outlook

Surviving the tough stretch

Covid19 has been declared a pandemic. With many countries closing borders, restricting entry of passengers and goods from infected countries, how will mid-size businesses cope and overcome the challenges. We find out how some Businesses are taking up alternatives.

— By Diksha Vohra

Covid-19 or Coronavirus as it is more commonly known seems to have engulfed the entire world as a threat of a scale never seen in recent decades. Originating in China, it has eventually fanned out across most countries from Italy to Korea and many others being amongst the severely affected. Health comes first and therefore every other aspect of daily lives has been dis-rupted to ensure the damage is contained. Social distancing has been advocated as this is a communicable disease, spread from person to person contact. In this context business survival seems to be quite a steep mountain to climb. While Business in the worst and locked down zones of some of the countries globally is almost at a standstill, even in in countries that have seen only moderate numbers of infected residents, Business has slowed down. The global supply chain is disrupted and workforce of companies are increasingly working remotely.

With borders being closed and flights reduced to several countries, from airlines to logistics to trade, all businesses seem to have felt the impact overtly. But is the situation that intense in the UAE?

“Due to the delay in operation of factories in China, the delivery of goods for projects have been delayed,” says Ajay Awtaney, Managing Director, Nakashi General Trading LLC. “It has become difficult to cater to every new enquiry as not all projects can accept increased lead times.” Especially for B2B clients, the effect would be felt throughout the supply chain because if one’s trade stops, the other’s stops too.

Thomas Gregory, Executive Director & Partner, Fusion Specialised Shipping & Logistics LLC, says that usually during the first quarter, the market is anyway low in comparison to last few years. “Much to our surprise, we didn’t see a major slump compared to 2019 or even 2018. This stems from the fact that business is always at its low in the first quarter considering the New Year followed by the Chinese New Year and associated holidays. The virus spread happened during this low period and the

impact was not that visible.” He agrees that there was a slight dip of 6-8% in his industry but that always factor when it comes to projecting business plans. In-fact, now that China has resumed work within the close of the first quarter, Thomas feels the effect wouldn’t be long lasting. Like Ajay, he anticipates delays too but in his industry at least, he doesn’t foresee any closure of operations anytime soon.

Alternatives

While, the long term impacts still seem positive, in the short run, businesses are trying to innovate and use new ways of dealing with the existing situation to survive through the turmoil.

“Our suppliers are renowned companies in China and have excellent work ethics and policies in place they have returned to work with 60 to 70% workforce,” says Ajay. “Thus, we are acquiring help from factories to deliver products and complete supply chain at earliest.” Thomas, on the other hand, believes that diversification will help him sail through this. “We have a spread of various services like exports, imports, cross trades, special equipments, bulk liquid movements, project cargo movements etc. We have also targeted segments that are in demand like specialty supplies. Though we have seen a minor dip in imports from Far East, our exports to various African countries and In-dian subcontinent

have helped us bridge this gap.” But while diversification is a good option, it needs to be pre-planned. For those who’re in immediate requirement of goods, they’re sharing a very different story.

“My containers had stopped coming from China since early November 2019. And I am now procuring the same goods from UK and USA for a cheaper price,” says Sandeep Bhatia, Managing Direc-tor, Quality Printing Press. “I am into printing and I have a requirement for printing on sanitizers but I don’t have paper. What option am I left with except not procure them from the western coun-tries?”

Tackling the fear

As Sandeep mentioned, he hasn’t traded with China since November, which was much before the global outbreak of the pandemic. And at the same time, USA and UK imports became much cheap-er. Connecting these dots, he feels that the scare is more man-made than an actual one.

“My prayers for those who’re genuinely affected but I don’t see why we need to be so scared of the virus,” says Sandeep. “To me, it looks like a trade war between China and the western countries. China has flooded the market with its products so in order to restore the trade power, there is a possibility that the scare has been built out of proportion.”

Statistically too, influenza or what we call common flu, kills more people than Coronavirus in a year. In-fact, in comparison to SARS, an epidemic in 2003, where the fatality rate was just 10%, Corona-virus’s is 2.3%.

“In-fact companies which know how to make money, will make money during this period,” he adds. “China being the largest producer of paper in the world today is receiving paper from India. And India is exporting paper to China when the demand for paper in India is sufficient for all its paper mills to work well. So somewhere something is fishy, what is it that time will only tell.” While feeling that much of hype is not genuine, he recommends following basic hygiene rituals for safety. Thomas has allowed for working from home options for some of their employees. “Wherever feasible, we have opened up the option of work from home. We have equipped our field mates and driv-ers with sufficient supplies of santizers and perform basic health checks. We monitor every employees body temperature daily and any cause for concern will be attended to immediately. Similarly, our drivers and field mates are checked daily. We have also considered using contract drivers to en-sure that the load on each driver is reduced for some time till the situation comes to normal and that their exposure to too many people is reduced. Our office is equipped sufficient supplies for personal hygiene.”

Ajay also suggests that this is a good time to sit back and think about what expenses can be reduced and optimising spending patterns. “Hunt for ways to reduce expenses drastically and save every bit possible. The economy has taken a strong hit and will require a good amount of time to rebound. In current market scenario, there is not much one can do to increase sales in their business. Moreover, let’s be responsible by practicing hygiene and restricting ourselves from social gatherings as directed by the government to battle the situation. The more careful we are, sooner shall we out of this situation.”