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3 ways COVID-19 is affecting China’s business sector

Future of Work|Health and Benefits|Talent|Integrated Wellbeing
Geopolitical Risk|COVID 19 Coronavirus

By Smilla Yuan | March 6, 2020

As a result of the COVID-19 outbreak, employers in China are rethinking the way work is organized, and developing a new model for the future.

As a result of the COVID-19 (coronavirus) outbreak, employers in China are further rethinking the way work is organized and executed — providing the opportunity to explore alternative arrangements and possibly fast-track a more forward-thinking model of work.

The rise of COVID-19

As the 2020 Chinese New Year holiday drew to a close in February, local governments in China issued notices that asked workers to continue to stay at home in order to stem the spread of coronavirus, which since has expanded across the world. According to our research, the order was followed by 52% of companies, which kept their businesses closed even after the New Year. Forty-eight percent applied the order to all employees. Our data found that factories and productions units were more likely than offices to resume operations immediately after the New Year (35% versus 5%, see chart below).


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How was work reorganized after the holiday?

Source: 2020 Willis Towers Watson Pulse Survey: Working Arrangement after Chinese New Year holiday in response to the nCoV outbreak

Impacts to the business sector

COVID-19 is affecting the business sector in three key ways. The timely and strategic manner in which companies respond to each of these challenges could lead to improvements in the short and long term.

  1. Production and operations fallout — Production and revenues will likely fall in the first quarter — and possibly beyond. An enforced, extended closure (or even continuing operations but having employees work remotely) can have far-reaching and unseen implications on various industries. For example:
    • Manufacturing businesses and export companies are among the most immediately impacted due to delivery time requirements.
    • Industries served by manufacturing and export will be affected by delays in the supply chain upstream and downstream.
    • Service firms have introduced policies that restrict business trips or mandate working in isolation for a short period of time, which has caused a slowdown.
    • Traffic between domestic regions and flights between major foreign countries and China have been significantly impacted, which affects communications and the business community as a whole.
    • The hospitality industry in China has been impacted as people are more reluctant to go out or travel.
  2. An increased focus on employee wellbeing — One positive impact of the outbreak is that employers are taking various measures to safeguard their employees. Government and employers are creating room for employees’ health management and insurance/protection.

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    What actions have you taken to support/protect your employees?

    Source: 2020 Willis Towers Watson Pulse Survey: Working Arrangement after Chinese New Year holiday in response to the nCoV Outbreak

    HR’s most pressing concern with regard to any viral outbreak is responding to the immediate health emergency.

    HR’s most pressing concern with regard to any viral outbreak is responding to the immediate health emergency and ensuring and protecting the health of employees and their families. When the epidemic broke out, many companies quickly formulated relevant response policies. These included:

    • Quickly identifying employees who have traveled to affected areas and notifying them, paying close attention to their physical condition
    • Issuing protective masks and other protective supplies to employees
    • Implementing safety measures such as disinfecting the office and measuring the temperature of visitors, notifying all employees to work from home as appropriate, and so on
    • Communicating with global HR and other personnel to ensure the safety and security of the entire enterprise 

    However, other implications will creep to the fore — flexible working arrangements, for instance, will constitute a challenge in terms of engagement and remote office management. Many employers try to bridge this gap through telephone video systems and other remote office technology. But inevitably, it has a great impact on the personnel management of many large-scale enterprises.

    Procedures to support a health and wellbeing strategy, methods for emergency contingency plans, business continuity plans and employee policies and insurance arrangements will also need to be developed.

  4. Accelerating changes to how work is done — HR will also have to lead the way work — and the workforce — might be structured and organized to best support business in a new environment.

    HR will have to lead the way work — and the workforce — might be organized to best support business in a new environment.

    This is an opportunity for employers to think about "future work" arrangements (or “the future of work”) as it relates to their organization and accelerate new blueprints for jobs that can use artificial intelligence (AI) and robotics, outsourcing and short-term employment models. Other examples of the future of work could include:
    • Acceleration toward an agile/flexible staffing model
    • Employers becoming more adaptive to virtual teams
    • Moves toward e-learning/digital marketing
    • Remote working/online communication

However, our survey found that not all employees are equally impacted by working remotely. In many cases, employees find the lack of face-to-face communication challenging, making it more difficult for teams to complete projects. Companies will need to navigate this hurdle by further exploring AI, robots and other means and methods to accelerate the transformation of work.


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Concerns from senior managers and employees on working remotely

 

Overall, we found that employees of multinational companies are more likely to accept a work-from-home model. Employees at state-owned enterprises cite having insufficient resource support and especially lack of culture to support remote working — but they are trying to adapt. Private enterprises are worried about the team’s skills and abilities, and have more concerns on work experience, such as limitations in communications, when it comes to flexible work.

Turning a challenge into innovation

As with any large-scale challenge that arises in the business sector, there is also opportunity for innovation and the development of forward-thinking strategy. While many immediate impacts of COVID-19 on the business sector have already occurred and are being proactively managed, many more are largely unknown and hard to predict. Quick responding companies will embrace the uncertainty and use the momentum of change to implement practices and policies — perhaps not considered a priority prior to the outbreak — that have the potential to provide competitive advantage.

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