Four Consumer Market Trends in China after the Coronavirus

COVID-19 continues to have a huge impact on the world, however with many lock downs gradually being relaxed, many businesses are now looking forward towards recovery. Undoubtedly an organizational shift has occurred, and there is a ‘new normal’ for the way business will be conducted. In China, the coronavirus has fast-tracked key consumer trends, which may serve as an indication for businesses across the world.

Increase in use of digital platforms

China, in recent history, has been a leader in the application of digital business-to-consumer channels. Amid the Coronavirus, employers mandated employees to work from home, schools transitioned to online teaching, and brick and mortar stores were rendered needless. Online channels were the only way brands and retailers could maintain a connection with consumers, as such there was a sharp increase in e-commerce transactions.

Post coronavirus, a recent study by Mckinsey shows that around 55% of consumers in China are likely to continue purchasing their groceries online, which reflects that buying behaviors have significantly changed. Due to risk of exposure and convenience, many businesses have found ways through which they can establish and maintain a connection with their customer base. For this reason, a greater level of trust and reliability has been developed between customers and digital transactions.

Decrease in spending on ‘unnecessary goods’

Chinese consumers are a powerful force, not only in China, but across the world. According to the Mckinsey China consumer report, on single’s day (China’s equivalent to black Friday) in 2019, total sales on all platforms reached a record breaking $58 billion, eclipsing the $7.2 billion generated on black Friday.

Tofugear’s Digital Consumer in Asia report 2020, which was conducted on consumers across more than 12 countries in Asia, during the time of the outbreak, revealed that mainland China’s consumer confidence remains among the highest in Asia. This study reflected that around 47% of consumers in China were feeling secure about their personal finances and more than 59% having a positive outlook on the Chinese economy over the next 12 months. This reflects a huge contrast with neighboring South Korea where only 22% of consumers have a positive outlook and 14 % of consumers in Japan.

This serves as a strong indication that although consumer spending on ‘trivial goods’ had inevitably slowed during the peak of the outbreak; consumer confidence still remains quite strong as China leads the road to recovery.

Luxury goods in China

While many experts predicted a decline in the luxury goods sector, an analysis of past recessions reflects that the luxury sector is likely to rebound faster than most other industries. Of course, not all brands are immune to the harsh effects caused by the coronavirus, but those who are able to weather the storm are indicated to prosper, as China still remains one of the most important markets for luxury brands. 

With many brands struggling in Europe and many other parts of the world, they now turn to China, as China spearheads the post-coronavirus recovery. Brands such as Prada, Armani and Cartier have all turned to the Chinese digital platform T-mall, in an effort to increase customer engagement during this period.

Within its opening week, the French luxury giant Hermès’ Guangzhou store sold $2.7 million worth of goods. This sizeable figure serves as a positive indication that Chinese customers are ready and willing to spend on the right products.   

Larger focus on health and well-being in China

Over recent years one of the biggest trends of consumer behavior in China has been the growing awareness of the link between nutrition and health. Considering the severity of the outbreak of the Coronavirus, many Chinese consumers have shifted their spending priorities and are now adopting an even greater health-related outlook. According to Mckinsey, around 60% of consumers in China’s larger cities now ensure they look at the labels on foods they buy and try to avoid products which do not seem healthy. More than 50% of consumers indicated that natural and healthy ingredients are one of their primary buying factors.

Businesses have reacted to this, as stores on digital platforms such as Taobao and Tmall are selling nutritional supplement products at discounted prices; Starbucks and KFC have introduced plant-based meat alternatives; and Nestle launches its customizable superfood drink.

While COVID-19 has inevitably had an effect on markets across the world, it is evident that the Chinese consumers are hungry to spend and the Chinese market is on the path to recovery. It is important for businesses to carefully consider and monitor the trends in the Chinese market, especially for those looking to do business in China, as we now enter the ‘new normal’.

Top Industries for Investment in Asia in 2020

Asia, with its mix of established and emerging economies, sees a significant inflow of foreign and domestic funds. In recent years, maturing local economies have driven growth in Asia, with countries such as China becoming a global force to be reckoned with. A surge in consumer affluence has led to powerful economic shifts in several industries. Many changes in the APAC region are driven to some degree by rapidly developing technology. This article examines some of the industries witnessing an explosion in growth in Asia’s technological ecosystems. 

1. Fintech

Fierce competition has had a transformative effect on fintech adoption, particularly among consumers and small businesses. Fintech start-ups are offering an ever-increasing range of virtual financial services, from online loans and credit cards, to digital insurance and foreign currency exchanges. Digital payment platforms have in turn buoyed other related services, with e-wallet platforms supporting ride-hailing and food delivery.

Online lenders are posing a formidable threat to traditional banks and incumbent financial institutions. Grab, a Singapore based fintech company, is an emerging giant in South East Asian markets. Starting as ride-hailing app GrabTaxi, their expanded offering now includes digital payment platform GrabPay, as well as GrabCar, GrabBike, GrabFresh and GrabFood. Bundling a range of services into one app is increasingly popular in a world where users tend to only interact with a small handful of apps each day. Grab is capitalizing on markets where a large percentage of people don’t hold bank accounts, offering peer to peer payment platforms that are enabling an explosion in investment and organic economic growth. Grab was valued at $14 billion in 2019.  Its Indonesia-based competitor, Go-Jek, is valued at $8-10 billion.  

Mainland China continues to spearhead financial services innovation for consumers and SMEs. The abundant growth opportunities witnessed in China inspire neighbouring countries looking to emulate their success, propelling rapid innovation and market penetration. We can expect to see other Asian markets continuing to follow China’s lead, spurred on in part by an increase in Chinese investment in these markets.

Tech literate countries in Asia who otherwise only have a limited option of financial services are seeing a swell in transactions that utilize new financial technology, fuelling the trend towards a cashless society. In the 2020s we can expect this trend to continue, as previously financially underserved individuals embrace a range of new fintech offerings.

2. E-Commerce

In the West, social media and online shopping companies are still considering their future expansion into financial services. In China, companies such as Tencent and Alibaba are already key players in the financial services industry. Social media is recognized as a gateway to online shopping, providing a direct and seamless user journey from community to commerce, utilizing network recommendations and the power of peer influence.

China is the globe’s leading e-commerce market, with giants JD.com and Alibaba dominating the e-commerce ecosystem. Despite some recent slower growth due to geopolitical challenges, retail sales in 2019 are estimated to have amounted to $5.291 trillion. On key dates such as 11.11 the sales rocket: in 2019 the Singles Day shopping bonanza generated over $38 billion in 24 hours.

But it’s not just China. GoPay, Go-Jek’s online payment platform, is used in 370 cities across Indonesia. In a challenge to another element of banks’ traditional business, Go-Jek has launched a buy now pay later service, ushering in easy access to personal credit. Services like this combine financial facilities, spending habits and other lifestyle choices, yielding valuable data and providing a gateway for these companies to offer wealth management services. Fuelled by the booming e-commerce industry and enabled by constantly improving transportation networks, delivery and logistics companies are thriving.

Going forward, we will see e-commerce exhibit continuous growth across the APAC region, particularly in developing economies where consumer have an increasing disposable income.

3. Gaming

From strategy games to simulations, the digital gaming economy is booming in Asia. China, Japan, South Korea, and India are leading the way, with heavy weight companies such as Nintendo driving a multimillion-dollar industry. In 2019, the games market generated $72.2 billion in the Asia-Pacific region alone, more than twice the revenue of the North American gaming market.

Fuelled in part by the ubiquitous presence of powerful smartphones, the mobile games scene is exploding, with everything from esports to casino experiences available. Gaming as a social experience is more popular than ever. Whether playing with a close group of friends or exploring massive multiplayer online games, community-based gaming is the new normal. When popular gamers live-stream their gameplay, thousands of viewers can tune in to watch, producing an optimal environment for marketing and advertising, driving e-commerce within the industry. In 2020, we can expect to see increasing advertiser investment in the esports and gaming industries in the APAC region.

4. High-Tech Meat Substitutes

Eating meat has long been a status symbol in many Asian countries. Despite this, a heightened awareness of the environmental impact of everyday choices is leading consumers to seek green alternatives. A small but significant amount of people are beginning to transition away from a meat-based diet, driving demand for ‘clean’ plant-based meat substitutes.

Responding to these growing consumer demands are some cutting edge start-ups experimenting with soy protein as a substitute for meat. It is predicted that plant-based, and even lab-grown, meat is to become a $140 billion industry in the next decade. US based Impossible Foods was established in 2011, launching in Hong Kong in 2018, and in Singapore in 2019. In the past five years, the valuation of Impossible Foods almost tripled from $700 million to $2 billion. And it’s not the only one. It has been reported that Beyond Meat, an American company founded in 2009, is planning to start production in Asia in 2020, recognizing a fast-growing niche for plant-based protein.

There are other reasons to why a transition away from meat may be desirable. China continues to combat the effects of the destructive outbreak of African swine fever that has forced it to cull around one million pigs. This has left a large void, and a market looking for alternatives, dovetailing with individuals looking to make sustainable and healthy lifestyle choices.

In 2020, we will continue to see green lifestyles choices as the new status symbol, with a transition towards plant-based meat substitutes as part of a wider consumer trend towards sustainability.

5. Biotech

Changes in technology have generated considerable momentum in the pharmaceutical and biotech markets. Data driven advances in medical research are benefiting from increased computing power, allowing huge swathes of data to be analyzed. Cloud computing hosts a wealth of data, capable of being shared across the globe.

Detailed personal data can now be gathered through a range of consumer wearables, and machine learning has already transformed areas such as predictive analytics for diagnoses.  Advancing technology also supports new models for improved patient access to medicine, allowing researchers to host virtual clinical trials or offer telemedicine, literally ‘healing at a distance’. These digital diagnostic tools are increasing access to medicine, increasing diversity within the industry.

All these advances result in an industry that is increasingly innovative, efficient, and cost effective. The SARS-CoV-2 pandemic will have only increased interest and growth in Asia’s dynamic pharmaceutical markets, making this an industry to watch in 2020 and beyond.

Investing in Asia in 2020

Whether you are looking to enter the Asia market, or already have a presence here, finding a reliable local partner can be key to establishing a successful business strategy. INS Global have an in-depth knowledge of local markets in the APAC region, meaning that we are perfectly placed to support your business. We can offer a range of services, from recruitment to human resource management, offering bespoke solutions expertly tailored to your company’s needs. Contact us today to learn more about how we could help your company flourish in Asia.

How to get permanent residence in China

The process for a foreigner to obtain permanent residence in China is quite a complex one. Since 2016, China has moved to gradually loosen their stringent barriers for foreigners to obtain permanent residency, in an effort to attract more talent to the country. However, even with more relaxed regulations, a low number of permanent residence permits are granted each year. This article explores how to get permanent residence in China, as well as who is eligible to apply for it.

Permanent residency in China

Obtaining permanent residence in China is usually quite a lengthy process. Once obtained, such person will be able to live and work in China without any limit on their stay, and will be entitled to certain social benefits.

In February of 2020, the Chinese Ministry of Justice issued draft rules relating to foreigners obtaining permanent residence in China. The draft, Regulations of the People’s Republic of China on the Administration of Permanent Residence of Foreigners[1] (hereafter referred to as “the regulation”), was released to gather public comment.

The new regulations have been implemented to replace the Measures for the Administration of Examination and Approval of Aliens’ Permanent Residence in China (2004).

Who qualifies for Chinese permanent residence

The latest draft of the act provides a new, broader threshold for candidates to qualify for permanent residence in China based on education, talents, contributions, income and experience.

According to Article 11 of the regulation, you are eligible to apply for permanent residence in China if you:

  • Have made significant contributions to China’s science and technology, education, health, culture or any other field of importance;
  • Live in China and have made contributions to China’s development of public welfare;
  • Have outstandingly contributed to promoting cooperation and friendly exchanges with China and foreign countries; and
  • Have contributed significantly to China’s economic and social development.

Urgently required talents

This article was implemented with the intention of replacing the regulations of ‘high level management and personnel’, contained in the 2004 regulations. In terms of Article 13, a foreigner can apply for permanent residency in China if they fall under one of the following circumstances:

  • They possess an urgently-required talent in a national key development industry;
  • Academics or researchers who hold a position of assistant professor or higher and who have been recommended by another well-established institution;
  • Senior professionals, senior management personnel or technical personnel that have been recommended by well-known local high technology or innovative enterprises; and
  • Professional foreigners recommended by other foreigners who have previously obtained permanent residence, in accordance with Article 12 of the regulations.

High level education, expertise and Income

Under Article 15 of the regulations, foreign citizens may apply for permanent residence if they live in China and maintain good tax and credit record, and they meet one of the following requirements:

  • Possess a PHD from a renowned university and have 3 years working experience thereafter (actual residence cannot be less than 1 year);
  • Working in a key industry or region of the country for at least 3 consecutive years and their annual salary is no less than 4 times the previous year’s average salary of urban employees in that region;
  • Working in China for at least 4 consecutive years and the annual salary is no less than 6 times the previous year’s average salary of urban employees in that region (actual residence cannot be less than 2 years);
  • Working in China for at least 8 consecutive years and the annual salary is no less than 3 times the previous year’s average salary of urban employees in that region (actual residence cannot be less than 4 years);

The annual salary income mentioned above is the minimum national standard. The specific standards are determined by local government of the province or municipality of that region.

Investment

In accordance with Article 16, a foreigner is eligible to apply for permanent residency in China if they have made investments in accordance with the domestic foreign investment law. This applies to an individual in his or her own capacity as well as to a controlling shareholder of an investment company. Provided they have made investments for 3 consecutive years and they have maintained good tax and credit records, such persons are eligible to apply to become permanent residents in China, if they meet any of the following requirements:

  1. They have invested a capital amount of at least RMB 10 million in China;
  2. They have made considerable investments in regions prescribed by the government and the investment amount, tax payments and number of Chinese citizens employed meets the required standard; or
  3. They have established a high tech or innovative enterprise that has noticeable benefits and it has been recommended by provincial and municipal governments.  

Other persons

Under the draft provision has also been made for:

  •  A foreign citizen’s spouse, children or elderly relatives.  They are able to apply for permanent residency at the same time as the primary applicant; and
  • Foreign citizens who have made internationally recognized achievements across various fields such science and technology, sports, culture and healthcare.

Conclusion

The draft of this regulation was published on the 27th of February 2020 in order to gather public opinion. Businesses and individuals were able to submit their opinion on the draft until the 27th of March 2020. After reviewing the public’s opinion, the Ministry of Justice may make adjustments to the bill or put the regulations, as they currently stand, into effect.

If the bill passes, the relaxation of China’s regulations opens the possibility for more foreign citizens to obtain permanent residence permits in China, however, the process to obtain one will remain a long and arduous one.


[1] Ministry of Justice of the People’s Republic of China, Regulations of the People’s Republic of China on the Administration of Permanent Residence of Foreigners, http://www.moj.gov.cn/news/content/2020-02/27/zlk_3242559.html. (April 30th 2020)

The hukou system in China: Everything you should know about the Shanghai hukou

What is the Chinese Hukou?

The hukou system in China is the system of household registration that is currently in place, which identifies a person as being a resident of a particular area. As such, the person’s residence is officially recorded as their hukou.

Although the hukou system in China dates back to ancient times, a more modern system was implemented in 1958, in an effort to control the stream of resources that were leaving the agriculture areas and moving to the urban centers. After Deng XiaoPing came into power in 1978, the initiation of reforms moved to bridging the gap of disparity between those who held rural hukou’s and those with urban hukou’s.

Thereafter, gradual reforms occurred from the late 70’s all the way to the early 90’s and again from 1992 – 2013. The current system, which has been in place since 2014 aims to address issues surrounding China’s fast urbanization process.

The hukou system in China requires that all Chinese citizens be registered at birth, with each family member in a family unit being assigned a separate page in the hukou. The hukou contains basic information of a person, including:

  • The full name of the person;
  • Their registered address;
  • Their relationship to the other members of the family;
  • Status, i.e. urban or rural;
  • Marital status; and
  • Origin (even if you are born in a particular place, it contains information on where your family is originally from).

A hukou differs from a residence permit, as a residence permit is a temporary document that allows a person to be in a particular place and gives them access to certain socio-economic benefits. A further distinction is made between the two, in that the benefits granted for a residence permit are significantly limited than those granted for a Shanghai hukou.

The main purpose of a hukou in China, is to serve as proof of identity and residence. For Chinese residents a hukou is highly important as it determines access to healthcare, education, social welfare and housing.

What are the benefits of a Shanghai hukou?

Having a Shanghai hukou gives the holder a number of benefits, the most prominent being the access to education, healthcare and housing.

Hukou system in China: Healthcare and social security

Each city in China has different medical insurance and social security contributions. If a person is to relocate from one city to another, their contribution in their previous city will not be carried over to the new city. Therefore, if they require medical care and they do not contribute to medical insurance in Shanghai, their medical insurance will not cover a portion of the amount and they will have to pay the total amount due.

China hukou system and education

A Shanghai hukou allows for children to attend public school locally. For those who only have a residence permit, their children are able to attend elementary and middle school in Shanghai, however they would have to return to their hometown for high school.

Furthermore, major cities in China, such as Shanghai and Beijing, boast some of the best universities in the country. These universities have limited space, and as such, students with a local hukou may have preference over those from other cities.

Hukou system and housing in Shanghai

The cost of housing in a city such as Shanghai is exceptionally high. Strictly speaking, it is possible for people from other cities to purchase property, however, a bank loan will not be granted to those who do not have a Shanghai hukou, thus making it impossible for most. Property in Shanghai is also highly sought after, as the value and return on investment will increase far greater than the value of property in other cities.

How to get a Shanghai hukou?

The Shanghai local government has implemented guidelines, outlining who can apply for a hukou, which include:

  1. Talented individuals – those who have a strong educational background, possess expertise in a particular field or hold a position of seniority in a large company;
  2. Investment – those who make a significant investment in Shanghai;
  3. Transfer of work permit – this is for white collar professionals who reside and pay tax for a period of 5-7 years, they are able to apply for their hukou to be converted; and
  4. International graduates – those Chinese students, who have studied abroad at a world renowned university, and upon returning to China, their first job is in Shanghai. Such students would need to have obtained a qualification in a specific field considered important by the Chinese government.  

Additional considerations:

As not every person that meets the above conditions, will be granted a Shanghai hukou, the Shanghai local government has outlined some further considerations. These considerations are intended to make it easier for an applicant and include inquiries into an applicant’s social contributions, field of work and tax payments.

Although the hukou system in China has been around for centuries, it has been evolving to address freedom of movement for persons to move from rural areas to urban centers. The continued implementation of hukou is to address the problems that can  occur with rapid urbanization. With more than 50,000 Shanghai hukou’s being approved in the past 3 years, it is clear that the Shanghai government will continue to award the Shanghai hukou to many more in the foreseeable future.  


Contingency vs Retained Recruitment: Which is better?

Introduction

Recruiters will generally work on either a contingency or retained basis. But what do these terms actually mean? This article looks at the two recruitment methods and explores some of the pros and cons of each, giving you the confidence to make the right recruitment choices for your business.  

What is Contingency Recruitment?

When recruiters talk about working on a contingency basis, they are usually referring to an arrangement where the recruiter will only charge a fee once you have hired a candidate. In other words, their fee is contingent on you hiring their recommended candidate. Typically, contingency recruitment is used where the pool of potential candidates is large. Recruiters can utilize their existing databases of potential candidates and line up applicants for you to interview. Once you have hired your new employee, you will then pay the recruiter a fee based on a pre-agreed percentage of the new employee’s salary (often around 15-30% of the starting annual salary, but this varies based on industry and experience level). Put simply, you only pay the recruiter who puts forward the successful candidate.

This model can be seen as a low risk option for employers, as there is no up-front fee and therefore no financial commitment to any particular recruiter. It is in the recruiters’ interest to send you the most suitable candidates as quickly as possible in order to increase their chances of putting forward the successful candidate. With contingency recruitment it is common for multiple recruiters to be instructed to fill one role, and these recruiters may even be competing against your company’s own HR to find the right candidate. Contingency recruitment can therefore be perfect if you are looking hire someone quickly. 

The downside of the contingency model is that, with so many recruiters working to fill a role, you may end up with duplications in the candidate being suggested. In addition, recruiters will usually be aware that they are not the only ones looking  to fill this role, and as such your vacancy may be a lower priority, as recruiters may feel their chances of recommending the candidate that is ultimately successful are low. It can therefore be useful to limit the number of recruiters who are searching for candidates, and to make sure they are aware of this.

What is Retained Recruitment?

If you hire a recruiter on a retained basis, you pay them an upfront fee and ‘retain’ them to the job of finding your new candidate. By doing this, you are guaranteeing them exclusivity and up-front income, which is highly attractive to recruiters. Retained recruitment is a boutique method and is often used at the top-end of the market, where there may only be a small pool of highly qualified or specialized potential candidates.

Retained recruitment is therefore great if you are looking for dedicated resources, and a customized, quality-driven approach. A recruiter working on retainment will dedicate more of their time to your vacancy, and exercise professional discretion when headhunting the right candidate for you. Recruiters that work on a retainer will generally have a large, informal network that they can discretely utilize while maintaining confidentiality.

With retained recruitment, you are investing more in the recruiter and putting more trust in them to exercise their discretion when finding possible candidates. This can be great for everyone if you have a good relationship with the recruiter, but it can be daunting to make such an upfront investment if you have never worked with them before. The fees for retained recruiters will also vary depending on the industry and the role they are filling, but will generally be higher than contingency recruitment, often calculated as between 25 and 30% of the starting annual salary of the successful candidate.

Which is better?

Whether to used contingent or retained recruitment depends entirely on your circumstances and the type of vacancy you want to fill. If you are looking for multiple candidates, and believe there may be a large pool of potential people who would be suitable, then contingency recruitment could help you to fill those roles quickly. On the other hand, if you are looking for a bespoke service to help you fill a niche role, it may be better to retain a recruiter so you can be sure they are dedicating the right amount of resources to locate suitable candidates.

INS Global

INS Global exclusively work on a retained basis, which allows us to provide a boutique service to our clients. Our industry experts can dedicate their time and tailor their methodology to find the most suitable candidates for you. We take a hands-on approach and use our considerable resources to source top talent for your project in the Asia-Pacific region. We also offer post recruitment support, for example by assisting with employment contracts and administering payroll. Contact us to find out how we can support your recruitment needs.

Business plan for COVID-19

A plan of action for businesses to consider during the lockdown

The new Coronavirus, COVID-19, is like nothing we have ever experienced in our lifetime. Countries around the world have gone into lockdown, with governments directing their citizens to stay home. Like a natural disaster, the effects of the outbreak are far-reaching and will be deeply felt. Businesses in particular are reeling from the effects, with a high level of uncertainty surrounding when things will return to ‘normal’. Although business owners and leaders may feel overwhelmed, there are lessons that can be learned from how businesses in China responded to the initial outbreak of the virus. This article will examine some of the steps businesses can take in order to mitigate the effects caused by the Coronavirus pandemic.

The effect of the Coronavirus on business

The expected impact of the COVID-19 on businesses and the economy is continually evolving. Due to the pace at which the virus continues to spread, there is no certainty when the pandemic will come to an end. COVID-19 will undoubtedly have a commercial impact on all industries, especially those in manufacturing, events, F&B, retail and entertainment.

There are a multitude of problems that arise, from cash management, to performance of contractual obligations, and the suspension or termination of contracts, among other things. Businesses should carefully analyze and assess the potential impact the virus will have in the short, medium and long term.

Short term

Business owners and managers should address the cash management situation and outline a course of action in the event the lockdown is prolonged. It may be necessary for managers to rework operations and establish various ways through which business can be conducted, considering the current circumstances. A plan of action is also necessary in case the lockdown period remains ongoing for an extended period.

If an end to the lockdown is in sight, it is imperative for managers to lay out a blueprint in order to cope with any knock-on effects, such as reduced demand, problems with supply chain, new regulations, etc.

How can businesses reduce costs?

It is important that businesses try and survive their respective lockdown periods. Even though there is uncertainty regarding the duration of the lockdowns, there is hope that once the spread of the virus stops, everything will return to normal. There are various ways in which businesses can reduce costs in order to ensure they are able to withstand the challenges brought about by the COVID-19 pandemic.

Reduction in working hours/flexible schedules

Laying off employees should be considered a last resort during this crisis. As an alternative, you can negotiate with staff and ask them to accept reduced salaries or take unpaid leave for the duration of the lockdown. Be sure to familiarize yourself with local employment laws, as in some jurisdictions you may not be able to direct employees to work adjusted working hours or flexible schedules (e.g. take unpaid leave).

Seek financial aid

In response to the heavy economic implications for individuals as well as SME’s, and to prevent their respective financial systems from seizing, many governments are rolling out stimulus packages. Governments such as the USA, Japan and Malaysia, among others, are attempting to mitigate the effects of the COVID-19 pandemic on their economies through large stimulus packages that are provided to their citizens through cash handouts, subsidies, loan relief and coupons.

The US government has signed into law a $2 trillion stimulus, of which $500 billion dollars will be provided to businesses in the form of loans, loan guarantees and investments. Contract workers and part time workers will also be eligible to receive aid.  While Japan is planning to inject a $1 trillion stimulus, of which a significant percentage will be handed out to the public in cash and subsidies. Although the exact details have not yet been provided, the Japanese government had already introduced a $239 billion stimulus in December of 2019 to assist businesses and workers that have been affected by the virus. Shinzo Abe, the Japanese prime minister, stated that a large portion of the package would be offered to small firms hit by a slump in sales.

Businesses leaders and managers should stay up to date with any information regarding a possible stimulus package and whether they qualify for relief.

Stay up to date with regulation

It is important to stay up to date with any guidelines or regulations provided by the government. Many governments have been recently forced into changing regulation. In the UK, for example, lawmakers have announced new insolvency measures in order to prevent business from filing for bankruptcy. The purpose of the change is to assist UK companies which need to undergo a restructuring process or financial rescue, in order to keep trading.

Rethink processes

The outbreak of the COVID-19 pandemic has, for many business leaders, brought forward the notion of structural change and innovation. Many leaders and managers are now forced to find alternate means to facilitate operations, reduce costs and optimize their supply chains. Many are looking at digital tools to assist them to reconfigure and adjust their supply chain, marketing approaches and overall strategies.

Communication with your local authorities

It is important to stay in communication with your landlord and local municipality. You may receive reductions in rent or subsidies from the municipality during this time. Depending on how the system is designed, your landlord may receive relief from the banks or government.

What comes next?

China is slowly recovering from nearly two months of lockdowns and business closures caused by COVID-19. Although some businesses were unable to survive this unprecedented period of disruption, more than 70% were able to resume operations by the first week in March. Operations in China are returning to normal, however the global spread of the virus is causing problems for those outside of the PRC. Although the current outlook may be grim for many business leaders and managers, with China in mind, there is a glimmer of hope for those that are able to withstand the duration of the lockdown. Therefore, the most important thing to do right now is to plan, prepare and ensure you, your staff and family are safe and healthy.  


5 Tips for Hiring Your First Country Manager

What Does a Country Manager Do?

Country Managers are responsible for overseeing a company’s operations in a particular country or region.  A new Country Manager will be in charge of developing the market for your product or services in that specific country or region. If operating in a new market, he/she will often work remotely, and will be the ‘face’ of your company as they build your brand internationally.

Other common profiles used to launch businesses in new markets include Sales Managers, Brand Ambassadors, and Business Developers. Each of these roles is uniquely specialized. By following the 5 tips below, you can ensure that you are sourcing the correct profile, identifying productive outcomes, and laying the right foundations to ensure you hire a candidate who is well suited to your business needs.

1. Market Research and Planning

Before you recruit, you should carry out detailed market research in order to thoroughly assess what your company needs from your new Country Manager. When planning the role, you should be very clear about what you need this person to do and design some outcomes which can be used to assess performance. It is crucial that these outcomes are specific, realistic and achievable. You should also ensure you have a plan in place for the Country Manager’s onboarding. Giving them the right information and support from the very beginning will mean that there is no lost time as they bring themselves up to speed, allowing them to begin expanding and building your brand’s presence overseas straight away.

You should also carry out detailed research into the new country you will be operating in. Every country has its own distinctive ways of doing business, with unique regional and cultural idiosyncrasies. For example, the way business is conducted in America is quite different to Japan, and an American style approach and introduction in Japan could risk being received as rude and abrasive if no consideration is given to cultural differences.

You should also be aware of local hiring practices and the employment laws of your target country. Using a local partner like INS Global takes some of the pressure off you, and ensures that you have a complete picture of what is required, and on what terms you can hire your new Country Manager.

If you already have an established network in your target country you should utilize this, both to learn more about the country and to see whether your network can recommend anyone who would be a suitable candidate.

2. Defining the Right Profile

When defining your Country Manager’s job description, you need to think about the skills and qualities needed to fulfil the outcomes you have identified as part of your research and planning. You should aim to hire someone who is independent and self-motivated. Due to the nature of their role, your new Country Manager may be working on their own for substantial periods of time, and should be comfortable managing their time accordingly. This also means that personal organization and a ‘self-starter’ attitude are vital. Ideally, you will be looking for someone who is passionate and eager to take on a challenge, and who is happy to go the extra mile in pursuit of your shared goals.  

You need to consider how much experience in the region and industry the candidate should have. Depending on your business, it may be vital that they are already familiar with your product / services, or it may be more important that they have extensive experience doing business in your target country.

In order to find someone who fits the above criteria, you will need to propose an attractive salary and benefits package. To do this, you must research the market to understand what the norm is for this type of role, and what remuneration package would be suitably motivational. INS Global can assist with these types of benchmarking exercises, giving you the right information so you can avoid the guesswork.

3. Get Local Help

Finding a local partner or recruitment agency to accompany you throughout the project can streamline the process and ensure you have considered every angle of the role. From early definition of what you need, to formulating terms of employment and a suitable remuneration package, and through to signing the agreement, a local partner like INS Global can support you at every step.

4. Preparation Time is Never Wasted Time

When it comes to the interview, it is important to have a face-to-face meeting if possible, and you should customize questions you’d like to ask the candidates. It may be important to you that your Country Manager has previous sales experience, or that they have certain operational or financial skills. You need to find out what existing network your candidate has, and how they will utilize this network when they are working for you. Looking beyond technical capabilities, you should ensure that the candidate is compatible with your company’s culture.

5. Patience is a Virtue

It is natural to want to move quickly when hiring your new Country Manager. You will no doubt operate in a competitive market, and want to see results quickly. However, hiring the wrong person for the job will cost your company a lot more than if you dedicated time to finding the right person from the start. The wrong person could set you back up to 12 months by the time you have realized they are not a good fit and found a suitable replacement, with untold potential damage to your brand and business relationships.

You should therefore take your time when laying the foundations, as this will ensure you have identified exactly what skills and attributes your candidate should possess.

In addition, you should not take your eye off the ball once your new Country Manager has been hired. Aim to optimise the probation period to allow you to assess on an ongoing basis whether the candidate is the perfect fit for the job.

INS Global

In conclusion, the success or failure of your brand in entire country or region could rest on who you hire. Make sure you are confident that you have done the right research and hired the right individual by working with an experienced partner. INS Global specialises in HR and market-entry solutions, so we can not only help with your recruitment needs but also the administrative burden of expanding abroad. We have a hands-on approach to sourcing talent, take the time understand your needs and expectations.

At INS Global we follow the life cycle of a project, from early definition to after probation to ensure you get the right candidate. Our recruitment consultants have expertise in many different sectors and have hired top talent across the Asia-Pacific region. Choose us as your local partner in your global expansion today.

4 Tips to Effectively Manage Your Team Working From Home

Tips and tools to help you manage your staff while they work remotely

As the number of confirmed Coronavirus cases continue to increase, and the availability of hand-sanitizer begins to decrease, worldwide people are being directed to remain isolated. For many businesses this unforeseen challenge could have far reaching consequences, however many companies are adapting fast and making the necessary changes to maintain their operations. With the amount of resources, tools and connectivity available today, it is much easier for teams to continue work-related activities as they would in the workplace.

1. Communication

Whether it be working in an office or working from home, communication remains one of the most essential parts of your team running effectively. Research has shown that effective lateral communication in a work group can lead to an overall improvement in company performance. It also has the ability to empower employees, increase job satisfaction and improve output.

With less time spent face-to-face, you have to ensure communication remains efficient throughout your team. Keep your processes simple and straightforward, delegate tasks clearly and develop a good system for your team to report back to you.

Effective communication also does not mean detailing every small task completed in a day, but rather making sure your team is working on the correct tasks, at the correct times in order to reach the common goal. Fortunately, we are in the information age, and with that comes a multitude of ways for us to stay connected. E-mails, text messages, phone calls, video calls, storage clouds and social media platforms are just some of the many means we have to communicate. However, effective communication does not boil down to having all the tools, but rather using the right tools in an effective manner, which brings us to the next point.

2. Tools

As your team is working together towards a common goal, collaboration tools are highly important in the facilitation of your team members working together. Choosing the right tools does not determine the success or failure of your team, but it does allow for your work affairs to remain simple, organized and efficient. These tools have features that often overlap, offering collaboration, video and messaging options among others. Notably, many of these service providers have increased the features usually offered on the free version of their products, due to the Coronavirus outbreak (so now may be a good time to give some of these apps a trial run).

Collaboration tools – these tools allow you to make schedules, implement effective plans and systematically organize tasks for you and your team. Apps like Trello help organize projects onto boards, enabling you to see what is being worked on, who’s working on it and at which stage the process is. Picture having a huge board with and endless array of sticky notes, that your whole team can access.

Other tools like Slack double up as not only a collaboration tool but as a means through which your team can communicate. Slack organizes your community into channels, with each channel being a department, project or task. These channels support open conversation as well as direct messages, which allows for private conversations between two or more members on a team. Slack is a popular option as it easily integrates other third-party tools including Trello, Dropbox and many more.

Video tools – with remote work being widely implemented, many teams are turning to video chat platforms, which in some measure replicates the meeting experience. With apps such as Zoom, you can conduct your weekly meeting, as per usual, in the comfort of your own living room. Google Hangouts also offers video conferencing options which links seamlessly with other Google products.

Messaging tools – Messaging tools have become increasingly important, not replacing e-mails, but rather allowing for an ease of internal communication in a less formal way. There are numerous apps that facilitate this such as Slack, Google Hangouts, WeChat Work and many more. These apps allow for organizations to stay connected to each other, their smaller teams and sometimes even their customers. Slack again proves to be a popular option in chatting tools, however apps like Microsoft Teams and Google Hangouts all have great ‘freemium’ offers and are easy to use for small and large teams alike.  

3. Time optimization

For many, staying productive at home can be a challenging endeavor. With many more distractions around, from cleaning to getting in a quick episode of your favorite show, staying focused and doing work can be tough. On the flipside, some employees work better or do more than they usually would when working from home. This could perhaps be due to not knowing how much work others are doing, or due to less coffee machine chats and browsing the news. Time optimization remains vital for both managers and employees.

It is perhaps important to forego sleeping in and having long breakfasts. Employers and employees alike should try and align their times with each other to work at more or less the same time. This would prevent people from overworking and allow them to maintain regular hours and thus a regular schedule. It is imperative that managers and employees still adhere to plans and deadlines, to ensure that targets are still met.

4. Trust

A 2017 Harvard Business Review article Want Your Employees to Trust You? Show You Trust Them comprehensively explored the employer – employee trust dynamic. With more than 10 years, a multitude of organizations and hundreds of employee – manager relationships being analyzed; it was found that employees who are less trusted by managers are in turn less productive, they exert less effort and there is a higher chance of them leaving the organization. Although this analysis was carried out on employees in the workplace, the same logic can be applied to employees who are working from home.

Managers need not only trust their employees but it is important for them to show it. Employees who felt trusted were shown to put in more effort and go beyond what is expected of them. During this period of isolation, it is important for managers to refrain from acting as a watch dog and following up with an endless array of phone calls, emails and video conferences.

As a manager WFH does not necessarily require you to be more hands on, but you do have to have efficient processes for your team members to report back. From the get-go, a functional system needs to be put in place, with suitable checks and balances, to allow your employees some independence while still ensuring work gets done. Although this ‘special period’ was thrust upon us unexpectedly, it is now time to quickly adapt and maintain good practices while working from home. Well equipped with the right tools and effective communication, your team may not only brace itself for what may come but rather function just as efficiently as it does in the workplace.

Is My Company Too Big to Work with a PEO?

Companies have a range of options when looking to recruit employees overseas, and the choice will depend on each businesses’ individual circumstances.

What is a Professional Employer Organization (PEO)?

By using a PEO, a company outsources the employer-employee relationship to the PEO, who act as a third-party intermediary. The PEO can handle all HR and administrative tasks that arise in relation to hiring new employees in any given location. ­The PEO will ensure the legal and regulatory requirements of employment have been met, organise all visas and work permits, administer payroll, and will invoice the employer directly for these services. The employee will be directly employed by the PEO, but all decisions relating to management, duties, compensation etc. will remain with the company.

Is a PEO Right for My Company?

When assessing whether working with a PEO is right for you, one of your considerations may be the size of your company. There are obvious benefits to using a PEO for smaller companies who do not have the knowledge or staff to recruit overseas. But what about larger, more mature companies? Many big companies will already have in-house HR support, whether this is one or two individuals or a whole team. Maybe you are thinking about expanding your in-house HR team in order to adequately manage your international expansion, or maybe you are looking at other options. All these decisions will depend on the specific circumstances of your business and what markets you operate in, but it is worth considering the costs and risks associated with an in-house HR department and how these compare to the cost saving and risk minimising services offered by PEOs.

Using a PEO comes with a range of advantages, regardless of the size of your company. One of the most obvious benefits is the significant reduction in the administrative burden shouldered by the employer. Even if your company has a sophisticated in-house HR department, and you already employ HR staff who may be capable of developing their knowledge of another country’s customs and laws, and who could look for suitable candidates for a role, they simply may not have the resources required to do this in your desired timescales. There is also a risk that they may not fully understand the specific employment requirements of other countries. The services of a PEO would therefore enhance and complement your HR department’s capabilities, allowing you to work more efficiently and focus on your core business while benefiting from the PEO’s in-depth knowledge of local laws, regulations and customs. This invaluable expertise will ensure the hiring process is seamless and your new employee can quickly focus on the demands of their role, in the knowledge that all administrative issues in relation to their employment are in good hands.

Using a PEO vs Establishing a Local Entity

There is common misconception that a business must always establish a local business entity when looking to expand into a new region to allow you to hire your own employees directly. However, while this is a valid option, it can be expensive and time consuming. An alternative is using a PEO. For example, in China, if you establish a local entity you can invoice your own clients, and benefit from the added credibility of having your own business licence and operational autonomy. However, market entry is significantly slower than using a PEO, and it is much more expensive to establish your own Chinese entity, which requires substantial up-front investment. If you are entering a market for the first time and want to minimize your risk exposure, a PEO is an excellent idea. Once you have established yourself in the new market and your business has begun to grow, you can then consider incorporating a local entity to allow you to start hiring directly.

INS Global can assist you at every stage of this journey. We follow the full life cycle of our clients’ projects when they expand into a new country: from recruitment of individuals, employing them as a PEO, to incorporating your company a few years down the line.

Conclusion

As a serving PEO, INS Global can offer services in most of the Asia-Pacific region as well as countries such as India, UAE, Australia, etc. We have over 15 years’ experience in market entry consulting, and have worked with over 300 companies worldwide, from start-ups to multi-national corporations, using our sophisticated employment solutions to expand our client’s global reach. Contact us today to find out how we can support you.

Coronavirus: The World’s Largest Work From Home Initiative

With the number of confirmed COVID-19 cases reaching its peak in mid-February, the hopes of many employers in China for work to return to normal after the Chinese New Year period, were dashed. The vast spread of the highly contagious Coronavirus had forced many local governments within China to direct businesses to remain closed, in order to control the epidemic and prevent any further spread. However, even amidst the outbreak, it is unfeasible for many businesses to cease operations, leading to one of the largest “work from home” (WFH) initiatives the world has ever seen.

Working from home: a first in China

A large part of controlling the Coronavirus outbreak relied on the containment measures China would put in place. The government in Wuhan, where the outbreak first occurred, ordered a complete lockdown of the city, with no one being able to enter or leave freely. Other major cities imposed less severe measures and urged citizens to isolate themselves at home and only leave the house when absolutely necessary. Businesses in certain industries, however, received strong direction to avoid letting employees congregate, resulting in certain businesses closing until further notice. With such restrictive measures in place, employers across the country directed their employees to WFH.

For many, the nature of their work demands them to be present in their workplace to carry out their duties. For others, the lack of access to the workplace is no longer a problem. With the arrival of the information age, people are more connected in every aspect of their lives and work is no exception. With access to computers, phones, the internet, shared drives and specific databases, an employee is able to set up shop wherever he or she sees fit.

China is no stranger to the information age, with tech giants like Tencent, Alibaba and Baidu ensuring Chinese citizens remain connected around the clock. With the arrival of the Coronavirus, tech companies came to the forefront and had to prepare for one of the world’s largest workforces to carry their work out remotely. Immediately after the extended Chinese New Year period, more than 200 million workers were directed to set up office at home; an unprecedented event both in China and the world.

The order to work from home immediately resulted in a surge in the use of business connectivity apps such as DingTalk, Zoom and WeChat Work. Zoom has added 2.22 million users so far in 2020, eclipsing the 1.99 million it added over the course of the whole of 2019. While Alibaba Group’s DingTalk had over 50 million students utilize its online classroom feature. 

With the immediate and unforeseen increase in number of users, these tech companies were put under pressure to ensure their servers were able to maintain the load, with inevitable crashes and glitches occurring along the way. While many industries in China suffered as a result of the Coronavirus, these tech companies experienced a boom, all in the wake of the world’s largest workforce going online.

Working from home: an increase in performance?

Although this is the first time employees across China were directed to work from home, there has previously been a spell where specific employees in China were requested to WFH. In Shanghai during 2010-11, 996 employees from the travel company Ctrip volunteered to work at home for 9 months as part of an empirical study.

The results of the study showed a 13% increase in performance among employees working from home in comparison to working in their typical call center environment. The findings of the study further revealed that those who worked from home, worked more minutes per shift and had an increase in the amount of work completed. Notably, there was an increase in employee satisfaction. The only downside seen within the 9-month period, was that the ‘promotional rate contingent on performance’ decreased. This meant that fewer employees got promoted based on their performance; perhaps due to their employers not being able to physically see them work. Nevertheless, due to the success of the trial, Working from home became a company-wide option for employees of Ctrip and the overall performance gains then increased to around 22%.

Chinese law on working from home

According to Chinese law, an employer is able to request an employee to work from home if there is a significant health and safety risk to other employees. If an employee is requested to work from home, he/she is entitled to receive his/her full compensation.

Benefits of working from home

While Ctrip saw an increase in productivity among its employees, that’s not to say working from home will be viable across all industries. Each industry differs in characteristics and as such the external factors which determine the success or failure of WFH, may vary. Also, in certain industries working from home may be impractical due to the nature of the work.

Nevertheless, over the past few decades there have been various studies on the benefits of working from home, for both employers and employees. For the employee, working from home offers a more flexible work schedule, less time spent travelling, a less stressful environment with fewer distractions and surprisingly an increase in productivity. Studies reflect that the overall happiness of an employee improves, if he or she is permitted to work from home.

Although a high level of trust is required for employers to allow their employees to work remotely, there are various benefits that may accrue to the employer. The employer may have reduced overheads, lower turnover in staff, employees may produce more work on a daily basis and they are likely to see an increase in productivity. The Ctrip study revealed that improved performance was valued at about $230 per employee per year. Moreover, the estimated savings on the cost of capital per year was valued at $1,400 per employee, due to reduced office use and IT costs; while there was a reduced turnover savings of around $260 per employee annually. This resulted in a grand total of $1,900 saved per employee per year.  

Drawbacks of working from home

Of course, working from home is not purely advantageous, otherwise there would be hordes of vacant office spaces around the world; there are various disadvantages that come along with implementing it.

Firstly, implementation may be difficult, as managers may be apprehensive to the idea due to concerns over their career (if a scheme like this fails, it could be damaging to their careers). A period of adjustment may also be required to enable employees to get used to the process of WFH. Preference may also play a roll, as some employees may feel they are unable to concentrate or be productive at home, as such they may prefer to work in an office. A director of a Beijing start-up stated that on the first day he did a video conference with employees, some of the employees looked like they just got out of bed; however, on the second day they all looked ready to work. Lastly, there is a possibility some of your employees may have difficulty communicating, however this may be mitigated through use of the right tools and processes.

As it appears with the arrival of the internet age, it may be time to start looking at the way we work from a different perspective. Even though China was forced into adopting the concept due to external factors, the empirical evidence does indicate that the benefits may outweigh the disadvantages and remote work may be beneficial for both employers and employees. Although it can’t be predicted how long companies in China will allow their employees to WFH, more companies around the world are looking at modern approaches to managing teams, such as 4-day work weeks and allowing employees to work remotely. It is often said that remote work is the future of the way we work, perhaps the future is now.