Forbes Asia Webinars: Accelerating Disruption

On June 23, Forbes Asia held a webinar titled “Navigating the Pandemic.” This event was the first in a series of Next Frontiers Webinars.

First Panel: Triangulation — Business Gets Its Bearing

One of the major themes that emerged from this webinar was how the pandemic has sped up the digitization of global business. New World Development CEO and executive vice-chairman Adrian Cheng described how his K11 division, which focuses on retail, has been coping with the sudden decline in physical shopping by launching an e-commerce platform in Greater China. “We were able to shift around 10% to 15% of our sales online within just two months because of Covid-19, and Covid-19 helped us accelerate this O2O [online-to-offline] omnichannel platform,” said Cheng.

Being hit by lockdowns in early March, Blue Bird, Indonesia’s largest taxi operator, quickly launched two delivery services: Chat-Order-Delivery, which is accessible via WhatsApp; and BirdKirim (Bird Send), on the company’s mobile app. “One sprint, I said to the IT people,” noted Blue Bird president director Noni Purnomo. “One sprint, that’s all you have.” These newly launched services, she noted, accelerated Blue Bird’s long-term plan to expand from transportation services into mobility-as-a-service.

The hospitality industry has also been hit badly during the pandemic. Three of the speakers have big hotel investments, and discussed the impact of the pandemic. Cheng said tourism had dried up in Hong Kong, affecting occupancy at his Rosewood hotel in the city. Both Gaw Capital Partners managing principal and chairman Goodwin Gaw and RB Capital founder and CEO Kishin RK took similar hits at their hotels. “I never would have imagined, with 36 hotels spanning from Bora Bora in the South Pacific, to Japan, all the way to New York and Spain, we would have 33 hotels closed,” said Gaw.

To combat the downturn, Kishin is developing his startup TiffinLabs as a global food delivery platform. “What we did over the last 60 to 90 days is that we acquired over 1,000 cloud kitchens globally, and we’re bringing our restaurant brands here in Singapore to go global,” he said, referring to a TiffinLabs deal announced in June.

For the future, Gaw predicted that the work-from-home trend would be temporary. In Asia’s densely populated cities, he said, staff may be uncomfortable working from home, especially if they live in a cramped apartment shared with a family. Also, younger, driven staff want to be seen by the boss putting in the hours. Thirdly, he said, people working together in an office create “the energy and vibe for you to be actually creative and productive.”

Second Panel: Sail With The Tide — Investing In The New Normal

The second panel also underscored the overarching theme of rising digital disruption. “The virus has accelerated [digital] infrastructure growth in every country that we know. Even in Singapore, it has actually accelerated the adoption of online payment, 2D barcodes, swiping [and] mobile usage by at least five years,” says GGV Capital managing partner Jenny Lee.

As for investors, AJ Capital CEO Abhinav Jhunjhunwala added a reality check on the V-shaped rebound expectations now built into the dramatic recovery of global equity markets worldwide from their March-April lows. “The worst is yet to come in terms of the real economic impact, because much of it has been offset by the incredible amount of support provided by governments,” said Jhunjhunwala.

While some panelists noted how governments worldwide had launched generous support programs, Dymon Asia Capital CIO and founding partner Danny Yong pondered what will happen when the bills for those programs come due. “If these jobs don’t come back, we will just keep giving these handouts, that’s where I think that it will not be cost-free,” he said. Continued government handouts, he said, would lead to massive inflationary pressures on asset prices and consumer costs.

Some businesses, such as logistics, data centers and e-commerce, are thriving amid the pandemic. Technology stocks are at a record high due to investors’ belief that the pandemic will spur a tectonic shift in digital disruption. This is unsurprising, said Asia Partners managing partner and cofounder Nick Nash, because technology is now a utility and “the central nervous system and bloodstream” for businesses and consumers. “There’s never been a crisis—economic or biological—that didn’t help the software industry,” said Nash. “Software always benefits coming out of a crisis.”

The second part of this series of Next Frontiers Webinars was held on July 9.

First Panel: How Deep Is The Ocean? — The Outlook For Liquidity

In this panel, which consisted of two private equity experts, a banker and a former Federal Reserve governor, a major theme was investing in the time of the coronavirus crisis. For Baring Private Equity Asia chief executive and founding partner Jean Eric Salata, being careful is especially important during this uncertain period. “In these environments where you have dislocations, you can make a lot of money, it’s also very easy to lose money,” he said, adding: “Never let a good crisis go to waste.”

Tan Su Shan, the group head of institutional banking at DBS Group, sees pockets of growth amid the pandemic. “I think [Covid-19] has created some real, differentiated winners,” she said. Tan identified several areas where she is seeing potential winners: digital, supply chains and sustainability.

Gateway Partners cofounder and CEO V Shankar is tapping into lessons learned from the 1997 Asian financial crisis and 2008 global financial crisis. “During and after a crisis is a great time to buy great companies at great prices,” he said. “So this is a great time for value investing. If you look at the last 10 years, the market has been focused more on growth rather than value, and probably this is the time to pivot back to value versus growth.”

Another lesson Shankar learned was to be patient in a crisis. “Sometimes it is better to wait and not rush. As the saying goes, ‘the early bird gets the worm, but the second mouse gets the cheese.’ It’s sometimes just better to wait and be cautious because you don’t know in a situation like this, where the bottom is,” he said.

Investors also need to prepare for fundamental changes in the global economy, such as in the transportation and hospitality sectors, noted Randall Kroszner, deputy dean for executive programs and Norman R. Bobins professor of economics at the University of Chicago Booth School of Business. “They’re just not going to come back to where they were,” said Kroszner, who served as a Federal Reserve governor between 2006 and 2009. “That’s true even in an economy like China, which has largely gone back to where it was, but those sectors [transportation and hospitality] are much smaller than what they were before.”

Salata gave praise to the Fed for its quick action in providing liquidity when markets started to freeze up in early March. “The Fed took the worst case scenario off the table,” he said. The need for continued government intervention to support businesses, which might otherwise fail, also came from banker Tan. “It’s good. We’re kicking the can down the road, we’re keeping employment,” she said. “But there might well be a cliff when that stops.”

What’s needed now is to restore a sense of safety to have public interactions, said Kroszner. “Until people feel confident that they can go out and shop, that people feel confident that they can go into the office, that they’re confident that they are not going to get infected, you’re going see much lower consumption growth,” he noted. “You’re going to need to get that kind of confidence to be able to get back anywhere close to where we were before.”

Second Panel: Red Sky At Dawn — Pandemic Disruption

In the second panel, four founders of a diverse range of startups operating on a regional basis discussed how they are adapting their businesses to both help alleviate the pandemic and find opportunities for their own businesses.

With hospitality and travel being one of the hardest hit sectors worldwide, Eric Gnock Fah, cofounder and COO of Hong Kong-based travel experiences site Klook, shifted his platform towards domestic tourism from outbound tourism because of the restrictions on air travel. He launched a new service, called Klook Home, in May for staycations and “home-based experiences,” such as do-it-yourself craft and cooking kits, online workshops and virtual tours of museums. “Those remain relevant even when it is during a lockdown,” said Gnock Fah.

Another sector that has been impacted is live events. Chatri Sityodtong, the founder, chairman and CEO of Singapore-based mixed martial arts promotion company ONE Championship, has also been looking to new businesses as it shifts its fights to digital platforms, such as streaming video, instead of live events. ONE Championship is also launching a new reality competition show The Apprentice: ONE Championship Edition later this year. “We’re constantly thinking of new products, new content, that aren’t tied to events,” said Sityodtong.

Kevin Aluwi, cofounder and co-CEO of Indonesian superapp Gojek, is focusing more on Gojek’s core businesses, notably food deliveries, financial services and ride-sharing. “The pandemic has taken a pretty big toll on us,” Aluwi said. “[But] as an aggregator, almost by definition, we are a lot more resilient than the individual constituents.”

Food delivery, he said, has remained resilient, and in financial services they were able to quickly adjust. Gojek was “fortunate to be able to pivot to a more online payments model,” said Aluwi. The ride-sharing business remains weak, he admitted, but is showing signs of recovery. “But very, very far off from where it was, and probably will continue to be around these levels for some time,” he said.

Ankiti Bose, cofounder and CEO of Zilingo, said her Singapore-based fashion e-commerce platform was also hit hard, and she has had to lay off more than 12% of the staff since April. However, Bose sees an acceleration of the digitalization process. “Ten years of digitalization is going to happen in the next two years,” she said. “What we can learn from history is that every time there is a massive event of volatility, the most innovative solutions were born.” She’s also hopeful of better times ahead if she can make it through the current challenge.“Reinforcements arrive in the morning for the soldiers who survive the night,” she said.

Sityodtong echoed her sentiment, noting he had recently raised cash and consolidated spending so ONE Championship could survive if conditions remained tough for a while. He said: “A friend of mine used to tell me, ‘don’t get knocked out,’ and that’s the number one thing I always tell my team—don’t get knocked out.”