[New crown pneumonia] We should think about how to make economic activity survive the epidemic

01 perspective

Written by: Comment Editor

2020-03-22 10:00

The new crown pneumonia epidemic is raging around the world. In addition to endangering the lives of people in various countries, it has also caused a great blow to the economy. The U.S. stock market, which has always been known for its calmness and stability, fell sharply to a technical bear market due to the outbreak of the epidemic, ending the 11-year "long bull" and more historically melting 4 times in just 10 days. In order to save the economy, major economies have begun to introduce various economic stimulus policies. However, as the outbreak spreads around the world, the hope for early control becomes increasingly slim. In the face of the epidemic, governments and companies in various countries can not only passively wait for the epidemic to pass, but also think about how to survive the fittest in the epidemic.

The global pandemic has prevented many people from going out and gathering, which has greatly hit consumer habits so far. Up to now, most areas of consumption have mainly been physical out-of-town consumption, including shopping at malls, travelling, and entertainment in entertainment venues. Consumption is the fundamental driving force for economic growth. The epidemic has caused such consumption activities that require physical outing to halt, which will naturally have a severe blow to the overall economy.

Consumption is a matter of confidence

In today's society, more than half of the consumption is not required. Therefore, whether people consume is largely a question of confidence in the economic prospects, not simply whether they have money. Just like the Hong Kong Government announced that it will send 10,000 yuan to all residents, except for some families that really need this money, most people will judge how to use it based on economic prospects. If most people think that the economic outlook is dim, even if they have money, they will want to save and not consume.

Affected by the epidemic, the public reduced their willingness to go out, and tenants in Kwai Chung Plaza were also greatly affected. (Photo by Zeng Xuewen)

Consumption confidence and employment are basically closely related: those who lack employment stability do not want to consume rashly; on the contrary, if there are people with stable income and residence, consumption is naturally bold. The current pause in consumption will affect the demand, and then there will be business closures or layoffs, which in turn will make consumption more sluggish and form a vicious circle.

To fundamentally improve the economic situation, it is necessary to stimulate demand and stabilize employment. Many governments, including Hong Kong, have basically only considered how to help existing companies weather the difficult times when they introduce economic rescue measures. However, in terms of the current outbreak, the global epidemic may not be able to be roughly controlled before June, and the pause in traditional consumer activities is likely to be much longer than expected two months ago. Since "difficult times" are much longer than imagined, and society seems to take a longer time to return to normal, this bail-out policy seems to feel like waiting for the rabbit.

Opportunities for inward consumption

How to improve demand under the epidemic situation is worth thinking by governments. After the outbreak, some companies actually broke out. For example, the demand for medical supplies such as masks has soared. Many countries have been rushing to convert production capacity to medical product production lines. In addition, there is a sudden surge in demand for some tools that can be consumed remotely. The remote conference program Zoom, which was rarely known before, became popular after the outbreak, and was used in corporate meetings and schools to teach online. E-commerce companies such as Taobao in China and Amazon in the US also ushered in a boom. Because of the sharp increase in orders, Amazon earlier announced an increase of 100,000 employees to process. On the other hand, the domestic mobile game giant Tencent's mobile game business is generally considered to be stimulated by the epidemic and some ratings agencies have raised their expectations.

Tencent made 52% more profit in the fourth quarter of last year. (Reuters)

Not going out or gathering will inevitably hurt some consumption. For example, some women said that they do not need to buy cosmetics, clothes, brand names and other "body wear" at home, so consumption is naturally small. But this does not necessarily mean that society cannot adapt to these changes. In fact, there are some people in the society who don't like going out and are naturally introverted. They actually have their demand market, but the introverted consumption has dominated the market for a long time, and the demand for this introverted consumption has been ignored. Since staying at home will last for a while, society can think about how to take advantage of opportunities and think about the possibility of introverted consumption. Take Hong Kong as an example. There are many different ways to spend on the street, but there is very little that can be done at home. Even for items that can be consumed at home, such as online shopping, takeaway, games, etc., their platforms are not Hong Kong companies and cannot create employment opportunities for local people.

Today's level of technology is enough to change many established habits. Internet connectivity can change the way resources are obtained and the way people communicate. Especially in a city with little industry like Hong Kong, the possibility of working from home is particularly high, and non-contact services are not theoretically impossible. However, for a long time, Hong Kong has not used technology to change consumption consciousness, and it lacks relevant talents.

Human beings started from the era of primitive people and already know the truth of the survival of the fittest. Rather than complaining about the situation or waiting for the rabbit, why not change your self-adaptation to the environment?

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