Header: Photo 1: Li Yang / Photo 2: Ling Tang by Unsplash
Cover Story: HOW SAFE IS CHINA?
How safe is China?
China - 2021-09-27
Isolated case or bubble: Is Evergrande dragging China's economy into the abyss? The fate of the Chinese real estate company Evergrande is keeping the stock markets on tenterhooks. The weal and woe of the markets hang on one question: Is China's economy threatened by a domino effect? Residential towers as far as the eye can see, some almost finished, many still under construction: the plight of the Chinese real estate company Evergrande provided impressive images.
With its impending bankruptcy, it is not only a company that is tottering, but also the fortunes of millions of Chinese who have put their money into the company. And there is even more at stake. The question has long been what will happen if Evergrande is only the beginning - and how China's head of state Xi Jinping will deal with large company bankruptcies in the future.
However, initial signals suggest that things may indeed get tight for Evergrande. A report in the "Wall Street Journal" on the situation at the Chinese crisis group put investors on edge on Thursday. Attempts were immediately made to dispel this unease, whether by the CEO of the company or by its representatives. But it is also a fact that the interest payments due on 25 September have not been met - and even more so, have passed without comment. It is also a fact that in the affected Chinese provinces, the regional governments are preparing for insolvency and trying to minimise all the risks involved. Insiders see this as a sign that the central government in Beijing is reluctant to pull the company out of the debt swamp.
It is important to know that state and economy are closely linked in communist China. Experts therefore blame China's government under Xi Jinping at least partly for the problems of the country's second largest real estate developer.
Government could make an example of Evergrande. If the government now allows Evergrande to go bankrupt, this could mean that China will cancel the bailout mechanism for its companies and possibly make an example of Evergrande - which could be followed by future ones.
There should be no shortage of other candidates, if only in the construction sector. The real estate sector in China has grown strongly in recent years - some experts are already talking about a gigantic economic bubble.
Snowball or domino? The fact is: The government in Beijing has a problem - also with the anger of its own people. "Evergrande took the money from people looking for housing and used it to service its debts, but didn't build any housing. That was basically a snowball principle".
But even customers who have actually received a flat for their money are disappointed. "One should keep the specific conditions in the Middle Kingdom in mind. Many Chinese have bought properties in these so-called 'ghost towns' as retirement provisions because they were betting on rising prices." These clients are also likely to become nervous at the current news. So head of state Xi Jinping faces a conflict. He has to satisfy his small investors, stabilise the economy and at the same time educate businesses to rely less on the state hand.
A closer look is called for! China's government is therefore expected to examine other companies in the sector. "Since Evergrande, as the second largest real estate developer in China, now has a problem, they will also look closely at other real estate companies to see if there are 'skeletons in the closet' and then reassess loans and collateral."
ECB remains calm: According to the Executive Board and the President of the European Central Ban - ECB, Christine Lagarde, we do not see a big problem for the euro area because the participation of companies and banks in the Chinese real estate market is very manageable, and thus also the default risk for the euro area.
Switzerland strongly involved: If there is a structural problem behind Evergrande, this also poses dangers for the international financial markets. According to press reports, the head of the Swiss National Bank (SNB), Thomas Jordan, takes a critical view of the situation in China: "We have seen time and again that seemingly small developments suddenly unsettle the financial markets and cause major corrections. We will follow this very closely, as all other central banks will do." The Swiss banking sector in particular has strong ties in China and with China and its wealthy private clients and has a lot to lose here. Referring to relevant press reports, leading Swiss banks have revised their annual forecasts for 2021 downwards, as defaults are expected.
China is changing the rules.
China - 2021-09-16
Companies like Alibaba are coming under massive pressure. In the education sector, thousands of teachers lose their jobs. Online games are being restricted, salaries are being cut. Instead, true ideological values are brought to the fore.
"Heroism, righteousness". The "revolutionary spirit, heroism and righteousness" must return. And the author welcomes current developments and regulations by saying, "We must fight the manipulation of markets by big business, close down platform-based monopolies and prevent bad money from crowding out good. We need to ensure the flow of capital to high-tech companies, manufacturers and businesses in the real economy." China President Xi Jinping himself also keeps murmuring about "big changes coming soon that haven't happened in a hundred years.
User data is something like the basic raw-material the 21st century. The Chinese government, itself a world champion in collecting the data of its citizens, is now also accessing the raw material of Chinese tech companies. At the beginning of July, it hit the ride service provider Didi, the Chinese Uber. The popular app could no longer be downloaded from Chinese stores, even though the company had just gone public in New York.
Data Protection? The reason given was that the company was concerned that the approximately 380 million user data could fall into the wrong hands, i.e. American hands. Planned IPOs of other tech companies were then cancelled without further ado.
Regulatory loopholes. Just recently, Beijing has followed suit: China's securities regulator wants to close regulatory loopholes: Tech giants are to be prevented from going public via holding companies in tax havens in the USA. Beijing fears that Chinese companies there will be forced to be more transparent with user data or even hand it over to the American government.
The mega-corporation Alibaba is also being hit hard. Its founder disappeared for several months last year after the IPO of its subsidiary Ant Group was cancelled by the government. Since he reappeared, the otherwise very talkative multi-billionaire has fallen silent in the media.
Unclear situations. Not one hundred percent clear is the line-up of Chinese tech CEOs who threw in the towel in recent weeks: "Richard Liu", founder of the mega-corporation JD.com, announced only last Monday that he was withdrawing from day-to-day business. "Colin Huang" the founder of Alibaba competitor Pinduoduo, also stepped down. And "Zhang Yiming", founder of Bytedance, the company behind the app Tiktok, just said goodbye.
Prohibited investments. Then it was the turn of the education sector. Tutoring and education services offered by foreign companies were banned virtually overnight. Investments by foreign companies were banned.
Companies like Blackrock, Baillie Gifford and SoftBank's Vision Fund had invested massively in the sector. The sector was previously worth around 100 billion dollars and was growing steadily. Last but not least, thousands of teachers are also affected, who are now losing their jobs. But China's President Xi Jinping is also expanding his control over the lives of his citizens in other ways. The government has ordered the largest provider of online games, Tencent, to limit online gaming time to just three hours per week.
Chinese men are far too effeminate and "feminised". Degenerate K-pop and an obsessive fan culture imported from countries like Japan and South Korea are to blame. For this reason, in recent weeks, the entertainment industry has been put under the bar: "Excessive industry salaries" are to be punished.
Some of these regulations seem to be in the interest of Chinese citizens and serve to protect them. Since short time ago, Alibaba and other companies have been prohibited from using algorithms that influence purchasing decisions. The government justifies this by saying that the "privacy of users should be better protected". An absurd demand in a country where the government uses facial recognition software to monitor its citizens in everyday life.
In any case, it remains exciting, because the fact that these changes will also have social and, above all, economic consequences does not need to be explained separately. How this way will be developed and the effects to booming luxury industries - mostly imported for the western hemisphere, is to wait for. Maybe this will be the next restriction coming up for realising the more authentic Chinese lifestyle.
Text: Red. / Photo: Ling Tang by Unsplash
TIME FOR SMARTER MARKETING?
INTERNATIONAL - 2021-08-25
How should suppliers from these three categories do marketing during the present situation?
Good marketing is as good as the bundling of measures and activities itself. There are several crucial factors: Data-driven decisions: It is more important than ever to make decisions based on data. Because these help to understand which channels deliver the greatest return and, above all, from which campaigns this is generated - so this is how you ensure that marketing activities have the greatest possible impact and that resources are used optimally. However, there is no need to explain that neither marketing nor digitalisation is miraculously self-healing; it is an applied science.
This includes the fact that all relevant information must be stored and retrieved. In this way, the "where-from/where-to" effect can be clearly analysed and promoted. However, many SMEs that certainly belong to the niche businesses listed above have this knowledge and know how to use it profitably in the long run? The entrepreneur should make sure that the above data is taken into account and that it is clear which activity provides added value. Capturing the data and determining movements based on data will ensure that the campaigns that are further up the sales channel cannot be overlooked.
It is important that all decisions made during the crisis are both based on data and implemented according to best practice - but it is also important to stress the importance of continuity - The submarine strategy: you are only temporarily visible in the market - the rest of the days you are submerged, is absolutely counterproductive here and certainly does not generate repeat customers.
Sending the right impulses: No brand or company wants to lose customers or partners because it sets the wrong tone or comes across as putting profits before people. Providers have an obligation to both their employees and their customers to provide the performance to continue. This positioning must be clearly communicated to campaigns and customers. Unfortunately, in many industries - such as aviation - this is currently happening to a very limited extent. Therefore, it is extremely important to understand who the clients are. It may be that even at the beginning of the year it was absolutely clear who the audience was. But because of the pandemic and the economic circumstances and shifts in demand it has caused, a different demographic may now feel targeted by marketing activities than before.
Suppliers will attract new online customers, many of whom are likely to be making their first ever online purchase. This could be particularly true for the older generation of customers. A market study in October 2019 revealed: That 71 per cent of customers in Central Europe prefer to make their first purchase from a brand in-store. Since this was not possible due to the closure of physical, i.e. offline, shops, the opportunity arose to attract new customers online. Even now, online retailers can benefit from limited access to shops and should therefore adapt their messages to this new target group. For this, simple language should be used that is understandable for everyone and puts the USP in focus.
Supporting other businesses! The changes in consumer demand in all parts of the retail industry offer suppliers the opportunity to form so-called affinity partnerships with other brands. With some brands experiencing too much demand and others too little, both customers and other businesses can be supported by directing the volume in the market movement - i.e. traffic - to suppliers that are not in direct competition but offer complementary products and services.
With the help of so-called "publisher tracking", these affinity partnerships can be established and their activity measured. Each brand acts as a reference for the other. It can improve the perception of one's own brand by providing customers with information about other companies that may be relevant to them and thus produce added value.
Networking on the Network: Before a company decides where to invest, industry trends should be analysed and considered. Is the company in line with developments and the current situation? To find out, the network can be asked to regularly provide data showing how much the industry is growing compared to its own activity. This knowledge helps to identify both the success of the company's activities to date and where more focus should be placed. With current events leading to major changes in consumer behaviour on an almost daily basis, the situation can change quickly. Looking at the big picture on a regular basis allows for quick reactions and the best chance of meeting customers' expectations. If neither tools nor knowledge are available for these tasks, professional support is certainly advisable - keyword: market monitoring is becoming more important than ever.
What does the future hold? The current situation presents marketing experts and companies with new challenges and completely changed parameters. These are parameters that change extremely quickly and redefine the strategists' time horizons. More and more brands are taking advantage of this opportunity to do good - by supporting systemic professions, enabling their customers to easily send donations to charities or adapting their own product variety to the current demand.
Positive examples include: distilleries and breweries that have become the linchpin in the production of disinfectants. Or Chanel that has agreed to make its factories available for the production of personal protective equipment such as mouth and nose protection, etc. However difficult the situation, such actions and initiatives show the strong spirit of community solidarity and cohesion. A big bright spot for all in digital marketing is definitely that the short term forced shift to online shopping and the related willingness to not only accept but also use online as a full-fledged channel will only be beneficial for the long term future of the industry.
SPONSORED CONTENT - 2021-07-30
The search engine QWANT released its new design 3 Years ago! Qwant the European answer to Search Engines specially the Search Engines - which were connected, build and published, for respecting the privacy of each user and uses fewer cookies than any other search engine on market - released its new design three years ago - exactly at 4th of July 2018. The best moment for TG Magazine to remember this day and look back how the actual design was developed.
BUT FIRST ABOUT QWANT Designed and developed in France, Qwant is the first European search engine to have its own web indexing technology, which protects the privacy of its users by refusing any tracking device for advertising goals. Unlike the main search engines on the market, Qwant does not install cookies on the user's browser, does not ask who it is or what it does, and does not keep a history of requests made. With a warm interface that leaves plenty of room for results, Qwant allows you to find the information you are looking for efficiently across the web and social media, while respecting total neutrality. Qwant treats all the indexed sites and services without discrimination, without modifying the order of the results according to its own interests or the sensitivities of the user.
Let's start to remember: Paris, Wednesday 4th of July, 2018 - Qwant, the search engine that respects the privacy of its users, celebrates its 5th anniversary and releases its new design and visual identity, which is more modern and more efficient! Launched in 2013, Qwant is always evolving to better meet the expectations of its users and offer them services with higher performances and an interface that is both pleasant and easy to use. Perfectly adapted to mobile devices, the new design allows a faster and more comfortable use on all screens.
A 5TH YEAR FOR THE ALTERNATIVE With nearly 10 billion requests in 2017, 70 million visits per month, 5% market share in France and the goal of reaching 5 to 10% of the European market by 2020, Qwant is today one of the 1000 most visited websites in the world and is in the French top 50. The European search engine based in Paris is available in 28 languages in over 160 countries and has two European subsidiaries, in Germany and Italy. By keeping with the needs of Internet users, increasingly sensitive to the use that can be made of their personal data, Qwant is now well identified as the reference search engine that protects the privacy of its users by not collecting data. Created to promote a European vision of the Web, Qwant now confirms its positioning by offering a whole environment of services and innovations based on values of neutrality and respect of rights and freedoms. Thus, during the inauguration of its new headquarter in Paris on June 14th. True to its identity and commitments, Qwant has also developed Qwant Junior, the 6/12 years old search engine that protects children from offensive and inappropriate content. Other innovations will soon see the light of day, such as Qwant Pay, the Masq technology that will make it possible to store personal data locally, or Qwant Med & Surgery, for patients, doctors and institutions.
A NEW DESIGN MORE ADAPTED TO CHANGE. In order to make the reading of search results easier, our design team decided to give up the traditional three-column view (web, news, social) in favor of two complementary columns on the desktop version. The “Instant Answers”, initially placed at the top of the page, are now placed to the right of the results, giving valuable space on PCs and Mac for Internet users with a 16/9 screen. News and contents from social media are placed in this same column, which allows hops to other types of content without interfering with the reading of web results. Since the beginning, Qwant has never stopped evolving and continues to offer its users new innovative features. This is particularly the case for the "verticals" dedicated to music and video games, and the "Instant Answers" which offer richer and more immediate interactions. These frequent iterations, bringing ever more value to the engine, required a redesign of the interfaces in order to simplify the reading of the results and to bring ever more comfort of navigation to the user, in particular on the mobile screens.
Text: Qwant Press Release / Photo: QWANT_HOME_DESKTOP
CHINA'S NEW SILK ROAD JOURNEY
CHINA - 2021-05-31
Australia stops joint venture projects. What signal effect does the government's move in Canberra have for the prestigious project of China's head of state Xi Jinping?
Even if it is only smaller projects of China's Silk Road Initiative (Belt and Road Initiative - BRI) in the state of Victoria that have now been stopped by the Australian central government - China's communist state and party leadership is raging and threatening consequences.
The planned cooperation, especially in infrastructure projects, had hardly gone beyond declarations of intent. But the thrust to "increase the participation of Chinese infrastructure companies in Victoria's infrastructure program" had been enough for Australia's central government to end Victorian Premier Daniel Andrews' flirtation with Beijing's communist leadership through federal legislation.
While the Chinese embassy called the decision "unreasonable and provocative", Australian Foreign Minister Marise Paine said the arrangements were incompatible with Australian foreign policy. The previous agreements under the BRI are not legally binding from Australia's point of view anyway. And so nothing will come of Beijing's plans to open branches of Chinese infrastructure companies in Victoria and to bid for contracts for large projects in the state. Nor will delegations of infrastructure companies from Victoria regularly travel to China in future to "better understand" cooperation opportunities in exchange with Chinese partners - this interpretation is left to the experts. Nor will the cooperation in industrial production, biotechnology and agriculture that Beijing had hoped for materialise.
What does this mean for the world? For Beijing, the rejection from Canberra is not dramatic, at least in terms of values and money. First of all, this is a bilateral issue between Australia and the People's Republic of China. Australian-Chinese relations have been bad for some years now and they are not getting better month by month - on the contrary. But it is an extraordinarily heavy blow to China's image, as the world has taken note of the fact that increasing resistance to the Belt and Road Initiative is forming in Western countries.
Dampener for the New Silk Road The pandemic comes at a very inopportune time for China. Many countries are experiencing great economic difficulties. This starts with the main partner country, Pakistan, which has once again found itself in difficult circumstances, and other, even poorer BRI partner countries are in the same situation. China must now consider how it will deal with the new situation as a donor country. China would either have to extend the terms of loans or generally put projects on the back burner for the time being, both of which cost China not only money but also reputation and growth. The latter is exactly what the Chinese Communist Party needs to maintain domestic stability and satisfy the population's desire for better living conditions.
Opaque contract details But this runs counter to the BRI's original trademark of not waiting long, but implementing announcements relatively quickly. And this shows that even Beijing "cannot reinvent the wheel" and that Beijing has not invented an all-weather cooperation, as Xi Jinping once said about the cooperation with Pakistan, but rather cultivates and prefers a fair-weather cooperation. Because little information is known about the small print in the loan agreements of the BRI partner countries with the Chinese financiers, it is completely unclear what impact the economic crisis will have in the poor countries of Asia and Africa. Only recently, a group of researchers from the Kiel Institute for the World Economy (IfW) and Georgetown University in the USA evaluated 100 BRI loan contracts and published them in a study entitled "How China Lends". The core statements of the study confirm what critics of the BRI loan agreements have been complaining about for a long time: For one thing, Chinese contracts contain unusual confidentiality clauses that prohibit borrowers from disclosing the terms or even the existence of the debt, the study authors summarise. In addition, Chinese lenders secured an advantage over other creditors by excluding that BRI debt may be included in debt relief.
Danger of a chain reaction? Beijing has great respect for more countries like Australia to act and stop cooperating with China's BRI. The Chinese concept would be severely affected if it had to be noted that not only Australia, which is comparatively small in terms of population, but also larger players are saying goodbye to the "Belt and Road Initiative - BRI" and thus to the prospect of closer cooperation with the People's Republic of China. The likelihood that Australia is only a forerunner here is, however, absolutely given. In Brussels, too, there are increasing signs that the EU is tightening its grip on China. Even countries such as Italy are increasingly counting on a closer alliance between Europe and the USA. This was most recently demonstrated by the decision of the EU-Parliament and the EU-Commission to halt further development of the reciprocal investment agreement between the People's Republic of China and the European Union to put activities on hold for the time being.
Text: Red. / Photo: Ryan Kwok by Unsplash
NEW HIGH IN SAVINGS IN EURO-AREA
GERMANY - 2021-05-11
The development of capital in an economic area is of course not only related to stock market and company data, but also to private households, their consumption behaviour and thus also their savings behaviour or, more precisely, their savings rate. The global pandemic has of course also brought about a very positive development of savings balances in the euro area due to closed shops or a change in consumption behaviour or rather due to a change in consumption needs.
In reference to an analysis, people in the euro area are richer than ever before - and by far the most people save in Germany. Based to calculations by ING Deutschland and Barkow Consulting, savers in the 19 countries invested more than one trillion euros in financial assets for the first time in one year during the Corona crisis in 2020. Adding value increases, financial assets at the European level rose by 4.7 percent to 27.3 trillion euros compared to the previous year. According to the evaluation, private households in Germany are the European savings champions for the eighth time in a row. They put aside 388.5 billion euros last year, 45 per cent more than in 2019, followed by people in France (260.7 billion euros), ahead of Italians (122.7 billion euros) and Spaniards (78.2 billion euros).
One reason for the overall strong increase in spending: because of the pandemic restrictions, many people were unable to spend their money as usual. Many trips were cancelled, the temporary closure of restaurants and shops slowed down consumption. In addition, many households held on to their money for fear of short-time work or unemployment. In reference to the analysis, on average, every European put 3121 euros aside last year. In Germany, the figure was 4671 euros. That was almost a third more than a year earlier and more than ever before. Shares were in particularly high demand in the Corona year, as various other studies have already shown. According to this study, investors in this country invested a record 49 billion euros in shares in 2020. Investments in funds also increased significantly.
Text Red. and Press-release ING Germany / Photo: Mathieu Stern by Unsplash
BRAZIL: KILLING FOR PROFIT
BRAZIL - 2021-03-08
Indigenous people from Colombia and Brazil sue french supermarket chain for deforesting the Amazon. Representatives of several communities accuse the French group of buying meat from suppliers suspected of involvement in forest destruction and slave labour.
Representatives of several Amazonian indigenous communities filed a lawsuit with a lawsuit on Wednesday in Saint-Étienne, in southern France, against French supermarket and retail giant, the Casino Group, which they accuse of failing to prevent, through its subsidiaries in Brazil and Colombia, the deforestation of their lands and violations of human rights. The lawsuit, backed by several international NGOs, is based on the "due diligence" law passed in France in 2017. The norm used now for the first time against a supermarket chain obliges companies with more than 5,000 employees to ensure that "both their subsidiaries and subcontractors" do not cause "serious violations against human rights and fundamental freedoms, against people's health and safety, as well as against the environment throughout their sphere of influence".
According to the plaintiffs, the Casino Group, whose South American subsidiaries Pão de Açúcar in Brazil and Grupo Éxito in Colombia account for 47% of its annual revenue, "failed to review its surveillance and action policies to ensure that throughout its supply chain there are no human rights or environmental violations." One of the main reasons, they say, is that Casino continues to buy products from global meat giant JBS, accused by several NGOs of sourcing its products from involved in deforestation practices and even slave labour.
Among the documentation compiled by the Center for Climate Crime Analysis (CCCA) for the lawsuit, it is argued that the Casino Group "regularly purchased meat from three slaughterhouses owned by JBS, whose meat came from 592 suppliers responsible for deforesting at least 50,000 hectares between 2008 and 2020, five times the area of Paris." In addition, the plaintiffs claim to present evidence of "rights violations" of indigenous people. Among others, they point out, "lands ancestrally owned by the Uru-Eu-Wau-Wau community, located in the State of Rondônia, were invaded and exploited by cattle ranches that supply beef to the Pão de Açúcar supermarket, a subsidiary of the Casino Group in Brazil".
"The demand for beef by Casino and Pão de Açúcar brings deforestation and land grabs, violence and murder of indigenous leaders when they decide to resist," explained Luis Eloy Terena, of the Brazilian Terena people and legal advisor to the Coordination of Indigenous Organizations of the Brazilian Amazon (COIAB), one of the plaintiffs. "Indigenous people are being orphaned in their own territories," he denounced in an online press conference.
By email, a spokesperson for the Casino group declined to comment on "an ongoing procedure" but said its Brazilian subsidiary "develops a systematic and rigorous policy to control the origin of beef supplied by its suppliers". In the face of accusations from NGOs such as the French Envol Vert, which on Wednesday said that in 2020 alone it was able to identify "54 products sold at Pão de Açúcar related to deforestation", the Casino Group says it "has been actively fighting, and for years, against deforestation related to cattle ranching in Brazil and Colombia".
If the lawsuit is accepted by the court in Saint-Étienne, where the Casino group is based, the case could go to trial in at least a year. As explained by Sébastien Mabile, a lawyer with Seattle Avocats, what the lawsuit seeks is for the company to "adopt a new plan with appropriate measures to curb deforestation in the supply of beef in the Amazon". In addition, the plaintiffs request "compensation for damages suffered" of more than three million euros (about 20.34 million reais) for the indigenous communities represented and 10,000 euros for each plaintiff association by way of "moral damages".
Coinciding with the coming to power in Brazil of Jair Bolsonaro, a president who has nothing concerned with environmental issues, with a heightened awareness of climate change as a global climate change as a global threat, international scrutiny of the deforestation of the Amazon and the production chains of the companies that feed on this region. This attention is focused on the Amazon, which covers nine countries, mainly Brazil. The largest tropical forest in the world lost 11,088 km2 in Brazilian territory, 9.5% more than in the previous year, according to the last annual report released in November. Bolsonaro's systematic weakening of environmental enforcement structures has turned Brazil into a villain in the eyes of much of the world and the target of direct criticism from French President Emmanuel Macron.
Text: Red. / Photos by Unsplash
MARKETS IN CRISIS MOOD?
EUROPE - 2021-02-17
Might be now the last good moment to face up to the update and, for many, the challenge in market or customer communication and to arrive in the 21st Century - because, as is well known, after the crisis is always before the crisis. The global restrictions have of course influenced and permanently changed the demand for goods and services. For many traders, the outbreak of the COVID 19 pandemic could not have come at a worse time.
Before, many companies were already struggling with major uncertainties, keywords such as: Brexit and the creeping recession of the global economy, tensions between the USA and China, polarisation in international trade and protectionism, are only mentioned here in addition.
The impact of the restrictions is already showing an increased administrative burden and media agencies report that more is to be expected in the coming weeks.Reactions to this extraordinary situation differ depending on the industry and the provider. One thing is clear, however: Major shifts in consumer demand.
Customers are now relying on online retailers to meet their needs more than ever before. In the past few weeks, the world has changed so much that we hardly recognise it - and marketing has changed too. If you take a look at the reactions in marketing, you can see different approaches by the suppliers - depending on where they find themselves, want to find themselves and probably will find themselves in the new consumer landscape - even if not always entirely voluntarily and intentionally. Due to market uncertainties, lack of planning and general budget cuts in marketing, some suppliers have reduced their activities within marketing channels.
Let's observe three categories:
First: Too little demand: Suppliers experiencing a decline in customer demand have to make difficult decisions. Management's instructions to cut all costs are understandable - however, research and observation of economic history, has long shown - actually since the Great Depression of 1920 - that those who increase their marketing spend in times of crisis benefit in the long run. It is important that suppliers separate the impact of the Corona virus from other factors and continue to adhere to best practice. Both commercial customers and consumers will remember how they were dealt with during the crisis, which in turn will affect their brand loyalty in the future. Some suppliers who experienced low demand paused their marketing activities to reflect and reassess their position in the new consumer landscape - including an analysis of inventory and supply capacity.
Second: Too much demand: The grocery industry is a well-known example of excess demand. Here, retailers have been prompted to pause their marketing activities in recent weeks. In some cases - especially with consumer goods, medicines and food - websites even had to be taken offline temporarily and virtual queues introduced in order not to overload server capacities, not to deepen the situation in the customer hotlines and service phone numbers of a wide range of providers, from grocery retailers to credit card companies.
However, it is the niche products of small retailers in particular that tell us what consumers are looking for during the restrictions. Whether it is sports equipment, leisure wear, toys or board games, gardening tools or takeaway food - all of these are in high demand and for the most part it is the small suppliers who are seeing strong demand for their products and services.
Many smaller businesses are usually more agile and can or should react more quickly - and that is an enormous advantage in a time when physical shops had to close overnight. For this reason, they were also often able to successfully get customers from offline to online shops. In addition, smaller companies had the unique opportunity to reach significantly more customers with a small budget, as Amazon, the market leader in online business, drastically reduced its advertising expenditure in March.
When is an increase in demand too much? When some retailers couldn't accept new orders because they didn't have the resources to do so - either due to a lack of availability or a lack of delivery capacity. But these measures are usually short-lived. Because with new optimised processes in the supply chain, many of these traders have the chance to establish themselves in the markets and build up new regular customers.
Third: Push/pull effect: There are many suppliers that are still affected by the pandemic, but where online demand remains fairly constant. These include companies like department stores that offer both in-store and online offerings. We see that loyal in-store customers are also buying from the online shops, but at the same time there are drops in demand in certain areas, such as women's clothing. This push/pull effect means that the business performance and thus the customer movements - even these in the online area of the business remain relatively constant.
UK - 2021-02-16
Not only is the online purchase of whiskey and other distilled products in the UK a frustrating and expensive undertaking for continental Europeans at the moment, but for small distilleries, especially in Scotland, it is currently extremely difficult to completely impossible to sell alcohol into the European Union Member States.
The confusion over the necessary forms to send alcohol currently makes it almost impossible to send even a single pallet of spirits on its way. On both sides of the new border, he said, shippers, producers and trade customers are unprepared to deal with the changed conditions, which also vary from country to country in the EU. While large companies can still ship whiskey across borders in large quantities, small distillers are hard-pressed to find carriers willing to take on the multiplied formalities.
Many importers have sold out of stock, and it is currently impossible for distillers to send new goods to Germany. It is already failing because the carriers are unable to quote transport costs. Many CEO's and Managing Directors of are complaining that no carrier will accept small shipments of one or two pallets to the EU. Alan Powell of the British Distillers Alliance (in reference to press statements) also does not believe, that the situation will improve substantially once the bureaucracy has settled down. Alcohol shipments from the UK to the EU would be much slower and much more expensive compared to before, because the procedure would remain complicated, because even with the authorities in place, it would still be three times the work compared to before Brexit. And that would hit the small producers much harder than the big companies.
Text: Red. / Photo: William Bout by Unsplash