On May 23, 2020, students from the Belt and Road Initiative (BRI) Executive MBA Program Cohort 2018 joined online to engage in a virtual sharing session discussing the response and opportunity in relation to the Covid-19 pandemic. Kan Cai, Associate Director of the Center for Finance EMBA at Tsinghua PBCSF, began the event by delivering an uplifting message to the students. Peter Ho, Executive Director of Unit-Teque Electronics Corporation, hosted the session.
This convening is the second class sharing session of Tsinghua PBCSF’s BRI EMBA Cohort 2018 since the Covid-19 outbreak. Richard Mai, Executive Director and COO of Tian Ge Interactive Holdings Limited, Bryan Goh, General Manager of Itochu Plastics Pte., Ltd., and Kevin Tsai, Vice President of Want Want Group, each gave a thematic presentation in relation to the pandemic. Through a series of discussions and exchanges, students broadened their perspective on the fast-developing e-commerce live-streaming industry in China and learned from two case studies of a Fortune 500 energy/chemical subsidiary as well as an influential cross-industry family business operating in Asia.
E-Commerce Live-Streaming at Full Throttle
In the past two years, the rise of e-commerce live-streaming in China has set off a new wave of marketing. As the Executive Director and Chief Operating Officer of Tian Ge, which has achieved great success in this emergent field, Richard Mai began the virtual sharing session by giving an overview of the sizzling market. “Particularly in 2020, due to the Coronavirus pandemic, e-commerce live-streaming has become an important new direction for the transformation of many incumbent enterprises,” Richard opened.
E-commerce live-streaming first started in 2016 with the live-streaming of entertainment shows. After developing rapidly in the following two years, the industry finally broke out into online marketing in 2019, with remarkable growth in gross merchandise volume (GMV). After 2019, e-commerce live-streaming entered a period of self-sustained development, and is now expected to reach around 800 billion RMB in 2020, expanding at approximately 200% annually.
Richard underscored the significance of online celebrities in the business model because they not only bring traffic but also push sales with their fame. In terms of what makes a successful Key Opinion Leader (KOL), Richard said that the abilities to cross-sell different product lines and combine self-created brands are their core competitiveness. Over the past years, a strong base of high performing livestream hosts and content generators such as Viya, Li Jiaqi, and Li Ziqi has reached celebrity status in China, frequently ranked as top selling streamers.
The core business of Tian Ge involves live-streaming apps used in Southeast Asian countries. The company also has one of the largest multi-channel networks (MCN) on Taobao e-commerce live-streaming, with more than 5,000 Taobao cooperative merchant resources and more than 10,000 customer resources. Over the years, Tian Ge has successfully cultivated 300 popular online KOLs for e-commerce live-streaming.
Impact of Covid-19 on Plastics
Bryan Goh works for Itochu Plastics, the trading headquarters for all Polymer businesses globally. Itochu is a Fortune 500 company founded in 1858 with a market cap of over 30 billion USD and 130,000 employees worldwide. Aside from FamilyMart and Dole Asia, Itochu also has shares in C.P. Group and CITIC Group.
Itochu Plastics is one of the largest plastics distribution companies globally. The total quantity of plastics distributed in 2019 amounted to 3.4 million mt. Handling over 100 suppliers’ material in 44 countries, the company has more than 60 sales offices and over 4,000 customers throughout the globe.
In talking about the global trade challenges resulting from the Covid-19 pandemic, Bryan discussed four main areas of concern, including payment risk, cash flow, logistics, and currency. Overdue payments and inventory build-up have been exacerbated by banks’ tightening of credit facilities. Trade flow encountered longer lead times due to suspensions of airlines, land shipping, and sea transport businesses. Depreciated currency against the US dollar has led to profit loss for imports.
Bryan said that political instability will lead to unemployment, which will then lead to bankruptcy. However, as Bryan quoted a Chinese saying that crises signal turning points, he stated that it’s important to focus on people investment, relationship investment, and good assets/companies that have become undervalued amidst the crisis. He pointed to food, packaging, and IT as sectors to invest in the near future, and advised to avoid tourism, automotive, and hotel sectors.
Reflections from a Top Family Business in Asia
Kevin Tsai is Vice President at Want Want Group, a highly successful Asian food and beverage brand with more than 40 years of history. Kevin is also the son of Mr. Tsai Eng-Meng, Want Want’s Chairman, Chief Executive Officer, and Executive Director who succeeded Kevin’s grandfather to become the Group’s Chairman in 1987. Today, Want Want‘s food and beverage arm is present in over 60 countries across six continents and publicly listed on the Hong Kong Stock Exchange.
Besides the manufacture, distribution and sale of food and beverages, Want Want Group is also engaged in several other businesses including real estate, hotels, healthcare services, media, and finance. Drawing from real-life examples encountered during the Covid-19 pandemic, Kevin shared the reflections and priorities of his family business.
“On a group company level, the first concern is looking out for government policies,” said Kevin. In difficult times, the government gives out many subsidies and temporary supportive measures in order to support the real economy. Kevin expressed that it’s vital to efficiently capture all the available incentives given to different industries and geographic locations. This requires proper understanding of these policies and proper documentations.
Secondly, the company has to ponder on the change of behavior brought on by the pandemic. Everyone’s talking about what change of behavior will take place and how that will affect different industries. In the food and beverage industry, Kevin said that there are two advantages - manufacturing capability and the go-to market.
Overall, the pandemic’s impact on Want Want’s food and beverage business was limited. The government was efficient in supplying outbreak-related subsidies and compensation. Right now, sales are going relatively smooth. Kevin said that the pandemic is likely to give rise to new regulations for manufacturing which might benefit the company by raising the entry barrier for new players.
On the hotel side, with ample cash reserve in some parts of the family business, they are considering whether it is the right time for supplier bargaining as well as reducing inefficient headcounts. On the hospital side, Want Want has actively responded to the nation’s call for medical aid and devoted many physical and human resources to serve the country during the crisis. The Want Want Hospital in Hunan province has already displayed a V-shaped recovery, which is a better rebound compared to hotels.
The virtual sharing sessions of the BRI EMBA Program will continue to be a place for students to share ideas during this special time. With almost 70% of the students enrolled in the Program based overseas, remote learning and online class meetings have benefited students in terms of time and location flexibility. The Center of Finance EMBA has also been organizing a number of other online exchanges for students of the Chinese EMBA Program.
Since its inception in May 2017, the BRI EMBA Program has attracted more than 180 high-level enterprise decision-makers from 22 countries and regions, including Singapore, Indonesia, Malaysia, Thailand, the United States, Canada, Kyrgyzstan, Kazakhstan. A number of students from Southeast Asian Countries hold Tan Sri, Dato' Sri, Dato’, Tengku and other honorary titles. Nearly 40% of the students graduated from world-renowned universities such as MIT, Stanford, Harvard, Yale, Cornell, Oxford, Cambridge and Imperial College London.
