How Asia weathers the pandemic

08 February 2021

Both national governments and private businesses find themselves quickly learning how to improvise and deal with oncoming challenges resulting from the pandemic. Thanks to unconventional arrangements and a complete rethinking of the strategy, some may come out from the pandemic stronger than others.

S Korea leader urges businesses thriving in pandemic to share profits

South Korea's GDP is expected to grow 3% next year and the government, which managed to avoid a lockdown in 2020, is planning to start a nationwide vaccination within the next several weeks. Yet, South Korea's president, Moon Jae-in, has recently asked the companies to share their profits with businesses and people who are coming out worse off from a pandemic. This plea for help highlights the worsening disparities that have been accelerated by coronavirus. Moon Jae-in's record stimulus spending, including cash handouts and business bailouts, is proving to be insufficient to address the growing inequality. While stocks and property prices are seeing new highs, unemployment continues to rise and wage fails to keep up, leaving young people and temporary workers questioning their prospects. At the same time several South Korean companies, including LG and Samsung, were among the top 100 globally to benefit during the pandemic. It is unsurprising then, that, the president calls on the private sector to come to the rescue.

Read the article on the Financial Times website. (available to subscribers)

Indonesia’s Traveloka finds strength in local markets amid the pandemic

As the pandemic halted the flights, Traveloka's focus switched from expanding offerings and preparing for an IPO to cutting down costs and weathering the storm. Henry Hendrawan, the president of Traveloka, shares the three strategic pillars: helping customers through a crisis, moving beyond travel bookings, and investing in local markets, that the company relies on to overcome the challenges. The governments' decision to stop commercial flights across Southeast Asia, Traveloka's biggest market, means that the company's revenue took an enormous hit. The refund requests for flights alone totalled over $100m. As a result, the company was forced to lay off staff raise more funding to outlast the crisis. Traveloka did not, however, cut costs on customer service. On the contrary, the company prioritised helping customers to get refunds or rebook. Mostly underbanked, many Southeast Asian customers, instead of using credit cards, have to accumulate cash to make a travel purchase. As a result, the booking window in Vietnam or Indonesia is much shorter than in Western countries, creating challenges to operations. To mitigate this problem, Traveloka now offers almost 40 payment options across the region, simplifying the purchase process for millions of customers. The company also discovered that going deeper rather than broader in terms of geography might be a more lucrative strategy. Localisation of the platform allows the company to expand its offerings and go beyond the one or two locations that are popular among the inbound tourists. Following these steps, Henry Hendrawan believes that Traveloka can come out from this pandemic stronger than ever.

Read the article on the McKinsey website.

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