The economic turmoil brought by the COVID-19 pandemic has wreaked havoc across the globe. The largest economies in the world, including Canada, Japan, The European Union, and the United States, have been hit hard.
The International Monetary Fund (IMF) predicted that each of these nations would witness a GDP contraction between 5.2% and 9.1% in 2020. The forecast also highlighted a 6.1% contraction in advanced economies in other parts of the globe.
Despite a global economic downturn, businesses are staying vigilant and planning for the post-COVID-19 world. Though all markets will experience the ripple effects of the pandemic, some will be more affected than others.
Businesses that take an agile approach to pursue overseas growth opportunities will be able to beat the short-term effects, establishing a long-term presence internationally.
Digital Technologies to the Rescue
The most significant change introduced by the pandemic is the growing recognition and popularity of digital technology for work and leisure. From the delivery of medicines to working from home, digital technology has bestowed us with a myriad of benefits during the lockdown. And the trend is not going to die down anytime soon.
When it comes to international ventures, digitalization would mean greater and cheaper access, higher productivity, lower costs, and better coordination. As a result, entrepreneurs are expected to use innovative means to capitalize digital technologies for growing and expanding their businesses globally in the coming years.
Markets with the Safest Global Expansion
Though the April 2020 forecasts by IMF state that advanced economies are going to shrink, few emerging Asian markets are expected to see growth in modest levels. China managed to eclipse all other nations with a 6.1% economic growth. However, the pandemic brought it down to 1.2% in the same year, leaving India with a 1.9% GDP growth, higher than China.
As per the 2020 State of Global Expansion Report: Technology Industry, India was identified by 35% of the UK and US tech companies as the top market due to overall global growth before the pandemic.
While the pandemic has hit India hard too, the market remains among the most promising ones for global expansion when the COVID-19 crisis comes to an end. Asia may ride the economic storm better as compared to other regions.
Dubai is currently hosting Expo 2020, which is bound to give the economy a much-needed boost and establish the UAE as one the markets leading the recovery of a post- COVID19 world.
In fact, the VP of Sales at TASC, Mohamed Jawad, a leading recruitment and outsourcing company in the UAE, has said:
“A large-scale global gathering like the Expo 2020 promises not only to boost the Dubai economy but also to bring new opportunities for growth in several industries. We have seen this first hand, at TASC, with the huge recruitment and outsourcing drive we have experienced in the past few months. Many companies are recruiting heavily in a bid to gear up for 2022. We are, of course, happy to see this trend and support our clients with permanent and contract solutions in Dubai, the GCC, and now also emerging markets."
Industries that Are Likely to Grow
Despite major challenges, the post-COVID-19 world will offer important opportunities to many industries. Here are some of the
Global Expansion Trends
Growth opportunities will be accessible to businesses if they rethink their global expansion approach. Recent travel restrictions to international locations are bound to bring new challenges to businesses that plan on entity establishment as a global expansion method. While it has been the primary means to expand in the past, it comes with significant drawbacks in the post-pandemic world.
From restrictions, drawn-out regulations, and other costs, establishing entities is already a major cause of stress to international entrepreneurs. On top of that, limited resources for investment post-COVID-19 could prove disadvantageous to expansion.
Businesses typically must consider initial setup costs, annual maintenance costs, and even final teardown costs while setting up an entity in a foreign location. They must look at more flexible options like Professional Employer Organisation (PEO) services to expand overseas, which won’t force them to leave their domestic location or establish a costly entity in a foreign country. For instance, TASC has helped many companies to set up in the GCC and emerging markets like Africa through its leading PEO services.
There Will Be Changes in the Supply Chain
The ripple effects of COVID-19 have significantly affected global trade by forcing businesses to re-evaluate their supply chain and search for raw materials, source components, and finished products near home. This trend is bound to continue in the upcoming years, when companies look for supply in neighbouring countries, such as Mexico, Canada, and Costa Rica, instead of importing them from Asian countries, such as Indonesia, Vietnam, and China.
People’s Attitudes Towards Global Expansion
According to the survey submitted by CFO Research, most businesses are determined to recover from the COVID-19 impact, making future plans to start or expand international operations. The respondents in the research showed interest in adding or expanding operations, particularly in the Asia-Pacific region. Interestingly, around 83% of respondents expect to follow a remote, global staff model in the post-COVID-19 world.
However, that doesn’t mean entrepreneurs will not come across operational challenges. Areas like recruitment, complaints, and local legal rules can be complex, easily taking months to comprehend. Hence, international entrepreneurs should brace themselves and prepare themselves realistically to adjust accordingly to the new normal.