Interview with a Head of Business, Asia region, for a large chemical company

By Ricky Foo

Since my first article, published on March 11, the Covid-19 situation has developed rapidly and drastically. Europe has become the epicentre of the pandemic since March 13. The U.S. is predicting there might be more than 100,000 deaths. The number of Covid-19 cases are approaching 900,000 and the deaths have exceeded 42,000.

Most of Europe is under complete lockdown and three-quarters of the U.S. are facing the same outcome. Malaysia declared a two-weeks "Movement Control Order (MCO)" on March 18th, and it was extended to April 14th. India declared a three-weeks lockdown on March 24th and started the implementation within 4 hours, causing another crisis that many poor migrant workers are forced to 'walk back' to the villages. Although Singapore is not yet in lockdown situation and Shanghai (plus many parts of China) is trying to get back to business as usual, the global situation is looking quite pessimistic.

Yet, I believe that we will need to fight and win in this crisis. Winning in this context does not mean 'beating your competitors', but about finding a solution to survive and able to rebound after the crisis.

Introduction 

I had my second interview on March 23 with a Head of Business for the Asia region for a large chemical company. He is also part of their internal Regional Coordination Team for the Covid-19 crisis. Due to internal communication policy, he will remain anonymous for this interview.

Here are the excerpts from our interview:

Our values are our compass

Ricky "R": What is your overall perspective on the Covid-19 pandemic situation?

Interviewee "B": It is a wake-up call for the society as a whole about our vulnerability. It is also a wake-up call for companies and the need to have strong values. It is a moment to shine with regards to the decisions that we are taking in dealing with the coronavirus outbreak.

Obviously, we are looking into how to save costs. However, our values are our compass. We clearly decided that we will protect our employees, that there will be no restructuring. We will protect our business partners and extend their credit terms.

We want to let people know that they are dealing with a decent company – when times are tough, you can count on us. We want to make sure that suppliers will not fall over because of this outbreak. This will go a long way to safeguard our future.

At the individual level, the good in people is coming out. Everybody is putting on a lot. I believe that people are intrinsically good. This is our chance to step on to the plate.

You and I know that the world has become very short-term focused. This crisis move people to focus on the long-term. We are forced to realize that if we only take a short-term approach, we are not ready to deal with this crisis. This crisis will help us to rebalance.

Impact on Business and Supply Chain

R: What is the impact to your business and supply chain?

B: The actual impact is not yet drastic for our business. We are doing relatively OK. Our colleagues in China had a significant disruption after Chinese New Year (CNY). Our supply chain is doing relatively well as we have built up the stock before CNY. The first containers have already left China and we have already found alternative suppliers.

Unfortunately, India and Malaysia have come to a stand still. Indonesia seems to be doing OK, but Vietnam is very panicky now. Thailand is still buying but my team is nervous. Australia is in lockdown.

Up until last week, we are closing the first quarter relatively well. Q2 will be bad for us. We are not expecting a V-shape recovery. It will be a U-shape. We might recover slowly by Q3 or Q4.

R: How are your customers reacting at this point?

B: Vietnam customers are seriously nervous and some of the dealers want to discuss their targets and rebates. Many stores in the North of Vietnam are physically close and the distributor base is not buying. We are checking whether they need financial support to carry them over and to help them to overcome liquidity crisis.

R: Where do you see the opportunities in the current situation?

B: Internally, even though we are under pressure from a cost perspective, we are not going to survive this crisis at the expense of our employees. We didn't stop salary increase and we have not announce any restructuring. We conduct a lot of engagement and communication.

At the same time, we have issued guidelines on "what does it mean to work from home?", which is less acceptable in Asia. As a multinational company (MNC), we have updated our Business Continuity Plan (BCP) and upgraded our internet capacity. We ensure our employees have proper Internet access and the right equipment (e.g. cameras for video call).

We setup a "virtual coffee sessions" to engage our team members. I sent out weekly newsletter to share with my team on how we are responding.

Externally, we take this opportunity to strengthen our relationships with our partners. We believe in doing good and doing right in the midst of the crisis.

Scenario planning give us time to reflect

R: Can you share with me on how do you perform the scenario planning exercise?

B: We are pretty fast in scenario planning. We have asked our local management team to come up the best-case and worst-case scenario. We consciously decided not to go cutting people.

The purpose of the scenario planning exercise is to create awareness with the country managers. We want them to be mentally prepared and put actions on the drawing board. An example is that should we continue to put up advertisement and have incentive trips. These small actions can save us millions of dollars.

We are stress testing our cash position. We are looking into different demand scenarios to decide whether we have enough raw materials. We are looking at the possibility of breakdown in our supply chains and assessing the risks.

The exercise gives us some time to reflect on what to do.

R: since you have many country managers, how do you do that in a structured way and ensure that there is alignment to the big picture?

B: We provided a template for scenario planning and we look at a couple of best practices. We told the country managers that we are not going to criticize your outlook. We want to understand your assumptions and thought process. For example, we ask them questions, such as: "Do you expect stores to close in one week or in one month?"

We don't try to involve too many people as nobody can be right. We keep to a small team of Country Manager, Controller (Finance) and one more person.

Now that Europe has 'woken up' and we a couple of steps ahead, they come up with a different approach and they ask us to comment on their plans.

R: How do you see the recovery between Europe and Asia?

B: Europe will be at least one year affected. Unless a vaccine comes to the market, Covid-10 will stay for a long time. You cannot treat Asia as one. Now that India is affected, we can expect this to be a long game.

End consumers want to bounce back. You can only be in lockdown for so long, before your wife stressed you out! (R: Yes, I agree!). Business will want to bounce back.

The governments are very active in their response. There will be trillions of dollars to stimulate the economy. There are extraordinary financial measures that are put in place.

India will resemble Europe. Once the genie is out, it is hard to put it back. If India is in lockdown (R: which happened one day after the interview), then it is a huge limiting factor for our business.

I don't think any country will let thousands of business go belly up. The government responses are much faster from the financial perspective. Governments know that we need to act and we need to act fast.

R: What advice do you have for business leaders?

B: Have regular and updated communication. Practice scenario planning. Live according to the company values. Show leadership. Treat it as an opportunity.

Get organised and have a "regional coordination team" that cuts across all businesses and moved away from the matrix structure.

In the beginning, our response to Covid-19 was quite national. There were instances that I've issued a travel ban for my business unit, but it wasn't the same for other business units. My country managers asked me to pass the message to other heads of business units.

Having a regional coordination team that cuts across business units is essential. There are 6 persons in my team: Health & Safety, HR, Communication, Supply Chain and the other business leaders.

Conclusion

The key takeaway from my interview is that companies can take this crisis to live their values. It is essential that all business leaders to plan for multiple scenarios and start taking actions. Also, it is essential to have regional coordination team to react decisively to the crisis, whether on safety measures or business decisions.

If you are interested in how to build a resilient leadership team in APAC, drop me a note at ricky.foo@mercuriurval.com.

Stay tuned for the next interview!


  • Bouncing Back from Adversity
  • Covid-19