Thanks to COVID-19, every member of the G7 is in a deep recession, from Japan’s 7.6% contraction to Britain’s 20.7%. China, the first country that reported an outbreak last January, is already back to growth. China may be the only major country to end 2020 with a growing economy.
China owes its spectacular economic turnaround to many things, among them timing and culture. The government moved quickly and decisively. Most of the hardest-hit nations did not implement face-covering requirements and strict quarantines until much later in the early summer.
Cornerstone has six of its 56 member offices in China. As many populations approach a traditionally festive time under severe duress, we looked for support from colleagues much closer to the finish line.
According to Simon Wan, the Chairman of Cornerstone International Group who is stationed in Shanghai, Chinese culture played a major role in speeding the recovery.
“The Chinese by nature are more likely to trust government instructions,” he says. ”I expect we were among the most compliant populations when it comes to masking and social distancing.
“We are also a nation of savers. That gave most of the population a buffer when the pay-cheques stopped. I don’t think our people were as stressed as highly as others during the recessionary period.”
Executive Search is Cornerstone’s primary business and the state of the industry in China is a likely guide to expectations elsewhere. China has two market segments.
The first, and longest established, is made up of subsidiaries of offshore companies around the globe. This sector is static, reflecting conditions in the home office regions.
The second is comprised of China-based enterprises. This group has been on a rebound since May.
Graphic forecasts of economic recovery over this year and next have taken many shapes. Early expectations of a “V” recovery have been discredited and even stretching it into a “U” is questioned. Based on the experience of our colleagues in China, a more likely choice would be an “L”.
That would represent the abrupt drop caused by the pandemic, followed by a lengthy period bumping along at a much lower level.
With the arrival of several vaccines in the next 2-3 months, maybe medical science will succeed where human behavior fell short and we might all get back to a relative normal before the end of 2021.