Transcript of Interview by Robert Hartline with John Lombard, American businessman who worked in China for 25 years
Link to video: https://www.youtube.com/watch?v=wGlqHsWGQpc&feature=youtu.be
John Lombard (guest speaker)
1993 went to China. Lived in China from 1993 til 2019. Experienced China change from post-Tiananmen Square to what it is today. Became a freelance consultant for Chinese companies looking to move to a global marketplace. Opened four companies in China. Only three were profitable. Cultural Diversity trainer for corporations.
Robert Hartline: How does capitalism work in a communist country?
John: China, no longer a communist country. Hard core capitalists in the communist party. Chinese people are among the most capitalist people on the planet. It’s the wild west. Massive opportunities. Very unique environment.
Robert Hartline: First moment that rumors about the virus started
John: They discovered something. Didn’t go public immediately. There have been several other instances where they jumped the gun on a situation like this. Chinese government eventually took action and did it far more comprehensively than the SARS virus. Happened just before the Chinese New Year (January 25, 2020). Chinese government shut down every major tourist area. Tends to do nothing or go to the opposite extreme. Public transit shutdown. More control over the ability to shut everything down immediately. Possible benefit of a dictatorship.
Robert: During the slowdown was there any business that seemed to survive?
John: Weren’t really any key industries that were capitalizing on the virus. Not even the obvious ones (hand sanitizer and face masks). The Chinese culture may complain about what’s happening, but they all take it as a national thing. Community vs. Individual society. In US, there were two sets of people, those who didn’t take it seriously and those who immediately began to take it seriously. China simply banned any more than 10 people together, otherwise you’d be arrested. There were actual rules, rather than options as in US. China was able to achieve the idea of social distancing practically overnight.
Robert: Consumer behavior will fall into new habits now. Concerned with these new habits. Did he see this with China?
John: Absolutely. The crisis is under control, large numbers of Chinese are still quarantining. Restaurants are pivoting to home delivery. There are restaurants that are setting up virtual dining.
Robert: When this crisis started, were there people already working from home?
John: It was being done, where it was needed. People are still telecommuting to work where possible. People are still working from home and this is mostly to be safe rather than sorry.
I think that the numbers are not that far off. Several other things that you can use to check what the Gov’t is saying. People have been self-reporting using an app that most Chinese people use. Some people have been using this info to establish the credibility of what the gov’t is saying. Plenty of info to verify that the virus isn’t gone, but is declining.
Robert: What does his newsfeed feel like?
John: In China, the feeling is to some degree about themselves. But the rest of China is beginning to get back to work. But their target markets are still closed down. A lot of the focus is on this.
Robert: Is there any sort of business or service that’s grown out of the situation?
John: Anything to do with maintaining sanitary standards. People are looking at the dispensers rather than the hand sanitizer. Anything sanitation adjacent. Social distancing ideas. The biggest thing is with the factories. Anyone who wants to work with the factories should reach out now since they are desperate for business now despite the lack of international shipping.
Robert: Do your contacts there have any idea when the economy will start picking up?
John: The restrictions that are weakening the economy are up to us, not them, since we put those in place.
Robert: If you could talk through the timeline of everything.
John: Start was early January and the peak was at the end of the Chinese New Year (January 25). About two weeks after that was when it started to get under control.
Robert: Any defining moment for when the gov’t started opening things back up?
John: No, mostly the people still being cautious. Business owners felt that more strongly. People felt urgency to get back to work because of financial reasons. If you had to stay home, no one was paying you for that time off.
Robert: Do you see any effect of this working from home affecting certain industries like CRE or the need for office space?
John: There is a fair bit of telecommunication going on. Not sure how long it will last. After SARS, a year passed and everyone went back to their old patterns.
Robert: Was SARS more dramatic there?
John: Less contagious, more lethal. The paranoia from that has certainly carried over to this in China. People in US don’t have that sense of paranoia from an experience like SARS.
It took about a year before everything went back to normal.
There are opportunities for lower pricing from Chinese vendors.
Question: I’m curious about China’s response to this, it seems like we are going to hit a divide at some point which is how long we stay isolated in the interest of protecting public health and those most at risk vs. the overall risk of the country turning into a major depression because we haven’t just bit the bullet and gone back to life as usual. I’m curious if you know of anyone else who is thinking about this?
John: There are a number of differences. US decisions are driven by business owners, China not so much. Another thing, the Chinese are much more used to this. The Chinese are more comfortable stepping back from business at times like this. The debate over whether or not we should be doing this, is a very North American debate. China doesn’t have the option for that kind of open debate on the topic.
Robert: When you talk to people in China, are their faces as dour as the people on this call?
John: Yes and no. Businesses are definitely impacted. They are in the recovery stage, so looking forward for them is growth and everything. Whereas for us, it’s mostly looking forward to the growth of the disease and the shutdown of the economy, so there’s definitely a difference. They aren’t super optimistic, but they aren’t where we are. There is the issue of a second wave in China, which is why people are still self-isolating.
Robert: Some positives that have come out of this.
John: Talking on the phone with people who you wouldn’t regularly chat with.
In China, people are fostering this ‘all in this together’ kind of attitude. University students collecting groceries for the elderly. One thing that Chinese companies have been doing is using social media, email, and text to keep in touch with their clientele. Not actively doing business, but just maintaining those ties.
Question: What percentage of time do you think that we get the truth from our government compared to the Chinese government?
John: If you look at the CDC, it’s quite rapid and up to date. As far as the info coming from politicians and leadership, it’s not so reliable.
Robert: Were there daily updates in China?
John: Absolutely. Hourly updates and websites. The Gov’t was using all sorts of different things to keep people informed.
Robert: Has anyone here done a major pivot in their business in the last 7 days?
Angela: She has seen the need to show entrepreneurs how they need to understand what these social media content agencies are doing with their money. She’s spent the last few days explaining to different people how to work WordPress and several other things that would usually be farmed out to agencies. She has a client in Cabo who wants her to fly there. Would you go and work for a week?
John: Well my answer to that would be no. That area doesn’t have a lot of infections, but that area will flare up because people will have that mindset of it being safe.
Robert: Is it false that some people are getting sick then getting better and then a few weeks later getting sick again. Is that a false thing?
John: That’s something I haven’t seen confirmed anywhere.
Robert: Did China experience the negative aspects of human behavior in this crisis? Looting?
John: No, just because the government has so much control. People were stocking up on things to a certain degree. Price gouging as well. There were some stories about people who were socially shamed for not listening to the government and traveling while being sick with COVID-19. Lots of selfish behavior followed by social shaming.
John: In talking with my friends in China, I am seeing one major difference in their business perspective. Westerners are mostly focused on the here and now. The Chinese are focused on the ability to pounce once the crisis is over. It’s not just a question of surviving this, but there will be big holes in the market to capitalize on once this is over.