As you know, the US is knee deep in dozens of real time experiments on how to safely reopen the economy. Cases are swelling in some states, and plateauing in others. Testing backlogs in many cities are worse than they were in March. Unfortunately, the road to recovery in the US is long and winding. In Taiwan, however, restaurants are bustling with hour long waitlists, friends and family gather in large groups, and social distancing is a concept of the past – well, kind of.
My calls with colleagues in Asia are fascinating – I am both looking into the future and into the past when I hear about their days. In some ways, COVID has left a lasting impression on businesses and consumers in China and Taiwan, with certain behaviors fundamentally changed for the foreseeable future. In other ways, it’s as if COVID never existed. If you’re curious what behaviors today the US may carry into the future once the virus is controlled, and which behaviors we may not, we can look to Taiwan and China as examples.
Below, I’ve shared our current observations of the before/after impact of COVID in these markets across 5 categories: remote work, tailwind verticals, public health policy, founder mentality, and travel.
Remote Work
- COVID Impact: In early 2020, tech workers in Taiwan and China worked from home exclusively. As restrictions eased, employees returned to half occupancy offices. Today, nearly all tech workers are back in the office – 5 days a week! In the US, many companies have committed to remote work through the end of 2020 and into mid 2021. Some have embraced a completely remote first culture and many, including those in our own portfolio are renegotiating and cancelling/subleasing office space entirely.
- Key Takeaway: This may be an area where cultural differences heavily influence behavior as remote work before the pandemic was uncommon in Taiwan and China. So in some ways, it’s not surprising most businesses have returned to a 5 day in-office work week. While the US and Silicon Valley in particular seem more comfortable with long term remote work strategies, it’s worth noting that sustained “zoom fatigue” will influence return to office decision making.
Tailwind Verticals
- COVID Impact: Before COVID, meditation and mental health were considered niche markets in China. Usage of sleep and meditation apps were low; it was not considered a growth vertical. Additionally, there was no mainstream narrative around the importance of mental health. During COVID, 42.6% of people in China reported feelings of depression and anxiety and the demand for mental health support grew. Today, momentum remains strong. Some apps in this space like Tide, are seeing 2X growth in their DAU users.
- Grocery delivery is another area where pre-COVID, grocery apps were used primarily by millennials and younger consumers. Older shoppers were less likely to download and use a digital platform to buy food. During the pandemic, strict lock downs and social distancing measures shifted previously offline shoppers online. Perhaps reluctant at first, all ages and demographics began to rely on digital platforms like Missfresh to buy groceries. After months of usage, today grocery stores in Taiwan and China remain quiet as previously offline shoppers have remained online with a new appreciation for the ease and efficiency of grocery delivery.
- In terms of productivity, pre Covid, WeChat was the platform for business and personal communication. Business meetings were conducted on WeChat group calls. Consumers would have dozens of active personal and professional text threads. With lockdowns, all communication was remote and the demand for video emerged – driving the popularity of “WeChat Work” and adoption of Zoom. Today consumers continue to use video in lieu of international travel and WeChat work is sticky as ever with over 200 APIs for enterprises to accommodate their workers “on the go.”
- Key Takeaway: If your business has experienced a tailwind from COVID, there’s a good chance it’s here to stay. This is an opportunity to convert customers for the long haul, and diversify your users. Previously unreceptive customers may become future evangelists. Nurture this swell in interest and be open to exploring ways to penetrate a newly unlocked market further.
Public Health Policy
- COVID Impact: In most parts of Asia, wearing a mask while sick was customary pre COVID. When COVID hit, everyone wore a mask preventatively, all the time. Today, most people in China and Taiwan wear masks only on public transit, or in hospitals/clinics. Some businesses like banks require a mask as well. Otherwise, few wear masks preventively anymore. In China and Taiwan, temperature checks are still common before entering an office, mall, or restaurant – indoor venues where it’s hard to socially distance. Large events like concerts are uncommon in China but operating as usual in Taiwan.
- Key Takeaway: Public health best practices previously uncommon in the US like mask wearing are likely here to stay, particularly in healthcare settings and possibly in schools and on public transit. Handwashing and hand sanitation stations, and an increased focus on ventilation/indoor air quality are other examples of public health policy and infrastructure that will endure beyond the pandemic.
Founder Mentality
- COVID Impact: Capital efficiency and cost savings were top of mind for founders in China and Taiwan when COVID was rampant. Many founders were optimizing for extended runway wherever possible. Today with COVID currently controlled, founders remain cautious with cash and domestically focused. Hiring is intentional, low performers are managed out quickly, recruiting candidates in hard hit verticals like travel is common, and international expansion is deprioritized with global markets harder to access.
- Key Takeaway: While much of life in China and Taiwan is back to normal, entrepreneurs remain operationally and financially disciplined. There is no shortage of hunger and ambition, founders continue to pursue aggressive growth – just not at all costs. There’s remnant conservatism around fundraising and an increased focus on healthy unit economics that we suspect will be true for US founders as well.
Travel
- COVID Impact: During COVID, cities and state lines were locked down and as a result, international and domestic travel plummeted. But with COVID at bay, domestic travel in China and Taiwan is booming – there’s palpable pent up demand. In Taiwan, domestic tourist spots are full of locals. Some airlines are launching virtual travel experiences where a consumer travels nowhere on stationary airplanes but enjoys duty free shopping, and airplane meals served by flight attendants. In China, the government is considering issuing additional duty-free licenses to certain merchants to boost domestic consumption.
- Key Takeaway: With most countries imposing travel bans on American travelers, it’s fair to anticipate domestic tourism will pick up and new creative experiences will emerge to accommodate unfulfilled wanderlust. If you’re building a consumer business, there may be an opportunity to capture this demand for a creative “staycation” and engage your community and future customers in new ways.
As always, we will continue to share our observations and learnings as the pandemic evolves abroad. In the meantime we hope there are a few insights that resonate today.
