The Economic Reset, Adapt or Die

Consumer and business habits are changing and it will be important to adapt to this new normal

The pandemic and its adverse effects on global economies are causing a change or economy reset as we know it. Consumer and business habits are changing and it will be important to adapt to this new normal. Next, I list the most relevant ones that will change the economy and business as we know it.

First, the pandemic caused a paralysis of the industry in Asia, the main source of global suppliers, which caused the delay of the production of many industries which translated into higher production costs. Companies are already thinking about nearshoring concept, in other words, diversify its suppliers to regions closer to its production processes. In this sense, Mexico has a competitive advantage by the T-MEC and the geographic proximity with the USA.

Second, work at home is here to stay. Many businesses will already start with hybrid work processes. The technology companies they are already thinking of keeping workers at a distance permanently. In this sense, foreign companies will no longer have so many problems of global recruitment since the employee will be able to work from their country of origin. Companies must strengthen their technological processes in order to adapt to this new way of doing business.

Third,Internet commerce is already the big winner from this pandemic. Businesses that want to grow will have to offer their products online and invest in technology systems to do so. Companies that do not adapt will tend to disappear as has happened for several years in the United States.

Fourth, technological advances in the automation of manufacturing processes are exponential and will soon displace thousands of jobs. Companies that invest in these technological processes will have competitive advantages. Countries and governments should undertake programs to migrate your workforce from the manufacturing sector to the knowledge economy sector. Investment in quality education and science and technology are essential for this.

Finally, the energy sector It is rapidly migrating from one dependent on fossil fuels to one on renewable energy. Big oil and most oil exporting countries (with a few exceptions) are investing a lot of financial resources to begin such a transition. The renewable energy prices They are falling rapidly, in fact solar energy is already the cheapest in the world. Companies and countries that adapt to this new normal will have a competitive advantage over the rest.

Originally published in El Financiero.

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