Hard economic times create strong entrepreneurs

Economic hardship has traditionally created a hardened generation of entrepreneurs. Historically, periods such as the Great Depression in the United States in the early 20th century, trigger an urgent creativity for the right mindset, leading to a flurry of innovation and hard work that contribute to the diversity of tomorrow's society.

During the current coronavirus pandemic, our intertwined global economy has meant that all across the world, people are facing the biggest threat to their financial security in generations. A study conducted in 2016 suggests that CEOs who experience so-called fatal disasters and economic hardship, especially early in life, tend to behave more aggressively, particularly with regards to corporate policies such as cash holdings, acquisition activities and leverage. The amount of risk a company may take directly correlates to these environmental influences.

A study published in the Academy of Management journal also suggests that Chinese entrepreneurs who experience hardship, especially early on in childhood, spend 10 percent less of their income on personal spending or recreational purchases. Their cost of sales also happens to be 22 percent less than the average for entrepreneurs.

Likewise, early experiences of frugality mean that entrepreneurs will also be less frivolous in non-essential spending. The businessman Liu Yonghao, founder of agricultural company New Hope Group, is well known for his frugality. Despite his company having a market value of more than $17 billion and more than 70,000 employees in 30 countries, he is well known for spending less than a dollar for a haircut and eats the same meals as his employees in cheap dining halls. Likewise, Chinese-born Philippine billionaire Lucio Tan, Philippine Airlines tycoon, does not even own a smartphone, instead opting for an old-school Nokia handset to handle business. When this is brought up, he often states that it is the simple life which he prefers.

There are also opportunities aplenty in the right places during this global shift in how our economies run. Chinese consumers especially are wary of person-to-person COVID-19 interactions, veering more toward online grocery deliveries rather than brick-and-mortar establishments. Businesses are fast catching up, with food delivery establishments offering everything from sanitized food packages to records of the temperatures of everyone who has prepared the food. Demand has skyrocketed.

Remote working is another growing area. While remote working was a common theme in progressive Western start-up culture, the attitude in the East was still very much one of being praised for being found sleeping at your desk from working so hard. Nowadays, the narrative is shifting, and the appetite for cloud technology to enable remote team operations is also growing.

Online healthcare apps are also diversifying in their sophistication. Motivated by the need for self isolation by many people, online healthcare apps have experienced a boom in popularity. Consumers who use them have developed a taste for the convenience, functionality and lack of red tape that these apps offer, grateful for being spared having to endure hospital waiting rooms.

Our next generation of entrepreneurs around the world will be forged from strong stuff from the current challenging global environment. No doubt the casualty rate has been high with shattered businesses across society being just one of the lamenting narratives from this pandemic, however opportunities do exist if you know where to look. The world is always a place of infinite, untapped resources for those with the right attitude and work ethic, and in the next few years, we may expect to see future business phoenixes rise from the ashes.

Barry He London-based columnist for China Daily