The crisis is giving birth to new winners
While much of society and the economy is moaning under the direct effects of the coronavirus, competition is slowly rearranging the market and new players may emerge in the new situation.
While social attention is – rightly – focused on the direct effects of the coronavirus, less attention is being paid to the reorganisation of market competition in the midst of the economic crisis. However, no business should forget about it, and no doubt everyone, to the extent possible, pays attention to their environment, partners and competitors. However, it is sometimes worth taking a step back and taking a closer look at the serious processes taking place in the economy, thus exploring further possibilities as well.
How a company is affected by the current situation largely depends on external factors, as well as on the capabilities and scope of activities of the company, its financial situation, suppliers and partners. These external factors have damaged domestic entrepreneurs very much; the sectoral effects may no longer need to be highlighted, and some sectors have been hit much harder by the pandemic than others. But even within a single industrial sector there are significant differences: the research conducted amongst the customers of Opten shows, for example, that 14 per cent of retailers reported improving prospects during the COVID-19 pandemic, while a significant proportion has got into a critical situation.
Entrepreneurs, however, have a number of tools to adapt to the changed market conditions. Adaptability and agility can be a major competitive advantage over competitors. Entrepreneurial agility can work really well if decision-makers know exactly their micro-environment, together with their wider field of opportunities and dangers. Information is a particularly important weapon in a crisis situation, and since deals are mostly entered into by enterprises, therefore conscious management of company information is essential nowadays. There are businesses that cleverly take advantage of this situation, while others are less resourceful.
A good example to illustrate the situation is the problem of supply chains. As a result of the economic crisis, demand for certain products and services has fallen significantly, but there is also a much more interesting aspect of this story. 68 percent of domestic companies reported supplier problems and disruptions as early as during the first wave of the epidemic. It seems logical that this may have been caused by logistical problems, production downtime, but the point is that a plethora of businesses were looking for new solutions to solve their supplier problems. This situation was skilfully recognised by many entrepreneurs who were able to move forward in the market competition by mapping out potential customers in a timely manner.
In addition, competition is already taking place at an international level, so it is worth examining the situation of domestic companies at an international level as well. It is often difficult to compare a domestic business with a Western European multinational company, but we do receive interesting results if we compare nothing else but the performance of the V4 countries. The V4 countries account for 15% of domestic foreign trade, so our trading activities with countries whose economic and regional situation is similar to ours is very significant.
Hungary's foreign trade product turnover in HUF, V4 countries
(2019, at current prices, million HUF)
(2019, at current prices, million HUF)
|Slovakia||1 863 182||1 671 874|
|Czech Republic||1 520 210||1 688 830|
|Poland||1 502 756||1 968 903|
|Altogether||4 886 149||5 329 607|
Examining the commercial data of the V4-s, it can be established that our foreign trade balance is negative within the V4, which indicates that there is still potential to increase domestic export to these countries of destination. One of the cornerstones of increasing export is market research and the mapping of potential partners in the given country, which is orientation using company information.
Increasing export, both at the macroeconomic level and for the stability of the business, is a key issue, and the regionally distributed portfolio ensures that the only economic ups and downs happening to companies are concentrated on distinct areas. Examination of the performance of V4-s during the coronavirus epidemic also suggests that neighbouring countries may be a suitable market for domestic enterprises.
Change in GDP of the V4s compared to the same period of the previous year (%)
GDP data show that Hungary was more active at the beginning of the year than its V4 partner countries, but the pandemic hit Hungary the most in the second quarter, with the momentum of domestic economy decreasing the most. This also indicates that entrepreneurs looking for new customers during the coronavirus pandemic had a better chance of finding a customer in the other V4-countries than in Hungary. Of course, it is far from certain that the trend is going to remain so vigilant; data from the third quarter is now becoming better even in Hungary, although in the third quarter the GDP was still lagging behind with minus 4.6 percent. Nonetheless, the situation is a good indication that agile entrepreneurs with a greater emphasis on international markets can gain an advantage during an emergency situation.
A similar export potential is visible when looking at the change in the foreign trade balance of the studied countries. During the first wave of the coronavirus, the foreign trade balance of both the Czech Republic and Hungary deteriorated amongst the V4s, but only Hungary's foreign trade balance became negative, i.e. Hungary became one of the losers of trade during the crisis. The balance of the Polish and Slovak economies also improved, meaning that their export could better adapt to the deteriorating economic conditions.
The trade balance of the V4-s (million EUR)
|Czech Republic||4 153,4||2 211,1|
|Poland||7 392,8||9 060,4|
It is not difficult to see that there is still development potential in the export activities of the domestic economy and enterprises. Of course, export opportunities and export transactions depend on a number of factors, but one important step of export expansion and market research can be easily implemented. The mapping of potential international partners and the selection of international marketing lists are easily available to anyone in Hungary as well. From 2020, Opten can provide valuable help to businesses with this, as opten.eu, the international company information portal has been launched. The portal provides access to data from 3 million businesses in 7 countries with a few clicks, making the production of international marketing lists extremely convenient. Opten has taken the first steps to boost domestic export – do cross borders and your limitations with Opten!