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| McKinsey & Company Global Managing Partner Kevin Sneader speaks in a video address at the 2020 Korea Times Forum held at The Plaza Seoul, Thursday. / Korea Times photo by Shim Hyun-chul |
McKinsey chairman warns of 'return of borders' in trade
By Kim Bo-eun
Korea has demonstrated a new partnership model in tackling the global challenges created by the COVID-19 pandemic by enhancing the collaboration between the government and businesses in an agile manner, according to McKinsey & Company Global Managing Partner Kevin Sneader, Thursday.
The chief of the world's top consulting firm expects that this new, unprecedented private-public partnership model will likely play a bigger role in addressing various issues in the post-pandemic world
"This pandemic has seen the Korean public and private sector collaborate. That must be a model that has broader implications," Sneader said in a speech at The Korea Times Forum held at The Plaza Seoul hotel, Thursday.
"It talks to a way of partnering for the future in the Korean economy on the whole," he noted in the speech delivered via video, at the event addressing the new post COVID-19 normal.
Such collaboration was seen in procedures such as prompt public testing and contact tracing, which led to Korea being recognized for its effective response to the crisis.
This partnership is part of a global phenomenon, where collaboration is seen across all sectors.
"There have been some valuable lessons learned about the way in which businesses, the way in which governments, the way in which people can collaborate in order to tackle the problems we now face, the way in which innovations can be accelerated," Sneader said.
"These features are likely to continue and are likely to shape the next normal."
Highlighted borders
The Hong Kong-based consultant also said that Korean businesses should brace for a tougher trade environment as borders between countries become more pronounced amid government movements to reduce external dependency.
"In the 1990s and indeed in the last decade, much of the focus has been on the death of distance. The idea is that technology can bring us closer," he said.
"But at the same time around the world we have seen borders return," he noted.
This phenomenon has been seen in the past years as the world's two largest economies engaged in a trade war, but the movement has spread and is accelerating since the world was hit by the coronavirus pandemic. Economies that were unable to secure key supplies, such as masks, and suffered supply chain disruptions that wreaked havoc on businesses have begun efforts to reshore production bases.
"There is the notion of distance is back, that there are going to be borders, that it is going to be harder to bring goods, people and services from around the world," Sneader said. "That's a challenge that Korea, and many countries and businesses need to get used to."
This aspect of the next normal has dire implications for Korea, whose exports account for about half of the country's GDP. Following the COVID-19 crisis, the government has boosted incentives and support for businesses bringing operations home from abroad.
Biz strategies
Tasks for pandemic-afflicted businesses to recover and prepare for the changing environment, in Sneader's view, begin with recovering revenue and rebuilding operations.
"As operation have shut down, as components have been harder to source, as value chains have been stretched, the need to rebuild operations is deep," Sneader said.
"This means looking hard at ways in which to increase operating resilience, accelerating end-to-end digitization."
Resilience is emphasized after businesses suffered pandemic-triggered shocks in global value chains built on efficiency.
"The shock that the pandemic has created has meant that we are likely to shift from a just-in-time economy to a just-in-case economy, where we plan for unusual events," the global managing partner said.
In emerging from the pandemic, "agility" has become crucial.
"This is about finding different ways to get information from the frontline and to ensure that the pace of decision-making is viewed as a key source of a competitive advantage," Sneader said.
