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ACT Kazakhstan continues to hold panel discussions with business representatives. This time, small business owners were invited to the discussion. We invited business owners from different areas of the business to get a wide range of opinions. The discussion was held online, with the participation of representatives of the service sector (hair and beauty salons, cargo freight, letting premises for commercial use), trade (trading garments), and production (leather accessories, confectionery). The attending businesses were operating before the onset of the emergency and related restrictive measures for business and has resumed (and some never stopped their activities) or are preparing to resume their activities. This article summarizes key insights from the discussions with small business representatives. We, as researchers, were interested to understand the current standing of small businesses, how it has managed through the state of emergency, and its mood after the isolation. The discussion has also served as a platform to exchange experiences, opinions, and ideas.
WHAT WERE YOU DOING DURING THE QUARANTINE?
Most representatives of small and medium enterprises (SME) said they used the time for personal growth, learning new trends in the industry, and doing work for which they had no time before. In addition to the implementation of previously postponed plans, many were able to rebuild their business to new realities and launch new areas of operation. The most common area of development was the use of an online sales channel, which either did not exist before or was less active compared to offline sales.
“During the quarantine, we managed to grow many times over, so we did a good job. Before that, we limped in many areas, and we managed to cope with that during the quarantine. We have learned to work online.” Aliakpar, manufacture of Luciano leather bags
We found out that business owners who were active online before the quarantine did not lose touch to their customers, but experienced difficulties with the logistics of goods both from abroad and to the nearby regions. Those areas of business that cannot operate online experienced all the quarantine-related difficulties (out of those presented, the logistics (cargo freight), hair and beauty salons, giving premises for rent). Representatives of such businesses confirmed they were bearing losses due to delays in goods delivery because of the closed borders, etc.
“We are getting a lot of orders now, but the problem is the lack of goods because of the problems at the borders and a very few incoming flights.” Asel, “Street 48+” clothing store.
WHICH WAS YOUR STAFFING BEFORE THE QUARANTINE? DID YOU HAVE TO REDUCE IT?
The target segment representatives largely confirmed many predictions regarding the impact of the emergency on the unemployment rate (see the ACT Kazakhstan’s measurements of the COVID-19 pandemic impact on employment rate: https://kazakhstan.act-global.com/news/1665/). Among small businesses, some had to reduce staff, others – to cut wages, and some had to dissolve the team for the period of emergency completely.
“We had only one freight voyage in 2 months – the truck went to Poland. Although our enterprise is small and we have 5-6 people working, this was not enough to pay wages to people.” Elena, cargo freight, IE Zakomorny.
However, business owners predict a gradual recovery of staffing as the country emerges from quarantine and the sales recover.
HOW EFFICIENT WAS THE GOVERNMENTAL SUPPORT FOR SME?
Regarding support from the government and large businesses, the SME owners commented they did not receive the necessary support, and the solutions proposed by the state did not apply to their businesses. Some respondents noted that they and their employees received social assistance from the state in the amount of KZT42,500. They hoped to receive the same aid in May. Some respondents were very surprised by that opportunity, and some noted that it was the first time they received such targeted material support (albeit not great) from the state.
HOW DID YOU AGREE WITH THE LANDLORD? DID HE CHANGE THE TERMS OF RENT?
All the participants could successfully settle the rental issue. Their landlords showed understanding and charged no rent during the shutdown. Some business owners said they own their business premises, so they had no issues with landlords. One of the participants, who was the owner of a company letting premises for commercial use, noted that he lost income during this time, but took account of his leasers’ situation and did not charge them rent.
“I have not charged rent since mid-March, I only asked to pay utilities.” Kuanysh, letting premises for commercial use
One SME representative shared his dissatisfaction that he was not allowed to access his workplace during the quarantine, even during sanitization.
“I had an unpleasant incident when I came and called in the staff to sanitize my salon. Police officials watched us. It was very unpleasant that we had not entitled to enter our premises.” Zhanna, “Berik Ismailov” beauty salon
HOW DID YOU OPERATE DURING THE EMERGENCY AND THE QUARANTINE? WAS IT EASY FOR YOU TO RECEIVE A MOVEMENT PERMIT FOR THE EMPLOYEES?
SME representatives shared different experiences about receiving permits to move around the city. The companies involved in “permitted” activities could receive the permits much faster while other companies were facing difficulties. The participants commented that the requirements for getting permits were changing daily, and one had to react very fast to receive permits before the requirements would change.
“Since we are in the food industry, we had no problems with that. We were in all the lists. We just had to act very quickly; there were changes all the time, and that made things difficult.” Dinara, “Asatu” confectionery
DO YOU PLAN TO APPLY TO BANKS FOR FINANCIAL ASSISTANCE?
Being asked about new challenges and how to be prepared for them, most of the SME representatives said they made no long-term plans but rather focused on the short term activities. Most of the participants positively assess the near future of their business and rely only on themselves. Therefore, not all enterprises consider the possibility of additional financing through a bank loan. The opinions of SME owners differ significantly depending on their core activity. Representatives of trade and production noted the need for working capital, but the amount required varied considerably. When choosing the way to obtain additional financing, business owners will consider a possibility of getting working capital micro-financing or a business development loan (in a more significant amount) after the crisis but on favorable terms as offered by the state at the moment. One of the panelists shared his experience in attracting investing partners. In his opinion, this approach is more acceptable for his business than bank loans.
HAS YOUR CONSUMER CHANGED? WHAT HAS CHANGED IN YOUR CONSUMERS DURING THE QUARANTINE?
The SME representatives believe the consumer habits will change under the pressure of circumstances, and more people will use online shopping and delivery services. These changes in consumer behavior will force businesses to go online and respond to customer needs and requests at a faster pace. We got a very interesting insight regarded one of the most popular sales channels – Instagram. This social network has its life cycle, like other channels; therefore, it might disappear over time. For this reason, a company should develop its corporate website in addition to maintaining accounts on main online-sites, said one of the participants to the discussion.
“I have a page of my store on Instagram, but I am already starting to make a website. ‘Cause Instagram will die someday, so we need to look further.” Asel, “Street 48+” clothing store.
Comparing the discussions with large and small businesses, we see a significant difference in the perception of the situation and the mood of people. Small businesses are more positive. They rely only on themselves and believe that if they make every effort, they can cope with the crisis. For them, it is also easier to reformat their work, change processes, or even start a new direction, while for a large business, such options require significant resources (HR, time, finances). However, both large companies and SMEs agree on the need to go online and quickly respond to consumer needs.
* ACT Kazakhstan will continue the series of panel discussions with experts in various fields.
COVID-19 has conquered the whole world in an epidemic threatening the health of man and economy. Despite its geographical location and proximity to China, Kazakhstan and most of the Central Asian countries were among the latter who faced this epidemic and declared quarantine. For almost two months, most of the businesses were facing a previously unseen crisis that nearly immobilized the country. Many companies had to rebuild their system radically; many people have lost their jobs for various reasons.
ACT Kazakhstan brought together experts from various business areas to discuss how the pandemic changed the market, which trends lost their relevance, and which ones intensified, and how all that affected the behavioral habits of consumers. The discussion was held online, with the participation of leading marketers and CFOs of large businesses: Anton Kim (ForteBank), Yana Kononenko (CloudPayments), Bakhtiyar Sabdenaliyev (UIB University), Asker Ismankulov (QSR LLP (Burger King TM)), Nurken Rzaliyev (partner of ChocoFamily Holding, CEO of RahmetaseApp), Chingiz Nurazkhanov (AvtoGaz Trade LLP (Gasenergy)). Such a range of industries and opinions made the discussion lively and productive. This article provides a quick overview of the discussion held.
We tried to find out the experts’ opinions about has the world ever faced a crisis comparable to what is happening now and whether the accumulated experience is helping Kazakhstani companies to cope with the situation. We have got an answer that what is happening today cannot be compared with past crises because this economic crisis comes together with complete isolation that leads to new realities. One expert commented that the current situation affects not only the preparedness of companies for such challenges but also the psychological state of the employees. According to the experts, today, the rate of reaction to challenges, as well as the market’s ability to quickly adapt to consumer needs are important as never before. This day, we are not in a crisis but at the stage of transition from the customary rules of the game to new rules. The current moment has exposed the pain points in business that seemed acceptable in the past, but now they hinder business growth and development.
“This is not a crisis; this is the end. The end of the customary life. And the recovery period will take at least one and a half to two years.” Anton Kim, ForteBank
Talking about the end of quarantine and the new challenges, some experts consider it necessary to take into account the specifics of this situation and the possibility of resuming quarantine measures, since the virus may repeat itself by this fall and bring in a second wave which may be followed by undesirable consequences for the business. Experts believe that the business is facing a global task to automate its processes and build communication with customers in a way to secure them.
“Autumn is coming, and we can wait for the second wave. We have a small window of time when we can adapt our tools to be better prepared for the second wave.” Asker Ismankulov, QSR LLP (TM “Burger King”)
Regarding possible changes in marketing approaches after COVID-19, some experts believe that many companies will reconsider their views on digital tools. Even companies that previously neglected these resources will have to face these changes. The most convincing argument is that most offline sales today are losing money (except for food and medicine). The experts believe that the companies that were not focused on digital before will have to go digital actively.
“When the crisis is over, a big construction will start. Everyone will start building for the future, if, God forbid us, something happens tomorrow again, or there is some the second wave.” Nurken Rzaliyev, the partner of ChocoFamily Holding, RahmetApp CEO
However, according to some experts, despite the digitalization, the demand for classic advertising will remain; and TV and outdoor advertising will continue to work.
“Billboards will live!” Chingiz Nurazkhanov, Avtogaz Trade (TM “Gasenergy)
Speaking about changes in the organization of corporate work and future corporate development trends, the experts share the opinion that the areas of business able to give up working in the office will switch to the remote regime, either completely or partially. COVID-19 has become a powerful impetus for the development of e-commerce. Experts note that even those companies that previously have not considered their presence in the electronic market, today are well aware that this is a new opportunity and a chance to maintain and even expand their businesses. Experts specializing in e-commerce note the growth and predict positive dynamics of purchasing goods via the Internet, as well as the development of new habits among customers (e.g., non-cash payments).
“New realities affect the purchasing habits of Kazakhstanis. Previously, the state had repeatedly set the task of popularizing non-cash payments, but the process was slow. The frequency of using payment cards has increased with the advent of banks that offer a user-friendly interface and commission-free money transfers. Quarantine has contributed to the emergence of various online services such as food delivery, grocery delivery, etc. since many companies saw new opportunities in e-commerce. It is known that it takes 21 days to form a habit. We had much more time.” Yana Kononenko, CloudPayments
Even though COVID-19 brought negative trends for business, experts in the e-commerce industry share the opinion that the quarantine resulted in new opportunities for Kazakhstani business. E.g., previously, the consumers could place orders on international platforms, but today they have an opportunity to use similar local services. Experts believe that this trend may continue, and the consumers’ confidence and loyalty to Kazakhstani producers will increase. However, not all experts agree that this trend embraces a large part of Kazakhstani population. Not all consumers have access to and the opportunity to enjoy the benefits of digitalization. The reason for this discord might be that our experts focus on different consumer segments.
“Not so many people can use non-cash payments. Perhaps, they would like to, but they do not have such an opportunity. People just below the middle class cannot order online, work remotely, as well as those who have lost their jobs because of the impossibility to stay physically at work or due to the layoff. They will not change their habits that much.” Chingiz Nurazkhanov, Avtogaz Trade (TM “Gasenergy”)
The experts did not reach a consensus on the expected changes in consumer behavior. Some experts believe new trends will emerge, such as technology, online learning, remote work, online shopping, increased health care, and a focus on proper home nutrition. Respectively, the emergence of new trends will drive the business to develop and remain competitive in the market. Discussing whether there will be a V-shaped economic growth after the end of the emergency, experts agree that it is better to be a little pessimistic and not expect a sharp growth in this situation.
Despite some differences of opinion, the experts agree that teamwork and team spirit are the keys to survive the crisis and ensure sustainable business development.
“Strong IT team and internal corporate culture will be the main driver of further growth.” Bakhtiyar Sabdenaliyev, UIB University.
* ACT Kazakhstan will continue a series of panel discussions with experts in various fields.
COVID-19 was the reason for introducing the unprecedented quarantine measures in modern Kazakhstan to contain the spread of the disease. In general, Kazakhstan has not introduced such large-scale quarantines over the past 50 years. The first economic forecasts related to the consequences of the introduced quarantine measures have appeared since the very beginning of the quarantine measures in Kazakhstan and other countries of the world.
During the state of emergency, ACT Kazakhstan has conducted a survey among the population of the Republic of Kazakhstan on the impact of the introduced regime on the work activities. It is worth noting that before the emergency, 79% of the respondents had a permanent job, 7% had part-time employment, and 14% of the respondents were unemployed. At the time of the survey, 36% of respondents who had a full-time or part-time job were on unpaid leave, 29% continued to work in the office (21% – full-time, 8% – part-time), 25% worked remotely, and 5% were on paid annual leave.
Regarding the workload of those Kazakhstanis who continued working online and offline during the emergency, the workload remained the same for 43% of the respondents, increased for 22% of the respondents(in particular, it affected medical workers – 18%)), and decreased for 33% of the respondents (mainly, for those involved in trade – 20% and services – 18 %). Most of the respondents have not experienced material damage from the measures introduced, and their wages remain the same (58%). Almost a third of the respondents (30%) who had a job before the emergency noted a reduction in the wage (in 11% of cases, it went down to 1 minimum wage). 12% refused to share information on changes in wages.
The reduction of wages of affected Kazakhstanis amounted to:
What are the expectations of Kazakhstanis in terms of employment? 53% of respondents expect no changes, 10% expect to be sent on unpaid leave, 5% expect to be sent on paid leave, 4% expect a reduction in wages, 2% expect to lose the job. Everyone perceives self-isolation differently. Most of the employed respondents (79%) are ready to work even in a pandemic, while 16% would not go to work even if the quarantine removed.
During the quarantine, one could come across many recommendations from specialists, psychologists, coaches, opinion leaders, and ordinary people on how to cope with stress and fears brought by the COVID-19 pandemic.In that information flow, we paid attention to a very interesting infographic (https://clck.ru/NCBxg ) by Robert L. Leahy, Doctor of Psychology. This infographic is convenient for self-diagnostics. It will help you to see which sphere you are in: the sphere of fear, education, or growth! This scheme also supports tracking the movement from one sphere to another, depending on various internal and external circumstances.
Our curiosity turned into interest. Who we, the Kazakhstanis, are during COVID-19? We’ve transformed the scheme into a question with possible variants of answers, adapted it to a data collection methodology, and asked Kazakhstanis the following question: “How yould you describe your style of behaviour during the COVID-19 pandemic? Choose one variant of the answer which provides the closest description of your behavior in the current conditions.”
The results should be reviewed in the context of a certain time period of collecting data, since, as we mentioned before, a person can move from one sphere to another.According to our measurements, on 17-22 April 2020, most of the Kazakhstanis (45%) were in the sphere of education, 43% tended for the behavior typical for the sphere of growth, 8% have found themselves in the sphere of fear, and 4% found it difficult to answer.
