Personal Touch Lost By Travel Bans Is Costing Businesses Dearly
(Bloomberg) -- A full reboot of global commerce is counting on business travelers being allowed to cross borders again.
But even as vaccine rollouts gather pace, a return to a pre-pandemic normal could be years away as many countries take a go-slow approach to reopening.
That’s a daunting prospect for executives like Sammy Tsui. The founder of China Tech Global, a company that sells sanitizing equipment, says the inability to travel has translated into stalled and lost deals as potential clients aren’t able to test out products such as walk-through sanitation tunnels and thermal devices.
Among the deals he’s waiting to close is a HK$200 million ($21.2 million) contract with a Qatari client who is interested in using the equipment during next year’s soccer World Cup in the Gulf state, but with whom he has only been able to talk to over Zoom.
“If I could have traveled in the past six months I would have sealed a lot of substantial contracts,” Tsui said from Hong Kong, where an unusually strict hotel quarantine period of 21 days for anyone coming from outside China has all but put a stop to non-essential travel.
Research last year by the Growth Lab at Harvard University’s Center for International Development found a direct link between incoming business travel and the growth of industry. The ability to swap know-how facilitated by such travel is crucial to economic growth, they found.
The business travel freeze is compounding the economic hit from the choke in international tourism. According to the United Nations’s World Tourism Agency in January, up to 120 million jobs, mostly in small and medium-sized businesses, are at risk. Bloomberg Economics estimates that the Philippines, Thailand, Mexico, Spain and Italy face the biggest hit.
That’s prompted the International Monetary Fund to warn that trade in services will recover more slowly than merchandise volumes, even as vaccinations help the global economy rebound this year at the fastest pace since 2007, spurred by trade and manufacturing.
The diverging pace of vaccine distribution between advanced and developing economies will mean only a gradual recovery in business travel over several years, with the resumption of critical services -- such as machine repairs and audits -- returning faster than other activities such as conferences, according to Ricardo Hausmann, a professor of international political economy at Harvard who worked on the Growth Lab paper alongside researchers Michele Coscia and Frank Neffke.
“I think this will translate into a productivity slowdown for the world,” Hausmann said.
There’s been little major progress on easing travel restrictions since the year began, with quarantines and other curbs extended or tightened from the U.S. and Western Europe to New Zealand and Hong Kong. A proposal by the International Air Transport Association for test or vaccine certificates to replace quarantines hasn’t gained traction with governments. Travel bubbles and digital health passports are other options that have been floated.
Even in countries where the virus has been quashed, cross-border travel has proven difficult to restart as governments are reluctant to drop mandatory quarantines as the front line in their fight against Covid-19.
Some Asian countries are willing to shorten their quarantine periods, however, for business travelers.
Singapore has started taking applications for a program that will allow people to enter for business and official purposes without having to quarantine for 14 days -- but they will need to stay in a bubble-like facility near Changi Airport. Plans for the city-state to host the World Economic Forum’s Special Annual Meeting have already been pushed back from May to August. Taiwan plans to allow shorter quarantines for business travelers provided they meet a host of conditions starting in March.
Shorter travel turnarounds will become easier as low-cost, high-efficacy tests are made more available, according to Gloria Guevara, head of the World Travel & Tourism Council.
But a full reopening will only be possible with mass vaccinations on a global scale.
“All countries need to realize that they cannot get out of this alone,” said Karen A. Grépin, associate professor at the University of Hong Kong’s School of Public Health. “We need higher levels of global cooperation to get us out of this predicament.”
For now, executives like Hong Kong-based Stefan Kracht, who advises and offers services to medium-sized European companies with operations in China, have put their frequent-flier lifestyles on hold. Online meetings, he said, have been effective in “continuing relations” with existing clients.
Before the pandemic, Kracht, managing director of Fiducia Management Consultants, was a frequent traveler to mainland China and to Europe. Without physical contact, he said, “the biggest challenge is winning new clients.”
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