James Elsom joins the panel of judges in Asian Export Awards 2020

A Deloitte corporate finance partner’s perspective on the importance of shifting the mindset of companies from today to tomorrow.

James Elsom is a partner in Deloitte Asia Pacific’s corporate finance practice based in Singapore. He is a senior corporate finance leader with deep cross-border transaction experience and has 14 years of experience in both buy and sell-side M&A, due diligence, valuation, financial modelling and strategic advisory work across a range of industries, with a focus on private treaty M&A transactions.

In an interview, James spoke about the changes to regional supply chains and trade flows in Asia Pacific, as well as the importance of shifting the mindset of companies from today to tomorrow.

Which particular markets or sectors are your main focus? Can you share with us your work experience or any backstory that has contributed to your professional career?

I focus on M&A and capital raising within the Healthcare and Consumer Business sectors across Australia and Southeast Asia, having been privileged to have advised over 100 companies so far in my career.

I get to advise people through some of their most complex life and career decisions, whether that be helping a founder realise their life's work, or a key executive putting their career on the line in a decision to acquire a company.

Tell us about the biggest trends you've observed from Asia Pacific's regional export scene for the past six or 12 months.

Obviously the impact of COVID is the single largest trend, if it can be called that, on the global economy and regional trade.

The dynamic we are witnessing now is the mixed recovery out of the crisis. Some economies are still in the depths of responding to the crisis with second, third and subsequent waves re-shutting down domestic economies. However others, such as China are already well on their recovery journey and positioned to thrive in a post-COVID environment.

It is this mixed recovery which will be the greatest focus over the coming months.

Prior to COVID, we were already seeing changes to regional supply chains and trade flows as a result of the US-China trade war. This has been augmented and accelerated in 2020. One market to call out is Vietnam, who’s handling of the COVID crisis together with its proximity to China, and role as a “finishing” destination has experienced strong growth in manufacturing and exports.

What is the pandemic's impact on intra-regional trade, particularly on exports? Which industries are able to stay resilient in these trying times?

The immediate impact in January to March was one of almost complete shutdown of investment, production, and sales.

Any intra-regional trade markets that relied on production in China were immediately impacted, and then the flow on impacts to supply chains throughout the region were, and continue to be, felt strongly.

Going forward we are seeing a rethinking and restructuring of supply chains; diversification of production and re-shoring of critical industries such as pharmaceutical production, agriculture and food, and critical manufacturing. These are significant, multi-year changes that require significant coordination and planning, but we are seeing organisations and Governments already execute on these changes.

In terms of export industries, the ongoing impact has been felt most among those which relied on discretionary or large consumer spending have been the worst impacted. Automotive, travel, as well as tourism and discretionary or luxury goods have had huge impacts on trading and cash flows.

On the other hand, basic consumer staples, personal and household goods and agricultural exports (provided processing and harvests were not disrupted) have been positively impacted.

What can businesses learn from the crisis? For those who have been badly hit, what do they need to consider to become more profitable and sustainable in the future?

Deloitte has positioned the lessons and actions required through the phases of the crisis of "respond, recover, and thrive". At its heart we have described the importance of resilient leadership; of our people, businesses and communities.

In our "Recovery Playbook" we describe the importance of shifting the mindset of companies from today to tomorrow and plotting the company's pathway through the uncertain future.

Specifically on the question of businesses which have been badly hit, it is important to recognise that no industries will be the same as what they were. There have been and will be permanent customer behaviour changes - for example, businesses which previously relied solely on selling goods through a single physical retail channel will have to reconfigure their route to markets, leveraging digital and omni-channels. These businesses should consider which changes in customer behaviour are permanent and which may be temporary.

Another obvious question that all industries should ask is, ‘how can I accelerate my digital transformation?’ This is not just about customer digital transformation, but right the way through the organisation to enable growth and leverage the insights that it can enable.