[In-Depth Review] Distribution Industry Must Prepare for the Post-COVID-19 Era

Chochunhan, Professor of Business Administration, Gyeonggi Science and Technology University

The World Health Organization (WHO) declared the novel coronavirus infection (COVID-19) a 'pandemic,' revealing that COVID-19 is no longer just a problem for China, our country, and a few other nations. While confirmed cases are rapidly increasing in the United States and Europe, our country is overcoming the crisis quickly thanks to the efforts of medical staff and the active cooperation of citizens through 'social distancing.'

In particular, Korea's drive-through testing technology is being benchmarked worldwide, and major countries including the United States and Europe are striving to import diagnostic kits. Domestically, with the start of 'social distancing,' telecommuting culture using online platforms is spreading, and the proportion of people using online shopping and dining services comfortably and safely at home has increased.

From the perspective of retail stores, the mandatory twice-monthly closure regulation combined with COVID-19 has led to the collapse of the offline market, a situation that experts describe as adding insult to injury. However, they also see a positive hope that this crisis could serve as an opportunity for domestic manufacturing and distribution industries to join forces and explore overseas markets.

Until now, except for Korea’s smartphones, home appliances, and automobiles, which have earned a reputation as Made in Korea, Korean products have been part of niche markets not only in the United States, Europe, South America, and Africa but also in nearby Japan, Hong Kong, and Singapore. Only Koreans living locally or foreigners who have experienced Korean products purchased them.

However, attention should be paid to the fact that new opportunities have come along with COVID-19, as seen in diagnostic kits exported based on product stability and speed. This has become a clear example that has firmly imprinted the Made in Korea brand. Therefore, this crisis can be seen as a golden opportunity for domestic manufacturing and distribution industries to unite and knock on overseas markets. While previous expansions targeted China and Southeast Asia, this time it is an opportunity to enter Europe and the United States. Partnering with local companies to enter overseas markets can also be a way to easily overcome entry barriers.

However, since many manufacturers face difficulties entering overseas markets simultaneously, distribution companies should act as a focal point for overseas expansion. If this happens, there will be opportunities for various products to enter the market simultaneously. Although strategies used by Amazon and Alibaba to expand domestically and overseas cannot be directly applied to the current situation, entering overseas markets through domestic success stories could become a timely and tailored entry strategy.

Above all, if domestic distribution companies expand overseas, domestic manufacturers’ products, led by private brand (PB) items, will also have opportunities to enter foreign markets. This will allow domestic manufacturers to export not only existing products but also other products through stable production. As a result, the multiplier effect of export competitiveness will be doubled.

Recently, a petition has been raised to name a COVID-19 diagnostic kit 'Dokdo,' which is not just a simple idea to assert that Dokdo is our territory but also reflects pride in exporting high-quality Made in Korea diagnostic kits to countries struggling with COVID-19.

Due to international travel restrictions and 'social distancing,' domestic demand has plunged even deeper than during the IMF crisis. At such a time, government support is urgently needed to enable Korean distribution and manufacturing companies to expand overseas based on advanced COVID-19 response strategies and excellent technological capabilities.

When COVID-19 disappears and countries around the world, including Korea, return to 'normal life,' the global economy will be divided between countries that prepared for the post-COVID-19 era and those that did not. This is a critical moment for the Korean government and domestic distribution industry to seriously consider the 'post-COVID-19' era.

Jo Chunhan, Professor, Department of Business Administration, Gyeonggi Science and Technology University

This content was produced with the assistance of AI translation services.