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CHEMICAL INDUSTRY: ADAPTATION TO NEW NORMAL
With strong dependence on the agriculture sector, the chemical industry has experienced extreme difficulties during the midst of the crisis. According to Hai Ha Chemical Joint Stock Company, in Vietnam, a 5% decrease in the produced quantity of chemical, fertilizer, and agriculture equipment was reported in 2020 compared with the same period in 2019. The global Materials/Chemicals sectors were reported to decrease up to 15% market return during the crisis. The indirect impact caused by the pandemic on agricultural chemicals (pesticides, herbicides, and fertilizers, etc.) has greatly influenced the imported input turnover for agricultural production, resulting in the reduction of chemical industry output in 2020.
The oversupply situation brought by demand destruction has become an alarming problem for the chemical industry, especially automotive transportation and consumer products sectors have been suffering from the toughest hit with continuous demand reduction. Various chemical manufacturers were forced to reduce their capital and operational expenditure, scale down the capacity of manufacturing operations due to the oversupply problem, shortages of labor, and raw material supply. Generally, chemical products in different categories all witnessed a downfall in demand and production.
TACKLING THE PROBLEM
Despite the demand destruction and sharp decline in price, the chemical industry still maintains positive operations while ensuring protective measures for all participants. The Vietnam Ministry of Agriculture and Rural Development has been stimulating agricultural demand by enacting policies to improve the consumption of domestic products. Several groups of industries, including chemical, have directly benefited from the epidemic thanks to the growing demand for medical services and personal protection, as well as disinfectants and antiseptics.
Apart from bringing difficulties to different industries, Covid-19 has created opportunities for businesses in reorganizing operational systems and planning for digital transformation to support work productivity. From improving and expanding revenue in the previous years, many businesses now have decided to turn into defensive to maintain momentum till the pandemic ends.
NEW NORMAL, NEW PRACTICES
Covid-19 has prompted the consumer’s shopping habit to change, and a high percentage of them deems that this new-founded habit will also remain post-pandemic. Consumer preferences have shifted rapidly towards more environmentally friendly, sustainable, and ethical purchases. With new regulations and incentives being introduced to achieve this target, companies with the chemical industries also need to alter their operation to adapt to this new trend.
Although the chemical industry has moved slower compared to other industries when it comes to digitalization, the Covid-19 pandemic has shown the potential power of digital movement which urged the chemical industry to follow through. Enterprises are seeking new ways to drive efficiencies and expected to see a new era of digital in the chemical industry, including the adoption of artificial intelligence (AI), machine learning (ML), robotic process automation (RPA), and other technologies across the front, middle and back-office.
Hybrid operating model that harmonized the physical operations with more virtual service delivery is one of the most potential adoptions within this development. With proper design and backed by more granular levels of customer data, online platforms and customer interfaces result in more responsive service, products more personalized to the customer needs, and reduction of expansion into underserved markets.
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