2016 provided a dramatic year for everyone, especially those concerned about their finances and future. World markets took a massive hit, as superpowers like America and Britain ended up going in directions no one thought they would. Even China watched as its economy weakened. The question you need to ask is what can you, as an individual and business, do to help reduce any negative financial impact that might happen. There’s no predicting the future perfectly, but you can begin taking steps to curb whatever negative impact might hurt you. It’s important then to consider what happened in 2016 that negatively impacted various markets.
China in 2016
After the last economic crash around 2008, the world was reeling from the sudden reduction in jobs and income opportunities. Banks closed, business people were taken to court and governments had to use taxpayer money to bail out banks. After all, if banks failed, then an entire country would find itself in a dire situation. China, however, found success after the last crash. As John Ross, a senior fellow of Chongyang Institute for Financial Studies, pointed out years ago:
“For the last 30 years China has enjoyed the world’s most rapid economic growth not by accident but because its policies conformed to the basic laws of economic development.”
Thanks to various policies, such as having largely state-owned companies, China could influence its own markets without relying on other, external factors. The country has unique aspects that allowed it thrive, such as a high proportion of exports. However, 2016 saw the opposite of success. As Forbes notes, this heavy reliance on state-controlled assets is what led to reduced growth.
“The bulk of the services sectors, such as transportation, healthcare, information technology and transmission, scientific research, education, and entertainment, remain mostly restricted to state-controlled firms, which are often uncompetitive and mired in inefficiencies. Even though China’s transformation to a service-based economy is in nascent stages, not enough energy has been devoted reforming the tertiary economy, resulting in ongoing lagging growth.”
The lesson here is relying too much one area, even if it’s complicated. China’s belief that it could rely on the properties which brought the country out of the recession in order to combat the international crisis was misplaced. Naturally, there was probably no way to change as rapidly as before – since, for example, it relies on exports but exports are determined by countries which are suffering their own issues. International (and Chinese) demand for construction materials and production inputs dropped off, leaving factories with excess supply. This slows production and has a domino effect.
Businesses must look at how Chinese firms have responded too slowly, too narrowly, and begin expanding their own outlook. Whether this means attempting to obtain more funds, such as machinery asset finance, or reducing supplies, anything should be considered to help improve business security.
Prepare for the worst
Too much of 2016 was a result of disappointment and disbelief. No one took Donald Trump seriously; few believed the majority of British voters would opt to leave the European Union, when no good reasons had been provided. Yet both of these subverted expectations of much of the so-called liberal media, resulting in a collective distant nightmare scenario uncoiling itself into a reality.
Businesses are advised to prepare for the worst, not what they think is likely to happen. This isn’t even a condemnation of optimism but rather pointing out even the “likely” scenario isn’t what happens. 2016 proved that all the smartest people’s opinions in the world won’t change the shape of the planet.
By looking ahead at what the worst outcome would be, you’re better prepared than anyone to help combat what might happen. This secures your and your staff’s future, in ways that benefit everyone. Your business can thrive while others, acting on a false sense of security, will suffer.
Even objective measures can be twisted into a narrative that fits our sense of security, as Fast Company highlights.
“Statistics, to many people, equal objectivity. And often business decisions are bolstered by a datum that supposedly speaks quantitatively to the issue at hand. But designer and writer Ash Huang cautions people to avoid using statistics spuriously, and make sure that numbers cited help the business long term. Additionally, some statistics people use aren’t the most illustrative of the goals at hand. We can even look at this year’s presidential election to see how statistical analysis went awry. Instead, Huang argues, data should be used as a tool and not as an end.”
2017 can be a better year for everyone, including you and your business. There’s no reason to give in to despair, when the future is unwritten. One way to do that is to learn from recent history. Even the strongest can have weaknesses they do not realise until those weaknesses are the very things that bring them down. To that end, you must look hard and reflect deeply – it’s only in this way you will succeed.