Since the government on May 19 imposed a nationwide level 3 COVID-19 alert, indoor gatherings of more than five people and outdoor gatherings of more than 10 have been banned.
While the restrictions, last week extended until July 12, have had relatively little effect on manufacturing and other export-oriented industries, they have seriously harmed the service sector, including transportation businesses, tourism operators and food and beverage firms, as well as entertainment venues, fitness clubs and beauty salons.
A survey early this month conducted by the Association of Chain and Franchise Promotion showed that about 75 percent of its member firms were on the brink of closing down, with 65 percent of them being food and beverage businesses. The extended level 3 alert has significantly affected service providers, and challenges such as wage cuts, layoffs and shutting down lie ahead for many, the association said.
The pandemic will be brought under control sooner or later, as governments around the world have accelerated their COVID-19 vaccination programs. However, many small firms in the service sector will have gone out of business by then, and those among them that lack the competitive edge to weather the challenges of the post-pandemic era might not be able to reopen. That is also because their larger rivals have quickly launched physical and virtual channels to continue operations, despite contact restrictions and other measures, and expanded their business to include products and services for the convenience and safety of their customers — with the secret weapon being e-commerce and digital transformation.
Since the outbreak of the pandemic, e-commerce has expanded, with new businesses, consumers and products entering the market. Despite cross-sector differences, COVID-19 has enhanced the scope of the e-commerce landscape, from luxury goods to everyday necessities and groceries. For instance, an increasing number of small-scale Taiwanese farmers have begun using e-commerce platforms to sell produce directly to consumers. Apart from providing fresh and affordable fruits and vegetables, as well as home delivery services, the platforms also help shorten the distance between farms and households, without the risk of intermediate businesses exploiting the farmers.
E-commerce services have over the past year been adopted more widely, particularly by people who never embraced them before the pandemic. As long as this digital transformation continues, small farmers will gradually become less dependent on large intermediate players that manipulate the market and control prices. Amid fears of new waves of infection, some of these changes might change the market profoundly and persist in the long term, especially with regard to consumers’ new purchasing habits and businesses’ investments in new sales channels.
As some small-scale service providers with limited resources are unable to keep up with this trend, the government should provide job training, investment incentives and marketing assistance, as well as financial aid. Several government agencies, including the Council of Agriculture and the Ministry of Economic Affairs, have over the past year made efforts to foster e-commerce among local businesses, but digital divides remain across sectors, with some small firms being unable to participate in the digital transformation.
The government should ensure a level playing field, especially for small businesses offering services on e-commerce platforms, and sufficient competition in the online market, as a service sector dominated by big players would also be harmful to consumers. People’s lifestyles will likely undergo drastic changes in the digital age, including challenges related to digital security and personal information, which the government must protect with greater vigilance.
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