Life after covid v4.3

Adjusting to life after COVID-19
By Kenneth Yeo, CIO
Having been in the private equity industry for over two decades, I have learned to
focus on slightly longer-term perspectives. While we are all busy adjusting our lifestyles in
the wake of the pandemic, I am wondering how different life will be when it is all over.
Mankind has survived many natural as well as man-made disasters and crises – these
not only failed to render us extinct, but also served to make us stronger due to our incredible
ability to adapt and change. COVID-19 has been a catastrophe and our thoughts are with
everyone who has been affected. I believe that we will triumph over this and that when we
look back years from now, this pandemic will be one more life changing event in the history
of humanity.
Every crisis teaches us something new and changes our lives to some degree. After
the September 2001 terrorist attacks, companies became more aware of the need for
Business Continuity Planning (BCP) and data redundancy across different physical sites.
Nearly two decades later, the Cloud technology we rely on today allows us to store data on
multiple servers across the world, making this data virtually “indestructible”. Moving forward,
the implementation of blockchain technology will make data not only “indestructible” but also
immutable.
After the Global Financial Crisis, central banks, regulators and legislatures around the
world put in place regulations such as the Dodd-Frank Wall Street Reform and Basel III to
ensure that a similar debt crisis that threatens to bring down financial markets will not
happen again.
Although we will likely go back to greeting each other with handshakes, hugs and
kisses eventually, I believe we could see changes in some areas:
Insights, 14 April 2020: Adjusting to life after COVID-19
© 2020 Xen Capital Asia Pte. Ltd. (UEN 201724182H) All Rights Reserved.
Offline-to-online
Once a buzzword of the internet era, this has now
been embraced fervently in every aspect of life from
shopping to working to learning. While these once
offline activities have been migrating online over the
past decade, the rate of adoption accelerated
exponentially as soon as cities started locking down.
When these technologies and services were first
introduced to the market they were met with
skepticism, flying in the face of the conventional belief
that people are social creatures who value face-to-
face interactions. The older generation used to lament
that young people now prefer to communicate through
devices rather than in person. On hindsight, we are
grateful that these technologies have been developed.
Without them, the world would literally come to a
standstill when cities are locked down.
Unfortunately, we did not learn well from past pandemics to prepare
ourselves for COVID-19. In fact, what we learned from past pandemics could
have caused us to become complacent and thus fail to act swiftly and
decisively, holding on to the supposition that that this will be like another
SARS and disappear by summer.

While schools and workplaces are expected to return to normal after the pandemic,
schools and companies will have to develop backup plans and invest in remote working and
learning technologies as a preparation for the next pandemic. There will be more
entrepreneurs developing such technologies and VCs willing to back them. There are still
green spaces where new technologies can serve in areas such as telecommuting, e-learning
and telemedicine. An example of an unexplored problem is how the tracking of students
taking examinations remotely to prevent cheating can be implemented. Scenes in sci-fi
movies today such as virtual meetings where participants’ holograms are projected in the
meeting room may one day become a reality. We will also see governments and regulators
becoming more receptive to recognizing e-signatures and video call authentication instead
of requiring face-to-face authentication.
E-commerce has also been given a huge boost and for the first time in Internet history,
online commerce has probably overtaken offline commerce in many parts of the world. In
France for example, while all channels of grocery shopping leapt in contrast to the preceding
year as the COVID-19 outbreak worsened, the e-commerce channel showed much bigger
percentage increases compared to physical stores, as seen in the chart below.
While people will probably return to the malls and supermarkets after the crisis, consumers
and companies will view e-commerce differently going forward. Again, there is room for more
technology as well as business model innovations in the space.
5.… 8.0%
12.9%
73.8%
8.2% 9.6%
29.4%
72.2%
18.0%
34.9%
74.3%
90.2%
0%
20%
40%
60%
80%
100%
Hypermarket Supermarket Drive Home delivery
24 Feb - 1 Mar
2 Mar - 8 Mar
16 Mar - 22 Mar
Percentage sales growth compared to corresponding weeks in the previous year,
France
OnlineOffline
Source: Statista
Major weaknesses in the global supply chain
were exposed even before the virus stuck. During
the US-China trade war, some tech firms in
China suddenly found themselves unable to
acquire critical components from US companies.
This exposed the weaknesses of sole sourcing, a
term used to describe that a component is only
available from one monopolistic supplier. The
COVID-19 crisis exposed another weakness of
the current global supply chain, which is a single
sourcing problem where companies select only
one supplier amongst those able to supply the
product. This is done to achieve greater cost
efficiency as well as better quality control.
Suppliers
Distributors
Manufacturers
Consumers
From supply chain to supply web

I believe the above experiences will drive two fundamental shifts in supply chains.
1. Development of multiple technology standards
2. Development of multi-sourcing or supply webs
Initially, phones were not compatible
and travelers from one region to
another either had to buy two phones
or rent one at the airport. Eventually
phone manufacturers were able to
integrate the two standards into a
single phone but the phones were
bulky and battery life was poor. After
almost 20 years the world finally
agreed on a single standard, 4G,
with core components being
controlled by a few major players.
Large companies will want diversification not only by supplier, but also by
geography of where components are produced. This is to guard against potential
failure of a single company or failure of a single geography. To meet customer
demands, manufacturers will need to set up multiple manufacturing facilities
across the globe.
This will lead to the establishment of satellite manufacturing hubs around the
world which will attract private equity and real estate investments.
Those of us who have been around long enough would remember that the world
once had multiple mobile phone standards led mainly by Europe’s GSM standard
and the CDMA standard from the US.
Regions with a stable
macro environment
and a skilled workforce
will become target
locations for these
manufacturing bases.
For illustrative purposes only
However, the US-China trade war has exposed the issue of reliance on foreign
companies as sole suppliers of components. Thus, I believe the development of
6G will revert to the previous model where the supply chain for key components
can be controlled within the region/country. This will create new investment
opportunities for private equity/VC funds as more companies will be started to fill
the technology void left by foreign suppliers.
GSM
CDMA
4G

Pandemic accelerates automation
“Robots Welcome to Take Over, as Pandemic Accelerates Automation”, was the headline of
a recent New York Times article. Ever since the invention of the first industrial robot in 1954,
automation in manufacturing has progressed and evolved for over half a century. Today,
advances in artificial intelligence (AI) and smart devices (or commonly known as “Internet of
Things” – IOT) have heralded a new era where service industries are being transformed just
like the factory floors of the past, giving birth to inventions such as robotic floor cleaners, AI
chatbots and self-service supermarkets.
While I do not expect companies to immediately embrace automation post-pandemic, more
companies will wake up to the fact that the benefits of automation extend beyond
productivity improvement and cost reduction – it could also serve to ensure business
continuity when humans are no longer able to perform their tasks. Although attention
towards and investments into the AI space have been increasing in recent years, I believe
we are still at a nascent stage, with profound developments and investment opportunities to
come. However, I would like to caution that over-reliance on automation could immobilize us
in the event of another type of crisis, such as a powerful solar flare that knocks out our
communication systems and GPS satellites. Thus, human workers and machines will have
to co-exist, with one acting as a backup to the other.
Dawning of the Age of Autonomous-everything
When cities in China were locked down, the Chinese – who are already well-accustomed to
online and mobile shopping – increasingly turned to e-commerce for the deliveries of meals
and daily necessities.
According to a TIME magazine article, Meituan reported online grocery sales increased by
400% in some cities, while online retailer JD.com has seen soaring orders of kitchenware,
baking products and home fitness equipment. This would have been a boon for e-commerce
and food delivery companies in a normal day. However, it presented two problems – how to
procure enough delivery drivers to make the deliveries and how to address the consumers’
fear of catching the virus from the delivery personnel. Autonomous delivery systems have
since become the obvious solution to both problems. Delivery by drones or autonomous
vehicles is still very much in the experimental phase in China as well as in the West prior to
the onset of COVID-19. E-commerce companies in China, such as JD.com, took advantage
of the lockdown in Wuhan to experiment with autonomous delivery robots. I believe the
development of technologies that facilitate autonomous delivery, driving and everything else
will accelerate, as the world prepares for another crisis when machines are needed to take
over the tasks that humans cannot perform.
$65
billion
> 500
million
China’s online
food delivery
market before
COVID-19Market size Customers
422.6m users
2,800 cities
260m users
2,000+ cities
Leading players

About the author
Kenneth Yeo has over 20 years of experience in the private equity
industry. He started his investment career with the Government of
Singapore Investment Corp (GIC) where he spent 12 years, half of
which was based in GIC's overseas offices in Bangkok, London and
Silicon Valley. Kenneth joined Allianz Capital Partners in 2007 as an
Investment Director, responsible for its private equity fund investments
in Asia. Most recently, he was a Senior Director at Azalea, a wholly
owned subsidiary of Temasek Holdings.
This publication is made available by Xen Capital Asia Pte. Ltd. for general information only and not for any other purpose. This
publication is the personal commentary of Kenneth Yeo and does not necessarily reflect the views of Xen Capital Asia Pte. Ltd. or its
affiliates or other employees (collectively, “Xen”). This publication includes opinions and forward-looking views of Kenneth Yeo as of the
date hereof, and none of Kenneth Yeo or Xen undertake any responsibility to advise readers of any changes in the opinions or views
expressed, or to the data contained, herein.
The data in this publication is believed to be reliable as of the referenced dates or as of the date on which this publication was initially
issued, and has been obtained from public sources believed to be reliable. No representation or warranty, either express or implied, is
provided in relation to the accuracy or completeness of the information contained herein. Historical trends are not necessarily indicative
of future behaviour or results.
The information contained in this publication is not intended and should not be used or construed as an offer to sell, or as a solicitation of
an offer to buy, securities of any specific collective investment scheme or particular company or other investment product in any
jurisdiction. Investment concepts mentioned herein are not suitable for all investors as they may involve any number of substantial risks.
The commentary contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or
investment recommendations. Xen and other individuals and organizations with which it works may have positions in, effect transactions
in the securities of, or seek to perform services for companies mentioned or indirectly referenced in this publication.
Contact us info@xen.capital Oxley Tower #23-01, 138 Robinson Road
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Conclusion
As the saying goes, “never let a good crisis go to waste”. We should turn crisis into
opportunity by challenging the norm and preparing to capitalize on opportunities in the new
paradigm once the battle with COVID-19 is over.
At Xen, we are constantly looking for funds and investment products that can thrive in
the post pandemic world. In the coming months, we will be bringing you some exciting
opportunities. These include buyout funds with decades of experience and expertise in
turning around stressed and distressed companies, highly sophisticated credit funds that
have invested in non-performing loans and distressed debts over multiple economic cycles,
and visionary technology venture and growth funds that focus on sectors likely to benefit
from the changes that this pandemic has set in motion. If you would like to be kept informed
of these exclusive investment opportunities , please sign up with Xen Capital at
www.xen.capital.
Xen is a next-generation platform for private investments. We provide access to top tier,
exclusive funds and companies to investors in Asia.
Xen Capital Asia Pte. Ltd. has a Capital Markets Service License in Singapore and has a
highly experienced team of people in Singapore, Hong Kong and New York.

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