By Alan Yung
Anyone in Macau with common sense should feel the current tough, rapidly changing, and fluctuating economic environment.
The last two-decade-long economic boom allowed most businesses and locals to benefit even without much extra effort or much changes in business practice other than increasing capacities of various aspects such as the number of hotel rooms, resort facilities, transportation, with various fascinating features. At the same time, locals always complained about inflation, traffic, property prices, etc.
Locals with a rather more dogmatic perspective on economic issues may not help overcome the current situation.
The fact of the matter is that the current juncture may turn out to be a blessing in disguise and a good time to focus on a creative destruction process.
I would go even further: creative destruction is a concept that should be embraced by society as a whole. It is a process that, in fact, is happening all the time, but has faced tremendous barriers over the past decades, when people tended to prefer a stable and predictable short-term future, instead of long-term insight.
Moreover, the opportunity-cost rationale for shifting from a booming business to another was huge.
Now, at this downturn, businesses and locals should have the mindset to change or embrace the creative destruction process in their businesses as well as in the whole social and economic development of Macau.
Creative destruction is an 80-plus-year-old theory that always has a standpoint in the business cycle. This creative destruction process keeps going on everywhere, and the difference is in its speed. Breaking the existing business practices with incremental and or drastic change may lead the economy to a viable new path, instead of the previous stable, routine business as usual.
The case is stronger than ever to break the old-fashioned mindset and move ahead with creative thinking about new business practices.
How can this be done?
We could try to learn from Reno, Nevada, which was once America’s gambling capital by the mid-twentieth century.
The city had gone through a downturn, and then the creative destruction process made its way. Old casinos were torn down or have become abandoned buildings now.
Casino operations remain in Reno, but with less importance compared to the heyday.
The city eventually attracted new types of businesses, attracting corporations that settled their offices and headquarters there, becoming a tech centre.
Diversify is the name of the game and the word to describe the change there.
This could inspire an approach to creative destruction here to bring about change.
In 2018, Macau ranked first in the world in terms of tourism as a percentage of GDP, with 75 per cent.
This crown, however, was not something to be particularly proud of as it did not indicate a sustainability path for the local economic model. This rather ultra-high percentage should instead have alerted the city to looming risks. The city should have moved towards diversification a long time ago.
With the current downturn, the SAR and its major businesses will have less favourable conditions for creating or at least transforming the business environment.
One should acknowledge that there is no such thing as a one-off solution.
We are here not talking about what is going to be created and destructed here. Destruction indeed has begun, and creation should be running ahead.
A creative destruction process must be managed, steered, and ultimately owned by the government and businesses.