Philippa Kaur

IN EARLY 2019 an executive at Visa, a giant payments firm, sketched a picture of an island volcano. He scribbled the current capabilities of Plaid, a Silicon Valley fintech firm founded in 2012, in “the tip showing above the water”. The startup, which has developed a platform connecting consumer accounts at more than 11,000 banks to financial apps, was offering services like “bank connections”, “account validation” and “asset confirmation”. But he warned of the “massive opportunity” beneath the surface. Plaid could expand into fraud detection, making credit decisions and, scariest of all, payments infrastructure.
This opportunity for Plaid looked like a threat to Visa. Ten months later, in January 2020, Visa announced that it would acquire its putative rival for $5.3bn. This sum was more than 50 times the revenue Plaid earned in 2019 (though a modest lift for a company with a market capitalisation of over $460bn). Al Kelly, Visa’s boss, described the deal as an “insurance policy”.

These details—volcano sketch and all—were included in the complaint America’s Department of Justice filed in November, when it sued to block the deal. The acquisition, the DoJ said, would snuff out a competitor in the debit-card business, in which Visa has a market share of around 70% and profit margins nudging 90%. In 2019 Visa earned around $4bn in profits. On January 12th the DoJ announced that Visa had pulled out of the deal, rather than continue to trial, which was scheduled for June.
The trustbusters’ intervention bears some striking similarities to the antitrust suits that have been filed against Facebook. Two separate legal challenges, one mounted by a bipartisan coalition of attorneys-general in 46 states and another from the Federal Trade Commission (FTC), centre on its acquisitions. They alleged that the technology titan maintained its monopoly in personal social-networking by systematically buying up potential competitors—notably Instagram in 2012 and WhatsApp in 2014.
In its defence, Facebook said that the government “now wants a do-over”, which would, as the company has put it, send “a chilling warning to American business that no sale is ever final”. The FTC’s complaint fails to mention that the antitrust authorities cleared the Instagram and WhatsApp deals at the time.
The move to block the tie-up of Visa and Plaid implies a new trustbusting approach taking shape in America. Henceforth the authorities will probably try to nip Facebook-like arguments in the bud pre-emptively by stymieing attempts by powerful incumbents to swallow upstart competitors. Explosive stuff.
This article appeared in the Business section of the print edition under the headline “Visa-free travel” More

MARY BARRA, boss of GM, took to the virtual stage on January 12th to launch BrightDrop. The carmaker’s new logistics division will peddle such unsexy things as delivery vans and autonomous electric pallets for use in warehouses (see article). Hardly stuff to set pulses racing.
Suppress your yawn, for Ms Barra’s announcement is the latest sign of a quiet but powerful revolution. “The convergence of software and hardware seen in the carpeted parts of enterprises is now seen on factory floors in every industry we serve,” says Blake Moret, chief executive of Rockwell Automation, a giant of the industry. His firm runs a full-scale manufacturing facility at its Milwaukee headquarters, to prove that automation enables it to make competitive products despite America’s high labour costs. Its share price has risen by 28% in the past year, nearly twice as much as the S&P 500 index of big American firms. Other purveyors have done even better.

Bosses have boasted of automating their operations for years without an awful lot to show for it. Covid-19 has spurred them to put their money where their mouths are. Hernan Saenz of Bain, a consultancy, reckons that between now and 2030 American firms will invest $10trn in automation. Nigel Vaz, chief executive of Publicis Sapient, a big digital consultancy, says that the downturn offers bosses the perfect cover. “The unrelenting pressure for short-term financial results from investors has temporarily been suspended,” he says. “Firms are not just going back pre-pandemic, but completely reimagining how they work,” says Susan Lund, co-author of a forthcoming report from the McKinsey Global Institute, a think-tank. A recent survey by the institute’s sister consultancy found that two-thirds of global firms are doubling down on automation.
Aye, robot
Robots are the most prominent winner. Robo Global, a research firm, predicts that by the end of 2021 the worldwide installed base of factory robots will exceed 3.2m units, double the level in 2015. The global market for industrial robotics is forecast to rise from $45bn in 2020 to $73bn in 2025.
“We have had a catbird seat during the pandemic,” says Michael Cicco, the head of the American operations of Fanuc, a Japanese robot-maker. With supply chains whacked, manufacturers were forced to find ways to build flexibility, he says. Companies reshoring production have sought to offset the high cost of human labour with the engineered sort. And robots are becoming much more capable. The most dexterous can now pick delicate objects such as individual strawberries.

Fanuc has seen a surge in demand for material-handling equipment and “collaborative robots”, designed to interact with people. These “cobots” are particularly useful in e-commerce, which covid-19 has given a huge boost. The pandemic has, on one informed estimate, led consumer-goods firms to increase buffer stocks by around 5%. To counter this, firms are snapping up robots for use in warehouses, made by companies like GreyOrange and Kiva (which Amazon acquired in 2012 to assist its e-commerce fulfilment).

Right now cobots help with social distancing. But, says Dwight Klappich of Gartner, a research firm, robots that move goods to workers will be a boon for post-pandemic productivity, too (as well as for the morale of humans, by sparing their weary feet). Luke Jensen of Britain’s Ocado, an online grocer and robotics pioneer, insists that his low-margin industry must find ways of fulfilling the recent surge in online orders with less labour. His firm already serves the bulk of its British customers from just three highly automated sites. Kroger, a big American grocer, is now expanding its roll-out of Ocado equipment both in warehouses and at its retail outlets.
A survey of supply-chain executives published on January 13th by Blue Yonder, another consultancy, found that the share of firms with fully automated fulfilment centres may rise by 50% within a year. And, as Sudarshan Seshadri of Blue Yonder puts it, “Automation is just the table stakes.” The pandemic’s bigger long-term impact may be a fuller embrace by firms of data their operations generate, and predictive algorithms to help guide real-time decisions.
Stuart Harris of America’s Emerson, a big automation firm, says that “pervasive sensing”—which combines AI and clever sensors—helped his company’s revenues from remote monitoring grow by 25% last year. Emerson’s clients range from a Singaporean chemicals factory to a Latin American mine. Peter Terwiesch of ABB, a big Swiss-Swedish industrial-technology firm, also reports a boom in remote-operations systems, from marine vessels to paper mills. His firm’s annual sales of such products have doubled to $400m from pre-pandemic levels. Drishti, an American startup, has come up with a way to apply artificial intelligence (AI) and computer vision to analyse busy video streams of workers on assembly lines. Marco Marinucci of Hella, a big German car-parts supplier, says his firm used Drishti’s kit to analyse and fix problems at a high-volume assembly line. This allowed its throughput to rise by 7% last year. Publicis Sapient automated the inventory forecasting of a division of a big European retailer which found itself repeatedly out of stock amid the change in consumption patterns during the pandemic. The consultancy’s software allowed its client to prevent shortages of its top 100 items 98% of the time.
It isn’t just production floors and warehouses that are being automated. So are back offices. By one estimate, America’s health-care system could save $150bn a year thanks to automation of paper-pushing. Allied Market Research, a firm of analysts, predicts that the global sales of process-automation products will balloon from $1.6bn in 2019 to nearly $20bn in 2027. In December UI Path, a trailblazing Romanian startup in the area, filed for an initial public offering. It may start with a market value of $20bn. On January 12th Workato, an American rival, said it has raised $110m in fresh funding.

Last year Alibaba, China’s biggest e-emporium, unveiled the results of a more ambitious project, code-named Xunxi (“fast rhino”). Alain Wu, who runs Xunxi, explains that this involved digitising and integrating whole value chains—from product design, parts procurement and manufacturing to logistics and after-sales service. This allowed merchants on Alibaba’s e-commerce platforms to fulfil customised orders within days while eliminating excess inventory. Time from production to delivery was reduced from several months to a fortnight.
Sceptics note that history is littered with examples of supposedly world-changing technologies that beguiled bosses, only to fail to live up to the promise. (Remember the blockchain?) Once covid-19 has been defeated, companies’ enthusiasm for new technologies may subside. Those that have missed the opportunity to automate—as many have because they were busy trying merely to survive the pandemic recession—will lose the cover that Mr Vaz speaks of.
Optimists counter that this time really may be different. In the past the biggest returns to automation accrued to giant, well-capitalised firms. Today advances in technology and business models allow smaller ones to enjoy similar benefits. That should increase demand for clever systems—and in time reduce their cost further. And so on, in a virtuous, fully automated circle.■

This article appeared in the Business section of the print edition under the headline “Bearing fruit” More

IT IS HARD to imagine a simpler product than a cigarette paper: small, rectangular, with no moving parts. So cheap it is often given away. And replaceable; desperate smokers have been known to tear out Bible pages as substitutes. It has none of cigarettes’ glamour (though, these days, some of their stigma). No wonder Rizla, which produces 45bn rolling-papers a year and dominates the industry, attracts little attention as a marketing phenomenon. Yet it is one of a few brands, like Coca-Cola, Google, Jacuzzi or Tupperware, whose name (“Got a Rizla?”) defines the product.
That is because a simple packet of Rizlas exhibits many of the qualities—history, design, consistent quality and values—that marketing gurus consider hallmarks of enduring brands. Flip open the cover and you find a lesson in how to remain relevant. Aptly for a business long associated with the counterculture, the tutorial is a wry summary of the dark arts of marketing.

Start with history. Long ago Rizla may have realised that if you lack an illustrious heritage, you could invent one. “The Original…since 1796”, as the underside of its packets’ lids still boasts, refers to a time when Napoleon Bonaparte supposedly granted the Lacroix family of south-western France a licence to supply rolling papers to French troops, according to Rizla’s website. This may well be nonsense. A museum in Angoulème, the Lacroix ancestral seat, calls this historical “fantasy” and says that until 1860 the family manufactured paper but not for cigarettes. Its history of the clan says it was not until 1867 that Léonide Lacroix created the brand. A spokesman for Imperial Brands, which owns Rizla, says the story is widely recognised to have been told through the generations. “It’s a heritage we inherited when we acquired the Rizla brand in the 1990s,” he says. The discrepancy notwithstanding, Napoleon is now part of Rizla folklore.
Or take design. Rizla’s name and its cross logo are cryptic clues, which also date back to the 19th century. Riz is French for rice, as in the paper. La is the first syllable of Lacroix. The second, croix, is French for cross—and symbolised by a gold one appended to the name. For Rizla fans the logo is iconic. A former marketing executive recalls emblazoning it on the heel of wellies that the company distributed at music festivals, so that the imprint would stand out in the mud. Rizla does not advertise to its customers that they can use its papers to smoke marijuana as well as tobacco; that would break the law in many countries. But it doesn’t have to: pot-heads do it themselves, by plumping for its king-size papers (which the company insists are only produced to emulate ultra-long cigarettes).
Consistent quality is another trait, and a must to ensure that the claim on the packet—“Keep Rolling with the World’s No. 1”—remains true. Being owned by Imperial, a global tobacco giant valued at £15.5bn ($21bn), helps. Rizla is a sleek industrial machine, producing almost all of its papers at a big factory in Wilrijk, a suburb of Antwerp in Belgium. Reels of paper, now made of wood pulp rather than rice, are layered with gum, cut into strips, packaged and shipped to about 100 countries. It is highly automated. Ties to Imperial, owner of Golden Virginia tobacco used for rolling, offer a structural advantage that rivals lack.
The trick is to tap its parent’s deep pockets while promoting values that appeal to roll-your-own smokers who like to think of themselves as individualistic iconoclasts. One is attention to detail, which users obsess over. The papers come in six thicknesses, from 12.5 grams per square metre (in silver packets) to 26.5g/m2 (liquorice).

The second value, irreverence, is more ephemeral. Brice Barberon, who took over as Rizla’s boss in March, speaks of the “tribal element” to rolling your own cigarette. “The kind of blend you will choose, the kind of paper, the way you roll it, how much tobacco you put in, there is a kind of ritual in it that our consumers like…that brings people together.” Brits favour green packets (17.5g/m2). The Dutch, orange (20g/m2). The French, Micron (12.5g/m2).
Tribes share a lingo, musical tastes, pastimes, memes, clothing and a sense of humour. That is a great way to reach them. A former executive says that Rizla once used models dressed as border guards with high heels and handcuffs as part of a “show me your papers” campaign. With that comes the most effective, and cheapest, form of marketing—word of mouth.
Going from paper to digital
For all its guile, Rizla faces challenges ahead, notably the rise of upstarts that use less subtle social-media campaigns to build a new kind of cult following, especially among pot-smokers. They include Raw, started by Josh Kesselman, a shaggy-haired American entrepreneur who instructs his 1.7m followers on Instagram how to roll the perfect joint (“if you pack it too tight, it can’t run right”).
Vaping presents another problem. Though smokers are trading down to roll-your-own cigarettes during the pandemic, sales growth in the longer term is expected to weaken. Rizla is diversifying. Coinciding with the European Union’s ban on menthol cigarettes, it now sells “flavour cards” that infuse a packet of cigarettes with the taste of menthol within 60 minutes.
The biggest risk, though, may be thinking it must change too much. It has a market position to protect, but also a heritage. This may not quite date back to 1796 but is, these days, real enough. Rizla’s competitors can, at best, hope to fake it. ■
This article appeared in the Business section of the print edition under the headline “Rolling in it” More

ON JANUARY 7TH , a day after a mob of his supporters stormed the Capitol in Washington, leaving five people dead and America shaken, Donald Trump had the sixth-most-popular account on Twitter, with nearly 90m followers. A day later he had none. The outgoing president was permanently booted off his social-media platform of choice for inciting violence.
Free-speech advocates—including Angela Merkel, Germany’s chancellor and no Trump fan—bristled. So did investors. Twitter’s share price has fallen by around 10% since @RealDonaldTrump’s expulsion. That of Facebook, which suspended his account “indefinitely” on its main social network and Instagram, its sister photo-sharing app, has also dipped.

This looks like an over-reaction, at least by the stockmarket. Social-media firms’ ad-sales departments may be glad to be rid of the troll-in-chief. Before being displaced by “coronavirus” last year, “Trump” was the most blocked keyword by online advertisers, loth to have their logos appear alongside content that might repel customers.
Twitter’s algorithms prioritise tweets that generate greatest engagement. Mr Trump’s were highly engaging, to put it mildly, and often ended up at the top of users’ feeds. This coveted online real estate is sold through automated auctions. If many potential bidders block “Trump”, this may depress prices. With Mr Trump gone, says Mark Shmulik of Bernstein, a broker, this ad inventory becomes more valuable.
Twitter may experience a decline in engagement in the short term. People who came to the site to gawp at Mr Trump’s latest outrage, and stuck around to read about movies or sports (or some lesser dust-up) may not return with the same frequency. But the upside of being more brand-friendly may offset losses from the Trump dump. The share price of Snap, which also suspended the presidential account, jumped on the news. Twitter’s remains well above pre-Trump levels (see chart).

For Facebook, Instagram and YouTube, which blocked Mr Trump’s account on January 12th, the impact is probably going to be negligible. Their monthly users (2.6bn, 1bn and 2bn, respectively) are more numerous and more global than Twitter’s (300m).
A bigger concern is whether muting Mr Trump undermines social-media firms’ claim that they are impartial platforms, and thus shielded from liability for what their users post, rather than publishers, who do not enjoy such protections. That is why they have been careful to couch their decision in the language of process and consistency with their own rules.
Even before the latest outrage, the firms had been stepping up moderation efforts, without giving up claims to platformdom. They employ tens of thousands of moderators between them to wade through toxic posts and remove those that break their terms of service. They have tried to limit the spread of misinformation around elections and other febrile times. Facebook has a semi-independent oversight body to hear appeals to disputed moderation decisions.
The social-media giants may welcome clearer rules, the need for which enjoys bipartisan support in America. These would raise barriers to entry for upstart rivals; Parler, a newish social network popular among American right-wingers, was boycotted into oblivion when it showed itself unable, as well as unwilling, to excise dangerously inflammatory content (see article). If muting Mr Trump engenders greater regulatory clarity, the thinking goes, so much the better for deep-pocketed incumbents. As an added bonus, it earned them rare plaudits from Democrats, who are about to take unified control of the federal government. ■

This article appeared in the Business section of the print edition under the headline “Capitol gains” More

“WE AIM TO be the most customer-obsessed company in the world,” declares the opening line in the 700-page prospectus from Kuaishou, a Chinese video app. The firm, launched a decade ago by a former software engineer at Google and another at Hewlett-Packard, boasts more than 250m daily active users, up from an average of just 67m in 2017. Kuaishou is expected to hit a valuation of around $50bn when it goes public next month in Hong Kong. That would lift it above better-known social-media titans like Twitter (worth $37bn).
Kuaishou’s revenues have soared in recent years, reaching 25bn yuan ($3.6bn) in the first six months of 2020, up by nearly half on the previous year. Just over two-thirds of this came from what the firm calls “live-stream gifting”. It hosted nearly 1bn live-streaming sessions in that period, taking a cut on “tips” that viewers shower on their favourite live-streamers. A tip can be as small as 10 fen (1.5 cents) or as generous as 2,000 yuan. Performers film themselves singing, dancing, otherwise prancing or just sunbathing. (Pornography is strictly prohibited.) New stars can expect to fork half of their tips over to the platform.

Amid this exuberance two threats loom. The first comes from China’s increasingly hands-on regulators (see article). In November they mandated that video apps like Kuaishou impose daily and monthly limits on the amount that users can tip live-streamers. Moreover, to prevent impressionable minors from being coaxed into sponsoring cunning broadcasters, platforms have been instructed to perform tougher background checks on users with such tools as facial-recognition technology. Bureaucrats in Beijing have yet to work out precisely what Kuaishou’s daily and monthly ceilings ought to be. But growth will probably slow down once the details are hashed out.
Douyin, TikTok’s Chinese sister app and Kuaishou’s arch-rival, is better insulated from the regulatory crackdown. Like Kuaishou, it operates a live-streaming business. But unlike its competitor, it earns most of its revenues from online ads, which the new rules do not affect. For comparison, adverts accounted for just 28% of Kuaishou’s revenue mix in the first half of 2020. The company may now try to raise that share. To do so Kuaishou will have to overcome the somewhat outdated perception that its users are disproportionately folk living in small cities and rural areas with less money to buy advertised wares.
The second threat is the potential for a price war between Kuaishou and Douyin. For both platforms, user growth is largely a function of the appeal of their video content, which in turn depends on the calibre of the producers behind it. A race to the bottom, whereby each firm lowers its “take rate” on tips and ad sales to lure popular broadcasters from the other app, would depress margins.
At the moment neither company has a particular incentive to shatter the cosy duopoly, points out Jeffrey Young of Grandly Asset Management, a broker. But the possible arrival of a big competitor—not inconceivable in China’s effervescent e-economy—could disrupt this equilibrium, Mr Young suggests.

Despite its domestic challenges (or maybe because of them), Kuaishou is proceeding apace with its global ambitions. The international version of its app, Kwai, claims “tens of millions” of users in markets from Brazil and Colombia to Malaysia and Vietnam. It still lacks the name-recognition of TikTok, though that may prove to be a blessing in disguise. Kwai has thus far avoided the sort of political scrutiny that its better-known rival has attracted in many foreign markets. ■
This article appeared in the Business section of the print edition under the headline “Feuding film stars” More

HABITS CAN be slow to form. But when they do, they can become entrenched. When workers headed home during the first lockdown of March 2020, they probably thought the break would last for a month or so. Had that been true, old routines would soon have resumed.
It is now ten months since many employees have made a regular commute into the office. New routines have taken root and those will be much harder to break. Some of these new habits are bad, and they may stem as much from managers as from workers.

Asana, a maker of office software, commissioned a survey of more than 13,000 knowledge workers (defined as those who mostly work at a computer) across eight countries. It found that, on average in 2020, employees were working 455 hours a year more than their contracted requirement, or around two hours a day. That overtime had almost doubled relative to 2019. And much of the excess may not have been necessary; workers complained about the amount of time they spent in meetings and video-calls, or in responding to messages.
Perhaps this forced communication is the result of manager anxiety. Fearful that remote workers will be tempted to slack, they have monitored their teams like an anxious parent who has taken a toddler to a swimming pool.
Or managers may have felt the need to look busy, prompting them to call more meetings than before. They may have trapped themselves in a cycle of futile activity—corporate hamsters on a wheel. Many managers complain of “Zoom fatigue”, as they drag themselves from one video-call to another, often keeping other participants waiting as they try to wrap up the previous meeting.
This bad news has a silver lining. Get rid of the needless meetings and productivity should improve.

Research suggests that executives may spend 23 hours a week in meetings. Cut that time in half and think of how much more might be achieved. And that will be just as true when people return to the office as it is when they work from their kitchen table. The pandemic could provide a wake-up call on meeting futility.
The best habit developed during the pandemic has been flexibility. The ritual of the daily commute and the standard working day has been abandoned. And with it, the curse of “presenteeism”—the idea that, unless you are constantly visible, you are not working. Self-isolating workers have shown they will happily get on with their work, even when not under the beady eye of their boss.
A survey of personnel chiefs by Gartner, a research firm, found that 65% planned to allow employees flexibility on their working arrangements, even after vaccines have been distributed. They predicted that around half the workforce would want to return to the office, for at least part of the time.
Permitting this flexibility makes perfect sense. When lockdowns end, many workers may relish the chance to escape from their homes and see their colleagues in the flesh. They will be even happier if they can arrive at 10am one day, and 8.30am the next, if that suits their domestic requirements. And if they decide to work at home on Fridays, they will no longer feel as guilty as they might have done before the pandemic. The office can be a refuge, not a prison.
Employers will also take advantage of the new flexibility. Silvina Moschini, who runs TransparentBusiness, a workforce-management company, says that firms will change the way they scale up their operations, relying far more on freelancers, contractors and vendors than on full-time employees.
Handling a combination of remote workers and freelancers will require managers to acquire new habits. Ms Moschini says the key will be to develop “empathic leadership” that understands the varied working conditions of team members. This might involve sending small gifts; at the start of the lockdown, she sent slippers to her team so they could feel comfy (mentally as well as physically) working from home.
Contacting workers should not be a matter of a rigid schedule but rather akin to the sentiment that prompts children to check in with elderly parents every so often. Friendly, informal contacts are a new habit that managers must still hone. More

HABITS CAN be slow to form. But when they do, they can become entrenched. When workers headed home during the first lockdown of March 2020, they probably thought the break would last for a month or so. Had that been true, old routines would soon have resumed.
It is now ten months since many employees have made a regular commute into the office. New routines have taken root and those will be much harder to break. Some of these new habits are bad, and they may stem as much from managers as from workers.

Asana, a maker of office software, commissioned a survey of more than 13,000 knowledge workers (defined as those who mostly work at a computer) across eight countries. It found that, on average in 2020, employees were working 455 hours a year more than their contracted requirement, or around two hours a day. That overtime had almost doubled relative to 2019. And much of the excess may not have been necessary; workers complained about the amount of time they spent in meetings and video-calls, or in responding to messages.
Perhaps this forced communication is the result of manager anxiety. Fearful that remote workers will be tempted to slack, they have monitored their teams like an anxious parent who has taken a toddler to a swimming pool.
Or managers may have felt the need to look busy, prompting them to call more meetings than before. They may have trapped themselves in a cycle of futile activity—corporate hamsters on a wheel. Many managers complain of “Zoom fatigue”, as they drag themselves from one video-call to another, often keeping other participants waiting as they try to wrap up the previous meeting.
This bad news has a silver lining. Get rid of the needless meetings and productivity should improve. Perhaps managers will make it their new year’s resolution to ask the question, “Is this meeting really necessary?” Bartleby’s Law is that 80% of the time of 80% of the attendees at meetings is wasted. The lockdowns have provided ample evidence to corroborate your columnist’s hypothesis.

Research suggests that executives may spend 23 hours a week in meetings. Cut that time in half and think of how much more might be achieved. And that will be just as true when people return to the office as it is when they work from their kitchen table. The pandemic could provide a wake-up call on meeting futility.
The best habit developed during the pandemic has been flexibility. The ritual of the daily commute and the standard working day has been abandoned. And with it, the curse of “presenteeism”—the idea that, unless you are constantly visible, you are not working. Self-isolating workers have shown they will happily get on with their work, even when not under the beady eye of their boss.
A survey of personnel chiefs by Gartner, a research firm, found that 65% planned to allow employees flexibility on their working arrangements, even after vaccines have been distributed. They predicted that around half the workforce would want to return to the office, for at least part of the time.
Permitting this flexibility makes perfect sense. When lockdowns end, many workers may relish the chance to escape from their homes and see their colleagues in the flesh. They will be even happier if they can arrive at 10am one day, and 8.30am the next, if that suits their domestic requirements. And if they decide to work at home on Fridays, they will no longer feel as guilty as they might have done before the pandemic. The office can be a refuge, not a prison.
Employers will also take advantage of the new flexibility. Silvina Moschini, who runs TransparentBusiness, a workforce-management company, says that firms will change the way they scale up their operations, relying far more on freelancers, contractors and vendors than on full-time employees.
Handling a combination of remote workers and freelancers will require managers to acquire new habits. Ms Moschini says the key will be to develop “empathic leadership” that understands the varied working conditions of team members. This might involve sending small gifts; at the start of the lockdown, she sent slippers to her team so they could feel comfy (mentally as well as physically) working from home.
Contacting workers should not be a matter of a rigid schedule but rather akin to the sentiment that prompts children to check in with elderly parents every so often. Friendly, informal contacts are a new habit that managers must still hone.
Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
This article appeared in the Business section of the print edition under the headline “Creatures of habit” More

WHEN AMERICA slammed sanctions on Huawei, barring American firms from supplying the Chinese telecoms-equipment titan on national-security grounds, China’s state media predicted that the restrictions would spur innovation in the local technology industry. In time, they may well do. But for now, much of the innovating is taking place within the Chinese state as it experiments with a new system of control over Chinese business.
On January 9th the Ministry of Commerce struck back against American sanctions. It said that it may force Chinese companies to stop complying with “unjustified extra-territorial application of foreign legislation” (in Beijing’s eyes, that means virtually all of it). It also gave Chinese firms the right to sue foreign and domestic companies that have complied with some foreign sanctions for compensation.

The measures are part of a broader trend, as the Communist regime led by Xi Jinping adopts an increasingly muscular stance towards the private sector. In November it halted the $37bn initial public offering of Ant Group, the payments affiliate of Alibaba, China’s biggest e-commerce empire, two days before the firm was due to debut in Shanghai and Hong Kong. The same month the State Administration for Market Regulation (SAMR), created in 2018 from three regulators, issued rules to rein in e-commerce giants and, in December, it opened an antitrust investigation into Alibaba. On January 10th the Communist Party’s main body for political and legal affairs vowed to take trust-busting more seriously.
The antitrust buildup has spooked investors—Alibaba’s share price has dropped by a quarter since October. And the barrage of new rules creates uncertainty for business in two other ways. First, who is in charge of one of the world’s biggest companies. Jack Ma, the tycoon who co-founded both Alibaba and Ant, has not been seen in public since October, when he likened Chinese state banks to pawn shops. He owns just 4.8% of Alibaba and stepped down as chairman in 2019, but is thought to remain firmly in control of strategic decisions. Even if he does resurface soon, as other AWOL tycoons have in the past, after showing contrition and “assisting” investigators, the episode sends a chilling signal.
The blowback could yet destabilise Alibaba in unexpected ways. Like many mainland tech firms, it uses an offshore legal structure that allows foreigners to invest in Chinese assets that would otherwise be off limits. The arrangement has been tolerated by regulators, without being fully endorsed by them, for two decades. But last month SAMR fined Alibaba and Tencent, another internet behemoth, for not seeking approvals for past acquisitions. If the firm is subject to a sustained legal onslaught by regulators it could raise doubts about the sustainability of these complex foreign-ownership arrangements—a situation that would further spook outside investors in tech groups in China.
The other immediate source of instability is the battle between the superpowers over their extraterritorial legal reach. In 2019 the commerce ministry dabbled with this by creating a list of “unreliable entities”. So far it has not been populated with any prominent foreign companies. Rumours that it would include HSBC, a British bank that played a role in an American investigation into Huawei, turned out to be wrong. If the commerce ministry acts more decisively this time, its proposed measures could pose an impossible dilemma for Western multinationals in China: either face fines in America for breaking sanctions, or end up in a Chinese court. Wang Jiangyu of the City University of Hong Kong imagines that the new rules will force global businesses to do something they would love to avoid: take sides.

The measures are a mixed blessing even for Chinese firms, which they are ostensibly designed to assist. Many firms could, it is true, seek damages from foreign partners. But some Chinese firms may be damaged themselves—for instance, mainland banks operating abroad which have abided by Uncle Sam’s sanctions over the years in order to avoid fines and maintain access to the dollar-clearing system, the backbone of global finance. Chinese lenders that have been forced to shut Hong Kong accounts for blacklisted Chinese companies and individuals could come under fire. Carrie Lam, Hong Kong’s leader, who has overseen a crackdown on pro-democracy activists, has said she has cash piling up in her apartment, unable to deposit it in a bank as a result of American sanctions against her.
In the short run, concludes a trade lawyer in Washington, DC, the commerce ministry’s rules are “more likely to sow discord than actually help Chinese companies”. This is not exactly conducive to innovation. Nor is the long arm of the Chinese state, especially as it grows ever longer and beefier. More