Despite some early-stage policy relaxations and a few new signs of life on the roads, Beijing remains unnervingly quiet this week. The neon lights of the vast majority of restaurants and shops across the city continue to be out (or are being dimmed early), and those that have re-opened still sit nearly vacant. Retail giants, now operating on reduced hours, are still sparsely populated. Office workers are trickling back in, though many employees are still requesting work from home arrangements or are in home quarantine. The subway system continues to run essentially vacant compared to normal rush hour standards. While this is all anecdotal, it certainly seems that the view on the street is finally beginning to be reflected in the view from the “Street”: markets have dropped on Covid-19 impact fears and the infection counts in Italy, Japan, and Korea increase. While Beijing struggles back into first-gear under the shadow of emerging global concerns, this week I bring you updates from several “multiplier” members – service-based companies that each engage with numerous firms doing business in Canada and China.

The global markets, at long last, have begun to react to new infections, supply chain interruptions and earnings reports out of the Middle Kingdom. Companies that are less vertically-integrated are continuing to see raw material shortages and experiencing labour access issues. Part of the latter is due to mixed messaging – officials are worried about getting their regional economies back up and running, but are still firmly focused on avoiding large scale infections, so are thereby discouraging people from returning to work from areas affected by the outbreak (and otherwise). With these challenges in mind, corporate services firms are seeing a myriad of questions from small and mid-cap organizations, often with large payrolls, regarding how to handle the legal, ethical and financial issues that arise from salary commitments with nearly zero revenue. Considering the complexity of labour law in China, I encourage any of our members that are under duress in this department to start by 1) strictly avoiding layoffs without professional advice and 2) getting in touch with CCBC. In addition to our own resources, we have several members in market that are experts in this field and can offer advisory services. Furthermore, as noted last week, there are several corporate income tax, rental, social security and housing fund exemptions that companies may not be taking advantage of – please let us know if we can offer guidance on these measures. If you don’t ask, the answer is always no.

From the perspective of these corporate service, legal and accounting firms, several observations of note came to light in conversations with their executives. One disheartening indicator? Bank account inactivity. Many of those in the accounting space are on a fee-based system, where they are paid based on the number of transactions that are settled on a monthly basis. Unsurprisingly, they are reporting significant reductions in billings, as so many client companies have either remained stagnant or are unable to make the purchases, transfers and sales associated with their normal operations.  They also report that many companies with new locations or outlets slated for Q1-Q2 have indefinitely delayed those deals – especially those organizations in travel & tourism, F&B, and retail. These findings were consistent with the analysis of the current climate from local law firms. Note, however, that the legal file volumes are not always a good indicator of whether we are in times of economic trouble or health: while benefitting from opportunities in FDI or new ventures, I was duly reminded that that business is good when there are acquisitions (which will probably spike) and bankruptcies (which will certainly spike) as well. I hope that members will be in touch with their corporate consultants, legal advisors and Council before the time comes to have those conversations.

On an unfortunate note, I want to bring attention to a small contingent of Canadian owned and operated companies here in China – specifically, the crunch being borne by Canadian restaurants. Several well-known and loved local establishments are faced with zero income due to forced (or effectively forced) closures, while still paying rent and wages as well as being unable to access preferential financing from domestic banks. Many of these entrepreneurs have attempted to stay afloat by relying on delivery business, but one even reported that local authorities, in an attempt to eliminate outside foot traffic, completely shut down the “hutong” (one of Beijing’s traditional alleyways) that his restaurant is located in to non-residents. It is a virtual certainty that any number of the privately-held restaurants, bars and hotels in the city will close their doors for good by the time this public health crisis is resolved. If any of our members are keen to find out how they might support in the circumstances being faced by the expats on the ground here, please reach out.

Finally, earlier this week I had the chance to sit down with most of the commercial and trade policy staff at the Canadian Embassy in Beijing. While they are operating with reduced local numbers (many are working remotely from Ottawa), I would remind Canadian firms that the TCS teams here and in the three regional consulates are still active and are eager to help – this is an excellent time to get in touch for support. Specifically, should our readers have any key concerns from a regulatory standpoint (the new company law, cybersecurity landscape, social credit system, etc), please voice them to the CCBC so we can aggregate and relay them appropriately. A timely opportunity to do so is by completing our 2020 Canada China Business Survey Update  – lending your voice helps us to better convey your commercial issues to government stakeholders on both sides, and is used to develop the education and research priorities that we bring to you over the course of the coming year. This survey is brief (only 5-10 minutes), anonymous, and open to both CCBC members and non-members.

I continue to be impressed with the on the ground rallying efforts of Chinese citizens here in the city. Admittedly, early delays from ground-zero in Wuhan most likely resulted in an increased national caseload, though once the entire state had mobilized to fight back against the infection, these efforts (optimistically) seem to have brought the domestic situation well under control. A local foreign-run publication here reports that the peak number of hospitalized patients in Beijing was two weeks ago –  and has declined every single day since then, with a trendline pointing to the last patient being discharged by mid-March. Outside of the Hubei province, there were only 5 new infections reported across all of China’s 1.4 billion yesterday – and none in Beijing. While I predict that the month of March will continue to be a far-cry from the pre-Covid-19 status-quo, the return to a new normal here in China seems to be within sight. Keeping these achievements in mind, I strongly urge our government partners on both sides to promote a proportionate policy response to get us back to business.

All the best from Beijing, and please do not hesitate to reach out to me (Noah[at]ccbc.com.cn) or my colleague Edward Dai (Edward[at]ccbc.com.cn), Director of our Shanghai chapter, for any and all inquiries.