China business expert Ting Zhang, Founder and CEO of Crayfish.io, writes:
If you are concerned and worrying about your own plans for China in 2020, here are a few suggestions to help you through this period of uncertainty:
Communicate with your stakeholders in China if you haven’t already done so. Show that you do care about them as people and for their wellbeing. Offer help as much as you can, perhaps running some errands in your location to get medical supplies for the hospitals your staff are trying to support. Chinese people greatly value “a friend in need is a friend indeed” and a helping hand at this difficult time will be remembered.
Many businesses in China have chosen to allow staff to work from home in the so called “New Norm”. However, if that is not possible for your China-based operation (production, high street retail etc), try to renegotiate the labour contract terms and salaries if your business cash flow cannot withstand the disruption. Ensure any changes to labour contracts in terms of reduction are done with sound legal ground and in line with local government policies. For example, it is explicitly not permitted to lay off any employees during this period, although staff can be made to take compulsory unpaid leave. And Force Majeure is not applicable to the labour contract in Chinese law.
If your Chinese business relies on movement of physical goods, then most likely you have been affected badly due to the grind-down of transportation and logistics. Consider alternative shipment methods if possible and keep in constant touch with your logistic providers to get the latest updates. Regulations changes are made on an hourly, if not daily basis in China. Make sure you are tuned in all the time to fully understand the situation so you are able to react/adjust quickly.
It is not all bad though. The word “crisis” in Chinese literally means “danger + opportunity” so the interpretation is that, in every crisis, there is an opportunity.While one must not be seen to profiteer from such situations, companies can grasp the short window of opportunity to tailor their products to meet the demand brought by the situation and widen their reach to customers, especially if they are in medical-related sectors. Online education is another obvious industry that is benefiting from the travel constraints and extended school closures. But quality cannot be compromised for delivery method and businesses should avoid rushing out courses to the Chinese market if they are not ready, otherwise bad customer experience will put off any further uptake post the crisis.
This may be a good time to take a fresh look at your China strategy and your overall supply chain. For example, if some of your distributors cope with this situation better than others, maybe they are a better business partner for you in the long run? Or, perhaps move more manufacturing to those factories with better health and safety practices which enable them to resume production much sooner than others, easing the bottleneck of your critical components supply? On the other hand, your Chinese partners would normally be too busy to listen to your suggestions for improvement, but for this period they may have more time to take on that advice. They may even be willing to share more of the future profit with you to compensate for the loss you have also suffered.
This is also a good time to be preparing the groundwork for the boom, which is expected to come after the crisis. If you don’t have a Chinese website or social media presence, then what better time to build one and test with your counterparts in China who sit at their computers all day?
China had 2% of GDP shaved in the quarter when SAS hit hard in 2003, but the economy managed to bounce back in the same year and went on to become the 2nd largest in the world eight years later. If any large country can manage to control such a crisis swiftly it will be China. It has done it with SAS before and can do it again this time around. Movement of people is key to resuming normal business in China. The next 10 days are vital for the country and its economy. Stay tuned!
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