Don’t let the coronavirus kill your Chinese subsidiary. Horizons can help you act fast to stop the damage done by COVID-19.

“Simply put, failing to take advantage of pro-business policies and measures put forth in the face of COVID-19 will hamper your business to no end, even sending it to its demise. Horizons has the resources, the ‘know-how’ and the finesse to get your business back on track and keep it there.”
—Danny Luk, Horizons Senior Equity Partner

The outbreak of COVID-19 has had an extremely disruptive impact on businesses worldwide. In the battle against the virus, the State Council of the People’s Republic of China has put forth a host of measures intended to both safeguard the population and help China-based businesses get back on their feet.

In support of State Council’s effort, Horizons Crisis Services aim to help your company weather COVID-19 and emerge with a clear-eyed path to mitigating the roadblocks created by the epidemic. With a careful assessment of your current situation and corporate needs, our professionals will devise a recovery plan that includes a best practices response while employing a sound legal framework that both complies with and leverages the State Council Measures to your advantage.

What Horizons can do for you will allow you to obtain the benefits available, return to the path of success and safeguard your business for the future.

With a full understanding of the State Council “Measures”, and abiding by the State, Provincial and Local measures intended to fight back against the effects of COVID-19, we identify 4 key pillars to establishing a stable framework for your enterprise during this difficult period. They include:

1Knowing employer obligations for protecting employees in the workplace

2Moving to stabilise cash flow, logistics and staff shortages

3Protecting your foreign-invested business now and post COVID-19

4Leveraging earmarked financial loans for the long term

For your reference, in the following pages, we provide you with a series of abbreviated key points under each pillar that is the basis for properly protecting your investment now and beyond COVID-19. To receive additional information on these items and more in-depth approaches to corporate solutions, please contact one of our crisis management leads below by calling or emailing them directly.

APAC Region
Ms LI Hua Jing
Mobile: +86 13166299232
crisis.services@horizons-advisory.com

EUROPE
Ms Lucia NETTI
Landline: +39 011 19711641 Mobile: +39 391 1283498
crisis.services@horizons-advisory.com

AMERICAS
David PANDT
Mobile: +1 917 945 8511
crisis.services@horizons-advisory.com


1. Your employer obligations for protecting employees in the workplace

During China’s epidemic prevention and control period, coined by State media as the “Special Period”, employers are strictly obliged to prevent cluster infections within the workplace and stabilise employment. What’s more, they are further encouraged to offer flexible working options for employees, while terminations during the Special Period are highly discouraged by the State Council.

In support of the latter, enterprises are obliged to maintain strict procedures and reporting systems to prevent cluster infections within the workplace. The State Council has called for general guidelines to be developed by provincial and municipal governments for implementation by enterprises. They include:

  1. Establishing daily health reports on employees;
  2. Implementation of specific prevention and control procedures for industries; and
  3. Providing employees with educational guidelines on maintaining good personal infection prevention and control practice.

For enterprises implementing the guidelines, careful procedures are essential in controlling contagion risk for both employees and the company as a whole. Failure to implement such procedures can result in the closure of business operations or, in more serious instances, having one’s business license suspended or revoked.

Horizons can provide your enterprises with the necessary tools to establish or review relevant employee procedures and policies that are in line with national and local measures and guidelines. In this manner, you will minimise the risk of both infection and penalty of the authorities, while positioning employees to do their jobs effectively.

Furthermore, with COVID-19 moving across the globe, the solutions we provide can be easily adapted across your global workplaces and, in the long term, unify and strengthen internal crisis management in the event of future episodes. To this end, the Horizons Group, and by way of our membership in the CCG Association, can offer the bridging of crisis services across more than 20 counties worldwide.

The professional guidance and solutions we offer related to employer obligations for protecting employees in the workplace include, but are not limited to:

  • Adoption of epidemic prevention and control policies and procedures
  • Monitoring, reporting and responding to employees’ health conditions
  • Ensuring an optimal prevention-control work and production environment
  • Enabling flexible working approaches
  • Payroll management

2. Move to stabilise cash flow, logistics and staff shortages

In the ongoing resumption of work and production, companies face three major challenges — cash-flow, logistics and labour shortages. Here, it is imperative that you take advantage of the pro-business measures enacted by the State Council to cushion the effect of COVID-19. Governmental entitlements addressing tax, human resources, customs and other areas are there waiting for you.

Below, we offer a brief overview of the three key areas where you need to take action in order to accelerate your COVID-19 recovery. For each area, Horizons can reveal to you the most advantageous measures that apply to your situation, and make those measures work for you.

Cash-flow
Moving to immediately minimise costs is your highest priority in establishing a reliable, safe cash-flow. In response to the economic hit COVID-19 has placed on businesses, the State Council has issued a series of human resources and tax reduction/exemption measures to support companies by minimising their outflow. They address two key areas:

Human Resources — The Ministry of Human Resources, Social Security, the Ministry of Finance and the State Administration of Taxation have enacted a number of social insurance exemptions and reductions. Here, it is important to note that national measures are mainly directives for local governments to implement according to the law and the local situation. With that said, it’s vital to learn what opportunities are available to you at the local level in the place your business or businesses operate.

Taxation — The State Administration of Tax and Ministry of Finance has issued a series of tax and fiscal measures for corporate income tax (CIT), value-added tax (VAT), customs and individual income tax (IIT).

Horizons can direct you to the specific measures where your company stands to benefit most, then take you through the most expedient route to securing those benefits.

Logistics
With the delayed resumption of work, manufacturing and trading, companies continue to face difficulties in logistics and supply chain. Recent policies put forth in response to COVID-19 focus on easing export and import procedures, along with extending greater access to government support via related industry chambers of commerce and other industry associations.

For those considering a “force majeure” position related to difficulty in supply chain and fulfilling contracts, it’s important to note that a “force majeure” certificate will not directly determine if you have encountered a “force majeure” situation. Rather, the certificate evidences objective facts, such as the resumption of work delay, traffic controls and so forth. For companies to effectively evoke “force majeure”, it is necessary to analyse, in a very clear and concrete way, the entire history of the contract transaction, which can be extremely challenging for companies.

Horizons can advise you on the best position to take in regard to the state of your logistics and supply chain. We can seek for you both the correct avenues for getting your supply chain back to its most operative state and, if necessary, make a proper assessment for a “force majeure” claim.

Labour or talent shortages
Companies are facing staff shortages as many people remain quarantined at various levels. Therefore, business operations are suffering staffing shortages across China. For some businesses, remote work has been arranged, while others, such as those in the manufacturing and consumer service industry, require operation staff to be present in the workplace.

To address labour and talent shortages, the State Council has issued measures intended on sustaining labour through the duration of the COVID-19 battle and recovery, of which there’s little end in sight. Among the measures include support for basic pension insurance, unemployment insurance and work injury insurance for small, medium and micro-companies; deferred payment on housing provident funds; and reduction in medical insurance premiums are reduced for companies.

Horizons can review for you the full complement of measures related to labour, and help you make smart, decisions on which measures you stand to benefit from the most, and then take action to secure those benefits for you in a timely manner.

The professional guidance and solutions we offer related to stabilisation of cash flow, logistics and staff shortages may include, but are not limited to:

  • Social Insurance reduction/exemption procedures
  • Tax incentive, reduction/exemption procedures
  • Force majeure procedures
  • Vocational training subsidy procedures

3. Protect your foreign-invested business now and post COVID-19

Alongside mitigating the immediate impact of COVID-19, companies should establish foundations for the long-term. Sustained recovery enables you to build resilience, regain growth work toward the future.

In response to COVID-19, the State Council has issued several measures with the aim of supporting foreign investment and maintaining foreign investor confidence. In this manner, governmental units across China are required to provide support services specifically for foreign trade and investment, including immediate assistance in acquiring “force majeure” certificates, resolving challenges of severely affected companies, fast-tracking export and import certificates, and fully implementing the new Foreign Investment Law of the People’s Republic of China (FIL) and fostering a more optimal business environment.

To fully take advantage of the latter, Horizons encourages foreign investors to focus and align with government policies for foreign investment as part of their ongoing recovery plan. In this manner, you can safeguard investment now and beyond COVID-19 by taking a dual approach to maximising the benefits of the whole of China’s pro-business policies.

Here, there are two important points to be made. Firstly, related to COVID-19 measures, it is essential to strictly follow all procedural formalities in moving to qualify and obtain benefits such as social insurance reductions and tax exemptions. Secondly, with FIL having come into play this past January, and the current emphasis being on “no-contact” online business procedures, the notion of strictly following procedural formalities cannot be understated.

Horizons can advise you on all matters related to the latter, including making a review of your corporate governance, labour, accountancy and tax withholding and payment according to the latest laws, rules and regulations pertaining to COVID-19, FIL and more.

A well-planned and keenly executed recovery will enable you to build resilience, regain growth and forge a path to success for your China investment now and going forward.

The professional guidance and solutions we offer related to the protection of your foreign-invested business now and post COVID-19 may include, but are not limited to:

  • Foreign investment Law compliance
  • Tax and accounting compliance
  • Trademark registration procedures
  • Company alteration or registration procedures

4. Leveraging earmarked financial loans for the long-term

For enterprises struggling with operational cash-flow and facing long-term challenges to maintain cash-flow well into the long-term, financial institutions across China’s provinces and municipalities have been directed by the State Council in cooperation with the People’s Bank to provide financial support to businesses.

Government driven financial support comes in the form of guaranteed loans, credit loans and reduced loan interest, as well as long-term and middle-term loans, through particular priority channels offered to those enterprises involved in prevention and control related to COVID-19.

What’s more, individuals, small and micro enterprises who have lost income due to the epidemic may also qualify for certain loans.

Further, enterprises with existing loans may apply to extend the loan repayment period and if the write-off conditions are met, could apply for loan repayment write-offs according to relevant regulations.

As an advisory with many years of experience in China, Horizons take the position that financial loans are advisable for foreign entities with vested long-term commitments in China. Access to this money will not only assist in your recovery from COVID-19, but allows you to engage in development and invest in new markets, products or services to regain growth and profit in the long-term.

Securing loans is an elaborate process, but it does not have to be a “painful” one. And as in pillars 2 and 3 of this outline, leveraging earmarked financial loans for the long-term also calls for enterprises to take immediate action and follow clear procedural processes for gaining maximum benefit.

Horizons can advise you across a wide range of loan opportunities related to COVID-19 lending programmes and more to move you in the direction of into the direction of long-term to support your enterprise. Our professionals will work closely with you in preparing all the correct and legitimate supporting materials for loan applications, ensuring they meet the exacting requirements of lending institutions.

The professional guidance and solutions we offer related to the leveraging earmarked financial loans for the long-term may include, but are not limited to:

  • Financial loans for severely affected enterprises
  • Financial loans for small, medium and micro-enterprises
  • Financial loans for enterprises involved in epidemic prevention and control

It is not alarmist to say a great many businesses worldwide will not survive the economic effects of the COVID-19 pandemic. At this juncture, it is crucial for China-involved enterprises to assess and establish a plan for navigating the way through COVID-19 and beyond. To do so will require a not just comprehensive understanding of the recent measures put for by the government, but a commitment to working locally to achieve global results.

With an advisor network spanning 30+ countries and administrative regions, Horizons Group and its partners are able to formulate actionable solutions for your Chinese subsidiary, providing you with services to manage the COVID-19 crisis on a daily basis.

Without leaving your home country, we will assist you at the local level in China by coordinating between you and your team in the most preferred language. We’ll put you on the right path to stabilizing your business, saving money and putting you in the best position for recovering from COVID-19.

Again, to receive additional information on these items and more in-depth approaches to corporate solutions, please contact one of our crisis management leads below by calling or emailing them directly.

APAC Region
Ms LI Hua Jing
Mobile: +86 13166299232
crisis.services@horizons-advisory.com

EUROPE
Ms Lucia NETTI
Landline: +39 011 19711641 Mobile: +39 391 1283498
crisis.services@horizons-advisory.com

AMERICAS
David PANDT
Mobile: +1 917 945 8511
crisis.services@horizons-advisory.com

You can learn more about Horizons and the CCG Association by visiting our websites at www.horizons-advisory.com and www.theccgway.com.