On 30 January 2020, the World Health Organization declared the 2019-nCoV (COVID-19 aka the coronavirus) outbreak a Public Health Emergency of international concern. From that moment going forward, every nation, more and more, has been forced to cope with a multitude of COVID-19 related problems concerning their population’s health and their country’s economic wellbeing. Throughout this scenario, enterprises have had to act quickly to mitigate the onslaught of dilemmas caused by COVID-19 pandemic and find solutions to keep their operations afloat during such an unprecedented moment.
New challenges, new risks
With COVID-19 come a new set of challenges and risks for enterprises and the advisors they trust to guide them through the global crisis. What are companies to do in the face of mandatory quarantines, large-scale lock-downs and the shutting down of non-essential businesses what is sure to be an abnormally extended period of time?
“At the present moment, we advisors, as law and tax experts, have a duty and obligation to be very concrete in the assistance we provide to entrepreneurs,” says Lucia Myriam Netti, Horizons Corporate Advisory regional partner for Europe, Russia and Belarus (Horizons Italy).
“Now is not the time to delve into philosophical principles or theoretical discourse with clients; what we are now called to do at this time, during this uniquely problematic crisis, is to find practical solutions that support enterprises in ways to safeguard them and their employees now, and for the foreseeable future” adds Gad Matalon managing partner of Milan-based Lawyalty Avvocati Associati (CCG Italy).
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Lucia Myriam Netti -
Gad Matalon
Through a collaborative effort between the Horizons Group and the CCG Association, whose advisory membership represents 20-plus countries, CCG advisors have created and implemented a crisis plan to support China-invested enterprises.
“Our plan provides enterprises with the right instruments to mitigate the disorder brought upon by the coronavirus, continues Ms. Netti. “Along with crisis best-practices advice for their operations, our team has laid out a plan for responding to and benefit from the many measures put forth by the State Council of the People’s Republic of China to assist companies through this difficult period.”
The fight against COVID-19
It has been asserted that China was the first country hit by the COVID-19 outbreak and, consequently, has been the first to implement concrete, step-by-step methods for combating the coronavirus. It has been a multipronged response designed to take direct action on both medical and economic front simultaneously. Therefore, one of the pillars of the Horizons-CCG crisis plan is to have China-invested enterprises mimic the China response as part of their crisis management effort.
“Beyond the nuts and bolts of our plan, it calls for enterprises to be wholly disciplined, driven to be aggressively proactive and diligent in carrying out the plan”, says Ms. Netti. “This effort will best position workforces for a return to full operations and profitability, at a time when many other countries, and their own workforces, are stuck in the lock-down phase of their fight against COVID-19.”
The effort has supported, particularly in Italy, a total of 285 enterprises in their return to full operational mode through the establishment of appropriate policies and instruments.
According to Mr. Matalon, safety is the path to success.
“The first action for managing one’s China investment in a ‘profitable way’ — at this particular time — is to implement a ‘correct’ safety management system to handle the workplace and operations involving employees of the foreign-invested company in China. There are some procedures and actions that companies constituted in China have to implement mandatorily; though these should not be confused with government investigations activated by the Chinese municipalities for the consent and approval of the resumption of the operations.”
CCG in action
For the past three weeks, the CCG Association and Horizons Italy have worked side-by-side with enterprises who have one or more subsidiaries in China. The effort has supported, particularly in Italy, a total of 285 enterprises in their return to full operational mode through the establishment of appropriate policies and instruments. According to statistics provided by Horizons’ Ms. Netti and fellow CCG member Gad Matalon, these businesses have recovered an estimated €855,224,357 (approximately €3million per company). Among the enterprises include companies active in the automotive, mechanical, chemical, luxury, machinery, food and beverage sectors.
Non-compliance with COVID-19 safety measures in China can have serious consequences in terms of legal responsibility for a company; the penalty can be substantial. What’s more, the legal representative of the company will be fully responsible for the inaction. Also, it will be considered the liability of the foreign employer to oversee detached employees (In the matter of Italy, there are large numbers of Italian national serving as detached employees Italian company’s Chinese subsidiaries.)
“This aspect of safety — compliance with recent laws reforms and their implementations in the workplace — is the natural precondition and the first step for companies to achieve profitability in China.”
“The need to comply with Chinese rules and implement the necessary safety procedures is essential for protecting employees and avoiding running afoul of the authorities in both China and in Italy,” adds Ms. Netti. “However, legal compliance is not the ‘only one reason’ to comply with such rules, even if it appears to be the most important. This aspect of safety — compliance with recent laws reforms and their implementations in the workplace — is the natural precondition and the first step for companies to achieve profitability in China.”
In the battle against COVID-19, some China foreign-invested companies who are committed to tackling the crisis in their country might ask, “How can act in China, when I have so much to face here in my own country.”
Working locally to achieve global results
To conduct and succeed in business today means to manage one’s operations in a wholly efficient way — be they at home or abroad. And while western countries struggle economically with the deluge COVID-19 has brought upon, in China, companies, with the help of the State Council, are moving fast-forward in their recovery by accepting the responsibility for safety, following a strict programme to avoid risk and remaining unified in their effort.
CCG Association and Horizons Group support enterprises with investments in China by carefully aligning their China-based operations with best practices governance and compliance with the rules of the State Council of the People’s Republic of China, and their own countries being the best bridge to abide by both laws regulations.
The Horizons Group has been operating for more than 30 years in China. And in cooperation with the members of the CCG Association, we are intent on a future of cross-border bridgebuilding worldwide, where for us — and for you — safety is the first step success.
If you have questions or would like to know more about the COVID-19 corporate crisis services available to you from Horizons, please contact us at +86 21 5356 3400 or email crisis.services@horizons-advisory.com.
This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com.
