The ongoing coronavirus COVID-19 outbreak has caused disruptions to businesses in different sectors, not only in China but also across the globe. Ever since China’s annual Spring Festival holiday, the country has united to fight together against the spread of this epidemic through various methods, such as by extending the holidays and requiring people to stay at home. Recent statistics have indicated that the number of new infections is declining, and major cities in China have issued guidelines for companies that wish to resume work as soon as possible. This article provides a few suggestions on how businesses shall cope with the impacts of the Coronavirus COVID-19 Outbreak.

 

Wage payment calculation during the epidemic control period

China has stringent employment laws and regulations to protect the legal rights and benefits for the Chinese employees. Employment relationship management during the epidemic outbreak period is a real-life test to examine how strong your HR compliance management is. A lot of companies have asked their Chinese employees to work from home after the Spring Festival holiday. As we approach the end of February, please make sure that your payroll calculation is in line with the central and local government rules, especially for employees that have worked during the extension of Sprint Festival holiday ( 31 January – 2 February), delayed work resumption period (3 February – 9 February) and after 10 February. 

Know how to apply interim policies to ease the cash flow burden

Healthy cash flow is vital to the survival of any business. The Central Government is committed to helping businesses in all sectors to resume work and production by providing financial relief such as loan interest discounts and tax benefits as well as encouraging local government to roll out further policies for reducing the financial burden of small-and-micro businesses. Pay attention to the provincial and district policies which may apply to your company, such as reducing rent and recruitment costs, extending tax filing and social insurance contribution deadlines, providing allowances for online employee training, adopting flexible hour working schedule, etc.

Is your company required to file an application before resuming work?

Affected by the outbreak, most provinces have announced a delay to work resumption until 10 February. After that date, a filing system with the local government has been implemented before companies resume work in many cities. This filing system requires most companies to assume responsibility for preventing and controlling the spread of coronavirus among employees and to cope with the on-site inspection by government personnel. While you are eager to see your employees back to work, please do not forget to check the local requirements for preparing for the resumption of work.

Fulfilling regulatory obligations while avoiding travel

As the outbreak is still ongoing, city lockdown and travel restrictions are currently in effect. Consequently, it is difficult to fulfill your regulatory obligations by filing applications physically. You may try to make telephone inquiries to the relevant local authorities on whether the online application of submission by mail/courier is possible. In most cases, it’s best to postpone your travel plans or engage a local agent to run the errands. If you need to send important documents to China, it is worth noting that the ongoing outbreak will cause some delay in cross-border customs clearance. 

Risk management strategy

The WHO has declared the current outbreak as a “Public Health Emergency of International Concern”. Certainly, you should respond rapidly to protect the health and safety of the local workforce. But make sure that the management team is not too distracted by monitoring and mitigating the medical risk. Your risk management strategy should also address the business aspects, such as supply chain, sales and marketing, customer relationships, operations, and HR procedures, how to stay strong with minimal economic impact for now, and how to drive the business back on track after the outbreak is under controlled.

Transforming your organization digitally

Every threat comes with an opportunity. The coronavirus outbreak has caused many businesses to re-consider digital transformation in how they operate. As a result, online communication tools such as Skype, Zoom, Microsoft Teams, become a daily necessity. Employers are forced to use online software to monitor the whereabouts of the employees and their working schedules. How long the outbreak will last is still unknown. What’s certain is that many companies will continue to reap the benefits of integrating digital tools into their organizational management. Efficiency can be achieved by encouraging employees to work from home. Colleagues develop habits of participating in online discussions actively. Administrative overhead costs and paperwork can be reduced significantly.  

Written by Edwin Yin and Toby Wong, China Consultancy Team, CW CPA

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