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Russell Advocaten B.V.
Amsterdam, Netherlands

The Coronavirus closes down large parts of the Chinese economy. This has major consequences for your business partners in China. How can you, as an entrepreneur, limit the impact on your own business?

The Coronavirus is spreading rapidly and more contagious than SARS. This has major consequences for entrepreneurs doing business with China. The Chinese government takes drastic measures to prevent the spread of this epidemic and locks down entire cities and provinces. Currently, this only concerns Wuhan and the province of Hubei, but other cities and regions may also be locked down if the virus spreads further. This has major consequences for the movement of people and goods. As an entrepreneur, what can you do to protect yourself against this?

1. Take care of your personnel in China

Pay attention to the measures taken by the Chinese government and ensure that your personnel adhere to them. Good employment practice: foreign employees can be taken home as a precaution. Help your Chinese personnel, for example, by sending face-masks, medical gloves, disinfectants and other products to prevent contamination. In China, these products are becoming scarce.

2. Take into account the potential closing of the businesses of your Chinese suppliers

If the virus continues to spread, companies may be closed down as a precaution. A company may also have to close down because employees stay at home to avoid contact with contaminated persons. Therefore, it is wise to see if you can find alternative suppliers.

3. Check if your contracts contain a force majeure clause

If your supplier has to close down, it will no longer be able to meet its obligations. You may suffer damage as a result. Check your contracts to see if you can recover this damage or if it is for your account. Take into account that your Chinese trading partner could try to take advantage of this situation in order to come back to agreements made, even if the company is not subject to restrictions yet.

4. Prepare for stricter rules on import

The outbreak of the Coronavirus has once again alerted governments to the importance of strict rules for hygiene and food safety. It can therefore be expected, that, in the wake of this epidemic, new, stricter rules will be introduced which will complicate both export to China and imports from China.

5. Take into account travel restrictions for Chinese personnel

Chinese personnel suffers from increasing travel restrictions. Even if they are allowed to travel, they might be less inclined to leave their family. You can also expect extra checks and restrictions if you want employees to come from China to the Netherlands.

More information

International business involves risks. Russell Advocaten collaborates internationally with our network of Primerus worldwide lawyers consisting of more than 3000 lawyers in 40 countries. We are happy to serve international businesses.

Do you have any questions about doing business with China? We will gladly help you and, if necessary, call upon our Primerus colleagues in China. Please contact Reinier W.L. Russell, LL.M. (reinier.russell@russell.nl or +31 20 301 55 55).