Operating Your China Business Remotely From Russia
Op/Ed by Chris Devonshire-Ellis, Maria Kotova & Thomas Zhang
The China Coronavirus and the measures taken by the Chinese Government to prevent further spread of the virus are impacting on how Russian investors into the country can effectively manage their businesses operations in China. Several cities have extended the Lunar New Year holidays until 9th February, meaning staff will not return to work before then. Even if they can return to work, public transport in many cities has been seriously curtailed, meaning transportation is likely to be an issue.
The gathering of large numbers of staff in China based offices should be avoided as much as possible, both in terms of infection risks, as well as because many staff have to rely on heavily restricted public transport to reach the office. It is in public environments where the risk of infection is highest. Your business needs to mitigate against having staff travel, if at all possible, anywhere in China during this time.
Similarly, other traditional methods of business operation like utilization of express mail for delivery of important documents cannot function under current situations. Such services have been shut down because both the physical documents themselves and those workers carrying such documents can be a cause of potential contamination. Sending staff to Chinese supplier factories to implement quality assurance work also becomes impractical under the restrictions put in place.
In short, most options for the standard operation of businesses using traditional methodologies are temporarily closed. The options that remain open rely on “remote” operations. These methodologies only require the transmission of data through cables / WiFi – something that at least the current coronavirus cannot take advantage of. There are of course other dangers and problems relating to over-reliance on digital communications, particularly for organizations that have not put in place a robust Business Continuity Plan (BCP).
In this article, we outline some options and advice that specifically relate to the Chinese business environment. Considerations should focus on the short-term situation (the coming two to three weeks when employees may be restricted to their apartments while the incubation period for this virus passes) and the medium-term situation.
For the forthcoming weeks, companies will need to rely on the corporate digital infrastructure that they have already put in place and supplement it with the other non-corporate infrastructure that exists in China, while being aware of the limitations and weaknesses of these public channels.
For well-prepared companies, remote working need not be too much of a hindrance in the short-term. To take our firm as an example, our employees have laptops and are working from home. The company utilizes the MS O365 platform quite comprehensively, and our employees can maintain constant contact with each other via this corporate platform. All the documents our employees need for the implementation of their work are available to them on Sharepoint Online and can be shared as necessary. Our ERP and CRM are remotely accessible. Data transmitted between company computers are being utilized at home and our servers are encrypted prior to transmission. There is a slowdown in the transmission of data, because employees have to utilize their apartment internet connections, but this does not have a serious effect. For example, today we held a conference call on MS Teams between nine people in various locations within China (including one staff member in Hubei Province) and in Moscow. While the video functionality was weak because of bandwidth issues, audio functionality was sufficient.
But for less well-prepared companies, some problems can be predicted. If your company is not utilizing a robust corporate tool, such as MS Teams or Skype for Business (also known as Lync), intra-company communications may have to rely on traditional telephone, corporate email, or less secure public channels, such as WeChat. If your corporate email server is hosted in your company’s HQ abroad, you may find that employees working from home are struggling to send or receive emails with large attachments. This is a common problem seen when transmitting data into and out of mainland China due to the congestion at international exits. Many companies circumnavigate this problem by setting up VPN-like structures between their China offices and overseas offices; however, when employees are working from home – these contingency plans no longer function effectively.
For client-facing or supplier-facing staff, the impact on operations because of the inability of these employee to physically meet their customers or vendors needs to be mitigated. If your company has robust corporate tools, such as MS O365 at its immediate disposal, you may consider inviting your clients / suppliers to communicate with you through those channels as an “external user”. If you don’t have such channels immediately at your disposal, maybe they do, and you can organize for your key staff to be added into their networks. Such coordination requires time to implement so please arrange for some lead-time for this to be facilitated.
We can assume that there will be some acute short-term problems for Russian companies with operations in China. Here are some simple guidelines that can be followed to mitigate the effects:
- Ensure your IT staff (both in Russia and China) are available to deal with connectivity and other related issues that arise. With employees working remotely, more problems can be expected to arise. Consider paying IT resources extra to ensure they are working during the holiday period in preparation for most of your staff to commence working remotely after the end of the extended Chinese New Year.
- If you have corporate communication tools that can be used effectively in China, ensure your China-based staff have sufficient guidance to use them and know that they need to be logged-on. In our experience, many companies that have these tools don’t inform their China-based staff about their full capabilities. Consider requiring employees to download the apps (Teams / Sharepoint Online etc.) onto their mobile phones as well.
- Make sure employees know that any costs incurred from corporate communications, which rely on traditional mobile telephone will be reimbursed by the company during this period.
- If you have emails with large attachments, there is a good possibility that receipt may be delayed for employees in China especially if your corporate email server is located overseas. Consider separating the email message from the attachment. Try to reduce the size of the attachments or find other channels for delivery of such attachments. Note that many services, such as Dropbox etc. are blocked in mainland China.
- If your employees are forced to rely on non-corporate channels, such as WeChat to communicate and share files etc., ensure you send out some guidance to them on what kind of information may not be shared over such channels. This is an area where your internal legal resources at HQ might be required to provide input. For instance, you may have contracts in place with certain clients or vendors that restrict the sharing of certain information over non-corporate channels. Efficiency is one key consideration for your organization in the coming weeks, but data protection should also be ensured. Without such guidance, you may find that your China-based employees are sharing all sorts of documents and information via their personal WeChat accounts.
- Setup a clear and regular communication schedule for senior resources during the coming weeks. This is particularly important when people are working remotely. Most modern conference call platforms include not only an online attendance option where full functionality can be enjoyed during meetings, but also a “dial-in” option for those participants who simply want voice functionality through their mobile phones. This functionality is recommended for employees that might be facing limited bandwidth issues from their residential addresses.
These above measures can at least enable your China-based employees to continue working with a reasonable degree of efficiency and security while the situation stabilizes. As that happens, your company should be considering how to deal with the medium-term impact. This is something that can’t be rushed. Business Continuity Plans need to be designed carefully before they are implemented, taking into account the nature of your business, its global requirements, as well as China-specific considerations. Once designed, appropriate hardware needs to be procured, software installed, and data migrated carefully. The process takes months, requiring close liaison between your operations teams in China (and elsewhere) and your IT resources.
Solutions should be put in place as soon as possible. This current situation should be a wake-up call to your organization that such technology is becoming increasingly important. It is not only critical in “crisis” situations, such as the current coronavirus outbreak; digital communication / sharing tools are increasingly being considered as a replacement to the traditional office environment. For those organizations that are “ahead of the game” in this respect, this current crisis should actually provide them with a kind of competitive advantage for a period of time.
For those that find themselves “behind the game”, maybe it is time to make the required investment. Dezan Shira & Associates can advise and help implement robust solutions with our IT Infrastructure Engineering and IT Consulting teams. Please contact IT@dezshira.com to discuss setting up such systems for your company.
Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact us at firstname.lastname@example.org for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.