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China business collapses: "Stress test" by virus: German companies are struggling


ZEIT ONLINE | News, backgrounds and debates

Beijing (dpa) - German and other European companies in China suffer severely from the spread of the novel corona virus.

"The effects are bad overall," said the German and European Chamber of Commerce in China after a survey among its member companies.

Almost 90 percent reported "moderate to severe effects" from the lung disease. Half had to adjust their business goals for the year.

Almost every second company expects a double-digit drop in their earnings in the first half of the year - a quarter even expect a decline of more than 20 percent, both chambers reported. A good third already have problems with their finances. The crisis could take longer than expected. The head of the Chinese government's commission of experts, Zhong Nanshan, expects the epidemic to be "essentially under control at the end of April."

In the crisis, the greatest challenges for companies are unpredictable regulations, severely restrictive requirements for quarantine and extensive requirements to be able to restart operations after the extended break since the Chinese New Year. Half of the companies complained about inconsistent regulations in different areas of responsibility and levels of the authorities, which changed frequently and also at short notice.

"The patchwork of contradictory regulations that the fight against Covid-19 created has created hundreds of different spheres of power that make it virtually impossible to move goods or people around China," complained Jörg Wuttke, President of the EU Chamber. While curbing the epidemic is the most important task, priority must be given to standardizing measures to get the economy on its feet.

For example, deliveries could be subject to a variety of arduous restrictions if they had to cross different provinces or cities or even districts. Supply chains are interrupted. Warehouses did not work normally. Member companies reported that it was difficult to bring workers back to the city to resume work.

"China is facing a delicate balancing act with two important but diverging goals: to carry out the measures to prevent the virus strictly while it is struggling to restore economic normality," said Stephan Wöllenstein, chairman of the German Chamber in Northern China. Government support is needed for those affected, especially small and medium-sized companies, until operations normalize again.

59 percent of the companies surveyed said they had "strong effects", while another 30 percent said they were "moderately severe". Demand is falling, as 56 percent of the companies complained. Delivery times could not be met due to the interruption in logistics (47 percent). There was also a shortage of staff (47 percent).

Production is also delayed due to a lack of supplies (45 percent). Due to the uncertainties, no business or investment decisions could be made (44 percent). 36 percent also find it difficult to maintain their financial flows.

Between February 18 and 21, a total of 577 member companies from both chambers of commerce took part in the survey - two thirds German companies. Almost a quarter of the companies work in mechanical and plant engineering, and a fifth in the automotive industry.

The results coincide in many respects with a survey by the American Chamber of Commerce in China, which also found "significant effects". The main complaints were the interruption of travel options and reduced productivity. Almost a third of US companies see rising costs and greatly reduced earnings.

Almost half of the approximately 150 US companies that participated in the survey are hoping for tax breaks to help foreign companies. A third called for clear and uniform guidelines. A third of the US companies surveyed expect normal operations to return by the end of March, while twelve percent expect delays beyond the summer.



Source: zeit

News/Politics 2020-02-27T00:33:42.368Z
news 2020/04/10    

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