As the first country to suffer from the coronavirus outbreak, China has also been the first major economy to get most people back to work after largely containing the virus. The government is implementing new measures to relax border controls and quarantine measures and law firms are returning to something approaching normal office life. But the long shadow of the pandemic continues to loom over the country.
Many global firms’ China offices have managed to resume office operations as large business centers such as Beijing and Shanghai reopen cities. “About a month ago, our office gradually returned to normal working hours,” said Charles Ching, who leads Weil, Gotshal & Manges’ China practice from Shanghai. Meanwhile, the firm continues to allow flexibility to work from home for staff who have needs such as taking care of children.
“It’s a gradual process of returning to normalcy,” he said.
In Beijing, Perkins Coie has also resumed in-office operations in a brand new space that the firm had only moved into in December. “Access to our operations in Beijing, Shanghai and Shenzhen were restricted for only a short while,” said partner James Zimmerman, adding that staff were able to return to their desks and working in short order once the lockdown was lifted.
The firm’s 9,000-square-foot Beijing office is designed with ample room for staff and thus is able to meet density reduction criteria easily, added Zimmerman. The most significant change, he said, was managing the registration and social distancing of incoming visitors, as required by the district governments and building management.
Ching said before resuming its office schedule in full, Weil’s China offices were partially reopened for about a month since late March and had a few people on rotation to work in the office while the majority of the staff worked from home.
It comes after an unprecedented lockdown that saw China impose strict social distancing and quarantine measures for the nation’s 1.4 billion population from late January until around mid-March. From late March China has banned foreigners from entering the country.
The lasting effects of the pandemic
But the coronavirus has taken huge toll on China’s economy, which was already met with many challenges before the virus outbreak, and the pressure to reboot the economy has led the government to ease travel restrictions. Since May, citizens are free to travel within the country using a nationally recognized QR code system that serves as an indication of their health.
“We will start to see domestic traveling pick up over the next couple of months if not the next couple of weeks,” said Ching, who points out that the travel restrictions’ impact has been much more significant on the business side.
Ching, a transactions lawyer focusing on mergers and acquisitions and private equity deals, said his typical work routine involved traveling, at least domestically, and visiting clients. “In our line of work, there are certain things you need to see from the other side in order to get the work done,” Ching said, “our clients spend a significant amount of money on deals.”
For Perkins, the pandemic and the resulting travel restrictions have had a more direct impact. Zimmerman said in order to accommodate clients and assure compliance with government orders, the firm had to postpone several large client social events until later in the year. Event organizations were also affected by the restrictions of international traveling, but Zimmerman said he expected those restrictions to be lifted, in whole or in part, after Lianghui, or Two Sessions, the annual plenary meetings of China’s legislature the National People’s Congress and political advisory body Chinese People’s Political Consultative Conference.
There are already some measures to relax international travel restrictions that are in the works. Earlier this month, the Ministry of Foreign Affairs told Bloomberg News that it is establishing fast-track channels for business professionals traveling from other countries to enter China if they are cleared of the virus. In fact, China already has a program in place with Korea that allows eligible business people to both countries to enter one another with an expedited quarantine process. Beijing has been reportedly in discussion of similar arrangements with Japan and Singapore.
These policies to loosen restrictions will have a positive effect on the market, but the result won’t be immediate, said Weil’s Ching. “Because of the COVID experience, people have become more guarded towards traveling, despite the positive policies,” he said. “The [new measures] are helpful; but people will have to be willing to travel again.”
Ching noted that while domestic traveling in China will return soon, cross-border traveling will take longer to recover; that’s also because travel restrictions still remain in most of Europe and the U.S. “That will more or less affect cross-border commerce,” he added.
Lawyers do expect work to pick up as China reboots its economy. Zimmerman said Perkins lawyers have already seen an uptick in the amount of work; the firm’s China practice focuses on intellectual property, international trade as well as advising multinationals on investments and operations in China.
Ching said he expects more activity in the realm of public M&A and has been working on private investment in public equity transactions of Hong Kong-listed companies as they sought funding to support their businesses. He also sees in uptick in foreign investment work, especially in the sectors less impacted by the pandemic such as ecommerce. Companies may also want raise their next round of funding.
But it will be a while before we see any large scale buyouts or sell-side transactions, Ching said. The uncertainty caused by COVID-19 has created difficulties for investors and targets to agree on issues such as valuation and price terms. “That will continue for a while,” he said.