How the Coronavirus is Impacting China Businesses

An Interview with Arie Schreier, GM of PTL group China. Click here to listen to the podcast.

James Eron: Hi, we're talking here today with Arie Schreier, GM of PTL group, a provider of business services to international companies who are selling their products in China. Arie, thanks for joining us.

Arie Schreier: Thank you James.

James Eron: Now we've been talking and you've got quite an interesting story here. Obviously Coronavirus is capturing a lot of conversations these days. Arie, can you tell us where are you now and what's happening in your particular case?

Arie Schreier: Well, at the moment I'm in Los Angeles. I actually came here for a family vacation about a month ago and then the whole story of the virus came out and we couldn't really go back. First the flights were canceled and then we realized that if you go back there, we have to be locked at home. Kids cannot go back to school. So for the time being, we're still in Los Angeles waiting for the school to open so we can go back to China.

James Eron: Now you're the GM of PTL group. What's happening with your company with PTL in China now?

Arie Schreier: Well, my company's actually quite lucky because most of our business can be done online. We have all of our team members, about 60 team members in Beijing, Shanghai and Guangzhou are actually operating, completely servicing our clients from home. We took one day to go to the office. We picked up everything that we need, printers, laptops and everything that is required for the service, and our clients are being serviced from home, getting all the services they needed from the HR issues, financial issues, logistics issues, tax issues and so on. The only team that actually has to go to the warehouse is the logistics team obviously, when we have orders and they need to fulfill these orders, they have to actually go there, call the transportation company and send orders out.

James Eron: So it sounds like in your case you've actually been able to do a lot of work remotely and your company's still up and operating.

Arie Schreier: Yes, pretty much. We're doing everything. In fact, we're working as normal, just the people are sitting at home.

James Eron: Interesting. So you're quite lucky. Now I'm curious, what do you see in terms of what's happening with the status of other companies and businesses in China?

Obviously companies that has a lot of interaction with people like restaurants or hotels or gyms or all sorts of event companies, they are basically stalling and waiting to see what's happening and they're not operating at all.

Arie Schreier: Well, it really depends on the type of businesses. Obviously companies that has a lot of interaction with people like restaurants or hotels or gyms or all sorts of event companies, they are basically stalling and waiting to see what's happening and they're not operating at all. Other companies are able to execute orders or sell or provide services. It all depends on the level of interactions between people that is required. Whatever can be done online obviously doesn't suffer that much. But anything which is related to people going out and meeting other people is more complicated.

James Eron: And we'd been talking before about a number of your clients and in the issues that you've seen, there's actually a bunch of unique issues coming up in the market today. What kind of issues do you see companies and brands facing?

Arie Schreier: Well this is a definitely an unusual period of time and companies are facing unusual problems. First, I'm sure that there's a lot of managers just like me, foreign managers who had to go out of the country. They left in a rush and they didn't plan for it and they're sitting overseas and they are not sure how to manage their company in China. We've been approached by a lot of companies with several issues. We see a lot of HR issues, companies obviously are paying salaries while they're not there and the business is not operating. So we've been approached by companies to help them either to reduce the salaries or terminate contracts or negotiate with the good employees. And I must say that the Chinese government has been really supportive of the employees, but also the companies. They put out certain measures to help the companies, for example, to defer VAT payments or to defer social benefits payment to help the companies and encourage them not to lay off people.

The Chinese government has been really supportive of this. At the same time, there have been some regulations not to lay off people, and I'm sure that it will not be easy to terminate contracts. So we've been approached by several companies to negotiate with the employees that had to leave or had to negotiate their salaries, and I think salaries is going to be a major issues for companies who cannot operate and they still need to pay the fixed cost. At the same time, we had other companies that ask us to negotiate with the landlords. Obviously everyone is paying the rent that they were committed to and it's not that easy to get a discount or not paying the rent. There were some governments who offered discounts or defer of the rent payment, but basically it's all negotiable. Each one is negotiating with his landlord so we can have some of the companies to go and see if they can reduce the rent fees.

Other companies have issues with control or controlling of the company stamps. Some of the managers left the stamps in the hands of somebody they're not sure who can be trustworthy, or they didn't leave the stamp with anybody. And obviously a lot of the actions in China requires usage of the stamps. And if you know China well the stamps are worth a lot in China. You can do a lot of things with the stamps. So it's important to keep safe the stamps with somebody who is trustworthy and give instruction how to use it in an appropriate way. So there's many special issues even as far as people asking me to pack up their homes and send their households back to their home country, which happened to be not that easy. It's not that easy to walk into somebody's home, pack it up and send it out. The authorities will not allow this. So we have a lot of challenges unique to this situation that we have never faced before and most of the companies didn't face before.

James Eron: What advice would you give to company managers that are in some of these situations?

Arie Schreier: Well, I guess the key question is not to lose control over the business in China, because I guess we all believe that this is a temporary situation and things will go back into track just like the SARS in 2003. It did take a few months, but things will go under control and business will resume in China. And the main thing is to keep the current business safe and under control and make sure everything is supervised. Make sure that the employees are being treated fairly and if you treat them fairly now they'll stay loyal, and when the business resume you'll have good employees happy that will take care of your business.

But in order to do this, you need a trusted party that can help you to make sure that things are under control. And that's everything which is related to the finance, to the HR, to the taxes issues we didn't even touch. You can talk about manufacturing that you may need to go to the factory and check stock counts and make sure nothing is missing. So it's all about keeping control and supervision of the business in China. And for us, because we have 60 people on the ground, we have the ability to keep some sort of supervision to a certain extent, to help all the overseas companies that cannot do this from overseas.

James Eron: Obviously that sounds like a very important service, especially in these extraordinary times. Arie, how can people contact you?

Arie Schreier: Well the best way, I guess through our website, which is www.ptl-group.com. And from there, it's very easy to contact us.

James Eron: All right. Sounds very good. Thank you so much for your time today and giving us some insights into how businesses are continuing to operate in China.

Arie Schreier: Thank you very much, James.

About Arie Schreier

Arie Schreier has over 20 years of management experience with companies and diplomatic missions throughout Asia, Australia and South America. He has spent the last 17 years managing logistics, administration, HR, recruiting, finance and manufacturing operations for foreign companies in China. Arie holds a Master Degrees in Entrepreneurship and Innovation from Swinburne University in Melbourne, Australia, and Public Administration from Tel Aviv University, as well as a BA in Political Science and International Relations from Tel Aviv University.

About PTL Group

PTL Group provides management and operational support for international companies throughout their market entry and growth stages in China. Founded in 2000, PTL Group is a privately held company with offices, logistic centers and facilities in Shanghai, Beijing, Guangzhou and Changzhou. Since inception, PTL Group has served over 300 market-entry projects in China and employs over 60 employees across China.

About James Eron

James Eron has over 20 years of consulting and industry experience in China, Japan, and the US. As a Partner at Kung Fu Data, James is a China market entry expert bringing quality brands into China and executing strategic turnarounds for brands struggling in the world's most competitive eCommerce market. His work makes extensive use of China eCommerce data to identify and capture market opportunities. Clients include a wide range of B2C brands from apparel, cosmetics, and luxury to pet food and consumables. James is a frequent writer on China eCommerce topics and is regularly invited to speak at events surrounding China’s e-commerce sector.

Kung Fu Data

With offices in Beijing, Shanghai, Hong Kong, San Francisco, New York, and Rome, Kung Fu Data is a China eCommerce Operator (TP) and Consultancy possessing a rare combination of authentic understanding of the West and China in-depth local know-how. Since 2010, we have used proprietary data and optimization technology to help foreign brands enter and thrive in China’s largest e-marketplaces. Our sole mission is to bring brand owners a level of strategy and data transparency they never thought possible.