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I have been a huge fan of Jim Boyce since 2007. Jim has lived in Beijing at least since then and while there he has frequented pretty much every bar and restaurant worth frequenting and he has probably written at least something about pretty much each of them. Jim is the brains behind BeijingBoyce an amazing and long-standing website on Beijing’s bar, nightlife and food scene, World Baiju Day,, a website on Baijiu and Grape Wall of China, the best and most influential website on China’s wine industry. If you are interested in any of these topics, these sites are a must read. Even if you are not interested in any of these topics, they are still worth reading because of the insight they provide into China.

I also follow Jim on Facebook, both because we are friends and for his great insights on China, mostly Beijing. His Facebook page has been a great source of information on what is going on in Beijing during the coronavirus and his most recent post on this is so good that I feel compelled to post it below, word for word. It is on what is going on with Beijing’s bars and restaurants and I have zero doubt that it is accurate and zero doubt that it is important and when i say important, I mean really important and important way beyond the Beijing bar and restaurant scene. It is important because it describes an important snippet of life under the coronavirus and it also describes an economy on the brink of disaster. No, I take that back. It describes an economy that is barely functioning.

Many of the big investment houses are saying things like how China’s economy could suffer as much as a one percent decline in GDP growth in 2020. In other words, it’s GDP growth might decline from around 6 percent to 5 percent. Whenever I read that sort of prediction (which is often), I figuratively throw up my hands and mumble either, “they are just guessing,” “liars,” “bullshit”, or “they have no clue.” From all that I am hearing from those I know who are in China and the steady stream of emails I get from people I do not know in China, there is hardly any economy to speak of in China right now. We are not talking about “maybe” a one percent decline in GDP growth. No. We are talking about what I have to believe is more like a 20 to 30 percent decline. We are talking about an economy that is not really functioning.

Why then are the investment houses getting this so wrong? I’ll tell you why. Because it is in their own self interest to do so. China will recover from this horrible virus and when it does, most of its industries will come roaring back. The American company that has not ordered ten million dollars worth of widgets this month will do so when the virus ends — if it has not moved its manufacturing elsewhere in the meantime. See Manufacturing in China Got You Down? Make a Run for the Border. The Spanish company that chose not to set up in Shanghai last month because of the virus will set up in Shanghai a few months after the virus has ceased to spread. See Opportunities for Spain After the Coronavirus Situation Ends. These investment companies know this and they want to be in the Chinese government’s good graces when it happens. They want to be able to say to the Chinese government and to Chinese companies, “look here, we had your back  (by essentially lying for you) during the difficult times, so now let’s do business together.”

Because my law firm’s clients, past, present and future, overwhelmingly come from the United States, Canada, Australia, and Europe, it is much easier for us to just tell it like it is. Because we are an international law firm (and not just a China law firm), we make money from our clients going into China AND from our client’s leaving China and going into Thailand or Spain (where we have offices) or Mexico (where we will soon have an office) or Poland or Colombia or Vietnam or wherever. We are country neutral.

Now if you are saying, sure, China’s economy is hurting right now, but pretty much everyone agrees it will come roaring back when the coronavirus threat settles down and that will be within weeks, I have to wonder where you are getting your information. Sure, President Trump is saying that the coronavirus will “miraculously” go away by April due to the heat, but, like so much of what he says, he had little to no factual basis for saying this. Sadly, there is a chance that it will just keep going. See Can Coronavirus Be Crushed By Warmer Weather? So it may end in March or April or May or June or July, or it may not. Obviously the coronavirus’s economic impact will depend on when it is defeated or at least greatly reduced and we simply do not know when that will be. As of right now, is spread is only accelerating. See Coronavirus Cases Seemed to be Leveling Off. Not Anymore. The huge pile of unknowns about the Novel (it is called that for a reason) coronavirus means any economic prediction for China is just guessing.

Back to Jim Boyce and his latest Facebook post. Here it is (below), word for word. Note also that the picture above comes from Jim’s Facebook page as well. Does this sound like an economy whose GDP might decline just a little? Draw your own conclusions.

 

Beijing’s restaurants and bars are being hit really hard by the coronavirus crisis. Many are closed. Others remain open, often with reduced hours and menus. They all face evolving rules as the situation mutates.

I’ve talked to many food & beverage trade people these last few weeks and done a lot of reading, and I’d like to post some stuff I’ve heard and info I’ve gathered. I don’t claim to be an expert on any of this, I’m just sharing things I’ve learned.

  • Beijing Evening News reported last week that only 13% of the city’s 87,000 food venues were open during the epidemic. Global Times pegged the catering sector loss at USD72 billion nationally as 93% of restaurants shut over the Chinese New Year holiday break.
  • I write a lot about wine in China and many sales are linked to entertaining. Losses are big: one top distributor said sales will fall 80% this month and 50%+ next month. Trade fairs, tastings, classes et al are postponed. Good luck finding many Chinese wine tourists in Napa or at Australian wineries, where they are usually major forces.
  • The Beijing authorities recently banned group dining, such as company and birthday parties. Even small gatherings are frowned upon. Events like quiz nights and open mic nights have been canceled at the bars I frequent.
  • Based on talking to a dozen-plus owners / managers, and F&B WeChat groups, the current rule seems to be groups of no more than three people, placed at least one meter apart, and taking up less than half of the venue’s capacity.
  • Owners told me they must now record the temperature and name / phone number of customers. Restaurants risk fines for staff not wearing masks, not following disinfection rules, etc. Some have closed rather than to deal with these issues or the pressure of authorities.
  • Some venues are also closed as staff have not returned from holidays and are stuck in distant cities. Some have started or boosted delivery services to get revenue flowing. Rent is a big factor and some have received relief from landlords while others still hope.
  • Here are direct quotes that typify what I’m hearing from Beijing restaurant and bar people.
  • Bar: We want to protect our staff. We haven’t closed for one day during the past ten years, so this was a really hard decision.
  • Bar: It will impact us and many other bars & restaurants. It will take a long time to recover. I think in general people will be afraid to go out.
  • Restaurant: It’s not looking good. My staff can’t even return to Beijing as some of their villages are locked down. And when they return, they are required to do a two-week self-quarantine.
  • Wine: The year is gone. Big losses. Some people will be out of business for sure.
  • Restaurant: The impact has been severe. Revenue has dropped 95%.
  • Wine: For sure, the first quarter is done, and things can only come back gradually. The ones who still have cash flow [and can hold out] will win in the end.
  • Bar: I feel very sad but what can we do? We can only try out best. I hope everyone will be be okay.”
  • Restaurant: “Our workers cannot come back. They are all blocked because of coronavirus.”
  • Bar: “Even [bar name] is closed today. I don’t think they’ve ever closed before.”
  • Tough times. I really do hope all of my friends in the food and beverage scene can keep jia you-ing until this crisis is over. Got a favorite restaurant or bar or a wine company? Give them some business today. Order a meal for delivery or grab a drink or stock up on some bottles.

UPDATE: Got a Qingdao update saying that hardly anybody is going out and at all there because they “don’t want to encounter another human being.” This is in a city without a single case of Covid-19 infection.

UPDATE: This CNBC article says that China’s textile factories are operating at less than 10 percent capacity right now.

UPDATE: Got this report this morning (2-15-2020) from Dongguan. It’s even worse than you and your friend think it is. I’ve lived here since 2009 and I’m currently in DongGuan, population 9 million. It’s a ghost town. Every restaurant, grocery store, shop, and small business is closed. Every shopping mall is closed, and there’s one on every corner. Here’s what the article is missing: what happens when all those retail businesses can’t pay their rent? And what happens when the tens of millions of people who work in them can’t pay their mortgage? And the four other houses they bought for investment purposes (because they are going to get rich) can’t find renters, and they can’t pay those mortgages either. And, all the big office bldgs built on spec, certain that businesses will move in on Day 1?  Real estate is the Achilles heel here.

UPDATE: Jim “Beijing” Boyce has updated his facebook post by adding considerably to it and it can now be found on his Beijing Boyce blog here. I urge everyone to read it.

I also note that I have been getting a ton of heat on social media for this post, mostly from Chinese saying that I have no right to write about their country and that I should instead be writing about my own country and saying I hate China. I mention this because I find this hugely ironic because the bulk of this post comes from someone who is staying on in China through the coronavirus and is so loyal that he urges people to order from their favorite restaurants so as to keep them afloat. Enough with the anger, people, we are all in this together against the virus. Don’t get mad at those who are just reporting on (or even analyzing) what is happening.

UPDATE: Got the below from a foreigner (not from the United States) in Zhongshan, “a small county of 3 million, up the Pearl River halfway between Guangzhou and Hong Kong.”

In a 45 minute walking radius, which includes the Central Business District, virtually nothing is open. All banks are closed. All retail stores are closed. All coffee shops are closed. The only places open are convenience stores, drug stores, some bakeries, a produce market, and supermarkets. Some small restaurants are open, but only for take out business which is very little. The shopping malls are dead. Nothing is open at the malls except for the supermarket.

All the parks are closed, so you can’t even go out and sit on a park bench.

You are required to wear a mask if you leave your home. I live in a gated community, which uses a check box card system for anyone leaving the community. Those who are working have a card that allows them to leave once a day. For all others, each household has a card that allows one person in the household to leave every second day to buy necessities.

Everyone’s temperature is checked both when they leave the community and when they return. It is also checked at the produce market and at the supermarket. My temperature is checked between 2 and 5 times a day.

The worst is the palpable fear. Friends wear masks while visiting. There is no contact on greeting, such as a handshakes. Aside from close family, people are uncomfortable being less than 1 meter from anyone.

The fear is so deep that I don’t think there will be a snapback. It will take a long time before people will feel comfortable gathering in groups. All the reunion dinners, company gatherings, and family gatherings will take a while before they return to normal. Until they come back to normal, I don’t see the Chinese economy coming back to normal.

 

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Photo of Dan Harris Dan Harris

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network. 

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network.  His work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by AVVO.com (also its highest rating), and is a recognized SuperLawyer.

Dan is a frequent writer and public speaker on doing business in Asia and constantly travels between the United States and Asia. He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice.

Dan is licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at his firm, Dan focuses on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.