China/Hong Kong in-market webinars archive
Your questions answered 7 April 2020
If your question refers to logistics and freight, then sea transport service in China has normalized as the number of calls in China’s ports across recent days reached the average of over 800, similar to the same period in 2019.
Air transport between Australia and China has been greatly affected by the suspension of international flights since the end of March.
While all China-destined international passenger flights remain restricted to 1 route to any specific country per week under the latest CAAC notice, China Southern has commenced a cargo transport service with passenger flights from 30 March on daily basis with 2 round routes: Guangzhou – Sydney and Guangzhou - Melbourne. A route between Shanghai – Sydney will be launched soon.
According to China Southern, they welcome airfreight inquiries and bookings. Please have your freight forwarder contact them for details, or let us know if we can be of further direction.
More air transport options for agri and fishery exporters will be coming in 2 weeks time, with the launch of Australian Government’s International Airfreight Assistance Mechanism.
Wuhan opened its doors to the outside world just after midnight Wednesday 8th April, ending a 76-day lockdown to contain the COVID-19 pandemic.
Within the city however, tough rules on individuals and businesses are still in place to prevent the virus from regaining a foothold. Officials continue to urge everyone to stay at home as much as possible. Schools are still closed.
Across Wuhan, nearly 94% of businesses — almost 11,000 of them in total — have resumed operations. For major industrial enterprises, the rate exceeds 97%. For service companies, it is 93%. However, at industrial companies in Wuhan, only 60% of employees are on the job.
The companies are suffering as the pandemic dampens overseas demand and international freight restriction for exports.
As such, regarding the exporting from Wuhan district, please provide specific product and category information, and we can check on a case-by-case basis.
Hong Kong has been pushing for greater development and adoption of digital and mobile payments with the Hong Kong Monetary Authority (HKMA) beginning issuing stored value facilities (SVF) licenses in 2016 and virtual banking licenses in March 2019.
From 2018-2019, nearly nine in ten consumers in Hong Kong have used a digital wallet underlining that there is a genuine willingness to engage with new payment methods.
According to JP Morgan’s report, digital wallets are the second most popular payment option in Hong Kong, with close to US$ 1 billion in transactions annually. The same report expects digital wallets to grow faster than card transactions to 2021.
There are 9 major digital wallets in Hong Kong including PayMe, WeChat Pay, AlipayHK, PayMe, Tap & Go, TNG Wallet(TNG), O!ePay, Apple Pay, Google Pay and UnionPay QuickPass. Apart from top up, cash withdrawal and P2P transfer, some digital wallets also provide functions for global money transfer and bill payments.
However, in Hong Kong, there is a need to address the deeper the digital inequalities exposed by the coronavirus pandemic.
All schools have been closed since end of January 2020, and the presence of students who have not returned to overseas study destinations due to border closures has facilitated the adoption of online learning. The quality of online education received by students is dependent on the home environment, computing equipment and internet speed, all of which are related to financial strengths.
During the mask shortage in early February, the digitally-sophisticated bought masks online, while others queued for hours to buy at retail locations.
On the banking side, credit cards are widely used and accepted, however, many people are still preferring cash transactions, queuing up at bank branches and using telephone banking instead of self-service kiosks and internet banking. Hong Kong probably has the largest variety of mobile wallets in the world, yet some consumers are still hesitating to use online shopping, deeming it unsafe and unnecessary.
Since the COVID-19 outbreak, Hong Kong like many other countries is advising people to work from home, practise social distancing and self-isolation, and restrict public gatherings and restaurant dining. Measures including 14-day quarantine orders have spurned a surge in e-commerce of food and essential items, using mobile wallets and credit cards.
A locally developed smart electronic wristband, accompanied by a smartphone app has been used by the government as part of its effort to enforce quarantine orders. Hong Kong is also set to become the world’s first testing ground for the deployment of devices and data analytics tools to remotely monitor COVID-19 virus patients and others under quarantine.
With its proximity to Mainland China, and strong support from the government and new opportunities brought by the Belt and Road initiative and the Guangdong-Hong Kong-Macao Bay Area development, Hong Kong is well positioned to develop innovation and technology. Major R&D infrastructure such as the purpose-built Hong Kong Science and Technology Park and Cyberport are helping drive innovation and technology whilst the vigorous enforcement of intellectual property protection provides a sense of security for companies. These include Biomedicine, AI and Robotics, Smart City and IoT Technology, Electronics and Clean Technologies.
The developments and initiatives taken by the HK Government, industries and businesses present excellent opportunities for fintech and cybersecurity start-ups, particularly in blockchain, regtech, insurtech, incident response, protection against crypto-currency ransomware, Internet of Things (IoT) security and cyber security education
By 2019, China has issued 255 3rd party online payment licenses, including 2 issued to foreign holders, PayPal and Payoneer from the US. Alipay and WeChat Pay are still leading the way, dominating 93.8% of the market. During the COVID19 pandemic, mobile payment is strongly encouraged by banks and merchants to avoid the need to handle banknotes.
With increased user numbers and broad application scenarios under a new retail model, fintech development has been derived in blockchain cross-border payment, face-scan payment, payment door, AI, and biological recognition.
Increasing cross-border e-commerce provides considerable potential for 3rd party payment business, with predicted business growth of 30% in 2020 and 2021, and a biz scale of RMB 355 billion by 2021, according to Iresearch’s latest report.
COVID19 has changed the way of life of many people in China in last 2 months, and this change in consumption patterns is also creating a boost to the digital services industry. The top 70% of users’ time goes to 5 companies: Baidu (search engine, media buying), Alibaba (e-commerce), Tencent (WeChat social platform, news, gaming), Toutiao/Bytedance (news, short videos) and Kuaishou (short videos).
The Chinese internet space is more vibrant today than it ever was, and the rise of short-video platforms has shaken the dominance of Tencent over social media. Such a diverse ecosystem is more challenging to understand for brands, but also provides opportunities for marketing campaigns to gain visibility in the China market.
However, mobile payments were hit hard early this year when shopping malls, stores and restaurants – which account for the bulk of transactions through Tencent’s WeChat Pay and Alibaba’s Alipay – were closed or had to severely curtail their business, according to a study by market research firm iResearch.
Many business activities in China are recovering quickly and are heading towards normalcy.
However, due to a large portion of recent COVID-19 cases confirmed in China, a temporary suspension of entry by foreign nationals holding valid Chinese visas or residence permits has been put in place as of 26 March 2020.
On 26 March 2020, Civil Aviation Administration of China advised that each Chinese airline is only allowed to maintain one route to any specific country, with no more than one flight per week. Each foreign airline is only allowed to maintain one route to China, with no more than one weekly flight.
As of the beginning of April, airlines are converting passenger jetliners into cargo planes after the COVID-19 pandemic brought heavy restrictions and depressed the travel market. At least 10 Chinese and international airlines managed to retrofit planes to haul goods instead of people.
China has now turned its fight against COVID-19 to two fronts – one, limiting exposure to infections from foreign arrivals through stringent travel restrictions and two, by focusing on asymptomatic cases. As a result of this, the country is witnessing another round of preventive measures as authorities race to remove any possibility of a COVID-19 rebound.
Most key trade fairs in first half of 2020 have been either cancelled or postponed until later in the year.
The SA China Office has resumed to normal working arrangements as of late February, and continues to support SA businesses by providing in-market insights on COVID-19 developments and the associated economic impact, and discussing and designing post COVID-19 in-market business activity recovery plans.
Hong Kong enterprises are taking exceptional prevention measures to minimize the risk of transmission, and are following Hong Kong SAR Government’s guidelines and advisory instructions.
Physical distancing and public gatherings regulations are still in force until 23 March 2020 and will be subject to further review depending on the COVID-19 situation. Arrangements have been made for staff to work from home or with flexible working arrangements to minimize the risk of contamination. Consequently, we have seen enterprises cancel promotional activities, face-to-face external meetings, and business trips due to the enforcement of physical distancing at workplaces.
Large-scale business and public events, exhibitions, conferences and trade fairs have either been cancelled or postponed to the second half of 2020.
As a result, it’s important to implement digital customer engagement and promotional programs to communicate with staff, customers, stakeholders and vendors in the interim. This may include leveraging smart device apps and technology, web systems and social media platforms.
The latest China Consumer Price Index (CPI) growth was measured at 5.2 % YoY in Feb 2020, compared with a rate of 5.4 % in the previous month. The rise of CPI was mainly due to increased demand over the Lunar New Year, the impact of the COVID 19, and stockpiling of daily food necessities as city lockdowns and transport restrictions disrupted supply chains.
As logistical operations and the ability to supply online and offline market platforms resumes, the price for daily food necessities is gradually returning to a normal level.
COVID-19 has restricted seafood consumption in China. Most imported seafood has been sold at a discounted price to attract consumers in key cities in recent months. Under COVID-19, the seafood price has dropped 30%-50% in the local market.
Customs statistics for wine in January and February: year-on-year imports for bottled wine are down 25% by volume and 22% by value. This is on top of drops of 11% by volume and 14% by value in 2019. Given the vast majority of restaurants, bars and hotels were shut or underutilized in March, and the resulting large backlog of inventory, market competition is becoming fierce and chaotic. Importers are busy with stock clearing and maintaining cashflow by giving discounts.
Based on the observations of some supermarkets, liquor stores and chain stores recently, the distribution of large brands such as Penfolds, Castillo Delo Diablo and Montes was relatively good due to a broad base of vibrant distribution channels.
Over 95% of food supply in Hong Kong is dependent on imports. As the pandemic evolves, local importers have warned they face unpredictable air freight services, with increasing uncertainty over cargo flights in April and May following severe cuts in passenger services to destinations such as Japan, Europe and North Africa. As air space usually utilized for imports is now much harder to secure and more expensive, consumers in Hong Kong will continue to face more expensive imported fresh food products in dairy, fruit, vegetables, seafood and meat.
Shipments of fresh fruit including grapes, blueberries, strawberries and plums which were usually carried on passenger flights from Australia, Africa and Europe have already faced disruptions in March, and now need to rely on airfreight in cargo planes where space was already in short supply.
Due to the HKSAR Government’s enforcement of social distancing and restaurant in-dining restriction measures, many food premises have introduced discounts and promotions for in-dining and takeaway to boost sales. On the contrary, prices of food produce sold through retailers and via e-commerce have surged.
All bars, pubs and liquor sections of food premises and entertainment gathering venues were ordered to temporarily close until 23 April 2020 (subject to further review), but we have not seen much change in wine prices sold through retail channels. Importers have lost 90% of their business to food-service and corporate customers, so it is critical to move inventory out as fast as possible to retain cashflow. As such, importers are offering more discounts to private customers in order to attract more purchases.
There are two levels of travel restrictions, international and provincial.
International Travel Restriction
From midnight of March 28, 2020, China suspended the entry of most foreign nationals, citing the temporary measure as a response to the rapid spread of COVID-19 across the world.
Provincial Travel Restriction
Many provinces and cities require 14-day mandatory home-based or centralized quarantine for inbound travellers from overseas or other Chinese provinces and cities.
It is predicted that a quarantine period will be in place if you go to visit your clients, however it will be dependent on your origin and destination.
To date there’s no specific notice or change on outward investment to Australia released by the China Ministry of Commerce.
No public media announcements from HKSAR Government have been observed regarding on the recent change in FIRB rules and overall investment in Australia during the COVID-19 outbreak.
DTI will support South Australian Exporters during CIIE 2020 as we have done in previous years. DTI will encourage SA business to attend and it will be one of the major outbound trade fairs in DTI’s agenda.
All land boundary control points between Hong Kong and the Mainland were closed temporarily with the exception of Shenzhen Bay and Hong Kong-Zhuhai-Macao Bridge (HZMB), to curb cross-boundary travel.
Shenzhen Bay Port - The operating hours of the passenger clearance services have been adjusted to run from 10am to 8pm daily. The operating hours for cargo clearance remain unchanged at 6:30am to midnight daily.
HZMB Hong Kong Port - The operating hours of clearance for cross-boundary coaches and shuttle buses passengers at the have been shortened to run from 10am to 8pm daily, and the operating hours of the clearance for private cars have been shortened to run from 6am to 10pm daily. The operating hours for cargo clearance remain unchanged, operating 24 hours daily.
All ferry services to and from the Mainland and Macao were suspended. Immigration services at Kai Tak Cruise Terminal and Ocean Terminal were suspended.
Entry points at Shenzhen Bay, HZMB, and Hong Kong International Airport (HKIA) remain open with customs and health monitoring resources stationed here.
Flights are still entering Beijing, Shanghai, Chengdu and Xiamen until further notice.
Inbound travel restrictions and quarantine measures into Hong Kong
Mainland authorities have suspended the processing of business visit endorsements for Mainland residents to travel to Hong Kong.
All non-Hong Kong residents arriving by plane from overseas countries, or who have visited any overseas countries in the past 14 days are denied entry to Hong Kong.
All transit services at Hong Kong International Airport are suspended.
All travellers coming from Macao and Taiwan, including Hong Kong and non-Hong Kong residents, will be subject to a 14-day compulsory quarantine, which is the same as the arrangements for people entering Hong Kong from the Mainland.
All arrivals at Hong Kong International Airport will be required to immediately take a COVID-19 test at the nearby AsiaWorld-Expo testing centre. Asymptomatic inbound travellers from Europe and the US are required to await COVID-19 test results before leaving the testing venue and continuing with their 14-day compulsory quarantine.
Inbound travel restrictions and quarantine measures into Mainland China
China has temporarily suspended the entry into China by foreign nationals holding visas or residence permits, effective from 28 March 2020. Entry by foreign nationals with APEC Business Travel Cards are also suspended. Policies including port visas, 24/72/144-hour visa-free transit policy, Hainan 30-day visa-free policy, 15-day visa-free policy specified for foreign cruise-group-tour through Shanghai Port, Guangdong 144-hour visa-free policy specified for foreign tour groups from Hong Kong or Macao SAR, and Guangxi 15-day visa-free policy specified for foreign tour groups of ASEAN countries will also be temporarily suspended. Entry with diplomatic, service, courtesy or C visas will not be affected. Foreign nationals coming to China for necessary economic, trade, scientific or technological activities or out of emergency humanitarian needs may apply for visas at Chinese embassies or consulates. Entry by foreign nationals with visas issued after this announcement will not be affected.
Guangdong and Shenzhen authorities announced that all inbound travellers (including travellers from Hong Kong SAR, Macao SAR, and Taiwan, and transit passengers), regardless of their destination, are required to undergo COVID-19 nucleic acid testing and will be quarantined in a designated place for 14 days at travellers’ own expense.
Shenzhen Municipal Government requires all cross-boundary goods vehicle drivers who enter Shenzhen via Shenzhen ports to present their "i Shenzhen" health certification code, and proof of a negative result of a nucleic acid test conducted within the previous seven days to customs officers for examination before entering Shenzhen. Concurrently, the Zhuhai Municipal Government will require all cross-boundary goods vehicle drivers who enter Zhuhai via Hong Kong-Zhuhai-Macao Bridge to present proof of a negative result of a nucleic acid test conducted within the previous seven days. Drivers must acquire a negative result of a nucleic acid test before entering the Mainland ports.
This is a complicated and technical regulatory issue that might involve NMPA China and TGA standards and requirements.
The acceptable technical standards, performance and features of overseas PPEs for import into Australia are determined by the TGA regarding the different regulatory requirements required for specific classifications. Determinations are made in consultation with industry professionals when approved products are not available.
The TGA website has detailed information on various PPEs for legal supply in Australia, including overseas manufacturers (including China) and Australian sponsors/suppliers. Post-market assessment of some PPEs is conducted by Australian leading medical research institutes, for instance, the Peter Doherty Institute, to inform their best use.
The Ministry of Commerce of China also announced Chinese PPEs export regulations on 31 March, which required Chinese PPE exporters to comply with product import regulations from oversea countries. Chinese PPE exporters are also required to obtain export approval from NMPA China.
As the increasing demand for and domestic shortage of PPEs in Australia continues, the TGA announced an expedited medical device application process related to COVID-19 diagnosis, prevention and treatment on 31 March. COVID-19 test kits manufactured in China for legal suppliers in Australia have experienced a significant increase of TGA approval in the past few days.
Given COVID-19 is a viral infectious disease and is an evolving situation, emergency exemption might be made or expanded by the TGA to ensure the timeliness of combat mechanism for prevention, protection and treatment.
For more information on overseas PPEs manufacturing standards required to be recognised by TGA visit TGA GOV AU
PPE manufacturing and trading businesses in China have witnessed explosive growth during the development of the COVID-19 outbreak.
According to the Chinese Ministry of Commerce on 4 April, 54 countries and three international organisations have signed manufacturing and purchasing contracts with Chinese PPE manufacturers, with 74 more countries and 10 international organisations currently in discussion. This has demonstrated China’s PPE manufacturing capacity, not only satisfying the domestic demand, but also exporting globally.
The PPE manufacturing industry has transformed from a sector with overcapacity and high inventory issues, to the most in-demand industry in China during COVID-19. Many invasive ventilator manufacturers are no longer able to accept new orders in the next couple of months due to the overwhelming demand.
According to Tianyancha, a commercial database that compiles public records, there are 8950 newly established Chinese face masks companies since 25 January as of 18 March, centralised in Jiangsu, Zhejiang and Guangdong.
China has 21 invasive ventilator manufacturers (8 of them have CE certified products), accounting for one fifth of the global invasive ventilator production. The development of ventilator manufacturing in China has been accelerated by import substitute policies, the establishment of ICUs in new hospitals, and demand from overseas developing countries. The product value remains comparatively low to established international brands.
There was an initial discussion when the domestic COVID-19 outbreak began to be controlled in China, however due to the outbreak worldwide there’s now more demand for PPE from overseas markets.