“Our goods exported to Ukraine are detained in transit and failed to arrive the destination port. What should we do if our clients are unable to receive the goods and complete the payment?”, “How can we find the list of Russian banks that are sanctioned?” ...These are questions raised by Guangdong enterprises during an online seminar on March 24.
The seminar aims to help Guangdong traders to deal with the impact of the "Ukraine Crisis" and is jointly held by the legal department of China Council for the Promotion of International Trade (CCPIT), Guangdong Commerce Department and CCPIT Guangdong Committee. It attracted more 2000 government and enterprise representatives to participate online.
“The Ukraine Crisis has little impact on Guangdong’s foreign trade for the time being, but it caused direct damage to the interests of enterprises with close trading partnership with Russia, Ukraine and neighboring countries,” said Ma Hua, Deputy Director General of Guangdong Commerce Department, “If enterprises meet any problems, they can make contact with Guangdong Commerce Department. We will spare no efforts to seek solutions, or report to higher authorities and push for solutions.”
Based on a survey by Guangdong CCPIT, more than two-thirds of the 92 sample enterprises consider the Ukraine Crisis have a negative impact on their business, including decrease in order quantity, logistics challenges, loan losses or delay, increase in costs and exchange loss. The survey shows a trend that some Russian clients have shifted their orders from US and Japanese suppliers to Chinese suppliers for medicine and mechanical equipment due to the crisis.
It’s priority for Guangdong enterprises to figure out measures to confront the challenges brought by the Ukraine Crisis and sanctions from US and European countries, so that they could minimize the loss in trading. Guan Jian, a CCPIT expert on economic and trade frictions, suggested that enterprises should evaluate risks considering if their deals are related to sensitive regions or industries; if involved entities are on the sanction lists; As the Russian banks were sanctioned, how will it affect capital turnover of the transaction. Enterprises should decide if they should suspend, postpone or continue their deals with throughout evaluation.
At the financial level, Chen Sheng, Senior Partner of Beijing Dentons Law Office, suggested that enterprises should deal with exchange rate fluctuations through reasonably choosing the transaction currency, setting remark terms for re-quotation, adding a hedging clause in contracts, locking exchange rates in forward exchange settlement, and handling RMB-foreign currency swap business.
In the face of export control and economic sanctions, it is significant for enterprises to carry out Russia-Ukraine related business in compliance. Liu Hongmei, Layers of Beijing Dentons Law Office suggested that enterprises should check if involved entities in the deal are listed in the SDN list, SSI list, EU comprehensive sanctions list and other restricted lists, and whether they are related to entities that are under sanctions.
Shu Huan, Deputy Director General of Department of Legal Affairs of CCPIT said the CCPIT has carried out a lot of work to help enterprises and government departments to address the challenges through organizing surveys, holding online seminars and launching a consultation hotline.
Qiu Zhaoxian, Vice President of CCPIT Guangdong Committee, said the online meeting aims to offer enterprises comprehensive understanding about the influence of the Ukraine Crisis and related sanctions, offer guidance on risk evaluation and decision making, and eventually to reduce losses and protect enterprises’ rights.
According to the organizer, they have collected 28 questions from enterprises covering problems of contract fulfillment, payment for goods and logistics. The CCPIT Guangdong Committee will continue to collect and sort out related question, and organize experts to provide enterprises with professional feedback.
