China’s SMEs strive to stabilize business amid battle against coronavirus

By Shen Weiduo and Li Xuanmin Source:Global Times Published: 2020/2/6 21:58:43

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sudden coronavirus strike has cast a shadow over many of China's small and medium-sized enterprises (SMEs), as the extended holidays and difficulties recalling staff will not only dampen production capabilities, but might also mean a whole-year loss for the main drivers of the country's economic growth.

Though there are still difficulties ahead, these fragile but flexible firms are striving to recover their production capability, meet domestic demand and complete export orders on time.

According to a survey from the CEIBS Business Review which polled 995 SMEs covering a wide range of industries including processing, logistics, retail and high-tech, only 9.96 percent firms said they could survive six months with current cash liquidity. More than 34 percent said they could survive only one month.

Moreover, 29.58 percent of firms predicted the epidemic could lead to a decline of more than 50 percent in their 2020 revenue, while 28.47 percent expected a revenue drop of 20-50 percent, according to the results of the survey. 

"We were asked by local authorities not to resume production before February 10 as part of the efforts to contain the virus. But the sad truth is that some of our employees cannot  come back - even in February - as some places have been locked down during the epidemic," Jack Wang, the owner of an auto parts factory in Nantong, East China's Jiangsu Province, told the Global Times on Thursday.

"But we have to pay salaries and rents as usual, which means we are spending as usual but seeing no income at all," Wang said.

Duan Lianmin, owner of a glass factory in Shenzhen, South China's Guangdong Province, said, "It seems that many of our staff will not be able to return to work by the end of February, which means huge losses for us - about 1 million yuan in the first quarter of the year."

Duan's company mainly exports products to countries in Southeast Asia and the Middle East.

"If it were not for the virus, we would have been able to send products to a customer in Malaysia after the Spring Festival. However, basically all enterprises have postponed the resumption of work due to the virus, including freight forwarder and logistics companies," Duan told the Global Times.

The situation is severe and firms are ramping up efforts to "rescue themselves." About 22 percent of enterprises from the aforementioned survey said they are planning to reduce staff and salaries. 21 percent are preparing to take out loans, and 16 percent have chosen to suspend production and business.

Some are coming up with different ways of dealing with these issues. "We will call back local employees first, who account for 70 percent of total staff. Then we will recover part of our production capability, thus some urgent demands can be fulfilled first," Wang said.

"Meanwhile, we are also trying to recruit more temporary laborers who are stuck in the city and cannot return to their positions later," Wang added.

Local authorities including those in Beijing, Shanghai and East China's Jiangsu Province have issued a host of measures to support SMEs, helping them weather the novel coronavirus outbreak through favorable policies for rents, taxes, loans and financing.

On February 1, China's central bank also said it would trim interest rates of some loans, increase credit and medium- and long-term loans to support SMEs to weather the current virus crisis. 


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