BEIJING: What is worrying Rao Yong more than the daily news updates of a virus outbreak gripping China is that he may soon have to shut his online handicraft store and tell the 1,400 craftswomen he employs he is no longer able to sell their work.
Rao, from eastern China's Zhejiang province, is among millions of small business owners feeling the ripple effects of the epidemic which has killed 490 people in China and infected more than 20,000.
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Businesses face widespread disruption as local governments order companies to extend their Chinese New Year holidays for at least another week and curtail transport links, while would-be customers stay home for fear of contagion.
Small and medium-sized enterprises (SMEs), already struggling for access to credit, are bearing the brunt of the pain. That's posing a further threat to China's economy, growing as it is at its slowest in three decades.
SMEs contribute more than half of China's tax revenues, two-thirds of the country's economic output and eight out of 10 urban jobs.
READ: More Chinese cities shut down as novel coronavirus death toll rises
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Florist Wang Haiyan, 41, works among flowers inside her shop as the country is hit by an outbreak of the new coronavirus, in Shanghai, China, Feb 5, 2020. (Photo: Reuters/Aly Song)
"It's having a huge impact on the business," said Rao, who buys embroidery from craftswomen in remote mountain villages. They can make about 2,000 yuan (US$285) in a good month, he said.
But Rao can't receive or send the goods due to transport restrictions. "Now the logistics stopped because that requires human contact."
SOME EFFORTS
Beijing has injected more cash into the economy and ordered banks and local governments to help businesses cope, including extending loan payment dates or cutting borrowing rates.
Financial institutions have also pledged to lower rates for virus-stricken firms based in Hubei province, the epicenter of the outbreak, and more measures are under consideration.
Florist Wang Haiyan, 41, stands at an entrance to her shop as the country is hit by an outbreak of the new coronavirus, in Shanghai, China, Feb 5, 2020. (Photo: Reuters/Aly Song)
Mall operators such as Dalian Wanda say they will temporarily waive rents and fees for commercial tenants nationwide.
But major losses due to business suspensions are not fully covered by existing insurance products, and some finance sector sources say many lenders were hesitant of increasing their exposure to SMEs.
"Lending out more also means shouldering more risks, we cannot cover every SME that is impacted," said one manager at a local commercial bank in eastern China, who requested anonymity as he's not authorized to speak to the media.
"After all, the decision will be varied case-by-case based on how much collateral they have."
AXE TO FALL
Other business owners told Reuters they may not have much time to wait for help or for public concerns over the virus to abate.
"Most of the SMEs like me cannot hold up too long," said Zhou Zhen, who owns a restaurant in Shanghai which was forced to close over the lucrative New Year season. She is considering laying off part-time staff because she is having trouble getting loans from banks.
"The axe will fall on us pretty soon."
Exporters like Zhao Zhenyu, executive director of Shenzhen Cham Battery Technology, had hoped for a better yRead More – Source
BEIJING: What is worrying Rao Yong more than the daily news updates of a virus outbreak gripping China is that he may soon have to shut his online handicraft store and tell the 1,400 craftswomen he employs he is no longer able to sell their work.
Rao, from eastern China's Zhejiang province, is among millions of small business owners feeling the ripple effects of the epidemic which has killed 490 people in China and infected more than 20,000.
Advertisement
Advertisement
Businesses face widespread disruption as local governments order companies to extend their Chinese New Year holidays for at least another week and curtail transport links, while would-be customers stay home for fear of contagion.
Small and medium-sized enterprises (SMEs), already struggling for access to credit, are bearing the brunt of the pain. That's posing a further threat to China's economy, growing as it is at its slowest in three decades.
SMEs contribute more than half of China's tax revenues, two-thirds of the country's economic output and eight out of 10 urban jobs.
READ: More Chinese cities shut down as novel coronavirus death toll rises
Advertisement
Advertisement
Florist Wang Haiyan, 41, works among flowers inside her shop as the country is hit by an outbreak of the new coronavirus, in Shanghai, China, Feb 5, 2020. (Photo: Reuters/Aly Song)
"It's having a huge impact on the business," said Rao, who buys embroidery from craftswomen in remote mountain villages. They can make about 2,000 yuan (US$285) in a good month, he said.
But Rao can't receive or send the goods due to transport restrictions. "Now the logistics stopped because that requires human contact."
SOME EFFORTS
Beijing has injected more cash into the economy and ordered banks and local governments to help businesses cope, including extending loan payment dates or cutting borrowing rates.
Financial institutions have also pledged to lower rates for virus-stricken firms based in Hubei province, the epicenter of the outbreak, and more measures are under consideration.
Florist Wang Haiyan, 41, stands at an entrance to her shop as the country is hit by an outbreak of the new coronavirus, in Shanghai, China, Feb 5, 2020. (Photo: Reuters/Aly Song)
Mall operators such as Dalian Wanda say they will temporarily waive rents and fees for commercial tenants nationwide.
But major losses due to business suspensions are not fully covered by existing insurance products, and some finance sector sources say many lenders were hesitant of increasing their exposure to SMEs.
"Lending out more also means shouldering more risks, we cannot cover every SME that is impacted," said one manager at a local commercial bank in eastern China, who requested anonymity as he's not authorized to speak to the media.
"After all, the decision will be varied case-by-case based on how much collateral they have."
AXE TO FALL
Other business owners told Reuters they may not have much time to wait for help or for public concerns over the virus to abate.
"Most of the SMEs like me cannot hold up too long," said Zhou Zhen, who owns a restaurant in Shanghai which was forced to close over the lucrative New Year season. She is considering laying off part-time staff because she is having trouble getting loans from banks.
"The axe will fall on us pretty soon."
Exporters like Zhao Zhenyu, executive director of Shenzhen Cham Battery Technology, had hoped for a better yRead More – Source
