Home Financial consultant Chinese small businesses crumble under shutdowns as expats leave | coronavirus pandemic

Chinese small businesses crumble under shutdowns as expats leave | coronavirus pandemic

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Beijing, China – For Li Pei, keeping two businesses running during China’s lockdowns hasn’t been an easy task.

At Li’s solar panel business in Shanghai, staff have been working remotely to meet sales quotas since the city was locked down in late March. Meanwhile, Li’s kindergarten in Beijing’s Haidian district is temporarily closed, having already struggled for months to attract new students following the announcement of the “double reduction” policy last year. “, which aims to ease the pressure on students by restricting private lessons and extracurricular establishments.

Stuck at home without work, teachers in Li are being tested daily for COVID-19 until at least Wednesday, following district authorities’ announcement of mass testing in urban districts over the weekend. .

“I have the same question as everyone else,” Li, who asked to use a pseudonym, told Al Jazeera. “‘Must I continue [my business] Or just shut it down completely?’ How can the government support small and medium enterprises? Without clear rules, we are immersed in uncertainty.

Li is among millions of small business owners and entrepreneurs across China bearing the brunt of Beijing’s “dynamic zero COVID policy”, which has put the economy in its most precarious position since the start of the COVID-19 pandemic. pandemic.

Retail sales and industrial production in April fell 11.1% and 2.9% respectively, according to official data released on Monday, their lowest levels since the start of 2020.

Transmission at community level

“If the government manages to end the current wave quickly enough, the question now is whether it still has time to increase infrastructure investment to the level needed to generate something close to gross domestic product. [GDP] target,” Peking University finance professor Michael Pettis told Al Jazeera, referring to Beijing’s ambitious target of 5.5% growth in 2022.

In Beijing, authorities have shut down much of the city, despite insisting the capital is not heading for a Shanghai-style lockdown, as they struggle to contain an outbreak of the highly transmissible variant of the Omicron coronavirus.

On Sunday, the Fengtai district, the site of the latest cluster of infections, announced the closure of gymnasiums, indoor recreation venues and training centers.

City health authorities said on Sunday that community-level transmission had “not been cut off” amid persistent clusters, including a number linked to a courier company in Fangshan district, a group of bus drivers and a railway construction company.

Authorities have advised residents of Fengtai, Chaoyang, Shunyi and Haidian districts – which are home to nearly 10 million people combined – to continue working from home.

With no end in sight to the tough restrictions in the capital, business groups have warned of the effect of prolonged shutdowns on their operations.

In a survey last month, the British Chamber of Commerce in China (BritCham) said 55% of respondents had “delayed or reduced their investments” due to pandemic-related disruptions since mid-March.

“It’s crucial for businesses and individuals to prepare for a potential downturn in business, ensuring proper infrastructure to help set up remote working and increasing warehouse inventory to cope with the potential supply issues,” Alexandra Hirst, policy analyst at BritCham, told Al. Jazeera.

Beijing residents rushed to stock up on food last week following online rumors of a citywide lockdown [File: Bloomberg]

Uncertainty about the way forward has also spooked individual consumers.

Beijing residents stormed supermarkets on Thursday following online rumors of a three-day citywide lockdown and the temporary suspension of food delivery and courier services.

The panic buying came despite the authorities’ efforts to deny the rumors and reassure the public that there was an adequate supply of food.

Eva Williams, who is leaving China in July after 12 years as an expat, said she immediately took a deep breath upon hearing the rumors because “having to go into full lockdown could have freaked me out”.

“I was very relieved the lockdown didn’t happen,” Williams, who works as the principal of an international school in the city center and asked to use a pseudonym, told Al Jazeera. “I’m moving and there are certain requirements and certain documents that I need, so part of me is like, ‘If you want to do something, do it now and do it. I’m sure a lot of people leaving soon think the same.

The American Chamber of Commerce in China (AmCham China) recently said it is “preparing for a massive exodus of overseas talent this summer”, while “fewer overseas employees [are] ready to fill vacancies in China.

“For two years we have been strongly advocating for an easing of restrictions on business travel, there have been some improvements, but today it is still as difficult as ever to travel to China,” the official said. AmCham China president Colm Rafferty following the publication of a flash survey of its members earlier this month.

Beijing-based financial consultant John Curry said the exodus of expats was affecting individuals more than foreign businesses.

“The vast majority of these foreign companies are still Chinese – so it’s even more about local talent,” Curry told Al Jazeera.

“Political decisions will have a more real impact. But what happens in Beijing will depend on the direction of the “zero COVID policy”. The situation is still unstable, so I think the status quo will remain until the end of this year.

“Barely Manages”

Earlier this month, China’s Cabinet pledged to roll out policies to support businesses and help reduce unemployment at a State Council meeting chaired by Premier Li Keqiang. Beijing also promised to help secure foreign orders and provide loans, in addition to maintaining the stability of the yuan, to support foreign business ventures.

Pending more concrete policy announcements and support from the government, struggling business owners like Li are weighing the future of their businesses.

Despite delivery issues, Li’s solar panel business in Shanghai has been able to stay above water by sourcing materials from suppliers in provinces without strict COVID rules.

“But the losses in my kindergarten in Beijing hit us hard,” Li told Al Jazeera. “We barely manage to keep going, but we still do thanks to the academics we support.”

“As a business owner, I have to convince my investors to back me because they trusted me and believed in my vision,” Li added. “But at the end of the day, I still have to make decisions – and my decision for now is to move forward based on the facts that I have and the hope that we will soon get out of this misery.”