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February 10, 2020

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Businesses get a helping hand amid all-out war on deadly virus

UNPREPARED for the novel coronavirus outbreak, many businesses in China were caught off guard and found that their bullish performances over the past year were not enough to confront a crisis.

But governments and financial institutions at all levels have been on the move to help businesses pull through.

“Almost all of our 400 offline stores have been closed due to the epidemic, and we estimated monthly losses around the Spring Festival would be at around 700 million yuan (US$100 million) to 800 million yuan. If the situation continues, our company will not be able to survive in three months,” Jia Guolong, chairman and founder of Xibei, a leading Chinese catering chain brand, said in a recent interview.

Xibei, with an annual sales revenue of up to 6 billion yuan and over 20,000 employees, was one of the first to feel the pinch amid the contagion.

“The government, relevant departments and many banks have offered to help,” he said.

The Shanghai Pudong Development Bank’s Beijing branch offered to provide financial support for Xibei and on Friday, a total of 120 million yuan was transferred to the restaurant giant’s account.

Meanwhile, many provinces and municipalities have rolled out supportive measures such as tax and rent deductions, delaying loan payments, cutting interest rates and waiving overdue interest to help businesses tide over the epidemic.

“We were in urgent need of money, and the loan effectively solved our money problem to purchase raw materials,” said Xu Zhiwen, head of Guangzhou Evertech Technology Development Ltd. His company sells machines for the development, testing and manufacturing of disinfectants and has been given extra financing quota amid the epidemic.

“The financial support is not limited to enterprises relevant to the epidemic, but all small and micro enterprises in temporary difficulty,” said Lu Fenghua, deputy head of an ICBC branch in Guangzhou.

China’s central bank has added a total of 1.7 trillion yuan into the banking system recently via reverse repurchase agreements (repos) and lowered the repo rates by 10 basis points to boost liquidity and stabilize financial markets.

As of Friday, more than half of the 900-plus large industrial enterprises, each with annual business turnover of at least 20 million yuan, had resumed or continued operation in the economic development zone of Guangzhou, capital of the southern economic powerhouse Guangdong Province.

Epidemic prevention measures, such as body temperature checks and the use of masks for workers, were adopted in these firms. Two-thirds of the companies will resume production by Wednesday, zone management authorities estimated.

The extended Spring Festival holiday has also made manpower a big issue. While restaurant chain bosses are vexed at how to keep their idle employees busy, retailers are suddenly shorthanded as online orders keep flooding in.

Data from MissFresh, which specializes in delivering fresh, pre-portioned ingredients, showed its sales soared by 350 percent year on year between January 24 and February 1. Sales of supermarkets and other online platforms also saw strong jumps in January.

The two industries have therefore joined hands with an innovative solution. Last Monday, Hema Fresh, Alibaba’s fresh food chain, announced it would partner with restaurant chain Yunhaiyao to cope with staff shortage and help the latter turn the corner.

“Since the epidemic outbreak, Hema Fresh’s 18 stores in Wuhan have been delivering food and daily necessities for local residents, and we are now providing such services across the country but have been shorthanded,” said Hu Qiugen, general manager of Hema Fresh.

“We came up with the idea of borrowing staff at catering enterprises that have suspended operations due to the epidemic,” Hu said. “These employees are experienced in epidemic prevention and hygiene, so we can save time and cost compared to training fresh hands.”

Despite a gloomy consumption in catering and entertainment during the epidemic, domestic consumption is expected to rapidly rebound soon after the outbreak.


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