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Small and Micro Businesses yet to Fully Recover

Apr 27-2021   



Of China’s small and micro businesses, 74% reported cash flows hardly enough for three months, according to the latest survey by the Center for Enterprise Research at PKU. Prof. Zhang Xiaobo, director of the Center, presented the findings in a recent forum of the NSD.

 

The quarterly survey began in the third quarter of 2020. The latest one, for the first quarter of 2021, was conducted online among small and micro business owners that frequently use Alipay’s payment barcodes to charge their customers. Within two weeks, a total of 10,923 valid questionnaires were collected, of which 83.3% were from the service industry, with the rest from construction and manufacturing as well as farming and forestry.

 

51% reported a quarterly revenue of less than 25,000 yuan; 28% were in red and 19% broke even after painstaking efforts. 54% fully relied on offline business, while among the 46% that reported online presence, only 37% had online revenues. Overall, 43.8% - higher than what’s found in the previous two surveys - saw significant recovery in business, benchmarked to the same (pre-pandemic) period in 2019.

 

But it remained much of a survival game as up to 74% of businesses only had cash flows enough for less than three months. Much of the pressure derived from rising costs and insufficient demand. Nearly 50% still regarded insufficient demand as the biggest pressure, down from 60% in the previous two quarters. The pain was further inflicted by rising costs of raw materials, rent and staff.

 

Slightly more business owners resorted to online loans, which dethroned lending among family members and friends. Both online and offline loan rates edged down, showing the positive effects of government policies offering low or zero-rate loans.

 

Policies to support small and micro businesses mainly came in four types: taxation support, financial support, cost reduction and exemption, and employment stabilization. Compared to the previous two quarters, the coverage of the policies decreased by about 2%, perhaps due to the gradual phasing-out of certain ad hoc measures. Tax reduction policies had the highest relative coverage, but most were found not to have benefited long-tail small and micro business owners.

 

For the second quarter of 2021, over 50% showed more confidence in their overall business. However, their confidence in business costs continued a downward slide, touching 39.9%.

Small and Micro Businesses yet to Fully Recover

Apr 27-2021   



Of China’s small and micro businesses, 74% reported cash flows hardly enough for three months, according to the latest survey by the Center for Enterprise Research at PKU. Prof. Zhang Xiaobo, director of the Center, presented the findings in a recent forum of the NSD.

 

The quarterly survey began in the third quarter of 2020. The latest one, for the first quarter of 2021, was conducted online among small and micro business owners that frequently use Alipay’s payment barcodes to charge their customers. Within two weeks, a total of 10,923 valid questionnaires were collected, of which 83.3% were from the service industry, with the rest from construction and manufacturing as well as farming and forestry.

 

51% reported a quarterly revenue of less than 25,000 yuan; 28% were in red and 19% broke even after painstaking efforts. 54% fully relied on offline business, while among the 46% that reported online presence, only 37% had online revenues. Overall, 43.8% - higher than what’s found in the previous two surveys - saw significant recovery in business, benchmarked to the same (pre-pandemic) period in 2019.

 

But it remained much of a survival game as up to 74% of businesses only had cash flows enough for less than three months. Much of the pressure derived from rising costs and insufficient demand. Nearly 50% still regarded insufficient demand as the biggest pressure, down from 60% in the previous two quarters. The pain was further inflicted by rising costs of raw materials, rent and staff.

 

Slightly more business owners resorted to online loans, which dethroned lending among family members and friends. Both online and offline loan rates edged down, showing the positive effects of government policies offering low or zero-rate loans.

 

Policies to support small and micro businesses mainly came in four types: taxation support, financial support, cost reduction and exemption, and employment stabilization. Compared to the previous two quarters, the coverage of the policies decreased by about 2%, perhaps due to the gradual phasing-out of certain ad hoc measures. Tax reduction policies had the highest relative coverage, but most were found not to have benefited long-tail small and micro business owners.

 

For the second quarter of 2021, over 50% showed more confidence in their overall business. However, their confidence in business costs continued a downward slide, touching 39.9%.