Nearly a third of firms in China suffer shrinking revenues as coronavirus bites: survey - Metro US

Nearly a third of firms in China suffer shrinking revenues as coronavirus bites: survey

BEIJING (Reuters) – Nearly a third of companies operating in China have seen their revenues slashed as the coronavirus outbreak disrupts activity, a survey by the American Chamber of Commerce (AmCham) in China showed on Thursday.

Travel restrictions and stringent quarantine rules implemented since January to minimize contagion risks in China, where the virus has infected nearly 80,000 people and killed over 2,700, have effectively paralyzed business activity.

While the Chinese government has recently reversed some of the curbs outside Hubei province, the virus’s epicenter, to support the economy, nearly a third of the companies said they only expect business operations to return to normal by end-March. Some 12% believe delays will persist through the summer.

Most of the 169 companies surveyed said it was too soon to count the costs of the disruption, but about 10% said they are reporting at least 500,000 yuan ($71,298) of losses a day.

Their top challenges have been travel restrictions and falling staff productivity, the survey found. Other damages included rising costs of operations and disrupted supply chains.

Many small companies in China have faced cash crunches because of a lack of orders, forcing them to lay off workers or dock salaries.

The survey adds to evidence of economic strains that may mean more government measures are needed to relieve corporate financing difficulties and offset losses to prevent large scale relocation of supply and industrial chains.

“Nearly half of respondents hope the Chinese government will provide tax alleviation to help foreign business; additionally, over one-third are seeking clear, consistent policies, while 35%ask that transparency be prioritized,” the report said.

More than half of companies surveyed hoped the U.S. government would relax travel restrictions as the World Health Organization recommends.

Nearly half said they expect revenues to fall this year if business cannot return to normal before April 30, while nearly 20% said their 2020 revenues will decline more than half if the epidemic extends through August.

As a result, many companies are slashing budgets to stay afloat, the survey found.

“More than half of respondents are prioritizing staff safety over business performance; but respondents are focused on finances too — 40% are revising annual budgets and 33% are cutting costs,” the AmCham report said.

The survey was conducted Feb. 17-20 among companies of differing sizes in multiple sectors.

(Reporting by Yawen Chen and Ryan Woo; Editing by Catherine Evans)

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