Empty kitchens, closed stores: Small China firms struggle to cope with epidemic fallout

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BEIJING (Reuters) – Ma Xinli has shut four of his clothing stores and expects to close another three by mid-June. Unsold winter stock is now hard to sell, there’s no money to buy summer clothing, and rent and staff salaries still need paying.

Customers wearing face masks shop bed linen under business closure notices inside a home linen store whose business has been struggling since the coronavirus disease (COVID-19) outbreak, in Beijing, China April 14, 2020. REUTERS/Tingshu Wang

He doesn’t expect to see any profit this year.

Ma’s is one of many small businesses in China still reeling from a collapse in consumption during months of lockdown, despite the COVID-19 outbreak in the country now easing.

Efforts to control the spread of the coronavirus left formerly bustling restaurants deserted and malls shut or empty. Retail sales in March, when much of China had started to return to work, still fell by almost 16% year-on-year.

Although crowds are returning to the streets and Beijing has rolled out a raft of support measures – pledging to reduce or exempt small firms from social insurance fees and encouraging banks to lend to them – many stores are now closing under the pressure of rent and salaries.

About 70% of Ma’s business came from tourists, but most visitors to the Chinese capital must still spend two weeks in quarantine on arrival, deterring all but essential journeys.

Suppliers who had previously allowed him to defer payment on new stock won’t do so this year, as they worry he won’t be able to pay, said Ma, who has been in the clothing industry for a decade.

“I’m only praying that I won’t lose too much,” he said. “I don’t see any other way to get through this, except for fighting hard to the end.”

‘NOTHING I CAN DO’

Beijing is famous for its crispy roast duck, but one restaurant owner, with the surname Li, said he couldn’t fire up his kitchen because the workers he needs to maintain the gas stove were stuck in quarantine.

“I didn’t even shut down my restaurants during SARS,” said Li, who’s been in the business for twenty years, referring to the 2003 virus outbreak. “We were even making profits during that time.”

If he could drop the business he would, says Li, but he signed a two-year lease in December. He believes the recovery will take time, and people will only slowly start to go out and eat together.

“I almost want to cry. There is nothing I can do.”

‘GARBAGE HAS NO COST’

Zhang Jun’s dumpling store opened three years ago and survived rounds of “cleanups”, when many of Beijing’s hole-in-the-wall restaurants were forcibly closed by the city government.

But the epidemic has proved too much: Zhang handed his keys back to the landlord and is making a living through collecting recycled garbage to sell.

“Garbage has no cost,” he said.

Zhang made 42 yuan (4.81 pounds) the day he spoke with Reuters, roughly half of his housing rent of 80 yuan a day.

Beijing is slowly returning to life around him, although Zhang doesn’t go back to see his old store, now empty, as it makes him too sad.

“There are more cars on the road. It looks like life is going back to normal.”

‘THERE WERE NO CUSTOMERS AT ALL’

Another businessman, also with the surname Li, said he had lost 3 million yuan this year and had to find a new job in a state-owned mall.

His store, which houses a collection of booths selling clothes and costs him 4 million yuan in annual rent, had to shut for the first three months of the year due to the restrictions.

“We finally opened in April. Then I received phone calls from the booth owners, dozens of them, crying, saying there were no customers at all.”

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Another clothes shop that Li ran had its electricity cut off by the landlord after he was unable to pay the rent.

Beijing has been slowly easing restrictions on movements, but plenty of curbs remain in place.

“If the government announces that the virus is under control and people are encouraged to go out, things will definitely change,” he said.

Reporting by Tingshu Wang and Gabriel Crossley; Editing by Tony Munroe and Kirsten Donovan

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