While the economic effects of the novel coronavirus continue to be felt throughout China, micro, small and medium-sized enterprises across the country remain optimistic about business prospects, according to the AliResearch Institute.
In a survey of MSMEs, more than 66% of the nearly 24,000 respondents expressed optimism about business opportunities for the remainder of the year, despite short-term setbacks such as declines in orders and customers, delivery delays and tight cash flows caused by the outbreak. Some 14% said they even expect to see rapid increases in sales or profit, while 11% expected little impact to their business activities compared to last year.
The results came from an online survey conducted between Feb. 5 and 7 by the Alibaba Group-backed research unit and the China Household Finance Survey and Research Center of Southwestern University of Finance. Designed to assess the sentiments of MSMEs during the coronavirus, the survey had 23,715 valid responses from merchants on Alibaba’s Taobao and Tmall e-commerce marketplaces, the majority of whom reported annual sales below RMB5 million ($711,100).
The survey, detailed in a paper on business and economic recovery prospects produced by Luohan Academy, an Alibaba think tank, shed light on the enduring entrepreneurial spirit of the small-business sector, which has been hardest hit by the health crisis. Over 90% of the respondents said they expected to suffer losses, but 99% also said they had no intention of closing their businesses. Meanwhile, 90% of merchants remained defiant about not cutting jobs this year, even with the added financial pressures they’re experiencing.
Those surveyed also had positive outlooks toward China’s macroeconomic landscape in 2020. Although sellers based in Hubei Province – the epicenter of the Covid-19 outbreak – were understandably pessimistic, 38.6% of total respondents said they were optimistic about the overall economic environment.
Mapping a Road to Recovery
The Luohan Academy report also detailed the impact Covid-19 has had on the economy so far, as well as measures that have been put in place to stem the outbreak and hasten the market’s recovery.
According to the paper, disrupted logistics and distribution channels were the main causes of delays to the resumption of business operations and production. Other pressure points included rent, labor costs, interest on loans, material backlogs and virus-prevention costs.
To ensure the survival of businesses during this critical period, Luohan Academy said it was crucial to help MSMEs with their cost burdens wherever possible – for example, by offering reduced fees and accessible financing options – and to provide them with the technological infrastructure to navigate obstacles presented by the virus.
Researchers also noted that economic recovery was closely linked to the return of approximately 170 million migrant workers to their jobs following a Lunar New Year break prolonged by health concerns. Outside of Hubei, 69 cities that reported the lowest levels of activity in recent weeks boast a migrant population of 59 million.
Luohan Academy said the swift and safe return of workers to their posts should be a priority for authorities, employers and employees, alike. In addition, the ongoing maintenance of a healthy work environment was key to ensuring solid and sustained recovery for businesses and the economy.
You can read the full Luohan Academy paper and more of the AliResearch survey results here.
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