Chinese SMEs Also Face Financial Difficulties

SCMP, Chinese SMEs Facing Crisis Amid Declining Creditworthiness

[Asia Economy Reporter Cho Young-shin] According to a report by the Hong Kong South China Morning Post (SCMP) on the 27th, Chinese small and medium-sized enterprises (SMEs) are experiencing severe financial difficulties due to the novel coronavirus disease (COVID-19). Since the nationwide lockdown in China began in January, these SMEs have reached their limits.

In fact, a survey conducted in February by Peking University and Tsinghua University found that among 995 surveyed SMEs, 85% responded that they could go bankrupt within three months without financial support. Among the surveyed companies, 10% said they could survive for six months.

Additionally, 38% of the surveyed companies stated that they would have to lay off employees or suspend business operations. Among the companies that participated in the survey, 10% reported using private loans rather than bank loans.

The survey targeted companies with fewer than 50 employees and annual revenue below 50 million yuan (approximately 7 million USD). SCMP diagnosed that Chinese SMEs are facing liquidity crises due to financial costs (interest) and labor cost burdens caused by COVID-19.

The newspaper added, "Among Chinese SMEs facing liquidity crises, some are utilizing short-term funds (card loans) or selling real estate and movable assets (cars)."

This content was produced with the assistance of AI translation services.