460,000 Chinese Firms Went Under in First Quarter, Underscoring Impact of Virus on Economy

April 6, 2020 Updated: April 6, 2020

Nearly half a million businesses in China closed down in the first quarter of 2020, according to data collected by online databases, revealing the extent of the epidemic’s impact on the country’s economy.

Meanwhile, business owners began protesting for government financial support as their businesses are on the brink of bankruptcy.

Since authorities realized the severity of the outbreak and began implementing lockdown measures in January, business activities have halted in much of China. At present, Wuhan, the city where the outbreak first began, is still under quarantine. Some areas, such as Jia county in Henan province, had isolation policies lifted briefly, before another outbreak led authorities to lock down the area again.

“We want [the landlords] to reduce the rent by half, and [the government] to cut the management and utilities fees by half,” said Cheng Dong, a garment factory owner in Zhuzhou city, Hunan province.

“I have no orders coming in. The wholesalers told me that people are not buying clothes right now [due to lockdown measures],” Cheng told the Chinese-language Epoch Times in a phone interview on April 3.

Meanwhile, workers are afraid to go to work, worried they may contract the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus. At Cheng’s factory, only 12 of the 35 typical workers showed up.

Cheng joined about 8,000 local entrepreneurs who protested in front of the municipal government on March 31.

“We marched 3 kilometers [about 1.86 miles] from the wholesale market to the municipal government. We occupied all the roads [due to the large crowd]. The police then arrested more than ten female business owners on site… trying to scare and disperse us,” Cheng said. “On the second day [April 1], many business owners continued to protest.”

In recent weeks, business owners in Guangzhou, Shenzhen, Guiyang, Nanning, and several cities in northeastern China, organized similar protests.

Businesses Close

State-run media China Securities Journal reported on April 2 that the Chinese database Tianyancha released the latest data on Chinese enterprises.

The database recorded that 460,000 Chinese companies closed permanently in the first quarter of 2020. About 57 percent of them were founded within the past three years.

Meanwhile, 3.33 million new companies were founded in the first quarter of 2020, which is 28.9 percent less than the same period last year. Newly founded companies were mostly located in Guangdong, Jiangsu, and Shandong provinces, with 46.12 percent of them being wholesale companies and retailers.

Online education businesses sprouted up due to quarantine policies, as schools across China were closed indefinitely. China currently has 194,000 online education businesses, 6,753 of them were founded in the first quarter of this year, according to China Securities Journal.

The gaming business also got a boost. 5,025 gaming companies were founded in 2020 so far, 60.53 percent higher than the same period in 2019.

The travel sector was hit hard. On March 30, Chinese portal website Sohu cited another online database Qichacha: “By March 25, 11,268 travel companies closed in 2020.”

The report said that since the end of January, the travel industry had almost zero income in China due to the impact of the CCP virus.

The travel industry contributed 11 percent to the country’s GDP in 2019, according to data from China’s Ministry of Culture and Tourism. Travel businesses created 79.87 million jobs, equivalent to 10.31 percent of the country’s employed population.

Epicenter

At the city where the outbreak began, Wuhan, 150 restaurant owners handed a letter to the municipal government, asking for financial assistance.

Mr. Li operates a barbecue company in Wuhan, which owns 15 restaurants in town. Li said the letter demanded that the government provide subsidies to employees, require landlords to slash rent, and ask banks to give loans to restaurants.

“During these months, we have had no income but need to pay employees’ salaries. We also need to pay rent on the restaurant space and employees’ dorms,” Li told the Chinese-language Epoch Times on April 4. “I have lost almost 10 million yuan ($1.41 million).”

Li said he wasn’t optimistic about the future, even though the city would lift lockdown restrictions on April 8.

“I’m sure that nobody would dare to eat at restaurants,” Li said. He estimated that about 10,000 to 20,000 restaurants in the city would be closed permanently due to the epidemic.

State-run newspaper Yangtze Daily reported on April 6 that when the city locked down on Jan. 23, 93 percent of restaurants in Wuhan chose to shut down. For dinner on Chinese New Year Eve alone (Jan. 24), 550,000 booked tables were cancelled in Wuhan, causing restaurants to lose 1 billion yuan ($141 million), according to the report.

The Chinese regime has not provided subsidies to assist ordinary citizens impacted by the virus. Medical staff at the frontlines of battling the virus were promised a supplement to their salary, but some have told The Epoch Times they have not received their payments.