China’s small businesses are desperate for a lifeline, but tax cuts are ‘just sweeteners’ amid dwindling demand
- Supply-chain disruptions, high raw-material costs and a power crisis have had an outsized impact on SMEs that are already struggling to stay afloat during the pandemic
- ‘Financially strained’ smaller retailers are underperforming larger ones and bearing the brunt of China’s economic downturn
As a retailer of household medical devices, Lynn Wang’s business has seen struggling since last year, even though the health care industry is supposed to be one of the most resilient and enduring sectors during the pandemic.
“Many people have basically stopped spending,” said the small-business owner who sells blood-pressure monitors and employs 10 people. “They buy only masks and disinfectants, which we don’t sell.”
She said she heard that about 40 per cent of small-medical-device retailers in the city have permanently closed down in the past two years due to dwindling revenue and unchanged operational expenses.
China’s small and medium-sized enterprises (SMEs) – accounting for half of the country’s tax revenue, 60 per cent of gross domestic product (GDP), 70 per cent of technology innovation and 80 per cent of urban employment – have been bearing the brunt of the economic downturn brought by the pandemic, despite tax and fee cuts from the government.