Shanghai’s small businesses and their staff scramble to minimise losses as Covid-19 lockdown delivers huge blow to revenues

Shanghai’s small businesses are scrambling to maintain daily operations and minimise losses, as the city endures a strict lockdown to combat its worst outbreak of Covid-19 so far.

Businesses in the Chinese commercial hub are facing a serious hit to their income as the two-stage lockdown forced shops to close for four days after customer numbers had already slumped since the outbreak began in early March.

Although the Shanghai municipal government said on Tuesday it is offering 140 billion yuan (US$22 billion) in incentives, rebates and exemptions to help businesses survive the phased lockdown, it has so far had little impact on the ground.

Around Jing’an Temple, the downtown area which houses some of the city’s best-known shopping malls, shops selling flowers, clothing and luxury brands are largely open. But there were no customers inside, just clerks.

People walked quickly past, on their way to or from supermarkets nearby, loading up on food and daily supplies.

Bary Liu, who owns a small coffee shop and bistro in the district, said there has been a stark decline in the number of customers since the latest wave of infections began.

“We could sell out more than 1,000 orders on a normal weekday, but now we’ve only got a dozen orders since all the workers in the nearby office buildings are now working from home,” he said on Wednesday.

Alex Xia, a Starbucks store manager in the neighbouring Changning district, said the store had seen “a significant loss in the number of customers” in the last few weeks. The shop has cut operating hours by four hours a day and reduced the shifts of staff in order to control costs.

Shanghai has reported about 260,000 Covid-19 infections since March 1, mostly asymptomatic. That is more cases in four weeks than it saw in the past two years of the pandemic.

The phased lockdown is expected to scupper the 5.5 per cent economic growth target set by the Shanghai government early this year, which was already much slower than last year’s 8.1 per cent.

The Omicron variant of the coronavirus has tested Shanghai’s reputation as a model of how to contain the pandemic. As cases surged, the city has made a major U-turn in its relatively liberal approach, ordering a vast swathe of the city into a two-phase lockdown from Monday.

For small businesses, this has compounded an already serious slump in revenue. Liu’s daily income is about to disappear entirely as the Puxi area, on the western bank of the Huangpu River, enters a four-day lockdown on April 1.

For the people who work in small businesses, things are even tougher as many of their salaries fluctuate with the sales numbers.

Zhang Wen, a 30-year-old clerk for designer jewellery brand Annaya in Jing’an, had been standing alone at the counter and has not secured a sales order all day on Wednesday.

“In peak season I can get a bonus ranging between 2,000 to 3,000 yuan per month, depending on the actual sales volume I’ve achieved, but I expect to get nothing but basic salary in the coming month, which barely covers my cost of living,” said Zhang.

Huang Qixuan, a clerk at a skincare counter in a department store in Changning, said she will not receive any salary from April 1, when the counter will be forced to shut.

Two of her friends, who worked at restaurants and started to take unpaid leave earlier, have already left Shanghai for their hometown to try to save money.

“I’m not sure how long I can survive, maybe I’ll stick with the city until the outbreak is over, or maybe I’ll just buy a train ticket and run tomorrow,” said the 25-year-old.