Covid-19's impact on Chinese Business Sentiments
According to the National Bureau of Statistics, China's retail sales dipped 20.5%, fixed asset investment plunged 25% during January and February over the same period in 2019. Even as the situation improves in China, businesses still struggle to recover and may continue to face more challenges due rapid worsening of the situation outside Asia. To further understand the impact on business sentiments, we've conducted a survey across over 1,000 senior executives in China. However, it is important to note that this survey was conducted when the virus was not as widespread globally.
In general, about 30% of businesses expect to see more than 20% dip in revenue and over half of businesses have insufficient cash to sustain for more than 3 months. They are looking at loans and shareholders cash injections to tide them over. Services as well as trade & retail are among the hardest hit sectors, while Xinjiang, Ningxia and Hubei the hardest hit provinces.
Sentiment is most affected in services, trade & retail and business services.
With the virus outbreak, many countries have issued travel ban and advisory regulations which significantly draws down on the service industry. More consumers are working from home, staying indoors and avoiding gatherings, affecting retail spending significantly.
Xinjiang, Ningxia, Guangxi and Hubei companies' revenue are expected to be the worst hit.
Major Industries in the affected regions 受影响地区的主要产业
Xinjiang: Oil and petrochemicals, Electric power production, Agriculture, Tourism
Ningxia: Coal, Metallurgy, Chemical, Finance
Guangxi: Automobile Manufacturing, Chemical & Oil refining, Wholesale Trade, Hospitality
Hubei：Manufacturing - Automobile/ Chemical/ F&B, Wholesale Trade
More than half the companies have insufficient cash flow to sustain the business for more than 3 months.
Businesses with larger portion of overseas income have sufficient cashflows to sustain operations for longer period of time
More than half of businesses with 40% or more of income coming from overseas, indicated that they have sufficient cash flow to last 6 months or longer. However, over 60% of businesses without overseas income indicated insufficient cash flow to last more than 3 months.
Loans, shareholders injection and salary reduction are the top 3 ways companies look to overcome temporary cash flow issues
Real estate companies are more inclined than other sectors to delay payments (11%) to tide over cash flows. On the other hand, the IT industry is more likely than other sectors to reduce headcount (10%) and cut pay (13%). Lastly, manufacturing companies are inclined towards taking business loans (28%), shareholders' injections (23%) for cash flow.
房地产公司相对其他行业跟倾向于通过延迟付款(11％) 来处理现金流问题。IT 行业更有可能消减员工(10%) 和薪资 (13%)。而制造业更倾向于贷款（28％）和股东融资 (23％) 来舒缓现金流问题。
You can also download the full report here.
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