Tsinghua's report shows how large enterprises are coping with epidemic
By Guan Xin
China has stepped up its support for small- and medium-sized companies to cope with the coronavirus outbreak, but how are big businesses faring? A recent report from Tsinghua University's Research Center for Enterprises M&A and Development shows that the impact is noticeable and calls for resuming production in most parts of China as soon as possible.
The survey discusses the virus impact, covering more than 200 enterprises — most of them have annual revenues above one billion yuan (about 142.6 million U.S. dollars).
Wang Yong, director of Tsinghua Research Center for Enterprises M&A and Development, said "Unlike small enterprises, they may not face immediate cash flow problems or even bankruptcy in the short term, but the epidemic still takes a severe toll on their business."
The shock comes from multiple fronts: declining orders, an inability to resume production, the burden of fixed assets, supply chain disruptions, and credit risks that may follow.
"With the prolonged quarantine measures, we gradually felt the vulnerability of the supply chain, especially the supply of small items was greatly affected by production halts and logistics. It's very difficult for us to restock," said Chen Gang, chairman of Aikosolar, one of the surveyed companies.
Wang also says that it is pressing to resume production.
"I think there is a lot that can be done to help companies," Wang told CGTN, "For example, the government can publicize the conditions needed to resume production. Making it registration-based, instead of approval based, stepping up guidance for enterprises to protect themselves from the virus, using big data to track personnel flows, coordinating the transportation and logistics nationwide to ensure circulation of production materials."
The report found that not all enterprises can return production to normal levels soon. Of the surveyed enterprises, 37.2 percent said they need one month at least to fully resume production at normal levels.
Export-oriented companies have their own concerns. Chen hopes that they can clear the international exchange channels.
"We should establish a quarantine system that can reassure international society about safety, so that we can resume international personnel exchanges," Chen noted.
The report also indicated that enterprises are still optimistic about the business outlook, as their capital expenditures remained stable or even increased slightly. And the report showed that the impact is mostly in the short-term and will be cushioned by supportive government policies in the long-term.