As Shanghai battles rising Covid 19 cases with a complete lockdown, the small and medium enterprises in the private sector have been the worst impacted. Though Shanghai has announced a slew of measures including reduction of tax and rents to support this all important segment, many of these enterprises face uncertainty and could be forced to shut down.
People familiar with the situation said that a large number of employees who are engaged with the SMEs have not received salaries.
According to Statista data, about five million new SMEs are added in China every year. SMEs are a strong pillar of the country’s economy, accounting for 80 per cent of nationwide jobs in the country.
These SMEs have been navigating through acute power shortage, rising raw material prices and difficult financing mechanisms through the last year.
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“The going for the SMEs in China has been tough since the outbreak of Covid 19 pandemic in 2020. The stringent restrictions back then dealt a huge blow to them and just when these enterprises had started to recover, the pandemic scare was back,” an entrepreneur running a small factory in mainland China told India Narrative.
Statista data highlighted that in 2019, the number of SMEs was estimated to be over 38 million. The data portal added that SMEs represent more than 90 per cent of the enterprises in the country, contributing over 60 per cent to the GDP.
Last year, China’s Vice-Premier Liu He at a forum described the SMEs as the “mainstay of the market and the main source of jobs.
South China Morning Post said that Shanghai’s new stringent Covid 19 approach has caused a slump in revenue for the small businesses. Which Shanghai maintained a relatively liberal approach in dealing with the Covid pandemic, it has made a “U-turn” in its policies with the outbreak of the Omicron variant.
Each year, there are about five million SMEs more in China, representing at least a ten percent year-over-year growth rate. Since the economic reformation in China, SMEs have become one of the driving forces in the economy.
