All Chinese businesses, large and small, have struggled since COVID-19 emerged at the beginning of this year, forcing stores, restaurants, and factories to cut down on hours or completely shutter. While the full economic impact of the outbreak on China’s economy is still uncertain, popular business writer Wú Xiǎobō 吴晓波 detailed in a recent report that about 247,000 Chinese companies declared bankruptcy in the first two months of 2020.
Wu Xiaobo’s financial blog revealed (in Chinese) that Guangdong was the most impacted province, with over 30,000 firms going out of business in January and February, followed by Shandong, Jiangsu, Sichuan, and Zhejiang.
The observation echoes a string of previous surveys showing many Chinese companies, especially small businesses, feeling the pinch as the pandemic brought consumer activity to a halt. Almost 36% of the private-owned firms that responded to a survey conducted by Tsinghua University in February said that they were hammered by the economic fallout from the outbreak and did not expect to survive after a month. In another survey released in February, more than 60% of the small and medium-sized enterprises in Shandong said that they could only hold out for a maximum of three months under current conditions.
Unsurprisingly, Wu also noted that new companies were the most vulnerable businesses affected by the crisis. Of the companies that pulled the plug in January and February, roughly 55% were startups under three years old.