Chen Linlin, who owns a board game cafa in Sanlitun, prepared as usual for what has always been her busiest time of year - the five-day May Day holiday. But customer turnout was far below average.
A March survey of 5,434 offline shops by the research arm of Meituan Dianping, a food delivery and services platform, showed that 74.5 percent of reopened shops did not see a single transaction and 11.5 percent reported less than 10 percent of the turnover they had during the same period last year.
What’s worse, many services still have no timetable for reopening. At a press conference on May 2, Li Sufang, a Beijing city official, announced pandemic control restrictions would continue for cinemas, dance clubs and music venues, internet bars, mahjong parlors, sports venues, indoor tourist spots such as museums and cross-provincial and cross-border group tours.
The China Film Association issued a notice demanding authorities set a nationwide reopening date, the Securities Times reported on June 5, as the nearly four months of closures have taken their toll. Statistics from Tianyancha, an industrial data provider, show that 2,700 cinema-related companies have gone bankrupt or closed their doors.
While still struggling, catering, a pillar of the service sector, resumed business earlier than others as demand is higher. In Shanghai, “80 percent of restaurants have reopened, but revenues are only at about 50 percent and recovery for restaurants that serve slowly prepared meals has been the most challenging,” said Jin Peihua, deputy secretary of the Shanghai Restaurant Cuisine Association.
Guangdong Province is also struggling. Cheng Gang, secretary general of the Guangdong Restaurant Association, told NewsChina that restaurants focused on formal dining rely heavily on banquets, which have declined sharply since the pandemic began.
Jiang Xu, a manager at a Chinese restaurant chain, said that eat-in restaurants nationwide are seeing less than 50 percent of their previous business. And because these restaurants are usually larger, they have higher rents and overheads. But the financial support they receive from the government is limited to meeting immediate needs, Jiang said.
Pandemic control measures such as spacing diners one table apart and restricting the flow of customers have also hurt restaurant revenues. A manager of a Chinese restaurant chain in Shanghai who asked to remain anonymous told NewsChina that as long as pandemic control measures are in place, restaurants would not match last year’s revenues.
“It will take at least three months for catering to recover. People’s dining habits have changed. Fewer people go out to eat now and they go out less frequently. More companies will go bankrupt if difficulties persist in generating cash flow and access to capital,” said Jin.
The service sector has been the largest driving force in China’s economy since 2014, creating more jobs than manufacturing since 1994, according to the National Bureau of Statistics (NBS). Yao Yang, dean of the National School of Development, Peking University, said during an online forum hosted by China Media Group on May 22 that more than half of the country’s urban workforce is employed by small businesses with less than five people, most of which are in the service sector.
Stimulating consumption in the service sector has been a priority for government at all levels, which has handed out billions of yuan in discount coupons for tourism, retail and catering. Many local officials are eating out at restaurants and shopping to encourage the public. In early May, authorities ordered reductions and delays in rent payments for small businesses struggling in sectors such as catering, hospitality, tourism, education, housekeeping, film and beauty.