Almost half of China’s listed consumer companies don’t have enough cash to survive another six months, underscoring the urgent task Beijing has to re-start its economy and get shoppers spending again, reported Bloomberg.
Restaurants are in the worst shape as the coronavirus outbreak has kept consumers at home, with about 60% unable to cover labor and rental costs, according to data compiled by Bloomberg and company reports covering 50 listed firms. Among jewelry and apparel companies, almost half don’t have the cash to last the six months unless demand rebounds sharply, the data show.
While the number of coronavirus infections in China has tapered off and retailers including Starbucks and Haidilao International Holding have reopened more of their stores in low-risk areas, demand looks unlikely to rebound quickly as consumers remain hesitant to leave their houses after weeks of government warnings about the dangers of mingling with others.
Many of China’s small and medium businesses are already collapsing as they run out of cash, but the vulnerability of the publicly listed consumer companies points to greater economic danger, as some of these employ thousands of workers across the country. Store closures and layoffs are expected, said analysts.