Incentives offer enterprises new lease of life
Shenzhen govt launches policies — rent exemptions, subsidized loans — to help firms recover
The wheels of Shenzhen’s manufacturing and service sectors have resumed turning after grinding to a halt since the Lunar New Year holiday, as the municipal government worked to minimize the losses emanating from the coronavirus outbreak.
As millions of people from across the country gradually return to the city, reviving machines and production lines that have been covered in dust for weeks, the government now has to turn part of its focus from the supply to the demand side.
While continuing to work on solutions to help businesses get back on their feet, it is also given a new task — stimulating local consumption, which is particularly crucial as the outbreak wreaks havoc outside China, severely denting global demand.
A migrant city with a young population, Shenzhen is known for its strong consumption power. But, the pandemic, which has kept millions of Chinese people at home or in their hometowns, has dealt a big blow to the city’s industries — from manufacturing and technology to services.
Relieving financial pressure
Cash-strapped enterprises, especially small and medium-sized businesses that have been hovering on the brink of death, have been given a new lease of life by the government, which quickly unveiled new policies to relieve them of the financial shock.
Under a host of policies launched in February, the Shenzhen government pledged to help enterprises to weather the economic storm and stabilize the economy. The measures cover rent exemption, deferred tax payments, exemption or reduction of social insurance payment and subsidized loans.
Through them, the government said, the operation costs of Shenzhen enterprises could be cut by more than 60 billion yuan ($8.4 billion).
Shenzhen Phograin Intelligent Sensing Technology Co is among the beneficiaries. Located in the city’s Nanshan district, the company deals in research and development, and production of optical communication core components.
“The Shenzhen government’s response to the coronavirus outbreak was very fast. It immediately thought of doing something for enterprises,” said Chairman Wang Jian. “The policies unveiled are practical and can benefit various types of enterprises. That shows inclusiveness and professionalism.”
According to Wang, Shenzhen Phograin, with more than 100 employees, incurs monthly operating costs of 2 million yuan. The company was able to enjoy two months’ free rent amounting to 500,000 yuan.
“We also applied for 30 million yuan in new loans since the outbreak and we’re able to enjoy subsidies that would lower our interest rates to just around 3 percent,” Wang said.
As part of its relief package, the Shenzhen government will allocate about 3.4 billion yuan for subsidized loans for micro, small and mediumsized enterprises which, it said, will benefit nearly 200,000 local businesses.
Boosting consumption
Besides relieving the pressure on enterprises, the government has also stepped up efforts to stimulate demand, as people are now allowed to go out. The central government issued a guideline in mid-March, stating that more efforts should be made to improve national market supply, enhance quality of culture and leisure-related consumption, strengthen consumption power among residents, and create favorable environment for consumption.
In response to the call, Shenzhen has launched an online shopping festival, starting from March and to last until June, to encourage people to spend.
It’s also following the footsteps of other cities, including Nanjing, the capital city of Jiangsu province, Hefei, the capital city of Anhui province and the municipality of Chongqing, in trying to boost local consumption by making government officials take the lead or giving handouts.
As an example, the district chief of Shenzhen’s Luohu district was seen at a McDonald’s restaurant in a popular commercial area in the district on March 22, eating hamburgers.
“It’s the first time I’ve eaten outside since the outbreak began,” said Liu Zhiyong. “Luohu is now a low-risk district. People can go out and consume without worrying about their safety.”
The district said it will give away 50 million yuan between April and June to boost consumption, of which 30 million yuan will be given to residents in the form of vouchers. Another 10 million yuan will be used to promote car sales and the remaining 10 million yuan will be used as incentives for enterprises that recover the fastest. Luohu is the first district in Shenzhen to launch a consumption stimulus program.
“We have seen a remarkable growth in the number of consumers since the start of March,” said Nie Julian, head of the Meilin branch of restaurant chain Season in Shenzhen, which specializes in coconut chicken.
“Before March 1, we could only receive 100 orders a day on average, and they all came from online platforms. Now, we’re able to get around 200 orders a day, a 100 percent increase,” Nie said, attributing the significant improvement in business to the government’s incentives.
The eatery chain is able to enjoy a 50 percent cut in rents for two months and only needs to pay 70 percent of its gas bill.
The Shenzhen government’s response to the coronavirus outbreak was very fast . ... The policies unveiled are practical and can benefit various types of enterprises. That shows inclusiveness and professionalism.’’ Wang Jian, chairman of Shenzhen Phograin Intelligent Sensing Technology Co