Chinese manufacturer Orolay, the maker of the popular ‘Amazon coat’, has been fortunate enough to receive government support amid the disruptions caused by the coronavirus outbreak. With the assistance of the local commerce bureau and trade associations, Orolay has managed to procure enough masks for its staff, allowing 40% of its workforce to return to work. The government of Jiaxing, where Orolay is based, has also contributed by reducing interest on loans, offering tax breaks, and waiving two months of rent for the state-backed factory building.

This government support is crucial as small businesses are the backbone of China’s economy, contributing over half of the country’s tax revenues, two-thirds of its economic output, and eight out of every ten urban jobs. Unfortunately, not all small businesses have been as fortunate as Orolay in accessing the necessary resources to resume operations. Government data shows that the average production level of smaller businesses is currently only at 32.8% of normal levels. Additionally, many migrant workers, who are vital to the manufacturing sector, have not yet returned to work.

The slow return to business has also impacted overseas companies, including Amazon merchants, who are facing shortages of goods and waiting for Chinese factories to resume production. Moreover, service sector businesses such as restaurants, cinemas, and gyms face even greater challenges in reopening as authorities remain cautious about allowing public gatherings.

However, Orolay’s owner, Kevin Chiu, remains hopeful and has plans to resume full production soon. Despite being three weeks behind schedule, Chiu aims to produce 200,000 jackets in the first half of the year. He also intends to expand the company’s product line to include men’s and children’s clothing. Although the outbreak has resulted in an increase of 10 to 20 yuan ($1.5-$3) in costs per jacket, Chiu has no plans to raise prices.

Overall, Orolay serves as an example of how government support can help small businesses navigate the challenges caused by the coronavirus. By providing necessary resources, tax breaks, and other incentives, authorities are actively working to ensure the recovery and stability of the Chinese economy. While uncertainties remain, the resilience and adaptability of businesses like Orolay give hope for a brighter future.

Useful links:
World Bank: China Economic Update
SCMP: Chinese government support package for small businesses