The sudden outbreak of COVID-19 in 2020 has brought a huge impact on China's small, medium and micro enterprises. The spread of the epidemic led to cities being blockaded, business activities shut down, and all industries facing a "crisis". With the opening of Wuhan and resumption of production and orderly progress across the country, industries have gradually begun to recover. But what has been the operating rate of small, medium and micro enterprises under the epidemic? What does the recovery look like? What is the impact on each industry? In order to understand these questions, the Fintech Lab, THUIFR, conducted research on data on the real dynamics of small, medium and micro businesses. Specifically, this report uses the monthly and weekly year-on-year business turnover data of all enterprises in 2020 as the basis for a national MSME recovery index.
Findings I: The turnover of small, medium and micro enterprises (MSMEs) increased by 141.4% month-on-month in March.
In February, when the epidemic was severe in China and the prevention and control measures were strict, the recovery index of the small, medium and micro enterprise turnover was 33.3% compared to the same period last year. With the remarkable effect of the epidemic control across the country and the gradual increase in the rate of return to work, the turnover of the national MSMEs in March significantly increased (an increase of about 300 billion yuan) compared with that of February increased month-on-month by 141.4%. By the end of March, the overall small, medium and micro economic recovery index had increased to 41.1%.
Findings II: MSMEs business activity in the last two months was only 4.9% and 18.9% respectively compared to the same period in Hubei province last year.
According to the performance of the small, medium and micro economic recovery index in March 2020 (excluding Hong Kong, Macao and Taiwan), among the 31 provinces and cities, the small, medium and micro economic recovery index in 18 provinces and cities exceeded 40%, and only 3 provinces and cities' economic recovery index was lower than 30%. The recovery indexes of Xinxiang, Sichuan, Gansu and Inner Mongolia exceeded 50 percent, with 65.9 percent, 60.6 percent, 56.3 percent and 53.3 percent, respectively. In addition, Xinjiang, Sichuan, Gansu, Jiangxi, Henan, Shaanxi, Qinghai, Heilongjiang in March, the small and medium-sized micro economic recovery index compared with increased by more than 15%. In February, Hubei, Anhui, Shandong, Hebei, Chongqing, Jiangsu and other regions in March, the small and medium-sized micro economic recovery index also rose more than 10% compared with February. In the worst affected province, Hubei, micro, small and medium enterprises operating activities in February and March were only 4.9% and 18.9% of the level in the same period the year before. Although the impact of the epidemic on MSMEs is serious, the business activities of micro, small and medium enterprises have begun to rise sharply in March.
Findings III: Education, accommodation and catering sectors have been hardest hit
The small, medium and micro economic recovery index stood at 40% for 13 of the 19 industry categories in the National Bureau of Statistics in March 2020. The highest levels of economic activity measured by the recovery index were in the real estate sector (59.4 per cent), residential services, repair and other services (57.3 per cent), public administration, social security and social organizations (56.5 per cent), information transmission, software and information technology services (51.2 per cent).
The hardest hit sectors were education, accommodation, and catering. The level of economic activity in the education sector in February and March was 10.2 percent and 11.8 percent respectively, compared with the same period last year, due to the delayed the opening of schools and training and education institutions in response to the outbreak. The accommodation and catering industry has also been hit hard by the outbreak, which has restricted the movement of people and affected residents' going out, restricted social gatherings and cut travel activities. According to the MSME recovery index, the level of economic activity in the accommodation and catering sectors were 12.8% and 23.5% respectively in February and March compared to the same period last year. While the recovery index rose further in March compared with February most of the enterprises in the accommodation and catering industry were out of business or faced a return to work which was different from normal business activities.
Finding IV: the recovery level of economic activity of micro-enterprises is higher than that of SMEs
The THUR report also conducted a targeted analysis of micro-businesses with the overall MSME index. In February and March, the economic recovery index of micro enterprises reached 41.4% and 60.4%, respectively, while the overall economic recovery index of MSMEs was 33.3% and 41.1%, and the index recovery index of small enterprises was 29.9% and 37.8% compared to the same period last year. The level of economic activity in micro-businesses has recovered more than in SMEs compared with the same period last year. In addition, the recovery of economic activity of small and micro enterprises varies by region and industry.
Finding V: the impact of the outbreak reduced MSMEs ' revenue by 69.5%
The Fintech Lab, THUIFR researchfurther quantified the impact of the outbreak on the income of small, medium and micro enterprises by constructing a big data regression model of enterprise operations. The estimated results show that as of March 31, 2020, the COVID-19 epidemic reduced the revenue of MSMEs by 69.5% compared to the same period last year.
From a regional perspective, the income of MSMEs in Hubei and Hunan provinces have been the most seriously affected. By industry, MSMEs in the accommodation and catering industry, construction industry, education industry, real estate industry, manufacturing industry, leasing industry and business service industry have been the most adversely affected by the outbreak.
Based on the analysis of big data of the operations of millions of MSMEs, the small, medium and micro economic recovery index has been shown to reflect the real time status of the recovery of the economic activities of MSMEs. In addition to use in academic research, the MSME recovery index provides the latest information for policy-making institutions, which is conducive to the formulation of more targeted enterprise support policies.
