(Yicai Global) May 26 -- The impact of the Covid-19 pandemic on China's service sector is far greater than on manufacturing, but executives of companies in the sector remain highly confident of successful operations in the country nonetheless, with their faith in the middle and long term higher than in the short term, a recent business school study has found.
In the service industry, 38 percent of companies lowered their annual revenue forecast for this year by 20 percent or more of their targets, compared to 27 percent in manufacturing, per the latest report from the prestigious China Europe International Business School.
Among the 10 major services sectors, 65 percent of companies in catering, accommodation and tourism forecast cuts of 20 percent or more, followed by education at 60 percent, and media, entertainment and leisure with up to 60 percent, the research team led by CEIBS Prof. Xu Bin, who is the associate dean of research, found in their study.
The consumer product, environmental protection and new energy, and automotive and transport equipment sectors foresee the most cuts in annual revenue targets. Firms that have lowered their revenue goals by 20 percent or more make up 38 percent, 36 percent and 35 percent, respectively, in these three industries.
The pandemic has hindered company sales of products and services and held their staffers back from business trips. The difficulty of supply chain operation is also a big problem for manufacturing firms. Service companies by contrast mainly face financial difficulties.
The report also compares the confidence index of service and manufacturing companies. The service sector’s average score is 7.0 on a scale of 0 to 10 for confidence in operating successfully in China this year, while manufacturing registered 7.3.
The confidence index of service and manufacturing firms in the next five years is higher than for this year. The average confidence index of service companies for successful operations in China in the next five years is 7.71, while that for manufacturing companies is 8.04, the report shows.
The study was based on 1,182 online questionnaires executives in China answered from April 2 to April 9.
Formed per an agreement between the Chinese government and the European Commission in Shanghai in November 1994, CEIBS was the first business school in the Chinese mainland to offer a full-time Master of Business Administration, an Executive MBA and an extensive array of executive education programs. It follows the European business school model and has an MBA program that consistently ranks among the world's best.
Editor: Ben Armour