(Yicai Global) April 19 -- Operators of brick-and-mortar stores in Shanghai still have to pay high rents and labor costs even though their sales have cratered as the city enters its fourth week of lockdown amid a new wave of Covid-19. Several small business owners told Yicai Global of the difficulties they face and how they are pleading with landlords to waive rents.
Kathy, who runs a custom jewelry company, pays CNY20,000 (USD3,138) a month to rent her workshop. Her firm has not received any orders since March 20, putting the business in jeopardy, but the landlord has not agreed to cut the rent and is still urging her to pay.
Gavin, a fashion buyer, has fixed costs of CNY800,000 (USD125,520) a month. His two stores in the city have been closed for almost one month. The landlords of both shops are state-owned enterprises and when the Covid-19 pandemic first started in 2020, his rent was exempted for a period. Gavin is hoping to receive more good news soon.
Last month, the municipal government said that micro, small and individual-run businesses that lease state-owned premises will be exempt from paying rent for three months, and that if they are in medium to high risk areas of Covid-19, they will be exempt for an additional three months, to help them get through the difficulties posed by the city-wide lockdown. Private landlords, though, are under no such obligation.
Jin Rui, who runs a tea chain, has several outlets in shopping malls, each with a monthly rent of between CNY35,000 (USD5,500) and CNY40,000. “The stores were closed one by one from mid-March, but I have to continue paying rent and basic salaries. I have no idea when we can open again. And it will still take one to two months for consumer confidence to recover after that,” he added.
Although some of owners of the shopping malls where his tea shops are located are state-owned, none have offered to waive the rent. Once lockdown is lifted, Jin and other vendors will apply for rent exemptions, he said.
Jiang Feng, owner of an auto parts maintenance firm, has four employees and an annual rent of CNY260,000 (USD40,700), he said. His store has been closed since March 19 and his landlord has refused to waive the rent during lockdown. “The Covid-19 outbreak is taking place during peak season, so the impact will be severer in than 2020,” he said.
Editor: Kim Taylor