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Suffering long term COVID effects is very real for some businesses

By HK Lawyer AJ Halkes Barrister-at-Law

Businesses that survived remained burdened by debt, had cash reserves and reduced consumer demand

Suffering long-term COVID effects is very real for some businesses. Even though the Hong Kong Government’s support for businesses was extensive. Loans, salary subsidies, and a locked-in local consumer base saw many F&B outlets perform reasonably well, despite restrictions and occasional penalties.

Many businesses fell behind on Mandatory Provident Fund payments just to survive, racked up debt to landlords that later led to court actions and closures; some tried but could not pay staff. Data suggests even the MPF may have pursued enterprises aggressively to the point of litigation; some landlords were less than supportive and even tried to claw back subsidies given in good faith.

Sole proprietors may have received only a few thousand HKD in support, so depleted personal savings waiting for a recovery once COVID ended, but it never came for them; instead, they faced mass consumer departures to neighbouring Asian cities or Shenzhen and Zhuhai every weekend. Hong Kong’s domestic spending population was suddenly significantly reduced, seemingly indefinitely.

Businesses that “survived” remained burdened by debt, had cash reserves and reduced consumer demand. Many were ultimately forced to close; they simply ran out of customers, ran out of money, and could not borrow; in tech financing terms, there was no “runway” left.

It is a shame more nuanced approaches were not adopted immediately after restrictions were lifted, when it became clear retail markets were being hollowed out by outbound travel and a lack of replacement consumers; too many businesses threw good money at survival in the hope of a rebound that never came fast enough for them.

Inbound tourism is finally rising. However, it remains questionable whether actual F&B market spending from visitors exceeds what domestic consumers actually provided in total during the COVID period when “trapped” in Hong Kong; prospects remain uncertain at many levels.

At least things are starting to move. Spending is returning, and vibrancy is reappearing in Hong Kong’s streets and alleyways after far too long.

We can get behind the SME sector now by reinvigorating street stalls, small vendors, and promoting the city’s textured character more assertively, so visitors roam, explore, and fully enjoy all Hong Kong has to offer. And please make sure to spread some of your spending with the independents, the sole proprietors, the start-ups and the innovative upstarts – they need your spending just as much, if not more than, heavily financed chains. They took the biggest hit to stay in the game.

If you need specific input regarding a strategic Hong Kong challenge or related legal matters in the HKSAR, you can always DM me and check out my profile at https://www.ajhalkes.com

HongKong FNB SmallBusiness EconomicRecovery MPF Retail Tourism Entrepreneurship UrbanVibrancy HKSAR

 

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