Thematic interviews
Written by: Yue Yueting
2020-03-11 08:00
Last updated: 2020-03-11 08:00The outbreak of Wuhan pneumonia (new coronavirus) has caused a heavy blow to the local economy, and many enterprises have difficulty in capital turnover. In his more than 30 years in the industry and known as the "liquidation king", Deloitte China Vice President Li Jiaen admitted in an interview with "Hong Kong 01" that the situation in Hong Kong is not optimistic and may be the worst since he joined the industry. And liquidation cases), there are now 1 or 2 cases every day! "
Facing this one of the biggest challenges since Hong Kong's opening of the port, Li Jiaen urged companies not to spend money rashly, and businesses that make money can continue to be retained, and businesses that don't make money should not be done. "Assuming the company wasn't making much money in the past, and it's doing worse now, I would advise the strong man to break his arm!"
After walking through the tourist area, it is not difficult to find that some shops have been closed or closed. Li Jiaen said that the economic downturn has had the most obvious impact on the catering and retail industries. Logistics, real estate, hotels, and tourism are also "heavy disaster areas." Some industries may not have an immediate impact. It may be due to a slowdown in production speed or employees. Convenient to work.
However, the number of bankruptcy applications has not recorded a large increase for the time being. According to statistics from the Official Receiver's Office, there were 703 bankruptcy petitions in January this year, an increase of 5.71% from 665 cases in the same period last year. The average monthly bankruptcy petition is 1,841. Li Jiaen explained that the number usually lags from 3 months to half a year, but the number of cases he has contacted has increased. From 1 week ago, there may not be 1 case, and now there are 1 or 2 cases per day. "I dare not say that there will be a wave of bankruptcy, but more companies are expected to fail."
Three major blows to Hong Kong ’s economic recovery are expected to take longer
In fact, many people compare Wuhan pneumonia with SARS, hoping that Hong Kong ’s economy will once again have a “V-shaped rebound”. Lai Ka-En believes that the impact of this epidemic on the economy is much more severe than SARS, because in 2003 The Chinese economy has been rising. After the SARS epidemic, the Mainland opened up to Hong Kong freely, enabling Hong Kong's economy to recover rapidly. On the contrary, there are waves after waves. Hong Kong has been plagued by the Sino-US trade war, the local social movement, and Wuhan pneumonia, and it has hit the slowdown of China's economic growth. In terms of scope, SARS has mainly occurred in Hong Kong and some cities in the Mainland, but the outbreak of the new coronavirus is much larger than that at the time of SARS, affecting almost the entire world.
He estimated that the epidemic situation would stabilize as soon as June. By then, the lag of bankruptcy petitions would gradually be reflected. He believed that it would take longer for Hong Kong to recover after this battle. Assuming a stable trade war and the end of social movements, the economy would be the fastest this year. It will slowly pick up at the end of the year.
Li Jiaen felt that the scale of the new coronavirus outbreak was much higher than that of SARS and also affected the production plan of the company. (Profile picture)
Before the economic rebound, it is inevitable that some companies will close down, especially the retail and catering industries. Li Jiaen believes that this is normal. If the company is no longer able to do business, it will only be able to withstand it. In the end, if there is a problem with short-term cash flow, it is necessary to find ways to open source and reduce expenditures, including selling assets to cash out, delaying. Repay, give employees unpaid or paid leave, or even lay off staff. "I don't encourage layoffs. This is a way out of no way. Some people are affected, it is better than everyone affected." Li Jiaen added that as a responsible company, the company should do debt restructuring as soon as possible when it encounters financial difficulties.
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Urge citizens to seek help as soon as possible
In this economic turmoil, the government and banks have launched many market rescue measures, including preferential low-interest loans guaranteed by the government with 100% guarantee, and mortgage loans that can "pay interest but not repay the principal". Li Jiaen said that if the company has not made much money in the past, and now the business is worse, it is recommended that such companies "strong men break their arms", do not continue to suffer because of affection, you should seek professional help; if the company has done well in the past, only short-term The cash flow has deteriorated, but each transaction is still making money, so you should borrow money to "hang your life."
"The more you borrow, the higher the risk will be, and you have to pay back the interest. If the interest rate is high, it will also be a burden on the company," Li Jiaen reminded.
Mr Lai said he was cautiously optimistic and hoped that the epidemic would soon pass and the political situation in Hong Kong would be more stable. (Photo by Gao Zhongming)
He also urged the public to be careful in making financial decisions. If there is a problem, they should ask for help as soon as possible, and do not rely on themselves; companies should avoid arbitrary spending and expansion. In addition, he hopes that the Hong Kong Government will pass bankruptcy protection as soon as possible to allow companies in financial difficulties to have a buffer period, during which creditors cannot apply for liquidation. These companies can have more time to find investors to inject capital and use market economy to help companies rebirth.
Hong Kong Economic Deloitte