SHANGHAI (Reuters) - A Chinese media company said it will lay off 500 employees due to the coronavirus outbreak, the latest among a string of firms to do so in the past two weeks as the epidemic takes a toll on small-to-medium sized businesses.
Xinchao Media, which places advertisements in elevators, will cut 10% of its workforce to “ensure survival”, the company said in a post on its official WeChat account on Monday, which carried the transcript of an internal speech by CEO Zhang Jixue.
“To overcome the epidemic, you have to step on the brakes, jam the cash flow, reduce costs,” Zhang said, as he noted the company’s cash reserve of 1 billion yuan ($143 million) would likely be enough for only 6-7 months in the absence of income.
The job cuts come even as President Xi Jinping said the government would prevent large-scale layoffs caused by the virus outbreak - which has killed more than a 1,000 people in mainland China and infected over 40,000.
Authorities said on Tuesday they will roll out measures to stabilize jobs.
But many companies are hurting from disruptions felt since late-January after local governments extended Lunar New Year holidays and urged people to stay home.
“It is possible that the coronavirus could result in two to three million lost jobs in the first quarter,” said Nie Wen, an analyst from financial firm Hwabao Trust.
While the job losses are likely to be temporary, authorities need to step up support to small firms as many of them are highly indebted and have cashflow issues and “may not make it through”, he added.
Chinese restaurant chain Xibei, which has over 360 outlets, has said it is worried about wages for its roughly 20,000 workers given how the epidemic had impacted its income.
“We need 156 million yuan a month to pay our workers, and if the epidemic continues, and cash flow continues to be inadequate, we will not be able to hold up for much longer,” it said on its official Weibo account.
In Beijing, only 11,500 restaurants were operational mid last week, or 13% of the total, the Beijing Municipal Market Supervision Bureau said.
Beijing’s “Karaoke King” has said it wants to terminate contracts with all its 200 employees as it shut its outlets due to the outbreak, local media reports said. The karaoke chain did not immediately return calls made by Reuters on Tuesday.
And at least one company has said it will cease operations due to cash flow issues caused by the coronavirus.
Band of Brothers, a 13-year-old IT education chain, said on Weibo last week that it would stop enrolling students at its Beijing campus and disperse its employees, after the government ordered schools to delay reopenings.
Reporting by Brenda Goh; Additional reporting by Shanghai Newsroom and Stella Qiu in Beijing; Editing by Himani Sarkar