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Rent reductions a lifeline for businesses

By LI YANG | China Daily | Updated: 2020-02-03 08:57
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LUO JIE/CHINA DAILY

In a letter issued last week, the Guangzhou Real Estate Leasing Association called on all commercial property owners in the city to take the initiative and reduce rents so as to help ease the burden on companies in the fight against the novel coronavirus.

Although the proposal is not legally binding, it has hit the nail on the head and deserves national attention.

The self-quarantine measures the population has taken during what would otherwise be the busy Spring Festival holiday period have unavoidably dealt a heavy blow to the economy, with catering and retail industries bearing the brunt of the shock.

The service sector contributed 53.9 percent of the country's gross domestic product, and created 55 percent of jobs last year, while consumption contributed 57.8 percent to GDP growth.

Many catering and retail companies are small businesses, whose owners rely heavily on quick returns and small margins, if the streets and markets continue to remain empty as they have been during the past two weeks, it is likely the rents on their premises will soon become the straw that breaks their backs.

Even the owner of a large-scale fast food chain store group told the media that the company will be in debt soon, and its 23,000 employees will then be laid off, if the pandemic does not ebb.

It is good to see nearly 600 department stores and shopping malls nationwide have reduced their rents to different extents. Hopefully, more landlords will follow suit.

Reducing the rent on commercial properties is badly needed to prevent large-scale business bankruptcies, which will necessarily cause systemic unemployment, and instantly trigger chain reactions in the economy that will leave no parties unscathed.

In a business environment where consumers are under pressure, it is important that property owners work with their tenants to overcome difficulties, reduce rents in a timely manner, and share the losses to avoid more business failures.

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