Chinese ‘Amazon coat’ maker resists coronavirus impact with tax breaks and rent exemptions

BEIJING / SHANGHAI (Reuters) – Orolay, the maker of the ‘Amazon coat’ that became an American fashion and social media darling a year ago, knows he’s luckier than most small businesses Chinese women trying to get back on their feet amid massive disruption caused by the coronavirus epidemic.

FILE PHOTO: Orolay founder and CEO Kevin Chiu poses for a photo during an interview with Reuters, at the company in Jiaxing, Zhejiang province, China January 28, 2019. Photo taken January 28, 2019. REUTERS / Pei Li / File Photo

Perhaps more than anything, the masks prove it. Despite huge shortages across China, Orolay was able to source enough masks for its staff, 31 or 40% of whom were back to work last week, through the local trade office and trade associations.

The government in Jiaxing, the eastern Chinese city where the company is based, also reduced interest on loans, provided tax breaks and offered grants. The state-owned company that owns the factory building has waived two months’ rent.

And the top government official of Jiaxing City, the party secretary, visited.

“It was a positive affirmation and praise for cross-border e-commerce, the company’s export model,” said Kevin Chiu, the owner of Orolay, adding that he believed his company’s problems were. manageable.

The measures are examples of how authorities are trying to provide support to small businesses as they evade the impact of quarantine and travel restrictions imposed to stem the outbreak.

The backbone of the economy, small and medium-sized enterprises contribute more than half of China’s tax revenue, two-thirds of the country’s economic output, and eight out of ten urban jobs.

But while Orolay has received huge publicity for its popular down jackets, with their price range of $ 80 to $ 160 favorably over more expensive Canada Goose offerings, other small businesses lack that cachet. and some have not been able to obtain enough masks to resume business.

Government data showed that the average output of small businesses was only 32.8% of normal levels on Wednesday, while a majority of migrant workers, on whom many manufacturers depend, have yet to return to work.

The slow return to business has also pushed many foreign companies, including Amazon AMZN.O merchants, worried because they are short of goods and impatiently awaiting the factories to come back to life.

Small Chinese service sector businesses like restaurants, cinemas and gymnasiums where members of the public congregate face even greater hurdles as authorities exercise more caution to allow them to reopen.

In contrast, Chiu hopes to resume full production this week when his remaining workers are released from quarantine, with a goal of producing 200,000 jackets in the first half of the year despite a three-week delay on the schedule.

With winter almost over, he does not have to ship his products until later this year. It will also continue its diversification projects in men’s and children’s clothing.

He calculates that the outbreak will add 10 to 20 yuan ($ 1.5 to $ 3) in costs per jacket. “But we don’t intend to increase our prices,” he said.

(This refile corrects the spelling in the data row)

Reporting by Pei Li in Beijing and Brenda Goh in Shanghai; Additional reporting by Melissa Fares in New York; Edited by Edwina Gibbs

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