Two years ago, as she walked down the hospital corridor in handcuffs and shackles to take a coronavirus test, Sun Junli felt ashamed and defeated. At the age of 45, I’ve come a long way. A poor village girl in northwest China has become a successful businesswoman.
Then it was crushed.
In 2018, state-owned banks suddenly stopped lending to their business, a chain of restaurants, and the pandemic destroyed their cash flow. By May 2021, Sun had lost her restaurants and was serving 16 days in jail for owing nearly $28,000 in wages to her employees.
Weeks after her release, the court confiscated her two-bedroom apartment in Xianyang, Shaanxi province, and her Toyota Camry because she was insolvent, and placed her on a national blacklist. She can no longer book a hotel room, plane ticket or get a loan.
“I am surrounded by people like me,” she said, listing dozens of friends in dire straits, and entrepreneurs in areas such as fashion, energy and furniture manufacturing. “We all came from nothing and worked hard to create wealth,” Ms. Sun said. “We’ve all lost everything and have a lot of debt.”
“Are we all bad at what we do?” she asked. “Are we all wrong?”
A few years ago, Ms. Sun was an example of how small business owners, through hard work, killer instinct and luck, can become the backbone of the economy.
Now it is illustrating something quite different: how China, under Xi Jinping, has killed the animal spirits of its business class as it imposes more state control over the economy. Mr. Xi’s government withdrew help when business owners needed it most, punishing them for their risk-taking and failures, and making it impossible for them to start over.
The Chinese authorities like to call small businesses the capillaries of the economy. But years of volatile government policies, crackdowns and blacklisting have left companies battered or destroyed.
In 2021, when China was heralding success in fighting the epidemic, more small businesses closed their doors than opened, said Zeng Xiangquan, a professor at Renmin University in Beijing. Tell Official newspaper.
Business confidence continues to suffer, which is one of the reasons China is in an economic quagmire. Small firms make up about 95 percent of China’s private sector, which contributes about 50 percent of national tax revenue, 60 percent of economic output, and 80 percent of new jobs.
Ms. Sun’s career began in the 1990s. After leaving high school at 17 to support her family, she worked as a farmer, textile worker, street food vendor, and taxi driver. Then in Hancheng, a city of about 400,000 near her village, she opened three sportswear stores selling Nike, Adidas and Chinese brand Anta. It was 2008, the year that China hosted its first Olympic Games, and it was the emergence of an emerging power. She would make what she called her “first bucket of gold”.
In 2013, just as e-commerce was beginning to affect retail businesses, Ms. Sun opened Manny Coffee, a 4,000-square-foot coffee shop in Hancheng. It sold coffee, steak, pizza, and other Western-style food and drinks, which is new to town. By 2018, it had expanded to 20 branches in six smaller cities in Shaanxi Province.
When it started years ago, Chinese banks were reluctant to lend to the private sector. Around 2015, due to competition from online financial institutions like the Ant Group, regulators instructed banks to lend more to small businesses.
The banks went after Mrs. Sun, who borrowed $1.3m to expand and build a central production kitchen for her restaurants. But credit suddenly dried up in 2018. Concerned about the debt, regulators issued new guidelines asking banks to “pay attention to the quality of loans to small businesses”.
sudden changes Many bruises comp. The fallout got so bad that the regulators started doing it searches “irrational practices” of banks
But it’s too late for Mrs. Sun. In October 2019, she borrowed money from family and friends to pay off her last bank loan, which is about $300,000. Her restaurants were doing well, with revenue reaching $8 million in 2018. She was confident that the Chinese New Year in January 2020 would bring good cash flow.
On the eve of the holiday, all of its branches were closed as the coronavirus began to spread rapidly. The lockdown was lifted three months later, but her work never recovered. To pay the rent and wages, Ms. Sun borrowed more from people close to her and maxed out her credit cards. Every month, she thought the next month would be better. The government did not provide any assistance.
By November 2020, she was $1.5 million in debt and unable to continue. She closed the six restaurants she wholly owned and gave up 70% of her ownership in the other 14 restaurants, in exchange for which the minority shareholders agreed to pay rent and wages.
China effectively does not allow bankruptcy, which in other countries may allow business owners to collect the money they owe.
Ms. Sun owes six weeks’ wages to her 31 employees. The employees reported her to the local labor inspection agency, which handed her over to the police.
During the 16 days she spent in the detention center, her hair turned gray. She spent most of her time in meditation. The police did not release her until the investigation confirmed that she had not hidden any assets. A year later, the court found “no criminal facts” against her, according to a court document. But she lost her job and her reputation.
Ms. Sun tried to make a living by helping to run the 12 branches of Manny Coffee that were still in business. But she will have little work and income in 2022 due to China’s strict “eliminate Covid” measures. The apartment complex you’re renting has been closed down eight times. Her brother, who delivered meals, sometimes gave her money and brought her food.
Her father, who had lung cancer and contracted COVID, passed away on December 25, 2022. It was her birthday. She was 47 years old.
Like many Chinese, Ms Sun believed business would pick up again in 2023 after Covid restrictions were dropped. But she didn’t.
To earn a living, she is trying to start a new food business. She thinks that in an economic downturn, her former customers might not want to pay $15 for a steak, but they might buy a bowl of spicy vegetables for $4.
She said she did not expect any financial support from the government. But she would like to get out of the blacklist that was added to her in 2021.
The so-called dishonorable persons list was launched in July 2013, a few months after Mr. Xi took power. It had eight million people in March. Several business owners are on the list, including the founders of at least 22 of the 500 largest private companies in China, according to Chinese media. reports.
“I don’t ask them to give me money,” Ms. Sun said. “But I would really like to get my name removed from the blacklist so that I can be a normal person and start a business again.”
She said, “I can’t fly if I want to go to Shanghai.” “I can’t take the high-speed train. I can’t travel. In a way, it’s no different than being locked up at home.”