Background
The COVID-19 pandemic had a negative impact on the operations of micro, small, and medium-sized enterprises (MSMEs). Small businesses in China have faced changes in consumption patterns, demand, product distribution, and consumer behavior (Liu et al., 2022). Saturday, Suharno, and Ahmad (2021) stated that COVID-19 negatively impacted MSMEs in China, resulting in a decline in turnover, profits, and employment.
In addition, Sungkawati et al. (2021) found that MSMEs experienced a decrease in capital, a decrease in demand, and an increase in operating costs as a result of the pandemic. These costs have put a strain on the finances of MSMEs, as they must allocate more funds to ensure the safety of their operations. Drawing from existing publications, little information is provided on the relationship between finance, market, employee, and policy, as well as the impact of COVID-19.
The purpose of this research is to analyze the effect of the COVID-19 pandemic on MSMEs in China. In particular, this study aims to determine how the pandemic has changed business operations, management strategies, and the financial performance of these enterprises. Thus, the research will provide suggestions to these enterprises on how to better manage the economic and financial uncertainties arising from the pandemic.
The research is highly relevant to HR managers, as the pandemic has had a significant impact on how businesses operate. As the pandemic has forced many organizations to close their doors, HR leaders must be aware of its implications for their workforce (Kaushik & Guleria, 2020). This study will provide HR managers with valuable insights into managing their workforce during challenging times.
Additionally, they need to understand the financial implications of the pandemic on these firms, as this can impact their ability to retain employees and provide them with the appropriate benefits (Harney & Collings, 2021). Therefore, managers can better prepare their organizations and ensure their workforce is supported during this difficult period.
Literature Review
The Purpose of MSMEs
With the advancement of the market economy, the number of small businesses has risen, and they have become the most dynamic group. According to Redjeki and Affandi (2021), MSMEs play a crucial role in generating profits, creating employment opportunities, enhancing people’s livelihoods, maintaining social stability, and driving innovation. MSMEs are key drivers of economic growth, job creation, and poverty reduction.
In support of this, Sampe et al. (2022) state that these businesses play a crucial role in driving innovation and offering products in both rural and urban areas. MSMEs are a significant source of income for individuals and families, and they play a vital role in the local economy. These businesses foster vibrant, healthy communities and drive economic growth, ultimately leading to increased prosperity for all. Furthermore, MSMEs help create an environment that fosters entrepreneurship and self-sufficiency, which can have a positive impact on human well-being.
In China, MSMEs play an integral role in economic growth. According to Ma, Liu, and Gao (2021), these businesses contribute more than 50% of taxation, 60% of GDP, 70% to innovation, 80% to employment, and 90% of the number of enterprises. Since MSMEs align with China’s economic benefits, they can leverage a comparative advantage in the competitive market, achieving strong profitability and generating additional social wealth (Zou, Huo, and Li, 2020). These businesses are more agile and flexible in responding to market changes, enabling them to compete more effectively with large enterprises. Therefore, SMEs are often more innovative and can develop new products and services quickly, giving them a competitive edge over larger companies.
The Impact of the COVID-19 Pandemic
The impact of the COVID-19 pandemic on Chinese MSMEs has been devastating. Ma, Liu, and Gao (2021) reported that nearly 67.69% of MSMEs had reported a decrease in their operating income, and 21.61% were unable to repay their debts promptly due to increased pressure on their operating funds. This has resulted in a significant increase in the number of SMEs facing liquidity and solvency issues, with many at risk of insolvency (Ma, Liu, and Gao, 2021). Furthermore, due to the pandemic, many MSME customers are facing financial strain, making it difficult for them to make payments. These concepts had a significant impact on MSMEs in China, making it difficult for them to survive the pandemic.
Due to the COVID-19 pandemic, the financial hardship of MSMEs caused significant disruption to China’s economic growth. Chenli, Bannerman, and Abrokwah (2022) posit that the coronavirus pandemic has particularly impacted these businesses, as many have been forced to close, lay off employees, or accept reduced demand for their products.
Similarly, Ma, Liu, and Gao (2021) claimed that the pandemic exacerbated the already challenging financial situation of these businesses, which are typically highly leveraged, and the lack of resources and financial backing of larger companies. As such, their financial troubles have had a direct impact on the Chinese economy, resulting in a decrease in the GDP growth rate in the first quarter of 2020, reaching its lowest level in 20 years. Therefore, the pandemic caused financial strain on MSMEs, leading to a decline in the country’s economy.
Influencing Factors
Market
The COVID-19 pandemic has significantly impacted the market size of MSMEs in China. Da Silveira Pereira and de Mello (2021) posit that the government has adopted several measures to support MSMEs. These interventions include tax relief, loan guarantees, and subsidies. Due to the pandemic, many MSMEs have been severely impacted, resulting in a decline in their production and market size (Chenli, Bannerman, and Abrokwah, 2022).
This is especially true for MSMEs in the hospitality and tourism industries, as travel restrictions have affected their ability to operate. Furthermore, the pandemic has decreased consumer spending and demand for many products, resulting in a decline in sales for many MSMEs. The pandemic had a significant impact on the MSME sector, leading to a decline in demand.
Personnel
The COVID-19 pandemic has had a significant impact on the flow of personnel of MSMEs in China. Forsythe et al. (2020) claim that to mitigate the problem, the government implemented strict travel restrictions, including closing borders and suspending international flights. These restrictions limited personnel’s ability to travel, both domestically and internationally. Similarly, Harney and Collings (2021) believe that due to the social distancing guidelines, many businesses have had to downsize their workforce, resulting in a reduced flow of personnel. This has impacted the ability of MSMEs to complete projects and effectively respond to customer demands.
Policies
The COVID-19 pandemic significantly impacted policies, including subsidies, tax reductions, and rent relief, for MSMEs in China. According to Guo and Shi (2021), the Chinese government implemented various policies to support MSMEs during the pandemic. These policies included subsidies for MSMEs to cover their operating costs and tax reductions to help them cope with the financial impact of the pandemic. Furthermore, rent relief was also provided to MSMEs, enabling them to reduce their rental costs and maintain their payments. These policies were implemented to ensure the survival of MSMEs during the pandemic and to facilitate their rapid recovery.
Research Findings
The publications included in this study offer information that can be used to examine the impact of the COVID-19 pandemic on MSMEs in China. Many articles focus on the economic repercussions of the pandemic, particularly on MSMEs (Ma, Liu, and Gao, 2021; Zou, Huo, and Li, 2020). These studies highlight the impact of the pandemic on the Chinese economy, including reduced consumer spending and production, increased financial risks, and a decline in GDP.
Zou, Huo, and Li (2020) have discussed the effects of government policies such as tax relief and financial assistance on MSMEs. Additionally, the literature offers insight into the social, cultural, and theoretical perspectives, including the resource-based view and cost economics, to illustrate the pandemic’s impact on MSMEs. The findings reveal that the pandemic hurt these businesses.
Gaps in Literature
However, there is limited research on the specific relationship between finance, market, employee, and policy, and their impact on MSMEs in China during the COVID-19 pandemic. Recent publications have primarily focused on the overall economic impact of the pandemic on MSMEs, rather than examining specific areas such as finance or market conditions. Some research has shown that the pandemic has had a negative impact on MSMEs in China, with many facing financial difficulties and a decline in sales. Therefore, further research is necessary to fully comprehend the intricate relationship.
Research Aim
The research aim is to understand how the finance, market, policy, and personnel of a business have been affected by the COVID-19 pandemic. It seeks to explore the effect of the pandemic on the financial stability of the business, the impact on market dynamics, changes in policy and regulations, and the influence on personnel, including changes in workforce size, job security, and working conditions. The research will provide insights into how businesses can respond to the crisis and prepare for the post-pandemic world.
Hypothesis
H1: There will be a positive relationship between finance and the adverse impact of COVID-19
The COVID-19 pandemic had a significant financial impact on many individuals, businesses, and governments. It has led to a sharp decline in economic activity, resulting in reduced incomes, increased unemployment, and decreased government revenue (Caligiuri et al., 2020). The financial issues that accompany the pandemic will be compounded as the global economy continues to struggle. This led to an increase in financial challenges for individuals, businesses, and governments, which could have a significant and long-lasting negative impact on the global economy.
H2: There will be a positive relationship between the market and the negative impact of COVID-19
During the pandemic, some MSMEs shut down their operations due to a significant drop in the number of employees. Among them, workers with less education were more likely to lose their jobs, regardless of their gender, and the economic blockade’s impact on their employment was more pronounced. These businesses have a low rate of employees coming back to work. As a result, MSMEs face a shortage of workers and higher labor costs, which can hinder their ability to run their businesses effectively.
H3: There will be a positive relationship between personnel and the negative impact of COVID-19
There might be a link between personnel and the negative impact of COVID-19. This is evident in the way companies have been quick to make the necessary adjustments to ensure their employees are safe, secure, and well cared for (Collings et al., 2021). Companies introduced policies to ensure flexible working arrangements, such as remote working and staggered shifts, and offered financial and emotional support to those affected.
H4: There will be a negative relationship between policies and the negative impact of the COVID-19 pandemic
Governments implemented various policy measures to mitigate the negative impacts of the pandemic. These measures have included providing financial support to individuals and businesses, introducing social distancing guidelines, and other forms of economic stimulus. As such, a negative relationship may likely exist between these policies and the pandemic’s negative impact, as the presence of policy measures generally indicates an effort to mitigate the pandemic’s adverse effects.
Hypothesis Embedded in Literature
The primary concepts in the hypotheses were addressed in the publications discussed in the literature review. Publications have shown that the pandemic’s financial, market, and personnel impacts have been significant (Ma, Liu, and Gao, 2021; Zou, Huo, and Li, 2020). For example, studies have found that the pandemic has led to a decrease in the market for products, a reduction in employee productivity, and increased expenses due to reduced revenue.
Additionally, Sungkawati et al. (2021) have found that the pandemic has caused a decrease in consumer spending, increased unemployment, and a slowdown in economic activity. Thus, the literature has revealed the existence of financial, market, and personnel issues, as well as the adverse impact of the COVID-19 pandemic.
Research Design and Methodology
This research will utilize both primary and secondary data to test the hypotheses. Primary and secondary data will be used because they are obtained directly from sources such as surveys or interviews (Sileyew, 2019; Kalton, 2019; Banerjee, 2019). This type of information can provide a detailed view of the pandemic’s impact on financial, market, and personnel areas.
However, secondary data refers to information that has already been gathered and examined by another person, such as government reports or industry research (Sileyew, 2019). It can provide an overall picture of the pandemic’s effect on the concepts and be used to compare the impact of the pandemic in different countries. Both datasets can offer valuable insights into the relationship between the pandemic and the finance, market, and personnel areas.
Primary data sources, including surveys and interviews, will be utilized to test this hypothesis. Firstly, a survey collects data using relevant questions from a sample population (Sileyew, 2019). The population will consist of approximately five personnel from MSMEs, including those in the finance, marketing, and personnel departments. The sample will consist of managers and supervisors of MSMEs in China. The response rate is likely to be high, as this is a crucial topic that affects many businesses. Surveys that are well-designed, easy to complete, and distributed via an effective medium tend to have higher response rates.
The interview population should include business owners or executives from the finance, marketing, and personnel departments in various regions of China. A total of 10 interviewees will be used to ensure a good sample size. The intended duration of each interview will be approximately 30 minutes. After conducting the interviews, the data will be analyzed using qualitative methods such as thematic analysis. By focusing on the specific departments, this study will provide valuable insight into the impact of the pandemic on business operations.
Secondary data sources will be utilized to address my research aim, including financial, market, and personnel-related data. Published literature sources will provide financial information such as balance sheets, income statements, and cash flow statements to analyze the impact of the COVID-19 pandemic on a company’s financial performance. Market data, including stock prices, industry-level market performance, and company-level market performance, will be accessed online to analyze the impact of the pandemic on the market.
Moreover, the data for this research will be accessed from publicly available sources, including books, the Internet, library catalogs, government websites, and industry reports. However, if the sources are not publicly available, they can be requested from individual organizations. This will ensure that the information used in the research is reliable and valid. The data sources will help me answer my research aim by providing information about how the pandemic has impacted finance, the market, and personnel. This will examine the impact of the pandemic on a company’s performance and inform decisions on how to respond to the issue.
Ethics Considerations
The risks associated with this research include the potential financial implications and unwillingness to disclose information. Firstly, there will be a need to conduct online interviews and surveys to collect the required data. The cost related to the Internet and calls will be significant, and this could be a drain on the research budget. Secondly, the survey itself could be hampered if respondents are unwilling to answer questions. The outcome may be distorted if the respondents are unwilling to disclose personal information due to concerns about their data privacy.
The intended research action will be to obtain data from organizations on the impact of the COVID-19 pandemic on their finance, market, and personnel. To adhere to ethical best practices, businesses will seek written permission to use their non-public data (Bayley & Phipps, 2019). All collected data will be kept confidential, and measures will be taken to safeguard information from unauthorized access. The timeframe for this research will depend on the subjects’ availability and the sample size, but it is expected to be completed in three to six months.
Resource Requirements
To successfully finalize this project, there will be a need for data, software, and skills, as well as adequate time. Microsoft Word and Excel are essential for summarizing and presenting data (Ravid, 2019). This will require data analysis skills to interpret the data and formulate hypotheses. Furthermore, there has to be ample time to collect and process the data, analyze it, and draw conclusions. Access to these resources will be determined by the availability of data, my skills in data analysis, and the time required for the project.
Limitations
The limitation of this study is that it can be hard to accurately measure the exact impact of the COVID-19 pandemic on the financial, market, policy, and personnel factors. To overcome this limitation, alternative methods of data collection could be employed, such as surveys and interviews, which would allow for a more detailed and accurate assessment of the pandemic’s impact on these aspects (Ross & Bibler, 2019). The development of contingency plans will be beneficial in understanding how these factors may be affected by the pandemic and identifying measures that can mitigate the negative impacts.
Reference List
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