Small and medium-sized commercial service enterprises face numerous difficulties in survival and development and urgently need policy support.

Under the general economic downturn both domestically and internationally, small and medium-sized commercial service enterprises in China have encountered numerous difficulties in survival and development, with strong feedback from enterprises. In response, the China General Chamber of Commerce and the China Federation of Trade Unions for Finance, Trade, Light Industry, Textile, and Tobacco recently spent more than a month jointly investigating the survival, development, and union construction status of small and medium-sized commercial service enterprises in typical regions such as Beijing, Shanghai, Sichuan, Xi'an, Shijiazhuang, and Dezhou in Shandong. The basic situation is as follows:
1. Current survival and development status of small and medium-sized commercial service enterprises
According to the national economic census, by the end of 2008, there were more than 42 million small and medium-sized enterprises in China, accounting for over 99.4% of the total number of enterprises, among which there were more than 38 million individual industrial and commercial households, making an important contribution to China's economic development. Statistics show that currently, the total industrial output value, sales revenue, and realized profits and taxes of small and medium-sized enterprises account for 60%, 57%, and 40% of the total respectively. Small and medium-sized enterprises in the commercial service industry account for more than 90% of the national retail service outlets, with individual industrial and commercial households concentrated over 95% in the commercial service industry. Small and medium-sized enterprises provide about 75% of urban employment opportunities, becoming an important channel for promoting economic development and arranging employment. The added value in 2010 increased by 1.3 times compared to 2005, with an average annual employment increase of 500,000 people. The proportion of employment in the service industry to total social employment reached 34.6%, becoming an important force driving economic growth. For example, during the "Eleventh Five-Year Plan" period, the turnover of the national catering and accommodation industry increased from 1,034.5 billion yuan in 2006 to 2,100 billion yuan in 2010, with an average annual growth rate of over 10%. Currently, the catering industry employs more than 20 million people, with over 1 million new jobs added annually.
However, since the outbreak of the European debt crisis, the economy has been severely affected, and China's economic downward pressure has increased, especially impacting the commercial service industry more seriously. Many small and medium-sized commercial enterprises are currently facing significant difficulties in survival and development. According to a survey by the Hunan Catering Association, 75% of catering enterprises in the province are on the verge of breaking even, and 30% of enterprises are close to bankruptcy. According to a recent survey by the China Cuisine Association, the growth rate of the national catering industry in the first half of this year decreased by 18.1% compared to the same period last year, with a monthly closure rate of catering enterprises as high as 15%. The overall profit level of the catering industry has rapidly declined, with the average profit margin of the entire industry only 8%. According to surveys, since the beginning of this year, industries such as community commerce, beauty and hairdressing, and wedding photography studios have seen significant decreases in customer flow and business revenue, with many enterprises barely maintaining operations or even closing down. According to statistics from the Beijing Municipal Commission of Commerce, the overall growth rate of the department store industry in Beijing in the first half of this year was only 5.9%, with 31% of department store enterprises experiencing negative sales growth. For example, Shin Kong Place and The Place Shopping Center, which mainly operate international brands, saw their growth rates in the first half of the year decrease by 27.9 and 9.6 percentage points respectively compared to the same period last year. Shenzhen supermarket leader Renrenle opened 4 new supermarkets this year but closed 3 branches, with a net loss of 57.88 million yuan in the first half of the year. ParknShop closed 2 branches in Shanghai in May this year. Large fast-food chain enterprises completed only 20% to 30% of their new store expansion plans. Some regional commercial chain enterprises have chosen to "hibernate" to get through difficulties, such as Jingkelong reducing 28 stores, Chaoshifa reducing 13 stores, and Tianjin Quanbao Supermarket reducing 8 stores, etc.
2. Prominent problems and cause analysis faced by the survival and development of small and medium-sized commercial enterprises
(1) Difficulty in financing. Lack of funds is currently the main reason causing some small and medium-sized enterprises to close down. Although the government is working hard to solve the "financing difficulty" of small and medium-sized enterprises, local financing primarily supports private industrial enterprises, neglecting small and medium-sized commercial enterprises. Under such circumstances, some small and medium-sized commercial enterprises have to turn to private lending, resulting in extremely high financing costs.
(2) Difficulty in recruiting and retaining employees. Currently, commercial service enterprises face great difficulty in recruiting workers, especially small and medium-sized enterprises in catering, beauty and hairdressing, laundry, bathing, and other life service industries, with an average staff shortage of 30% to 50%. In recent years, this phenomenon has spread to retail industries such as supermarkets and department stores. Due to the low entry threshold, fierce competition, low labor skill content, long working hours, low salary and benefits, and low social status in the commercial service industry, employee turnover is high, making it difficult for enterprises to retain staff. According to two well-known domestic catering enterprises, less than 30% of frontline employees have worked for more than one year. Due to frequent employee turnover, enterprises are reluctant to provide comprehensive training, seriously affecting service quality and development potential.
(3) Rising labor costs and significant profit decline. Due to continuous increases in regional minimum wage standards, rising price indices, and the national improvement of social security systems, labor costs for commercial service enterprises have been continuously rising, leading to a significant increase in enterprise costs. In recent years, labor costs in the commercial service industry have increased by about 15% to 25%. After Shanghai migrant workers' social security changed from comprehensive insurance to "three insurances," enterprises have to pay more than 300 yuan per migrant worker on average. Before 2009, the salary of waiters in Guangzhou was about 1,200 yuan, now it has basically increased to over 1,900 yuan, including meals, accommodation, social security, bonuses, and allowances. Last year, labor costs for the top 100 domestic chain retail enterprises increased by 26%. Due to rising labor costs, enterprise profit levels have sharply declined.
(4) Rising operating costs and increased burdens. This is mainly reflected in three aspects: First, commercial rents have continuously increased in recent years, placing a heavy burden on enterprises. From 2002 to 2012, commercial real estate rents increased by four to five times on average. In the past two years, rents for commercial stores in first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen have increased by an average of 30% annually. Small and medium-sized commercial enterprises with weaker strength can only choose to close stores. Second, with rising prices, the costs of service enterprises that consume large amounts of daily necessities, such as catering, bathing, and laundry, have increased rapidly. These enterprises consume large quantities of daily necessities every day, and the prices of these necessities, especially agricultural products, have risen significantly in recent years, increasing cost pressures. Third, the prices of electricity, water, and gas for commercial service enterprises have never been the same as those for industrial enterprises and have continued to rise. It is reported that the water price for the bathing industry in Beijing is as high as 86 yuan per cubic meter, and 37 yuan per cubic meter in Shijiazhuang, which is unbearable for enterprises.
3. Current operational difficulties in the commercial service industry have impacted workers' rights and interests
(1) Enterprises' ability to absorb employment has weakened. Under the rising labor cost situation, domestic and foreign commercial service enterprises are trying every means to reduce employment positions. Work previously done by two to three people is now done by one person. Whether in retail or catering and other service industries, the number of workers per unit operating area is continuously decreasing.
(2) Actual income of employees has declined. Some employees reported that although wages in the commercial service industry have increased significantly in recent years, due to the rapid rise in rent, transportation, and living expenses, the actual income of employees has not improved much, and the pressure of life is increasing. Under the current weakened profitability, enterprises are no longer able to raise salaries and can only lower hiring standards. It is understood that in 2011, 642 employees left a certain department store enterprise in Shenzhen.
(3) The realization of employees' labor economic rights is not optimistic. First, labor contract management is not standardized enough. Due to high employee turnover in commercial service enterprises, companies generally use short-term labor contracts. Some enterprises do not sign labor contracts for temporary workers and do not pay social insurance. Some employees do not want the company to pay social insurance for them, believing it is better to receive more cash, and request the company to give them the social insurance funds. Second, overtime is quite common. Commercial service enterprises have long working hours, and working on holidays is normal. Some enterprises implement commission-based wages and therefore do not pay overtime. Third, employees' right to training is not guaranteed. Due to high turnover in small and medium commercial service enterprises, companies dare not train employees. According to enterprises, many young employees born in the 80s and 90s immediately change jobs if dissatisfied, causing significant problems for training and management.
4. Several suggestions
(1) Strengthen policy support for the commercial service industry and create a system environment conducive to the development of small and medium commercial enterprises. Carefully study the current problems faced by commercial service enterprises, formulate tax incentive policies favorable to small and medium commercial service enterprises, and promptly introduce the specific policy proposed in the "Twelfth Five-Year Plan" to "implement the encouragement of equal pricing for electricity, water, steam, and heat used by the service industry as for industry," reduce operating costs, and create a relaxed policy environment for the development of the commercial service industry, enabling it to better play the role of expanding employment and guiding upstream industrial development.
(2) Establish a service platform for small and medium commercial service enterprises, improve service mechanisms, and guide the orderly and healthy development of small and medium enterprises. Establish and improve service platforms and institutions in the commercial service industry for information tracking, policy guidance, supervision and management, and credit archives for small and medium enterprises, grasp the survival and development status and problems of small and medium commercial service enterprises, and guide their orderly and healthy development. Establish and improve the credit system for small and medium commercial service enterprises, expand the scale of loans to small and medium enterprises, increase financial support for loan interest subsidies and guarantee institution subsidies, focusing on solving financing difficulties and insufficient working capital for small and medium enterprises. Strengthen special governance on enterprise burdens, cancel unreasonable administrative fees, simplify and standardize the registration and establishment procedures and fee items for small and medium enterprises, and reduce their burdens.
(3) Establish and improve the distribution mechanism for small and medium commercial service enterprises to ensure stable growth of employee income. The government should carefully study policies and measures for wage distribution in small and medium enterprises to ensure relative fairness and justice. Strengthen the establishment of industry associations and trade unions, especially in bathing, beauty and hairdressing, and laundry industries, actively carry out the formulation of labor quotas and labor standards in different industries, vigorously promote regional and industry-wide collective wage negotiations, establish and improve joint decision-making mechanisms for enterprise and industry wages, ensuring employees' income can grow steadily and share the fruits of enterprise development.
(4) Improve enterprise management level and overall quality, explore effective mechanisms to attract and retain talent, and promote enterprise development relying on talent. Fully utilize the roles of industry associations, higher education institutions, social forces, and training institutions, increase training for managers of small and medium enterprises, improve the quality of management personnel in small and medium commercial service enterprises, and guide enterprises to continuously improve scientific management, increase income and reduce expenses, and lower costs.