Shanghai is in crisis: 1 056 million restaurants closed in the worst first half of the year

If you've ever been to China, you might remember that restaurants are everywhere, but that is no longer the case today. According to data from Tianyuancha, a Chinese business and commercial information query platform, 1.056 million Chinese catering related companies closed in the first half of this year. The large scale closure of restaurants began in 2023 with 1.359 million closures that year. From January to June, 2024, in just six months, this data is close to last year's total. Let's first take a look at the videos uploaded by several bloggers on social media, showing the current situation of restaurant closures in cities such as Shanghai and Kunming. Now opening a store is like giving away money. This is the center of downtown Shanghai. No, 1 Y-High Road. Come and feel the current business environment. I ran from the first floor to the third floor, and there were more than two stores on each floor that had closed down. At this time last year, this place was still fully rented. It's only been less than a year. What do you think? In the first half of this year, 1.056 million restaurants closed down, which is close to the total number of last year. The situation is not optimistic. This is a catering street in the county town. It used to be very crowded. Let's take a look at the shops here. Lease, rent, transfer, landlord direct lease, Shandong barbecue transfer, vegetable supermarket transfer, and lease. This place is also selling electric cars. The vacant room at the corner of the intersection is rented at a low price. It is very difficult to do the catering business in Linshui this year. I have run a porridge shop at the location of Turtle Monument in Linshui for seven years, and I have never seen such a fierce wave of closures this year. To be honest, the Rujiamo restaurant opposite, his Rujiamo is delicious. We often buy it to eat, but it finally closed down, and I don't know why. The braised pork rice in the Cantonese restaurant is selling well, and we also like it, but it finally closed down. What do you think is going on? Look at the Maokai restaurant that is also closed down. The photo studio is no longer in business, and there is also this store. The stores over there have all closed down. When can these stores be rented out? Another Chinese blogger named Stahl King posted a video on July 17, introducing the current situation of the largest new city center in Kunming, Yan'an province. He said that the vacancy rate of closed stores in the entire shopping mall has reached 85%. July, August, and September are the peak seasons for catering, but can this year's peak season be prosperous? If you are in the catering business, you will succeed in one fell swoop if you don't lose money this year. If you can still make a little profit, congratulations, you have already beaten 50% of your peers. Just halfway through this year, 1.05 million restaurants have closed down, close to the total of last year. Many new and inexperienced restaurants closed down in two or three months, losing hundreds of thousands of dollars at lightning speed. Among them, hot pot restaurants are the hardest hit. In the first half of the year, 22,000 stores were registered, of which 26,000 closed down, and more than 4,000 stores lost money. Behind me is the largest business district in Kunming, known as the new center of the city, with an annual passenger flow of about 13 million. Let's take a look at such a large business district. For our physical merchants, how is the current situation? Let's take a look together. They're closed down, closed down, closed down, barbecue, hot pot. This whole large area is about 300 square meters. They used to be connected together, but now they are all closed down. This row of them are all closed down, Chaoshan Beef, and this one are closed down. The closure rate of the entire mall has reached 85%. There is almost no business. Many friends said that if it is not Saturday, there will definitely be no people. Even if there is less traffic on Wednesday and Thursday, it will not affect its closure. You may say that there is not much traffic on weekdays, but it is now in a state of closure. In such a mall, only big brands such as Haidilao may survive. The economy is in serious recession in the mainland. This situation may become more serious this year, in the second half of 2024, and in 2025. There are many cases where restaurants invested millions of RMB, but closed down within three months. The following video shows the boss talking about his feelings after the failure of his restaurant. He said that he would never do catering again. This is a barbecue restaurant where I invested 1 million RMB, which is $138,000 US dollars. Unfortunately, it closed down in less than three months. Many people advised me not to open this skewers restaurant, but I chose to open it without hesitation. I only saw others making a lot of money and never thought that it would fail. At that time, the rent for this restaurant cost nearly 200,000 RMB, which is $28,000 US dollars. The decoration and equipment cost hundreds of thousands of RMB. I dreamed every day that it would be enough to make tens of thousands of RMB a month, not to mention more. Unexpectedly, after opening, the income was not enough to cover the daily rent. The highest daily turnover was 2,000 RMB, which is less than $275 US dollars. I hired more than a dozen employees and waited three months to resell it, but no one was willing to take it over for a long time. Today, it finally ended. Looking at all this, I told myself that I would never do catering again. Why did a large number of restaurants close down? Ms. Liu, a resident of Shandong, said in an interview with Radio Free Asia not long ago that because residents could not find jobs and lost their source of income, they lived frugally. All walks of life are in recession. The prospects are not particularly good now. Ordinary people dare not spend money in order to cope with the situation that they have no choice. Therefore, the consumption pattern of ordinary people has changed. They cannot see hope or the future, but they have to maintain normal expenses. When spending money, they must first make comparisons and secondly, make budgets, such as for children's education, living expenses, and medical costs for themselves or the elderly. The depression of the catering industry is the most direct manifestation of the reduction in income of Chinese residents. Whether ordinary people go to restaurants for meals can be seen at a glance. In order to survive in this difficult environment, the Chinese catering industry has launched poor man's combo. For example, the well-known Chinese fast food brand Nanjing Xiang launched a three yuan or 40 cents buffet breakfast, claiming that for only three yuan, you can drink unlimited porridge, milk, soy milk, and other breakfast drinks. There are also restaurants that offer a two dish and one rice set meal for 14.9 yuan or about two US dollars. Tea chain stores also offer a $1.35 bread and milk tea combination. A hot pot restaurant owner, Sister Shai, introduced in a video that her hot pot restaurant's turnover fell 50%. Sister Shai found that both old and new customers rarely patronize the store. The turnover was sometimes less than 10,000 RMB. And at seven o'clock in the evening, the seats outside were still empty. Today's order was only four tables and the business of the whole street was also bleak with almost no customers in the neighboring shops. Taiwanese businessmen withdraw, Fujian's Taiwan town becomes a ghost town. The Henan authorities begged Foxconn not to leave. Pington is not a tourist attraction. The reason why the Chinese Communist Party authorities established a Taiwan town in Pington, said Wu Jialong, a Taiwanese macroeconomist, is because Beijing originally had an undersea railway and highway transportation route planned from Pington to Hsinchu, Taiwan. It was known as a transportation route from Beijing to Taipei. The starting point of the undersea tunnel was Pington. Pington itself has no significant construction and there is no tourism. However, recently some netizens visited Pington and saw that the streets were almost empty. The shops were closed and only a few shops were still open. It seems that the Chinese government's plan has failed. Some netizens left comments saying that if Beijing really wants to show goodwill to Taiwan, it should directly withdraw the more than 1,000 missiles deployed in Fujian. Other netizens also said that the one country, two systems policy that the Chinese government has implemented in Hong Kong has failed. Beijing's credibility is gone and Taiwanese are not stupid. Who will believe in Beijing again? Currently with rising production costs, trade tensions and geopolitical risks, many Taiwanese businessmen have turned to Vietnam, India and other places to build factories. Last year, Taiwanese investment in China fell by 40% and investment in Fujian plummeted by 80%, both hitting the lowest levels in 22 years. In recent years, Foxconn, founded by Taiwanese tycoon Terry Gu, has also set its sights on India and Vietnam and has continued to increase investment in these countries. As Foxconn adjusted its layout and began withdrawing, Henan's imports and exports suffered a serious decline. In the first quarter of this year, the number of mobile phone exports in Henan province dropped sharply by 61% year on year and the export value dropped by 62% year on year. Foxconn was the company that had the greatest impact. According to data previously disclosed by Customs, Foxconn's import and export volume in the first quarter while Henan's foreign trade decreased by 48.4 billion RMB. In other words, Foxconn alone turned Henan's foreign trade data into a negative number. A netizen described Foxconn like this. One company prospers a city. According to incomplete statistics, as of May this year, Foxconn has provided more than 3.5 million jobs in Henan. This is a huge number and it will be difficult for the Henan government to find another partner to replace Foxconn if it completely leaps. Labor markets are overcrowded with the unemployed. 460,000 businesses went bankrupt. Beijing is like a ghost town these days. The malls are empty and it's hard to find anyone out and about on weekends. Places that used to be packed with people now sit deserted. China's economy is in a slump and Beijing's is rapidly declining. Even Guizhou, once bustling with activity late into the night, now closes up before nine. It's like the streets are deserted with pedestrians almost floating through the air. Once vibrant restaurants now line up rows of empty plastic chairs and even the wide streets of Dongxiamen are eerily empty. It feels like New Year's Eve, but without the festivities. Even the famous Sanlitun is now desolate. Beijing residents lament the stark contrast from the past where students, migrants, and young workers were drawn to the city. The environment and location of this particular shop are still excellent, but there's hardly anyone around. Tourists visiting Beijing reminisce about the bustling World Trade Center, now a shadow of its former self. The overall business environment is bleak with many shops closing down. It's a tough situation for small businesses, especially in the food industry. There's a wave of closures happening in various retail stores across the country. Being the first membership store in Shanghai, Metro China's Hutai Road Store has now closed its doors, leaving many card-holding customers feeling bewildered. The Metro Hutai Road Store, which opened in November 2022, suddenly closed for renovations. Over two months have passed, and there's still no further news. Amid the uncertainty, Ms. Xue, a Shanghai resident, is considering canceling her membership, but she's disappointed that she'll only get a partial refund of her 199 yuan membership fee. As China's economy continues to decline and consumer purchasing power sharply decreases, industries are engaging in fierce price wars, leading to a wave of store closures nationwide. Since mid-October 2023, following Alibaba's subsidiary, Hema Fresh's announcement to launch a comprehensive supply chain optimization, more and more retail companies have joined the trend of discounting. In the first six months of 2023, 106 Carrefour supermarkets controlled by Suning.com holdings ceased operations. In December of the same year, Carrefour China closed its first supermarket in Shanghai, Tsuyang Store. According to incomplete statistics, from January 2023 to the present, at least 13 RT Mart stores have closed or announced closures, affecting several provinces including Hunan, Jiangsu, Hubei, and Sichuan. RT Mart is a large chain retail store from Taiwan. The closure and renovation of the Baoshan Metro membership store means uncertain times ahead. The days of enjoying free parking at Ryugwing while shopping at Metro are now just memories. This physical mega supermarket in Ningbo has finally closed, and the scene on site is unbearable to witness. The Yiwu old labor market back in the day was truly a bustling scene, with crowds of people jostling to find work. Similarly, in Yiwu, Zhejiang, the labor market is swamped with hopeful job seekers, all converging in hopes of finding employment opportunities. To those contemplating the journey to Yiwu, Zhejiang, it's advisable to think twice. The situation there is already strained, and the influx of additional seekers will only compound the challenges faced by those already struggling to secure work. Guangzhou Labor Market Service Center. In the midst of China's economic downturn, there's a surge of job seekers flocking to the Guangzhou Labor Market Service Center, all eager to land a job. However, upon their arrival, they are met with a harsh reality check. There are simply no job opportunities available. The disappointment and frustration in the air are palpable, especially for migrant workers who lack the means to return home. It's truly disheartening to witness individuals being emotionally crushed by the grim realization of their situation. After traveling from Guangzhou to Ningxia to find a job, it's been five days, and I still haven't had any luck. I've run out of money, and I don't know what to do next. March is almost over, and I'm wondering if everyone's found a job yet. I'm still struggling. They say March and April are the best times to find work, but I've been to a few job fairs and haven't had any luck. It's not that I'm being too picky. It's just that there aren't many options out there. Besides washing dishes, delivering packages, or working as a security guard or cleaner, are these the only jobs available for people like us in our middle years? I refuse to believe it. Some compare me to the character Im Kang-Eiji, who won't give up his old clothes. I find that comparison hard to accept. I come from the countryside, and my parents have high hopes for me. They see me as their pride and joy. After all the years of studying, facing unemployment after just a decade of work and switching from a desk job to manual labor is tough to swallow. It feels like all those years of education were wasted. If I had known, I would have started working sooner. There's a saying that says you can't hire a laborer with 3,000 yuan, but you can hire a college graduate. And it's often true that college grads rely on the laborers who support them. Sometimes I wonder, what's wrong with our society? Are we not working hard enough? Are we not ambitious or diligent enough? In February, the youth unemployment rate in China rose once again, another sign of China's slow economic recovery. According to data released by the National Bureau of Statistics on March 20, the unemployment rate for urban 16 to 24-year-olds, excluding students, was 15.3% in February, an increase of 0.7% since January. The National Bureau of Statistics of China previously announced on March 18 that the National Urban Survey unemployment rate for February was 5.3%, up 0.1 percentage points from January. Last year, the Chinese government suspended the publication of youth unemployment rate data, citing the need to optimize survey statistics. The statistical method of the Chinese Communist Party to obtain the unemployment rate is rather unique. It only counts registered unemployed individuals with urban household registration, and those who are not registered are not counted as unemployed. Earlier economic data released by the National Bureau of Statistics showed continued economic recovery, with officials claiming comprehensive over-expectation with steady growth. Regarding unemployment rates relevant to the public, Lui Hua, spokesperson and chief economist of the National Bureau of Statistics, stated that favorable factors for promoting employment stability continue to accumulate. The government strengthens policies and measures to promote youth employment and optimizes employment and entrepreneurship guidance services. Despite the optimistic signals from the authorities, many netizens on Weibo remain unconvinced. They argue that the unemployment rate only counts those who have registered as unemployed and excludes those who haven't, suggesting discrepancies in the data. They emphasize the importance of observing real-life situations rather than relying solely on statistics. Zhang Qing, a Shanghai youth who graduated from a 985 university in June last year, stated that he can only rely on flexible employment as he cannot find satisfactory formal employment. He expressed his helplessness, stating that he should be included in the unemployment statistics, but if people like him were all considered unemployed, For Zhang Qing and others claiming to be part of the unemployed population, regardless of changes in statistical methods or optimized data, the reality is that young people cannot find ideal jobs, leading them to embrace a lying-flat lifestyle as a do-nothing youth. Under a long-term sense of despair about the future, posts about do-nothing youth have been circulating on WeChat moments, listing specific lying-flat behaviors such as not getting married, not having children, not buying houses, and not investing in the stock market. Zhang Qing joked that while the official emphasis is on economic stability and growth, the younger generation is stable and lying-flat and reluctant to stand up. According to statistics from the Chinese Ministry of Education, the number of graduates from regular colleges and universities in China is estimated to reach 11.79 million in 2024, a new high, indicating greater employment pressure this summer. Calvin Lam, a senior Chinese economist at Pantheon Macroeconomics in the UK, stated in written correspondence with Voice of America that China sees approximately 10 to 12 million graduates enter the job market each year. In previous years of good economic growth, private and state-owned enterprises could provide enough job opportunities for them. However, in recent years, with increased regulatory pressure on enterprises and a downturn in the overall economy, it has become increasingly difficult to integrate these new workers into the labor market. The employment landscape mirrors a broader crisis, exemplified by a sweeping wave of closures across various sectors, vividly illustrating the gravity of the economic downturn. Vacant office spaces lining urban streets and a sharp decline in rental rates serve as silent witnesses to the bleakness of our times. The shuttering of once-thriving eateries and stores translates directly into lost job opportunities. Reportedly, during the first half of 2023, China witnessed the closure of a staggering 460,000 businesses and approximately 3 million dining establishments, as per scant figures from mainland media. Economist David Wan, hailing from the United States, cautions that the immense strain on small and micro enterprises could jeopardize nearly 200 million jobs. These smaller entities, lacking the financial robustness and technological monopolies of their larger counterparts, are particularly vulnerable to economic pressures. Wan further contends that the bankruptcy of these enterprises amid the economic turmoil would have ripple effects, impacting both seasoned professionals and fresh entrants to the job market. Such a scenario threatens to sow significant instability within society. Moreover, given that small and micro enterprises contribute around half of the nation's GDP, their collapse would deal a severe blow to the overall economy. Adding to the woes, the disruption of critical supply chains resulting from these closures is poised to drive up prices, exacerbating the strain on livelihoods and exacerbating economic woes. Forbes China said that the total wealth of the top 100 rich people in China decreased from 907.1 billion dollar last year to 895 billion yuan, a decrease of 12.1 billion dollars. Analysts say that the burst of the real estate bubble, which has long driven economic growth in China, has caused the wealth of high net worth individuals with multiple properties to decline even faster. The withdrawal of foreign capital has also dealt a blow to China's economic growth momentum. Qin Songqing, director of the Center for New Economic Policies at Donghua University in Taiwan, said in an interview with Voice of America that, in addition to the slump in China's consumption after the COVID-19 pandemic, companies facing weak consumer demand are unwilling to invest and recruit, resulting in a very high youth unemployment rate. Weak consumption and private investment in China have led to deflation, making it even more difficult for families and businesses to repay their debts. Further exacerbating the pressure and becoming an inescapable vicious cycle. He said, of the three drivers of China's economy, exports, consumption, and investment, the only one that has performed relatively well is exports. China's General Administration of Customs announced a 7.1% year-on-year increase in the total value of exports in the first two months of this year, but this is due to deflation, resulting in a decline in export prices and a large amount of dumping abroad. He believes that this part may also be difficult to sustain, as countries such as Europe, the United States, and Japan have launched anti-subsidy investigations into some of China's major export products, including electric vehicles and solar components, so the role of exports in driving economic growth may also be limited.