現金流危機 | The cash-flow crunch
約翰百德 (John BATTEN)
at 10:34am on 25th April 2020
In Australia, the 3-day Melbourne Art Book Fair was hosted by the National Gallery of Victoria; the following day the gallery closed, like other major galleries throughout the world, as a precaution against the spread of Covid-19. Photo: John Batten
(Please scroll down for English version)
The cash-flow crunch
by John Batten
My first art gallery was in a converted office in Sheung Wan in 1997 – sharing half the space with another business I ran from that office. Then, as the Asian financial crisis hit Hong Kong hard and rents fell, I moved in 1999 to a former ceramic goods shop in Peel Street, Central which I renovated. Spurred by better access to Central when the Mid-levels escalator opened, bars, restaurants and galleries had started opening and the area became known with its ‘SOHO’ moniker. The old bakeries, ceramic shops, Buddhist nunnery houses and shrines, barbers, grocery and laundry shops and some old style – like Gwai Yu – Chinese restaurants; all were still open then and were given a brief reprieve as the financial crisis kept property and rental prices in check.
SOHO in the late 1990s and early 2000s, like many places on Hong Kong island and around Kowloon, still retained its older shops and businesses dating back to the 1950s and 1960s: it had Hong Kong’s ‘old city’ ambience. All the SOHO businesses knew and supported each other by buying necessities locally. I particularly shopped at the archaic hardware shop on Caine Road, and, Mr Leung and his wife Grace’s curtain and handyman shop, which is still in the area, but now down a back alley off Aberdeen Street. I usually ate at one of the four local cha chan teng or dai bing for breakfast and coffee. All four have now closed, their former premises now bars, restaurants or ‘boutiques.’
My favourite cha chan teng was on the corner of Elgin Street and Peel Street; its outdoor sitting area always just catching the afternoon winter sun. Many artists and visitors over the years joined me for coffee and a snack there – it was our local coffee shop before any of the western-style cafés had opened. At the very start of the SARS outbreak in 2003, I popped in, as usual, to be greeted, as usual, by a gruff, from one, and a friendly “hello” from the other waiter. That morning, the two waiters also joked about the face masks their boss had given them to wear. I was the only customer. A few days later, I was still their only customer and the staff were no longer joking – they quickly understood that having no customers was a threat to their own jobs.
I returned to Hong Kong last week, after spending five weeks in Australia. Over those weeks, I watched Australia’s complacency towards the Covid-19 virus, then grudging awareness, and then a hurried, urgent response as the virus spread around the world. Australia’s pivotal moment of reckoning was on 11 March 2020 when the World Health Organization declared a pandemic – a term that simply means that Covid-19 is now spreading not just locally, but regionally and world-wide. The WHO’s belated upgrading of the Covid-19 emergency was triggered by the alarming increase of infections in Italy, Iran and Spain, indicating that the virus was now spreading outside Asia. Arguably of greater shock for Australians was the cancellation of a major sporting event. A few days after the WHO announcement, the Formula 1 motor racing Australian Grand Prix in Melbourne was cancelled on the morning of the first practice rounds as thousands of fans were waiting to enter the speedway track. A day later, social distancing measures and crowd restrictions at larger audience events were quickly ordered by government agencies. As experienced in Hong Kong, social services and recreational facilities were immediately closed, and major cultural and sporting events cancelled. Overseas, borders were rapidly being closed; and, the USA and Europe began a lock-down as airlines severely cut back on international flights: no-one was or was able to fly.
The Australian media vigorously questioned why Australia’s health authorities and governments had not begun media health warning announcements earlier and imposed the sort of social distancing measures China, Hong Kong, Singapore, and South Korea had implemented two months ago.
As stock markets plunge and remain volatile around the world, the economic ramifications of the travel and economic chaos caused by Covid-19 is now hitting home. As anyone who has run a business knows, a healthy business is only possible with a positive cash-flow. Steady cash-flow means rental payments and staff wages are paid on time. Non-payment has legal ramifications that can force a business to close. No cash can lead to insolvency. When a single business fails, other businesses in the supply chain are adversely affected creating a domino reaction amidst their own cash-flow problems. Unemployment then enters the equation as the cash crunch affects individuals and families, particularly those with high debts, such as credit-cards and mortgages, to pay.
Governments world-wide are grappling to flatten-out Covid-19 infections by imposing quarantine and border closures, so hospitals and health systems are not overwhelmed by a spike in serious cases. However, governments must also tackle the consequences of a cash crunch on businesses and individuals, particularly casual workers (including artists, actors and freelance workers). If the Covid-19 crisis and restrictions on travel and free movement continues for much longer than another month, then, just like my cha chan teng waiter friends in 2003, no-one will be joking. The economic ramifications are dire: many of the businesses, including cafés, hawker stalls, newspaper stands, restaurants, airlines, cultural institutions and magazines – yes, magazines – that we all love in Hong Kong will close, simply because they don’t have the cash to pay their bills.
So, if you are in a reasonable financial position, continue supporting businesses, institutions and casual workers that you admire, to help get them through this unprecedented, universal cash-flow crunch.
This article was originally published in Ming Pao Weekly on 26 March 2020. Translated into Chinese by Aulina Chan.