More companies were dissolved in the first three months of 2023 than in the last quarters of the same year, with the exception of 2021. Financial companies also fell in number and, above all, registered a drastic drop in share capital. Economists do not sound the alarm: data may not represent economic reality, but a good sign is certainly not
17,960 were formed during the pandemic, with accumulated share capital of more than 22.6 billion patacas. In the same period, between the last quarter of 2019 and the first quarter of 2023, 1,037 were dissolved, with share capital of 602 million.
The year with the highest number of incorporated companies was 2019, with 6,140. However, it was in 2022 that the highest share capital was recorded, accounting for more than the remaining four years together (14.9 billion). By the way, it was the year under analysis where there was also more capital coming from the interior of China (66.6 percent).
Most of the companies incorporated have the purpose of wholesale and retail trade (8,372), not far behind those created to provide services to companies (6,595). Numbers that do not vary much when compared to the period between 2015 and 2018.
As for the origin of the capital, it is mainly concentrated in Macau, followed by the interior of China and Hong Kong. In China, the biggest contributors are the nine Chinese cities integrated into the Greater Bay Area. In this first quarter of 2023, more companies were created compared to the same period last year. However, there is a decrease in the number of companies incorporated to carry out financial, IT and related activities, which explains the negative year-on-year change in the total share capital aggregated to incorporated companies (96 percent less). Is it bad news for economic diversification, particularly through the finance sector? “To have some confidence in the answer, more disaggregated data was needed. With this exception, it is a sign that deserves attention, not least because it is the only segment in contraction. It suggests reservations in relation to the development of the sector, even in a context of economic recovery”, says José Duarte, economist.
At the same time, dissolved companies increased compared to the first quarters of 2022, 2020 and 2019 – with the exception of 2021. Could this fact be a bad omen for the year that is now beginning? In theory, no. Economists interviewed by PLATAFORMA consider that these numbers may not represent reality, but neither do they reveal anything positive.
“It is premature to say that it is a bad omen. But it is certainly not a good omen. The Covid-19 years weighed heavily and will continue to weigh heavily. It is natural that there are companies that have reached their resistance limit, or that do not see great opportunities for recovery in the framework that is being drawn. But here, too, it would be necessary to carry out a more detailed analysis”, acknowledges José Duarte.
Associate professor at the Faculty of Business Management at the University of Macau, Xinhua Gu, believes that “the local situation is similar to that seen in mainland China.
It may just be a post-pandemic overcoming process before returning to the reality observed in the pre-pandemic period”. The economist does not hide his optimism in this transition phase, but warns that a lot depends on “the relations between the major economies at an international level not deteriorating”.
Another interviewee, whose request to speak anonymously was accepted by PLATAFORMA, says that these indicators “do not fully explain the economic reality” of Macau. This points out that, if on the one hand there may have been, in fact, many companies closing; on the other hand, “I believe that many also close for tax reasons”.
