A total of 25 catering companies in Haikou, capital of Hainan Province, have lobbied for policy support from the government as their profit margins have been squeezed by rising costs and decreasing revenues this year, a local industry association said Monday.
"We received a jointly signed letter from 25 catering companies, calling for local authorities to cancel the imposition of a new price adjustment fund on the catering industry," a staff member surnamed Chen at the Hainan Provincial Association for Beverages, Hotels and Food told the Global Times.
Local catering companies have been engulfed by rising operational costs, decreasing revenues and a heavy tax burden, according to Chen.
The fund, which accounts for 1 percent of the catering companies' revenue, will add an extra burden for them, Chen said.
In the first half of 2012, catering companies' labor costs rose by 25 percent year-on-year; raw material costs grew by 23-25 percent; and revenues dropped by 25 percent, the association said, based on a survey of 50 catering companies in South China's Hainan Province.
Local catering companies need to pay around 30 kinds of tax and administrative fees, accounting for nearly 20 percent of their total revenue, according to the association, and some of the companies have to transfer part of their operational costs to consumers.
In February, several seafood restaurants in Sanya, Hainan Province were exposed by the media for selling seafood to tourists at ludicrously inflated prices during Spring Festival holiday.
After that, local authorities punished those restaurants for defrauding customers and strengthened supervision of the catering industry.
Catering companies in other provinces and regions have also felt the pinch. In Hunan Province, one-third of the small and medium-sized catering companies are finding it difficult to survive and many are on the verge of closing down, according to the Hunan Cuisine Industry Association.
In Xiamen, a popular tourist destination in Fujian Province, only 30 percent of local catering companies reported a growth in profits in the first half.
The growth rate in the domestic catering industry slowed down by 3 percentage points in the first half of 2012 from the same period in 2011, according to a report published by the China Cuisine Association (CCA) Friday.
"Compared to moderately growing costs, the main challenge for catering companies this year is decreasing revenues, especially in the high-end sector," Tian Guangli, an expert at Beijing-based consultancy Longce Think Tank, told the Global Times.
Tian said demand for business dinners has dropped significantly this year due to the country's economic slowdown, and this phenomenon is highlighted in some export-oriented provinces like Guangdong and property-fueled provinces like Hainan.
Meanwhile, the CCA has called for a cut in turnover tax rates for catering companies to 3 percent from the current 5 percent, as well as lowering bank card transaction fees in the catering industry.
"Supporting the catering industry could help local governments increase employment, develop agriculture and promote regional specialties," Tian said.
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