China’s deadly outbreak of the Coronavirus virus has infected thousands and killed hundreds of people. This outbreak threatens to affect multinational businesses, global supply chain and financial markets. Consequently, China’s government have extended the Lunar New Year holiday to Monday 10th, February 2020. This has caused many companies to close their retail stores, corporate offices and manufacturing factories. In order to control the spread of the virus, travel between cities has been restricted.
The economic impact seems limited as travel and luxury goods appear most affected. Yet, the stock markets have struggled gravely, and the Chinese Renminbi has weakened compared to the US dollar. However, markets will only be able to gain a clear idea of the impact following the developments after the Lunar New Year holidays.
Major companies from food, fashion and technology industry have seen their business suffer.
Hyundai considered the world’s fifth-largest automakers had announced it will temporarily close its production lines at their factories in South Korea due to a shortage of the necessary Chinese parts.
Despite McDonald’s closing 3,300 of its restaurants, the company has stated the impact on its profits would be “fairly small” if the outbreak is contained.
Apple’s strong reliance on China has caused the company serious disruption within the supply chain. Amongst other international companies, Apple seems the most vulnerable as it has not diversified its manufacturing.
Apple has announced they are closing all of its stores and offices
The company stated they were developing plans to recover from lost production in Wuhan, where the top 200 suppliers based. But claimed it was harder to predict the consequences for the other factories. Apple is in the process of launching the low-cost iPhone SE which was released in 2016. The product was expected to ship in March but got delayed due to the disruption.
International law firms are equally going to be closed during the extended holiday. CMS Shanghai stated their lawyers would be working from home and will continue to if there is another extension put into place. Notably, this implementation is not represented as a major issue as firms are prepared to work remotely. Baker McKenzie has stated their lawyers do not need to go into the office unless there is a client meeting.
Likewise, Squire Patton Boggs Shanghai declared there was no major impact on office attendance as most of the work occurs via phone, email and video calls.
Ultimately, the coronavirus will have little impact in the shift of business as long as it is contained. If there are major concerns for clients and international trips, in the long-term firms may reconsider their presence in China.
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