Quite apart from the alarm and disruption that the coronavirus outbreak is causing in China, its rapid spread has forced global brands operating in the country to scale back their operations, close stores and restrict travel.
As of Thursday, 170 people have died from the respiratory disease and more than 1,700 cases have been confirmed, prompting brands to take steps to safeguard their employees and customers.
British Airways on Wednesday became the first major global airline to suspend direct flights to and from mainland China, the Financial Times reported, in a move followed by Germany’s Lufthansa, its Austrian and Swiss subsidiaries, and Indonesia’s Lion Air.
Coffee chain Starbucks has closed half of its 4,300 outlets in China, its second-largest market, while other fast-service brands, including McDonald’s, KFC, Pizza Hut and Taco Bell have closed stores, the Wall Street Journal reported.
Swedish furniture chain Ikea has closed all its stores in mainland China, Japanese fashion chain Uniqlo has closed about 100 stores, while Singapore-owned CapitaLand has closed six shopping malls.
Tech giant Google is closing all four of its offices in mainland China, as well as its offices in Hong Kong and Taiwan, and Amazon and Microsoft have also introduced measures to protect their staff.
Motor manufacturers have also been badly affected, especially as Wuhan, the epicentre of the virus, is home to several global brands, including Honda, Nissan, PSA and Renault, who have started to fly out their non-Chinese staff.
Meanwhile, General Motors and Toyota have announced that their manufacturing plants will stay closed until February 9th, while electric carmaker Tesla expects production at its Shanghai plant to be affected, denting first-quarter earnings.
There has been an inevitable impact on the hotel industry and several major companies, including FMCG giant Kraft Heinz and investment bank JPMorgan Chase have introduced employee travel bans to and from China.
“The economic pain is currently being felt by businesses dependent on travel and tourism,” Mark Williams, chief Asia economist at Capital Economics, told the Financial Times. His firm estimates that China’s growth rate could halve in the first quarter.
“The longer ... factories and businesses in China remain closed, the more production will be affected too, and this will ripple out to suppliers and customers outside China,” he added.
Sourced from Financial Times, Wall Street Journal, BBC, Inside Retail Asia; additional content by WARC staff