On Thursday 23rd January, Wuhan and other cities in Hubei were put on lockdown to stop the spread of coronavirus. Currently, around 45 million people in China are cut off from the rest of the world. In order to get a grip on the situation, the government had already extended the Chinese New Year holidays by 9 days.
But the images from the first official day of work do not paint an encouraging picture. Empty carriages on trains in Shenzhen and deserted streets of Shanghai show that things are far from normal.
When the South China correspondent for Reuters tweeted a picture of rush hour in Shenzhen, the metro appeared visibly empty.
— Simon Rabinovitch @S_Rabinovitch Feb 10th 2020
Citizens journalists in China are putting out similar reports.
Tough Times for the Chinese Economy
The virus outbreak has severely impacted the Chinese economy. Consumption is down and large New Year’s events have been cancelled. Cinemas and tourist attractions are closed. Hundreds of McDonald restaurants, 2000 Starbucks and 30 IKEA stores are all closed for business.
Factories in Wuhan are also not seeing much activity and the shrinking oil demand has forced China’s biggest oil refinery to cut the production by 600,000 barrels.
Coronavirus epidemic has affected the global manufacturing chain and the automotive sector in particular. Hyundai, for instance, announced it has closed its factories in South Korea due to the unavailability of components made in China.
Automotive is not the only sector affected by the Coronavirus scare. Retail is also feeling the brunt of the virus that has already taken more than 800 lives.
Meanwhile, Hong Kong’s tourism scene which was already suffering due to the protests has also taken a hit. Similar to how tourists cancel their visit to Australia in wake of the bushfires, travelers are now avoiding the once popular tourist’ destination.
Retail and Luxury Sectors Brace for the Impact
Wells Fargo analysts are concerned about the disruption in supply chain due to coronavirus outbreak and are warning of empty shelves.
In Europe, the shares of Louis Vuitton SE recently saw a 2.49% decline in early trading. Similarly, Compagnie Financiere Richemont SA and Kering SA were trading more than 3% lower in the morning.
In South Korean and Japanese Markets, the shares of companies ranging from travel and cosmetics have also underperformed. Since Chinese tourists are mostly known for buying designer wear and luxury goods abroad –coronavirus disrupting their travels will severely affect these industries.
Retailers might be forced to give discounts and websites like ClothingRIC might be come into play as brands make up for lost profit by targeting local consumers.
Misinformation May Lead to Increase in Consumption of Domestic Products in the USA
A new study published by The Lanclet contests some of the claims made by the Chinese government. The report suggests the virus and its spread among the citizens took off weeks earlier than what Chinese officials had previously said.
The researchers along with doctors working in Wuhan reviewed nursing records, lab findings, clinical charts and chest X-rays of the initial 41 patients with confirmed 2019-nCoV infections. Interestingly, their analysis revealed the first case wasn’t linked with Huanan Wholesale Seafood Market –which was initially pointed out as ground zero for coronavirus.
Questions about the severity of the outbreak, its origin and China’s ability to contain it have put pressure on the Asian markets.
With Chinese authorities holding back information, there’s a lot of distrust in the general public. Naturally, this leads to speculation about the extent of this virus.
People are concerned about the potential coronavirus transmission routes with some planning to stay away from Chinese products. NPR listeners are already asking whether they can contact coronavirus from a package delivered from China.
However, the Center of Disease Control and Prevention is already putting these concerns to rest. “Because of poor survivability of these coronaviruses on surfaces, there is likely very low risk of spread from products or packaging that are shipped over a period of days or weeks at ambient temperatures,” the CDC answered in a Q&A.
Meanwhile, Dr. Michael Ison of Northwestern University, who studies viral infections among transplant patients, is a bit more assertive. “It’s not going to be transported in a box,” he says.
In a bid to counter similar fearmongering around Chinese products, the German Federal Institute of Risk Assessment (BfR) has published detailed information of potential coronavirus transmission routes.
“Different respiratory tract pathogens can also be transmitted via smear infections. In those cases, pathogens located on the hands enter the mucus membranes of the nose or eyes, where they may lead to an infection” the reports explains.
Although the exact transmission method of the coronavirus is still limited, it’s now known that the important transmission route is a ‘droplet infection’. This is where coronaviruses are emitted in air by humans and animals via droplet and then inhaled.
But with emergence of fake news on social media and the general hysteria around the disease, many customers in the US will be inclined to pick homemade products over items imported from China.