The outbreak of the (COVID-19) coronavirus, which has not yet received a clear treatment and name, is called by the Chinese authorities a killing epidemic. The number of deaths and the number of confirmed cases of infection are growing with time. Fear is in every street, Impact of Coronavirus on Business. The economy is getting down rapidly. The death number is in the thousands, even though 11 million people live in Wuhan, and more than a billion in China.
All over the world, we see thousands of people losing their lives. Business activities are shrinking day by day. We need to find alternatives otherwise further destructions in the shape of hunger will arise everywhere.
Fall in Stock Markets:
Nevertheless, the topic does not go down from the forefront of the largest media in the world, and stock markets – both Asian and global – are sensitive to panic. Over the past week, the Chinese CSI 300 lost more than 4%, the Shanghai Stock Exchange index – almost 3.1%, the Dow Jones – more than 1%, and the price of a barrel of Brent fell by almost 10%. The consequences for the second economy of the world are mentioned by CNN correspondent in Hong Kong Cheriss Fam.
Global Economy & Global GDP
Foreign media compare the new coronavirus primarily with the severe acute respiratory syndrome, or SARS, whose epidemic claimed hundreds of lives in Asia and many in North America in the early 2000s. According to one estimate provided by the BBC, the virus cost the global economy recorded approximately $ 40 billion and it slowed global GDP growth by 1% approximately. Nevertheless, the epidemic was localized, and since 2004, not a single case of SARS has been recorded in the world.
Revenue for 400 Companies decreased
Impact of Coronavirus on Business More than 400 companies have reported the negative impact of coronavirus on profit volume. The number of companies is still bigger because coronavirus is still taking lives everywhere.
The epidemic may adversely affect profit in the first quarter. This was announced by several hundred companies around the world, including Apple, Nike, LVMH, and McDonald’s
Thus, 421 companies in their income statements for the first quarter of this year indicated that the rapidly spreading coronavirus in China could adversely affect financial results worldwide. Of these, 394 are based in the United States.
Most of all, the negative impact of coronavirus on business (damaging the local and international brands) was reported by Yum China Corporation, which is the largest fast-food restaurant chain in China. Under its management, there are restaurants of different brands such as KFC, Pizza Hut, and Taco Bell.
The fashion and luxury sectors also suffering
Among companies providing services in the fashion and luxury sectors, Louis Vuitton Moët Hennessy (LVMH), Capri Holdings, and Estee Lauder have also reported adverse effects on profits. The fashion industry is one of the most powerful professions but coronavirus proved it wrong.
Also, we see multiple reports of the negative effects of coronavirus on profits in the first quarter of the year which was made by Tech giants Apple, Nike, Starbucks, McDonald’s, and others.
AliExpress Also Down
A lot of AliExpress buyers are also in confusion. They may get their purchased parcels with a delay due to the extension of the New Year holidays and the coronavirus. Marketplace sellers have already asked buyers to cancel orders. And it’s a great loss even for Asian sellers as well who belong to Pakistan or Indonesia.
No More Starbucks
Big brands are closing down their operational activities in major countries and cities. Starbucks decided to close down over two thousand coffee houses in China due to an outbreak of coronavirus. And then we witnessed the plan was followed and there was no work for employees working in those coffee houses. It is reported by Bloomberg.
Impact of Coronavirus on Business – It is noted that throughout the country, Starbucks has more than four thousand associated offices. In China, this company has the second-largest market after the United States.
Earlier on January 25, the Starbucks coffee shop chain suspended operations in the Chinese province of Hubei, where nearly 60 million people live, due to the threat of the spread of infection. A similar decision was made the day before by a chain of fast-food restaurants McDonald’s.
Similarly, there is no international trade because the travel facilities are almost ended. Health safety measures seem weak against coronavirus. No country is ready to trade with other countries. Local small businesses are also closed down. Workers who earn on daily basis are finding it almost impossible to feed their families. The conditions are going out of control.
Limited Flights Operations with EU
Limiting flights with the EU threatens a wave of bankruptcies of tour operators. The World Travel and Tourism Council estimates that up to 50 million travel workers in the world may be without work. The Union of Exhibition Developers, which includes about 40 companies involved in the construction of stands at exhibitions and forums, suffers major losses due to the cancellation of almost all events.
Losses due to Cancellation of Exhibitions
Losses that have already been incurred are in the range of millions of dollars, only at already canceled exhibitions. And what will this lead to in the future? Maybe the figure will increase two to three times.
A real big trial is going to be started in the month of March-April 2020. And for the whole exhibition industry, it simply can act worse than even tourism. Because in our industry, almost 95% of customers are postpaid.
Impact of Coronavirus on Business, In these conditions, almost all exhibition companies are on the brink of ruin. Because customers refuse, of course, to post-pay for canceled exhibitions. And since the exhibition companies do not have any means of subsistence, now a cut down in several employees will begin. And according to careful estimates, up to 20 thousand people will be on the streets.
The fight against the spread of coronavirus and its consequences is gaining momentum. And in this struggle, government agencies and commercial companies have to make difficult choices. As said Xi Jinping, general secretary of the Chinese Communist Party, the most affected by the epidemic today: “The main value for us is human life and health.”
If there is sustainability in people’s health, then there will be business activities. If the conditions are safe for foreigners to travel anywhere in the world, then the businesses will resume otherwise governments are going to face real tough conditions in the next few months.
Financial Support to compensate for damages
Some governments are claiming that support will be given to companies in the field of tourism and transport, which are most affect by the outbreak. However, the conditions are getting worse as days are being pass. The authorities are also considering helping affected industries if they suffer serious damage. The Ministry of Finance and the Ministry of Trade and Industry are trying to introduce different alternatives to manage the big losses.
Extreme Recession in financial markets
Chinese markets lost up to 10 percent at the opening of trading on Monday after the Chinese New Year holiday. Also, significant losses were note in the markets of Japan, Australia, and Singapore.
International Tarde Damage
Singapore’s economy is heavily dependent on international trade. Singapore also often hosts international conferences. However, the spread of coronavirus has been going on for more than a month, which leads to the closure of stores, and the cancellation of flights, events, and hotel reservations throughout Asia.
Initially, countries in the region carefully monitored the possible economic consequences of the outbreak in China. Apple and Disneyland temporarily stopped serving customers on the mainland, and many neighboring countries have imposed entry bans.
Supply Chain Violations due to coronavirus
However, over time, it became clear that the economic consequences could be longer-lasting. Starbucks, Toyota, Royal Caribbean Cruises, and several other companies have partially suspended operations in China.
The State Bank lowered interest rates to support the economy. China is also an important supply chain for many foreign companies, so now everyone will suffer.
This is especially true for the technology sector. Concerns over supply disruptions have affected shares in companies such as Sharp and Foxconn (an iPhone component supplier). Overall the situation is not good for almost all countries. In the start people considered coronavirus as a local epidemic, they took it lightly.
Ultimately, coronavirus affected many countries. It started killing people. We did not take safety measures in the beginning, that’s why today there is a big disaster. Now, we are all trapped in this vicious circle of fear.
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Big Losses in the travel industry
The countries neighboring China are also concerned about the sharp decline in the flow of tourists from China. Usually, during the festive period, many Chinese tourists come to the island of Phuket in Thailand, and without them, the local economy could lose up to $ 1.5 billion, according to the forecasts of the Thai Ministry of Tourism.
In Singapore, against the backdrop of the outbreak, a sharp decrease in tourist flow was also note, a fifth of which is in China.
According to Natixis Investment Bank, Singapore, along with Hong Kong, Macau, and Taiwan, is one of the most popular destinations that can be most affected by a coronavirus. The conditions are not going to be better in the coming one or two weeks. It needs months to compensate for the losses.
According to the forecasts of bank analysts, the consequences for the regional and global travel industry will be more serious than in the past. It can affect the lives of millions of people. We should note that after this epidemic there is another phase of recovery. Economic stability and health safety precautions are going to demand huge costs and efforts from each government.