How global companies are responding to China virus

GIVEN China’s economic heft and position at the nexus of global supply chains, the new strain of coronavirus is affecting companies far and wide and in multiple sectors.

Here’s how a selection of multinational brands are responding to the epidemic, which has forced many companies in China to stay shut into next week at least, well beyond the country’s Lunar New Year holidays:

Travel and tourism

The travel sector is most directly affected by China’s decision to quarantine dozens of cities and ban overseas tour groups, in a bid to contain the outbreak. Other countries have told their nationals to avoid travel to China and banned arrivals from there.

Leading carriers have cancelled all their flights to China including Air Canada, Air France-KLM, American Airlines, British Airways, Delta, Finnair, Lufthansa, United Airlines and Virgin Atlantic.

Hong Kong’s Cathay Pacific is suffering the biggest financial hit and this week asked its entire workforce of 27,000 to take up to three weeks of unpaid leave.

Casinos in Macau, normally a playground for the rich and the hopeful from mainland China, have closed their doors. So have Disney theme parks in Shanghai and Hong Kong.

Paris department stores, a de rigueur stop for Chinese tour groups, are unusually quiet, and luxury brands in Europe are growing more worried after protests in Hong Kong had already hit their performance in greater China.

Italy’s tourism market could face a hit of 4.5 billion euros this year, according to the think-tank Demoskopika.

MSC Cruises, Costa Cruises and Royal Caribbean have cancelled stops by their ships in China while others decided Friday to refuse any passengers who has been to China, Hong Kong or Macau in the previous 14 days.

Electronics

Taiwan tech giant Foxconn is telling some staff to stay away for up to 14 days, the incubation period of the virus, even after it resumes most production on February 10.

That could affect global supply chains for tech companies that rely on Foxconn to assemble everything from Apple’s iPhones to flat-screen TVs and laptops.

For its part, Apple is working on “mitigation plans” to make up for any production loss from its suppliers in China.

South Korea’s LG Electronics and Swedish group Ericsson have withdrawn from this month’s Mobile World Congress, the leading showcase for the smartphone industry, citing expert advice to avoid non-essential travel.

Chinese telecoms groups such as Huawei and ZTE say they will take precautionary measures and limit their presence at the February 24-27 conference in Barcelona.

Autos

Wuhan, the central Chinese city that is ground zero of the outbreak, is a hub for foreign carmakers from the United States, Europe, Japan and South Korea.

The extended holidays have limited the immediate impact on their production in Wuhan itself, but concerns are growing about spillover effects, including on auto suppliers around China.

Hyundai Motor says it is suspending all production in South Korea because of a lack of parts from China. Toyota has extended the closure of its Chinese plants to February 16.

French group Renault said it was suspending work at its plant in Busan, South Korea for four days in anticipation of supply problems from China.

Electric car pioneer Tesla says the virus could delay a planned acceleration of production at its giant new factory in Shanghai, and potentially affect earnings this quarter.

Food and beverage

Mainland China is the second-biggest market of US coffee chain Starbucks, with more than 4,000 outlets. Half of them have been closed by the outbreak.

Fast-food giant McDonald’s has closed all of its “several hundred” restaurants in Hubei, the province of Wuhan, but some 3,000 others in China remain open.

Pizza Hut and KFC are also suffering closures in Hubei province imposed by their Chinese parent company, Yum China.

Others

Sportswear giants Nike and Adidas have shuttered hundreds of stores in China and warned of a negative impact on their performance this quarter.

European plane maker Airbus has halted production at its plant at Tianjin, east of Beijing.

Heavy-equipment maker Caterpillar, which has already suffered from the Sino-US trade war, warned of “continued global economic uncertainty” this year.