Retailers, manufacturers shutting doors, letting employees work from home as Wuhan viral outbreak spreads
- Retailers close shops as travel banned in eight Hubei province cities
- Many factories in Wuhan shut for Lunar New Year holiday, and questions remain whether quarantine will delay resumption of manufacturing
From Ikea to personal care manufacturer Beiersdorf, businesses are shutting their doors and telling employees to stay home in Wuhan, the epicentre of a viral outbreak that has killed more than three dozen and spread from China to as far away as the United States.
But, the question for corporate leaders is whether a travel ban in Wuhan and seven other cities in Hubei province amid fears over the spread of the coronavirus will keep workers home after the Lunar New Year holiday break, stifle the transport of goods from the logistics and manufacturing centre and keep consumers on the sidelines.
“The 2002-2003 experience from Sars [severe respiratory acute syndrome] disease suggests that if we assume a similar scenario, we could see some short-term impact on consumption and tourism for a few months, but it is unlikely to impact manufacturing/industrial sectors,” Suresh Tantia, senior Asia-Pacific investment strategist at Credit Suisse, said. “During the Sars breakout in late 2002, the public awareness rose in February-April 2003. During these months, China’s retail sales growth moderated, but exports/imports and fixed asset investment were stable.”
The Sars epidemic in 2003 afflicted more than 8,000 people in 37 countries worldwide and killed 299 people in Hong Kong.
Tanita said policymakers in China may be forced to step up monetary and fiscal easing to support growth if there is a slowdown in consumption in the mainland.