Some American companies are seeking to cut their reliance on China as coronavirus outbreak disrupts production, crimps revenue

Revenue in China will fall in 2020 if the coronavirus continues to disrupt work through April, said half of the respondents in AmCham China’s survey

Some US companies are shifting out of China, with 28 per cent polled saying they are setting up, or using alternative supply chains, according to a separate survey by AmCham Singapore

Reading Time:4 minutes

Employees on a photovoltaic solar panel assembly line at Risen Energy in Ningbo in Zhejiang province on February 21, 2019. Zhejiang Daily via Reuters

Published: 8:00pm, 27 Feb 2020Updated: 10:59pm, 27 Feb 2020

American companies expect their 2020 revenue to take a beating in China, as the ongoing coronavirus outbreak disrupts production and crimps consumption, prompting some of them to seek alternative supply chains to reduce their reliance on the “world’s factory,” according to separate surveys by the American Chambers of Commerce in China, and Singapore.

Sales in China will fall in 2020 if the coronavirus continues to disrupt output through April, said half of the respondents in AmCham China’s survey of 169 members between February 17 and 20. One in five companies polled see their 2020 revenue sliced by more than 50 per cent if the outbreak extends through August.

Some US companies are shifting out of China, with 28 per cent of respondents in AmCham’s Singapore survey saying they are setting up, or using, alternative supply chains to reduce their reliance on China. The Singapore poll, released a day before AmCham China, covered 225 members between February 12 and 18.

The two readings underscore how the coronavirus outbreak, which has sickened more than 82,137 people and killed 2,800 around the world – 95 per cent of the afflicted are in mainland China – has further unsettled a global economy that is still trying to adjust to the year-long US-China trade war.

China’s economy, the world’s sixth-largest with 4.3 per cent of global output in 2003 when the severe acute respiratory syndrome (Sars) outbreak starting from Guangdong province sickened 8,098 people in 17 countries, has since grown into the second-biggest, making up 16.5 per cent of worldwide production last year, according to IHS Markit.

A child with a protective mask riding on a scooter in a deserted shopping centre in Beijing’s Sanlitun on 26 February 2020, on what should otherwise be a bustling week day in one of the busiest areas of the Chinese capital. Photo: EPA-EFE