How coronavirus is hitting global business | FT

Coronavirus has sent a
shiver down the spine of the global economy. What started as
a crisis in China is now a worldwide
health emergency. And companies are being
hit in three key ways – disrupted supply chains,
a squeeze on consumers, and limitations on how
and where people work. China is the world’s workshop. When its factories are closed,
global business suffers. The tech and auto sectors
have been hit especially hard. China accounts for 30 per
cent of global exports of electronic and
electric components. Apple warned that revenues
for the first quarter of 2020 would fall short, partly
blaming the lockdown of the Chinese factories
that build its iPhones. Samsung has flown components
from China to its smartphone making facilities in Vietnam
because truck drivers have been stopped at the border. Exports of car parts
made in the country have trebled in the past decade. And engine exports
have risen four times. Global carmakers have all
said coronavirus closures would hit their just-in-time
manufacturing processes. Jaguar Land Rover has
taken to transporting essential components
in suitcases from China to its factories in the UK. Coronavirus is also
a serious challenge for consumer facing businesses. For luxury brands in
particular the disappearance of Chinese buyers is
a potential disaster. They account for as much
as half of global sales. Big brands rely heavily
on consumers in China. And Chinese tourists
are heavy spenders on Fifth Avenue and
the Champs-Elysees. Analysts say a 10 per cent
drop in Chinese spending in the first half of this
year could hit annual profits by about 4 per cent. The outbreak has also
grounded corporate travel for many companies. Airlines had already
cancelled flights, issued profit warnings, and seen
their share prices plunge even before coronavirus
spread to Europe. Now, some multinationals
have suspended trips to countries where there
has been an outbreak. Others have cancelled
travel altogether. But the impact isn’t just
hitting those on the move. In some markets, staff have
been working at home for weeks. Remote working is
becoming popular. But it also throws up
management challenges when everyone is doing
it at the same time. The impact on global
business was bad enough when the virus was
primarily in China. Now that the health emergency
has spread to every continent, the challenge for
business is even greater.

3 thoughts on “How coronavirus is hitting global business | FT

  1. UK Government is purchasing Green Belt Land for Plague Burial Pits and stockpiling Quick Lime for when we enter the mass death phase, also 5 Million Syrian Refugees entering Europe due to incompetence of the EU, many will carry the new Plague and diseases like smallpox and TB…close the UK Borders now!!!

  2. These times reveal (undress) how fragile and devastating the current globalised capitalism is. A world economy that is vulnerable to the slightest changes. Let the domino effect do its job now and destroy millions of people's lives.

  3. This has already caused irreparable damage to the world economy, but we just haven't really started to feel it yet. COLLAPSE IS COMING!

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