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No Customers, Closed Stores: Chinese Entrepreneurs Brace For The Worst Amid Coronavirus Outbreak

Zhou Yuxiang was not in the mood for festivities during China’s Lunar New Year holiday this year. The 30-year-old CEO of Shanghai-based software startup Black Lake Technologies had to figure out how to manage his company amid the country’s deadly coronavirus outbreak. Working from home to comply with local quarantine rules has lowered productivity, while expenses remained high as he still needs to pay rent even when no one is using the office.

What’s more, Zhou says, clients are slower to take on new contracts as factories remain shut and production is delayed, hurting his otherwise fast growth.

“This epidemic caused production suspension for a considerable number of factory clients,” he says, who counts 300 factory owners as customers of his cloud-based management software. “Unpredictability on when factories could resume production has increased uncertainty for our first quarter growth.”

As the deadly virus, temporarily called 2019-nCoV, shows no sign of slowing, China’s vast business scene is taking a hit. While some companies, including Zhou’s, hope to recoup any losses before the year’s end, others are suffering a much more devastating blow.

This is because the epidemic’s economic damage is far and wide. It is believed to be more contagious than the 2003 Severe Acute Respiratory Syndrome (SARS) epidemic, causing the Chinese government to impose nationwide mall closures, movie cancellations and factory shutdowns to prevent the disease’s further spread. As manufacturing and business activities cease, first quarter GDP growth will plummet to 3.8%—which equals to $62 billion in lost growth—and drag full-year GDP growth below 6% to 5.4%, according to UBS economist Wang Tao.

Sectors that are hardest hit include catering, entertainment, hospitality, retail and transportation. These businesses tend to have heavy inventory or a lot of expenses, but they can’t generate any meaningful revenue when people stay indoors.

Jia Guolong, founder of popular restaurant chain Xi Bei, told local media this week that his company only had enough cash for the next three months. He still needs to pay rent and salary to more than 20,000 employees, even when his restaurants are largely empty. To preserve cash, Hong Kong’s flag carrier, Cathay Pacific has asked its 27,000 employees to take three weeks of unpaid leave, warning that the condition is as grave as the 2009 global financial crisis. And fast-food operator Yum China is expecting negative impact on 2020 full-year sales and profit, after temporarily shutting down 30% of its stores in China.

While these larger businesses may eventually have the resources to weather through, smaller startups could experience a life-and-death moment. Zhang Yi, founder of Guangzhou-based consultancy iiMedia Research, says he won’t be surprised if a wave of bankruptcies occur. And Wang Ran, founder of Beijing-based investment firm CEC Capital, urged startups to do whatever they can to survive.

“Downsize if you need to, relocate if you need to and lay off people if you need to,” Wang wrote in a recent blog post. “Only those who lived through this can see spring, and have a future.”

Beijing has put out rescue measures. The country’s central bank, the People’s Bank of China, announced on February 2 that it would pump $174 billion worth of liquidity into the markets to help cushion the impact. Local governments have called for rent deductions and more flexible salary arrangements, with the Shanghai municipal government promising tax and insurance refunds to employers who don’t engage in layoffs.

But analysts say business survival may ultimately depend on whether the virus can be contained. Since originating in the central Chinese city of Wuhan in December, it has spread across the country, infecting more than 28,000 people and killing over 500. There are now coronavirus cases around the world, including Japan, Thailand, Germany, the United States and the United Arab Emirates. The World Health Organization declared the outbreak a global health emergency and dozens of nations, including Italy, Singapore and the U.S., have placed travel restrictions from China.

“The longer this drags on, the bigger the damage,” iiMedia Research’s Zhang says. “If it lasts for another month, then it would be unbearable for any business.”

Startups are doing what they can to minimize damage. Black Lake’s Zhou is offering discounted services, especially to clients who are based in the most affected areas. Zhou Wenyu (not related to Zhou Yuxiang), founder of Shaoxing-based software startup Youshupai, is slowing down marketing activities and transferring its first quarter sales goal to the second quarter. And Joanne Tang, founder of travel and marketing agency Infinite Luxury, says she is diversifying to other Asian markets while reminding overseas-based clients not to reduce efforts in China.

“For sure, we are in a challenging time,” Tang says. “We have to monitor how it goes, but we won’t be standing still and just wait until this is over.”

I am a Beijing-based writer covering China’s technology sector. I contribute to Forbes, and previously I freelanced for SCMP and Nikkei. Prior to Beijing, I spent six months as an intern at TIME magazine’s Hong Kong office. I am a graduate of the Medill School of Journalism, Northwestern University. Email: ywywyuewang@gmail.com Twitter: @yueyueyuewang

Source: No Customers, Closed Stores: Chinese Entrepreneurs Brace For The Worst Amid Coronavirus Outbreak

CNBC’s Eunice Yoon reports on how the coronavirus outbreak is expected to take a serious toll on China’s economy. Expect supply disruptions as China takes measures to contain an ongoing coronavirus outbreak, says REYL Singapore’s Daryl Liew. “The sharp action taken by the Chinese government to basically delay workers going back to work is definitely going to cause some supply disruptions,” Liew, who is chief investment officer at REYL Singapore, told CNBC’s “Street Signs” on Thursday. With the virus infecting at least 7,700 and killing 170 in China, authorities have taken measures to curb the disease’s spread. At least three provinces have declared that businesses, other than some essential industries, are barred from resuming work before Feb. 10. In Hubei province, where the majority of cases have been found, resumption of local business has been delayed till at least Feb. 14. A “big question mark” remains over how long the disruptions could last, Liew said, as it depends on whether the situation can be contained. That comes as manufacturing numbers were showing “some normalization,” he added. “It’s a bit of a lagging indicator but the December ISM numbers have all been broadly positive, especially for Asian economies … which suggest essentially that global trade is normalizing. It’s not bouncing back significantly but it is rebounding,” Liew said, adding that that has translated to better manufacturing numbers. “The current virus … and the extended shutdown in China will definitely put a crimp to that,” Liew said. Potential impact on US businesses The outbreak has sent tremors across markets in Asia and beyond in recent days, as investor concerns about the potential economic impact grow. “We’re concerned that there could start to be … some overall impact on the Chinese economy which could lend itself, from a sentiment perspective, to greater concerns … for the global economy,” Shannon Saccocia, chief investment officer at Boston Private, told CNBC on Thursday. That could spillover into the performance of U.S. businesses at a time when the “strain of lower production” is being felt stateside, Saccocia said. “If we start to see that upended by the fact that factories aren’t opening and … we’re not able to get the components that we need from the Chinese economy, you know, that could … certainly slow any sort of manufacturing reacceleration that we were hoping for in the first two quarters of 2020,” she said. The Chinese city of Wuhan, the capital of Hubei province, is the epicenter of the outbreak, and authorities have placed multiple cities in the province under partial or complete lockdown. Wuhan and the surrounding region of Hefei and Jiangsu are major manufacturing hubs that work with American firms. But they have also been shut down due to the virus outbreak. “As an investor, you need to understand … where the supply chain starts and ends and factor in to your expectations … for those companies,” Saccocia said, though she acknowledged that it’s “a little early” to “paint the picture that half of the year is going to be meaningfully lower from a growth standpoint due to this virus.” For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://www.cnbc.com/pro/?__source=yo… » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC #CNBC #CNBC TV

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U.S. and Others Enact Strict Travel Restrictions as Over 12,000 Coronavirus Outbreak Cases Confirmed

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The U.S., Australia, Japan, Vietnam and Singapore have announced strict travel restrictions against visitors flying in from China, even as the World Health Organization (WHO) has recommended against “limiting trade and movement” as a response to containing the new coronavirus. The respiratory illness has killed more than 250 people in China and infected thousands within the country and dozens beyond its borders, prompting the WHO to declare a global public health emergency.

The total number of global confirmed cases of infection has risen to 12,024 as of Saturday and the death toll is at 259, according to a virus tracker maintained by researchers at Johns Hopkins University. In Hubei province, the epicenter of the outbreak, more than 7,100 cases have been confirmed.

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The Trump Administration declared a public health emergency in the U.S. on Friday, announcing that any foreign national who “poses a risk” of transmitting the virus would be temporarily denied entry. The administration maintained that risk to the American public remained low but said it would ban entry to any foreign national who has been in China, barring immediate family of American citizens and permanent U.S. residents.

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This week, Japanese officials reported the country’s 20th case of the virus and said that Japan would ban foreign nationals who have been to Hubei province within two weeks before their arrival. Those carrying Chinese passports issued in Hubei are also banned from entering the country, although special exceptions may be made, government officials said, according to Japan Times.

Australia will ban travelers who have visited or transited through mainland China from Saturday onwards for the next two weeks. The restrictions will not apply to Australian citizens, permanent residents and members of their immediate family, although these groups will be asked to isolate themselves for two weeks from when they departed China, Australian Prime Minister Scott Morrison said on Saturday, according to the Sydney Morning Herald.

Additionally, Singapore has banned all travellers arriving from mainland China who had been there in the past 14 days from entry and transit by Sunday morning. The U.S. Federal Aviation Administration says that Vietnam has suspended almost all flights from and to mainland China, Hong Kong and Macau until May 1, according to the New York Times.

The new infection figure surpasses the tally of worldwide cases of the severe acute respiratory syndrome (SARS) during the 2002 and 2003 outbreak. SARS had nearly 8,100 confirmed infections and killed nearly 800 people.

As the deadly virus spreads, a growing number of airlines including British Airways, Air France, Delta and Lufthansa are suspending all flights to China. Many have cut down the number of flights, and some have stopped flying to major cities.

American Airlines announced Friday morning it would also suspend all flights to China, just a day after a union representing 15,000 American Airlines pilots sued the company to pressure the carrier to halt flights. The Allied Pilots Association cited “serious, and in many ways still unknown, health threats posed by the coronavirus,” adding that the risk posed to staff and passengers is “unacceptable.”

As several countries are evacuating their citizens from Wuhan, China organized three flights to bring home more than 300 Hubei residents from abroad, according to Chinese state media.

Although the vast majority of cases have occurred in Hubei province, the disease has also spread to over a dozen countries, including the U.S., where eight cases have been confirmed by the Centers for Disease Control and Prevention (CDC). On Thursday, the CDC announced the first case of the disease transferring from person-to-person within the U.S.

Sweden confirmed its first case of new coronavirus on Friday — a woman who recently visited Wuhan, according to Reuters. Spain also confirmed its first case of the virus on Friday, a German who had contact with patients who tested positive for the disease in Germany, Reuters reported.

Experts are skeptical that official numbers capture the full extent of the outbreak. Researchers in Hong Kong have warned that the actual number of people infected in Wuhan could be more than 30 times higher than the official tally. It’s unclear how long the outbreak will last and how bad it may get.

Experts say symptoms can be very difficult to detect and that many of those who died from the disease had underlying health conditions that involved weakened immune systems, like hypertension, diabetes or cardiovascular disease. They note that there is still a lot to be learned about the virus’ origins, clinical features and severity. Chinese health officials have said that the virus can be transmitted by touch, that young children can be infected and that the disease’s incubation period is usually between three to seven days.

A taskforce in China is coordinating the efforts to contain the disease and as of Tuesday morning, 4,130 medical staff from around China had arrived in Hubei province; it is expected that a total of 6,000 will arrive. At least two makeshift hospitals created to respond to the virus are being constructed in Wuhan and national health officials have said more than 10,000 beds will be ready in Wuhan soon.

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The construction of one hospital is more than halfway complete and is expected to be attending to patients on Feb. 6. A second hospital is expected to be functional from Feb. 5, according to state media.

On Wednesday, state media reported that nine tons of emergency medical supplies provided by Japan arrived in Wuhan. A government committee to respond to the virus held a meeting on Wednesday and said the situation is still severe. The Chinese New Year public holiday has been extended in an effort to keep people at home. By Thursday morning, more than 900 tons of medical and living supplies, including masks, protective suits and disinfectants, had been transported by road and air to Hubei Province, according to state media. As residents struggle to obtain masks, the Chinese city of Xiamen has decided to sell masks through a lottery, Chinese state media reports. (Health experts say that wearing face masks is probably effective in Wuhan — the epicenter of the crisis — but not in countries with a low risk of community spread, like the U.S.)

American response

From Sunday at 5 p.m. ET, flights from China to the U.S. will be funneled through seven airports with enhanced health screenings, the White House announced on Friday. They include Los Angeles International Airport, John F. Kennedy International Airport, Hartsfield-Jackson Atlanta International AIrport, Honolulu International Airport, Chicago’s O’Hare International Airport and Seattle-Tacoma International Airport.

Americans traveling back to the U.S. from Hubei province 14 days before returning to the country will be subject to up to 14 days of a mandatory quarantine, Secretary of Health and Human Services Alex Azar told reporters at a White House press briefing. Any American citizens who were in mainland China 14 days before returning to the U.S. will have to undergo a “self-imposed” quarantine for 14 days.

Following travel alerts from the U.S. Department of State and news of human-to-human coronavirus spread in the U.S., the CDC had announced that it will quarantine 195 passengers who were repatriated back into the U.S. from the disease’s epicenter in Wuhan, China.

The passengers were evacuated from Wuhan and taken by plane to March Air Reserve Base in California. But around 1,000 Americans still remained in the city, and many said they felt abandoned by the U.S. government.

The CDC announced Friday that all of those individuals who were brought to March Air reserve Base must stay there for 14 days, in an effort to contain the spread of the novel coronavirus within the U.S. Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases, called the rare step a necessary response to “an unprecedented public-health threat.”

The State Department has encouraged Americans in China to consider leaving; it is not clear how the CDC will handle future flights returning from China. “The Department of State has requested that all non-essential U.S. government personnel defer travel to China in light of the novel coronavirus,” the Level 4 Travel Advisory said.

The State Department alert on Thursday, which puts China in the same travel category as Afghanistan, Iraq, Syria and North Korea, acknowledged the WHO’s declaration earlier in the day that the Wuhan coronavirus outbreak was a global public health emergency.

Azar indicated that China had been much more transparent in its handling of the novel coronavirus compared with the SARS response; the Chinese government had been accused of covering up SARS. “The posture of the Chinese government and levels of cooperation and interaction with us is completely different from what we experienced in 2003 and I want to commend them for that,” Azar said.

The stock market has also taken a hit, as major US indexes fell more than 1% on Monday; the Dow Jones Industrial Average dropped as many as 500 points, the Associated Press reported. On Wednesday, U.S. Federal Reserve Chairman Jerome Powell referred to the coronavirus outbreak as a “very serious issue” but said it was too early to know the extent of economic damage in China and globally, according to the AP.

WHO declares global health emergency

The WHO reconvened an emergency committee and declared a global health emergency Thursday about a week after saying it was “too early to do so.”

The WHO’s Director General Tedros Adhanom Ghebreyesus said at a press conference that the decision was “not a vote of no confidence in China,” which he praised for a swift, transparent and effective response to the “unprecedented outbreak.”

“The main reason for this declaration is not because of what is happening in China but because of what is happening in other countries,” Tedros said. “Our greatest concern is the potential for the virus to spread to countries with weaker health systems, which are ill prepared to deal with it.”

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Tedros said the WHO opposes “any restrictions on travel and trade and other measures against China.”

The organization highlighted concerns about eight cases of human-to-human transmission in four countries — Germany, Vietnam Japan and the U.S., as well as the “rapid acceleration” of confirmed cases of the disease.

The WHO said it has asked member states to share standardized data with the organization on a daily basis so the organization can work towards building a “comprehensive global database” to track the disease’s evolution.

International cases and response

At least 132 patients have tested positive for the illness across 23 countries, according to the WHO. The majority of cases outside China are associated with travel to the mainland, and of those, the most involve visiting Wuhan, the agency says.

Russia and the UK confirmed cases of coronavirus on Friday. In the UK, two people who are members of the same family have been infected, according to the National Health Service.

“We have been preparing for UK cases of novel coronavirus and we have robust infection control measures in place to respond immediately,” said Chief Medical Officer Chris Whitty in a public statement. “We are continuing to work closely with the World Health Organization and the international community as the outbreak in China develops to ensure we are ready for all eventualities.”

Russia also has confirmed two cases, according to Russia Today, citing Deputy Prime Minister Tatiana Golikivoa.

The Philippines, Italy and India confirmed their first cases of the deadly virus on Thursday. In India, a student from the southern state of Kerala who attends a university in Wuhan tested positive for the virus, while in the Philippines, a 38-year-old woman from Wuhan was diagnosed despite being reportedly asymptomatic.

There are also at least 19 confirmed cases in Thailand, 18 in Singapore, 12 in Hong Kong, nine in Taiwan, seven in Macau and nine in Australia. Governments and health officials in Japan, Nepal, Canada, Cambodia, Vietnam, South Korea, Malaysia, Sri Lanka, UAE, France, the UK, Italy, Russia, Sweden, Spain and Germany have also reported patients testing positive for the virus.

Several countries have tightened their borders to restrict the flow of mainland Chinese visitors. Hong Kong announced Tuesday that it would deny entry to individual travelers and close a high-speed rail that connects the city to Southern China. Singapore said Friday it is banning visitors with recent travel history to mainland China.

Russian Prime Minister Mikhail Mishustin said Thursday that Russia would be closing its land border with China from Friday at least until March 1, the Associated Press reported.

Mongolia’s official news agency has said the country closed border crossings with China on Monday, according to the Associated Press.

7,000 people were stuck on a cruise ship in Italy in a port near Rome as a couple was being tested for the virus, according to CNN.

In a bid to curb the spread of the deadly virus, Hong Kong announced Tuesday that it will deny entry to individual travelers from the mainland, dramatically expanding a ban that had previously applied only to visitors from Hubei province. The semi-autonomous city will also sharply reduce cross-border transit, shutting down rail and ferry service to China, halving flights and decreasing tour buses. Several border checkpoints will also close in what Hong Kong’s leader Carrie Lame termed a “partial shutdown” during a livestreamed press conference. The measures went into effect on Jan. 30.

Singapore has banned the entry and transfer of travelers holding passports issued by China’s Hubei Province from Wednesday onwards.

Chinese authorities have said they will suspend tour groups and travel packages.

Multiple countries are also warning against unnecessary travel to China, and some have already started evacuating their citizens from Wuhan.

A group of 21 Spanish citizens were evacuated and flown from Wuhan and landed in Madrid on Friday, according to Spanish media.

Two government-chartered planes carrying more than 300 Japanese citizens from Wuhan arrived on Wednesday and Thursday. At least three Japanese citizens on the flight tested positive for the new coronavirus, according to local media.

The British government confirmed that an evacuation flight from Wuhan’s airport to the UK can depart on Friday at 5 a.m. local time.

Pakistan has chosen not to evacuate Pakistanis in China after learning that four Pakistani students in China tested positive for the virus. State health officials have said they are “monitoring the situation around the clock.”

Two planes would be mobilized to repatriate E.U. citizens from the Wuhan area to Europe, according to the European Commission. The E.U. said it would co-finance the transport costs; the first aircraft was scheduled to leave from France on Wednesday and a second plane will leave later in the week. Authorities estimated that about 250 French citizens would be transported in the first flight and more than 100 E.U. citizens from other countries will be on board the second aircraft.

Wuhan travel restricted

Chinese officials have shut down travel in and out of Wuhan — home to 11 million people — and enacted similar, strict transportation restrictions in a number of other cities. Immigration authorities said on Monday that no passengers have left the Chinese mainland over the past four days through the Wuhan Tianhe International Airport or the Hankou Port. China’s Hubei Province has also suspended services to apply for passports and exit-entry permits.

The head of the health commission of the Chinese city of Huanggang was sacked Thursday night, the South China Morning Post reported.

Videos appearing to originate from Wuhan show residents chanting from their homes, “Wuhan, stay strong” as cases across the country continued to increase.

Apple said Saturday it would close stores, corporate offices and contact centers in China “out of an abundance of caution,” the New York Times reported.

High school students have turned to online classes to prepare for exams.

Wuhan’s mayor acknowledged that information was not disclosed quickly enough at the virus’ outset, and said he is willing to resign if it would help contain the outbreak.

Authorities have also banned all forms of wildlife trade and implemented strict regulations on activities related to wild animals. The virus was first detected as a form of viral pneumonia centered on a seafood market in Wuhan on Dec. 12. Many of the first reported cases were people who worked at the market, which also sold wild animal meat. Officials closed down the market.

So far, no deaths from the virus have been confirmed outside the Chinese mainland. The city of Beijing reported its first death on Monday and last week confirmed that a 9-month-old tested positive for the disease.

CDC confirms first human-to-human transmission in the U.S.

The U.S. Centers for Disease Control and Prevention confirmed an eighth case of the new coronavirus in the U.S. on Saturday. On Friday, the CDC announced that they had detected the disease in California in a patient who recently returned from Wuhan.

The CDC has now confirmed eight cases of the coronavirus infection in the U.S. — one in Arizona, one in Massachusetts, three in California, one in Washington state and two in Illinois.

On Thursday, the CDC announced the first case of the novel coronavirus transferring from person-to-person within the U.S. — a Chicago resident in his 60s who had not traveled to China recently. The patient is married to an Illinois woman whom the CDC previously confirmed as testing positive for the virus.

The man has an underlying medical condition but public health officials would not elaborate on what he suffered from.

The agency said as of Friday that 241 individuals across 36 states were considered to be “persons under investigation” of which more than 100 had so far tested negative for the disease.

“Given what we’ve seen in China and other countries with the novel coronavirus, CDC experts have expected some person-to-person spread in the US,” said CDC Director Robert Redfield “We understand that this may be concerning, but based on what we know now, we still believe the immediate risk to the American public is low.”

The CDC’s travel precaution is currently at a level three, recommending that travelers avoid all nonessential travel to China because of the disease.

Companies tell employees to work from home, avoid travel

Companies across China are taking precautions, as well. Chinese gaming giant Tencent and the tech company ByteDance, which owns the app TikTok, have told staff to work from home, according to the BBC.

The co-working company WeWork is temporarily shutting more than 50 offices across China, it said in a statement on Tuesday.

Facebook has stopped non-essential travel to China, and Starbucks is temporarily closing some of its China stores, according to Bloomberg. Several major cruise lines have also suspended some voyages leaving from China.

Flight attendants working for Cathay Pacific, Hong Kong’s flagship airline, will be allowed to wear facemasks while working.

In Hong Kong, the government notified its workers on Monday that all workers except essential public servants and emergency services personnel can work from home until Feb. 2.

By Sanya Mansoor , Amy Gunia and Jasmine Aguilera

Source: U.S. and Others Enact Strict Travel Restrictions as Over 12,000 Coronavirus Outbreak Cases Confirmed

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