Health and Science

US companies suspend China operations, restrict travel as coronavirus outbreak spreads

Key Points
  • Disney, McDonald's, Starbucks and other U.S. companies with significant exposure in China are suspending operations as they respond to the outbreak of the coronavirus.
  • Starbucks said it has closed all shops and suspended delivery services in China's Hubei province, where Wuhan is located.
  • The municipal government of Shanghai also issued a notice Monday ordering companies not to resume work after the Chinese New Year holiday until Feb. 3, instead of Jan. 31.
Visitors wearing masks walk past Shanghai Disney Resort, that will be closed following the outbreak of a new coronavirus, in China.
Aly Song | Reuters

Disney, McDonald's, Starbucks and other U.S. companies with significant footprints in China are suspending operations and instituting travel restrictions as they respond to the outbreak of the coronavirus.

The virus has now taken the lives of at least 82 people in China and sickened 2,900 worldwide, including in the U.S. and Europe.

The Centers for Disease Control and Prevention confirmed Sunday a fifth U.S. case, and President Donald Trump has said the U.S. has offered help to China. U.S. health officials said Monday they are monitoring 110 people across 26 states for the coronavirus, including the five patients who contracted the infection in China and brought it back to the U.S.

In an effort to control the spread of the virus, Chinese authorities have suspended public transportation in Wuhan, the epicenter of the outbreak, and in at least nine other cities, Reuters reports.

As the virus continues to spread throughout China and across borders, it's hitting businesses around the world. The municipal government of Shanghai issued a notice Monday ordering companies not to resume work after the Chinese New Year holiday until Feb. 3, instead of Jan. 31. As a result, the Shanghai stock exchange will remain closed until Feb. 3.

All 3 major U.S. indices fell by more than 1% in intra-day trading Monday as investors reacted to the outbreak.

The travel sector is at substantial risk when public health threats like the coronavirus emerge, said CEO of the World Travel and Tourism Council Gloria Guevara, who was the tourism minister for Mexico during the H1N1 outbreak.

She said 90% of the economic cost of the outbreak "is not related to the virus. It's related to the panic," and it can take between 10 months and 19 months for tourism and spending in an area to fully recover from a local outbreak.

Most of the consequences of an outbreak like this are caused by mismanagement, lack of communication and panicked responses, Guevara said. She pointed to the SARS outbreak of 2003 as one example, saying it cost the global economy between $40 billion and $60 billion and cost China 2.8 million jobs.

"The management of the crisis is crucial. They need to be proactive and transparent. They need to work closely with the private sector and we need to not panic," she said of international health officials. "They need to contain the spread of the virus and we fully support that, but at the same time we need to take the necessary measurements to protect the sector."

Each U.S. company is responding to the situation in its own way: suspending operations, restricting employee travel, canceling holiday celebrations and more. Here's how some companies have responded so far:

Entertainment

  • Disney closed its Shanghai Disney Resort on Jan. 25, and it will remain closed until further notice. The company added on Sunday that it will temporarily close its Hong Kong Disneyland Park.
  • MGM Resorts said it scaled back a Chinese New Year celebration at its Macao resort this past weekend.
  • Royal Caribbean announced the suspension of two scheduled voyages, on Jan. 27 and Jan. 31, for its only ship home-ported in China.

Autos

  • Fiat Chrysler said it has restricted travel to Wuhan as well as 10 other Chinese cities, adding that the number could change as the situation evolves.
  • GM said last week it has placed a temporary restriction on travel to Wuhan, where the company has a manufacturing base as part of a joint venture with China's SAIC Motor.
  • Ford Motor has suspended all business travel to Wuhan, a spokesman said, but the Detroit automaker has not suspended travel to other parts of China.

Retail

  • Walmart, which has more than 400 retail locations throughout China, said last week it is following official recommendations but did not say if it has closed any locations.
  • McDonald's announced it suspended operations in Wuhan and its surrounding cities where public transportation has been shuttered. The company also announced measures to monitor the health of its employees throughout China.
  • Starbucks said it closed all shops and suspended delivery services in China's Hubei province, where Wuhan is located.

Travel

  • Delta Airlines announced Friday in a press release that it will allow travelers with flights booked to, from or through Beijing or Shanghai until Jan. 31 to change their itineraries without paying a change fee.
  • Airbnb is offering free cancellations on bookings for users who made a reservation in Wuhan from Jan. 21 until Jan 31. They will also offer cancellations if a user is being diagnosed or is suspected of having the coronavirus at the airport, port or train station.

— CNBC's Leslie Josephs, Amelia Lucas, Michael Wayland, Sarah Whitten, Dawn Kopecki and Reuters contributed to this report.

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