Disney, Tesla, more than a dozen airlines and other global companies with significant footprints in China are suspending operations, temporarily shutting factories and instituting travel restrictions as they grapple with the coronavirus outbreak that's derailed commerce in China and sent global markets spinning.
Infections from the virus skyrocketed this week, topping 11,000 as of Friday and surpassing the total number of infections from the nine-month SARS outbreak in less than a month. The World Health Organization formally declared the pneumonia-like virus a global health emergency on Thursday, citing concern that the outbreak continues to spread to other countries with weaker health systems. U.S. officials followed suit on Friday, imposing mandatory quarantines on U.S. citizens who have recently traveled to the Hubei province, the epicenter of the outbreak.
Local governments in China have extended mandatory factory shutdowns for the Lunar New Year from Jan. 31 to Feb. 9, impacting U.S. companies from Walmart to Tesla. Analysts are beginning to sour on companies with exposure to China, pressuring some stocks. A slew of companies this week warned investors that as the impact of the virus continues to spread, and institutions respond, it threatens to disrupt sectors from travel and retail to technology that look to the Chinese market for consumer demand or cheaper manufacturing in China.
Most of the economic cost of the outbreak "is not related to the virus," said CEO of the World Travel and Tourism Council Gloria Guevara, who was the tourism minister for Mexico during the H1N1 outbreak. "It's related to the panic," and it can take between ten 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 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:
The airlines sector is feeling the immediate impact of the coronavirus. Demand for travel to mainland China has plummeted as the virus spreads. Many airlines reduced service to mainland China earlier in the week, but after the State Department placed a "Do Not Travel" warning on China Thursday, airlines began to cut service entirely to the mainland.
Similarly to airlines, entertainment companies with offerings in China are responding to the outbreak by suspending service. Disney has closed both its Shanghai resort and its park in Hong Kong. Meanwhile, cruise lines with ships in China are halting service and refunding customers. Here's how major entertainment companies in China are responding:
Tech companies this week warned shareholders on their quarterly conference calls about how coronavirus might impact their bottom-lines to kick off the year. Production at Tesla's new Shanghai factory has helped boost the stock over the past few months. The factory, Tesla told shareholders this week, will remain closed amid the outbreak. Here's how other tech companies are responding:
Car manufacturers have said the outbreak likely won't hit U.S. consumers or substantially impact company operations. However, the largest car companies all have exposure in China whether it be through manufacturing or supply chain. Here's how the biggest manufacturers are responding:
Stores throughout the country are suspending operations and extending the Chinese New Year holiday for employees. The hardest-hit provinces have released official recommendations for company operations there, with some calling for suspension of operations and reduced hours at factories and stores. Here's how store owners are responding: