Coronavirus casts long shadow over 2020 business

Coronavirus casts long shadow over 2020 business
Market news |
The Coronavirus epidemic is expected to have a significant impact on the Chinese economy in 2020 even if the measures taken by the Chinese state to date control its spread.
By Peter Clarke

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The death toll in China continues to climb with the Chinese government putting the nationwide figure on Tuesday (Feb 11) at 1,016 people, up from 908 on Monday (Feb 10). The number of cases of infection also grew, to over 42,638. The figure for the day before was put at 40,171.

And it remains unclear whether the few confirmed cases of infection with novel Coronavirus 2019 (nCoV-2019) seen outside China represent an easily extinguished spark, or the start of global epidemic. Several technology companies are taking no chances and have pulled out of imminent events citing employee health and safety as their reasons. Intel Corp. has joined ZTE, LG, Amazon, Nvidia and Ericsson in refusing to participate or exhibit at Mobile World Congress, which takes place in Barcelona, February 24 to 27.

The GSMA, the organizers, say the event will go ahead but are enforcing a no-entry policy for any would-be attendees that have recently been in mainland China. There have been no similar pull outs from the Embedded World exhibition that takes place February 25 to 27 in Nuremberg, Germany

The fatality rate for Coronavirus is thought to be 3 to 4 percent but it remains unclear due to the long incubation period. This is somewhat lower than the rates for SARS and MERS. In the outbreak of severe acute respiratory syndrome (SARS) in 2003 a total of 774 people died. But the mortality rate was 9.6 percent. For MERS the fatality rate was 34 percent.

To try and limit the spread of infection the Chinese state has moved quickly and severely with multiple cities on lock-down. But the lack of worker mobility is keeping a number of electronics and other plants idle. Having returned home for Chinese New Year holidays many workers are finding they cannot return to their city of employment.

Foxconn blocked


The Chinese government blocked a wished-for return to work by electronic manufacturing services provider Foxconn on Monday. Health officials inspected Foxconn factories in Shenzhen and determined there was a high risk of Coronavirus infection. Similarly the Foxconn plant in Zhengzhou that makes iPhones for Apple was prevented from re-opening, the reports said.

Foxconn employs a million people in China with many living in factory provided dormitories and at a considerable distance from their original home towns and villages. This makes Foxconn and similar manufacturers a potential hub for the spread of infection. A second week of enforced shutdown at Foxconn and other assembly plants would lstart to have a significant impact on China’s output, according to analysts.

But meanwhile domestic demand is also being inhibited in China and is coming off a muted recovery at the end of 2019.

The Coronavirus outbreak impacted Chinese New Year gift shopping in late January and is expected to have an adverse effect for the next couple of months at least, according to market analyst IDC. In the smartphone market the effect will be a drop of Chinese smartphone shipments by 30 percent year-on-year in 1Q20. This will also likely delay product launch plans and disrupt supply chain and distribution channels.

“5G handsets will require lower pricing, better 5G network coverage, and attractive use cases to create a good value proposition for consumers,” said Xi Wang, a research manager for IDC China, in a statement.

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WHO advice on Coronavirus

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