Coronavirus casts long shadow over 2020 business: Page 2 of 2

February 11, 2020 //By Peter Clarke
Coronavirus casts shadow over 2020 business
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.

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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