Global Business Development

The Coronavirus Impact on Doing Business in China Today – March 9, 2020

This blog is an update on the blog originally posted on February 26, 2020.

Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. Our company opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Needless to say, things right now are different than ever before.

As of February 20th, all flights from the US to China and most to Hong Kong were stopped and are expected to restart until at least May. Face to face business meetings stopped in February and have mot restarted as of the date of this blog. The Chinese are learning to work remotely.

Here are some recent headlines and articles that define what is going on in China as of this date:

The Chinese government is strongly encouraging businesses to start back up in Guangzhou and Shanghai. The quarantine restriction has also been loosened on these cities. But not as much in Beijing, where the central government is headquartered.

The U.S. Faegre Drinker law firm has a China office and sent out an email on March 6th that states ‘Most employers in China are slowly getting back to somewhat normal operations, with most employees gradually returning to offices and factories. There are several things that employers should know to maximize the speed with which they can return to normal operations and continue to work in the time of the coronavirus.” This timely information is at this link:

http://bit.ly/BacktoworkinChina

The CEO of a California company with two high tech factories in Eastern China says his staff both facilities are open again and staff is gradually coming back but have to go through a 14-day quarantine period before they can work.

The business volume index of China Logistics Prosperity Index (LPI) came in at 26.2 in February, down from 49.9 in January. Fung Business Intelligence 030420

“The Caixin/Markit services purchasing managers’ index (PMI) fell over 25 index points to 26.5 in February from 51.8 in January, with the figure adjusted for seasonal factors, including the Lunar New Year. The latest figure, the first reduction in business activity across China’s service sector since the survey began in November 2005, followed the larger-than-expected deterioration in the official and private sector manufacturing sector PMIs  to all-time lows in February.” South China Morning Post (SCMP) 030420

“The value of China’s exports for January and February fell 17.2 per cent from the equivalent period of 2019 to US$292.45 billion, as virus-related production bottlenecks and the extended holiday reduced output. Imports, however, fell by only 4 per cent to US$299.54 billion, due in part to a spike in shipments of food and medical supplies.” South China Morning Post (SCMP) 030720

Manufacturing activity in China sunk in February to its lowest level since managers were first surveyed in 2004. Wall Street Journal. 030720

“Exports to the United States plunged 27.7% in January and February to $43 billion, worsening from December’s 12.5% decline. Imports of American goods crept up 2.5% to $17.6 billion, but China still recorded a $25.4 billion trade surplus with the United States. China’s global trade balance fell to a $7.1 billion deficit for the first two months of the year.”  ABC News 030720

“China’s top eight ports, including Shenzhen and Shanghai, reported a nearly 20 per cent drop in container traffic in February from a year earlier, The eight ports account for over half of China’s trade in containers, suggesting that China’s trade last month also shrank by a fifth. SCMP 030520

“Starbucks® said the virus had reduced revenue expectations in its second-biggest market by at least $400 million for its current quarter. They expect same-store sales to drop 50% in its second quarter in China, as opposed to the 3% growth previously expected.”  Wall Street Journal   030520

It appears that the majority of Burger King®, Dairy Queen®, KFC, McDonald’s® and Starbucks® stores in China have reopened except in Hubei province (Wuhan),

We daily keep our thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. Contact Bill Edwards directly at bedwards@edwardsglobal.com or on +1 949 224 3896

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