The 2019 Novel Coronavirus (2019-nCoV) was first detected in Wuhan, China, in December 2019. At the time of writing, it has killed at least 362 people and infected more than 17,300 globally.
The 2003 severe acute respiratory syndrome (SARS) outbreak cost the global economy an estimated $40bn in just six months. While no one immediately knows the full impact on Asia of the coronavirus, some signs are already showing, especially with 62 governments imposing immigration control and travel restrictions on Chinese citizens, and people reducing their travel amid global travel restrictions and even locally.
Some Asian airlines may not survive, Alan Joyce, the CEO of Australian flag carrier Qantas, has said. In April 2003 at height of SARS, global airline traffic fell by 19%. Already, many airlines are suspending flights to China or grounding their planes. Hotels, travel agents and tour guides, which are experiencing many cancelled bookings, have all been affected.
Many hospitality companies are allowing guests to cancel or change reservations with no penalties. In some places, such as Langkawi in Malaysia, hotels have seen a 40% drop in tourist arrivals since the outbreak. In Hong Kong, it is estimated that four in 10 hotel staff may lose their jobs.
Also affected is the meetings, incentives, conferences, and exhibitions (MICE) industry. In 2018, Asia had the fastest growing MICE segment in the world, accounting for 28.4% of global revenue. China made up more than 55% of Asia market share and hosted 70% of Asian venue capacity. South-east Asia collectively made up 10% of the Asia market share.
Retailers, restaurants and gaming industries will be hard hit as consumers stay at home. Many retail stores that are remaining open have reduced operating hours. Also, some retailers’ channel partners have also closed their store fronts; for example, US tech giant Apple temporarily closed all of its 42 stores in China. McDonald’s, meanwhile, has closed all of its several hundred restaurants in Hubei province; China represents 9% of the fast-food giant’s global restaurant count.
Global coffee shop chain Starbucks has closed more than half of its China locations, saying the number of stores and the duration of closures are the two primary drivers of business impact: 2019-nCoV has also affected the global industrial supply chain.
China now makes up more than twice the share of global merchandise exports it did in 2003, and some manufacturers have shut their factories and offices. Thus, of the 17 UN Sustainable Development Goals, five that are immediately affected by 2019-nCoV are poverty (unemployment), health and wellbeing, economic growth, industry, and sustainable cities (especially those under lockdown). It has been a rocky start to 2020.
Lawrence Yeo is founder and principal consultant of AsiaBIZ Strategy, a Singapore-based management consulting firm providing Asia market research, business strategy development and export/FDI promotion services.