Which global companies will be most affected by China's slowdown

[zakiyatasnim]

But tourism is just the beginning. Entire supply chains—automotive, electronics, industrial—are starting to creak. Shipping companies are reporting a sharp drop in container traffic. China also has a huge domestic market for retail and food and beverage. One indicator that fell sharply last week due to the virus was the price of coffee. Starbucks alone has 4,000 stores in China. Half of them have been closed due to the outbreak.


Many global companies rely on suppliers based in China. For example, 290 of Apple’s 800 suppliers are in China, and the country is responsible for 9% of global manufacturing. According to the DHL Resilience 360 ​​index, 50% of all manufacturing in Wuhan is related to the automotive industry, and 25% is related to technology equipment from the region.

Car companies in Europe and the US are warning that they are oman number data just weeks away from shortages.

To illustrate how integrated some foreign firms have become in China, consider the example of American industrial glass and ceramics maker Corning, which has built 19 factories across the mainland and employs more than 5,000 Chinese workers. The company plans to increase its footprint by spending $1 billion on equipment to produce the latest generation of 10.5 black glass used in LCD panels.

Apple is supplied by factories in China and has a network of 42 Apple stores. Other US retailers from Starbucks (4,200 stores) to Levi's have closed their stores, although Levi's has only closed half of its businesses and China accounts for only 3% of its global sales.

…and which countries?
Southeast Asia is most exposed because local economies are closely tied to the Chinese behemoth (it is worth remembering that Asia's worst post-war financial crisis in 1997-98 was partly blamed on the devaluation of the Chinese currency).

Japan may be a richer economy, but it too is taking a hit. China is a big buyer of Japanese industrial machinery, its cars, trucks and technologically advanced consumer goods. Chinese-made parts are going the other way, feeding components into Japanese factories.

And then there are the millions of Chinese tourists who visit their eastern neighbor every year. Japan is canceling the visits of 400,000 people in the first quarter of 2020.

Australia's economy is also closely linked to China, with Prime Minister Scott Morrison warning last week of a "real strain on the economy ." Even Australian universities are suffering as far fewer Chinese students return for the new academic year.

What can be done?
The Chinese government has moved quickly to address the economic impact of the coronavirus and take measures to contain it.

The People's Bank of China last week cut its key interest rate and injected huge amounts of cash into markets to help ease pressure on banks and borrowers. Officials also announced new incentives and subsidies designed to help consumers.