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The impact of the coronavirus (COVID19) is not only affecting the human lives, which all of us are mainly scared off, but also effects China and the global businesses, especially supply chain companies.
In order to get an idea how damaging the coronavirus is, analysts and economist are looking at the SARS virus in 2003, which also originated in China. However, in that time China has grown from the sixth’s largest economy to the second biggest economy. China has been a main growth contributor worldwide, with the International Monetary fund estimating that China alone accounted for 39% of global economic expansion in 2019. Therefore, China is nowadays much more developed and integrated in the global economy than 17 years ago. This means that the supply chain implication goes beyond national borders and a virus has a much greater impact than it has in 2003.
A massive impact can be seen at the automobile industry due to the fact that the Chinese car supply industry is massive and that a car cannot be built with only 99% of the parts. Jaguar Land Rover has only warned recently that they could face a shortage of parts soon as supply is halted in China. This could lead to stopping the production line in all 3 plants in Great Britain, which would result in loosing even more revenue as Jaguar faces already no sales in China.
Another industry, which faces an impact is the technological industry. Apple, the world-famous company, made recently clear that they may not hit their sales forecasting ($63bn and $67bn) for the second quarter due to the uncertainty of the coronavirus. Its supplier Foxconn has recently switched to produce face masks in order to satisfy the global demand, but now faces problems to get back to the iPhone production.
We can only certainly hope that the coronavirus epidemic slows down in order to save not just our lives but also our global economy.
Anna’s Business Blog 