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Quarantine of China virus epicentre leaves some businesses reeling

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China’s worst health crisis in years has sparked fear and uncertainty for businesses from North America to Asia that depend on trade in the affected region.

Experts say it’s too soon to know how disruptive the crisis will prove. But it’s already having an impact.

McDonald’s has shuttered restaurants in five Chinese cities, including the inland port city of Wuhan where the crisis is centered. Shanghai Disneyland has temporarily closed as a precaution. Restrictions on travel and fears of flying to the region are threatening to depress demand for oil and jet fuel just as China’s Lunar New Year is beginning.

In a sign of China’s vast economic reach, even niche companies in America have begun feeling squeezed. In Houston, Rockstar Wigs worries that production delays in China will hold up shipments. Omaha, Nebraska-based Home Instead Health Care has stopped sending caregivers to the homes of elderly clients in Wuhan.

So far, there are 830 confirmed cases of the virus and 26 deaths. Wuhan and 12 other Chinese cities are on lockdown, isolating a combined population of more than 36 million.

“Personally, I now cannot go to Wuhan to negotiate new orders, meet with new vendors, take foreign companies for supplier visits, and visit trade shows,” said Stanley Chao, a consultant in Rancho Palos Verdes, California, who helps foreign companies do business in China. “I may lose three to five trips to China, which is my bread and butter. In turn, my team in China cannot work, and I may have to temporarily lay them off for a while.”

The growing fears over the virus rattled financial markets Friday. The Standard & Poor’s 500 stock index endured its worst day since early October and snapped a two-week winning streak. The S&P index fell 0.9 per cent after having been down as much as 1.3 per cent earlier. Shares in airlines and other companies in the travel and tourism industries, which stand to be among the hardest-hit sectors if the crisis worsens, fell sharply.

So far at least, the virus appears to be less lethal than the SARS outbreak of 2003, which killed hundreds, though it is too soon to say for sure. And Beijing has apparently been more forthcoming about the health risks this time, leaving less room for panic-inducing rumors to take hold.

“The authorities are sharing more information,” said Kent Kedl, partner at the consultancy Control Risks responsible for Greater China. “They’re getting out in front of it.’’

Moreover, because the outbreak coincides with the Lunar New Year holiday, many businesses are closed as tens of millions of migrant workers return from big cities to their hometowns in the countryside.

Still, Wuhan is a central hub for China. Isolating the region could devastate Chinese production in automobiles, aviation, high-tech mechanical and electrical manufacturing, said Ahmed Rahman, an economist at Lehigh University.

“Its central role in facilitating exchange between the Chinese hinterlands and the rest of the planet cannot be overstated,” Rahman said. “Arguably, out of all the regions of China, closing off Wuhan may be the most disruptive to the global economy.”

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