Supply Chain Implications of Coronavirus

Hyundai has stalled operations in South Korea owing to supply chain issues brought about by the coronavirus. A cruise ship in Japan had to be cordoned off for inspection when 10 infections were detected.

Coronavirus death toll crosses 500 as the outbreak shows no sign of subsiding

Coronavirus has been wreaking havoc for over a month now with the number of fatalities having crossed 500. New cases have been showing up in alarming proportions, especially over the last couple of weeks, showing no sign of subsiding.

This epidemic has claimed more lives than the severe acute respiratory syndrome (SARS) which occurred nearly two decades ago in mainland China and caused the death of 349 people.

China’s Health Commission stated recently that 65 individuals lost their lives on Tuesday and nearly 4000 people had contracted the disease. As of now, the infection has been detected in nearly 25,000 individuals.

Health experts warn that more fatalities are to be expected owing to extensive spread of the disease. Although, in terms of mortality rate, the coronavirus is far less severe compared to SARS.

Experts haven’t yet been able to clarify the lethality of coranavirus owing to insufficient data. Many of those living in Wuhan are of the opinion that more number of people have lost their lives than what official reports state as a number of victims showing flulike symptoms couldn’t be admitted in hospitals that were already filled beyond capacity. Many cases are going undetected as the health care system lacks sufficient testing resources to thoroughly examine all people.

Having said that, more and more people are recovering, indicating that the treatment plan is both effective and efficient. Around 260 patients were discharged from hospitals on Tuesday. The number of suspected cases has been steadily shrinking for 48 hours now. Officials reported to be keeping a tab on around 4000 suspected cases as opposed to more than 5000 cases the previous day.

Nearly 70 percent of the fatalities were men. More than 80 percent of the people were above 60 with a medical history such as cardiovascular diseases or diabetes.

Most of the cases were reported in the centrally located Hubei province which is also the coronavirus epicenter where nearly 480 deaths and 16,700 infections have been reported. Wuhan, Hubei’s capital, is where the outbreak has achieved extreme proportions.

As per government communications, more than 250,000 people are being closely watched.

More Americans Evacuated from China

Americans are being shifted out of China in a second round of evacuations.

The State Department issued a communication that two planes with Americans on board have left Wuhan for the United States, although the planes’ destination couldn’t be confirmed.

It is expected that, like the first time around, the Americans will first be flown to a military base for medical tests.

The first Americans were evacuated from Wuhan towards the end of January. The plan refueled in Anchorage where the passengers were subjected to an initial round of tests before continuing to March Air Reserve Base in Riverside, California.

British and French Citizens Asked to Evacuate China

British and French governments strongly urged their respective citizens stationed in China on Tuesday to evacuate immediately, as a preventive measure.

Britain’s Foreign Office sent out an official message strongly insisting on immediate evacuation wherever possible as well as avoiding travel to Hubei and even mainland China (except if absolutely necessary). Although, Hong Kong and Macau were not included among the places to be avoided.

Britain’s foreign secretary, Dominic Raab, vouched to do everything possible to aid British citizens who were trying to evacuate Hubei.

The French Foreign Ministry made a statement along the same lines. The warning urged French nationals, especially those with families, to move out of the country if there wasn’t a pressing reason to remain in China.

The British government was criticized for not giving reasons for escalating its warning, which was a source of anxiety and confusion for many Britons in China. And the opposition Labor Party was quick to note how the British in China were compromised owing to the government’s lack of initiative.

Hyundai Stalls Operations at South Korea Car Manufacturing Facilities

Hyundai, the fifth most prominent car manufacturer, stated on Tuesday that it was halting operations at its manufacturing sites in South Korea. Hyundai is one of the first big names in the car industry whose operations have been disrupted owing to supply chain issues caused by the coronavirus.

The car manufacturer sources most of its auto parts from China and couldn’t avoid stalling operations at its Korean factories due to supply chain disruptions in China caused by the coronavirus outbreak.

In China, facilities owned by Hyundai, Tesla, Ford and Nissan have temporarily stopped operating. Hyundai’s South Korean facilities are the first instance of the coronavirus impacting business operations beyond China’s frontiers.

The company made an official statement that it is evaluating different mitigation strategies to curb the impact on production, including sourcing supplies from alternate providers in other locations.

Hyundai has a global presence and factories in nearby regions can compensate for the fall in production in Korea. But this production disruption in Korean factories might just be a precursor to more shutdowns at facilities that rely on Chinese supplies. The longer it takes for Chinese factories to resume operations, the higher the risk of insufficient supplies of crucial components.

Oil Industry Already Impacted

The business impact of China’s coronavirus only makes things worse for America’s oil industry that is already going through a lull with job cuts and heavy debts.

Low commodity prices have been denting oil and natural gas revenues for over a year now. Global prices for these products are expected to fall even further in the near future which has brought down investments in exploration and production.

For instance, the price of West Texas intermediate crude, an industry standard, went under $50 earlier this week, witnessing a 20 percent drop in under a month. Although its value recovered marginally on Tuesday, prices plummeted even more on subsequent days.

In a few weeks following the coronavirus outbreak, the need for oil in China has already fallen by 20 percent owing to significant drops in production, air and road traffic.

China’s daily consumption of American oil amounts to 200,000 barrels, in addition to other refined transportation fuels. Daily American exports to China amount to 8.5 million barrels. Less demand amounts to smaller profits as oil is traded on a global scale and reference prices are decided, not locally, but in global markets.

Not the Chinese, But the Virus Should be Held Accountable

China’s consul general in New York, Huang Ping, expressed gratitude in public to the Sino-American community and other well intentioned Americans on Tuesday for extending their goodwill and support during these testing times.

However, Mr. Huang, a seasoned diplomat, was quite disapproving of the American government restricting travel into and out of China, which he considered a little extreme. The evacuation of the American Consulate in Wuhan, the outbreak’s epicenter, was cited as an example. Mr. Huang further went on to describe the action as very unlike what is expected from the diplomatic fraternity under such circumstances.

Mr. Huang oversees 10 states where currently there are more than 100,000 Chinese university students. Yet he had no way of knowing how many of them were Hubei natives or had visited Hubei recently, owing to American privacy norms.

Mr. Huang also said that sourcing this information has been tedious despite his office’s best efforts.

Mr. Huang’s statement came a day after his return from Boston, where coronavirus had just been detected in a University of Massachusetts student who recently got back from China. The school officials confirmed that the student was currently convalescing and was being kept in isolation.

When questioned about how the coronavirus might be generating a lot of negative publicity for the Chinese community in the USA, Mr. Huang said that he had made mention of the same to Massachusetts officials, urging them to not let the Boston case prompt such responses.

Xi Jinping to Take More Decisive Action

Although initially reticent to take initiative, China’s head of state, Xi Jinping, has assured that no effort or expense will be spared in dealing peremptorily with the coronavirus.

Earlier this week at a second special Communist Party meeting, Mr Xi Jinping was seen in public for only the second time since locking down Wuhan on January 23. The decision to lockdown Wuhan was an order from the highest authorities in Beijing.

A week earlier, Mr. Xi asked Premier Li Keqiang to visit Wuhan when the number of fatalities had just crossed 100. By the start of this week, this figure had crossed 400 fatalities with more than 20,000 individuals infected.

Mr. Xi said the outbreak would put to test the country’s ability to respond to a crisis of this magnitude. He urged government bodies to carry out orders without resistance so that the outbreak could be subdued without unnecessary delays owing to bureaucratic red tape.

Mr. Xi even said that those who shied away from their duties during these testing times must be prepared for consequences.

Hong Kong reported its first death from coronavirus – that of a 39 year old male – earlier this week on Tuesday, the second outside mainland China. The first death outside mainland China occurred in the Philippines – that of a native from Wuhan.

The individual who lost his life in Hong Kong had commuted by train to Wuhan on the 21st of January and returned to Chinese territory two days later. Medical experts said he was also a diabetes patient which might have brought down his immunity levels.

The individual passed on the virus to his mother, although she did not make the trip to Wuhan. His wife, two children and a house-help who works for the family are currently undergoing medical evaluation.

Although Hong Kong is a neighbouring country, the impact of coronavirus has been relatively less severe compared to China, with just 17 reported victims. Whereas on the other side of the frontier, the Chinese city of Shenzhen reported more than hundred cases

There have been persistent demands, especially from medical workers, that the Hong Kong government completely block travel across the borders it shares with China. Thirteen out of sixteen border checkpoints were closed earlier this week. However, the remaining three are still being accessed by thousands of Chinese visitors on a daily basis.