Daily Management Review

New Study Claims 5 Million Companies Worldwide Could Be Impacted By Coronavirus


The Chinese provinces most impacted by the coronavirus virus are the ones that are most intricately linked to the global business network, found a recent study that was issued in the form of a special briefing by global business research firm Dun & Bradstreet, after analyzing the role played by the Chinese cities in question.
Hong Kong is the headquarters of nearly half (49 per cent) of the companies that have operational subsidiaries in the regions in China that are worst affected by the virus outbreak. Among those companies 19 per cent and American ones, while Japan and Germany accounts for 12 per cent 5 per cent respectively.
There are one or more direct or “tier 1” suppliers in the virus impacted regions of China for at least 51,000 companies globally, - of which 163 companies are listed in the Fortune 1000 list of companies, found researchers at Dun & Bradstreet. It also found that there were at least 5 million companies that have one or more “tier 2″ suppliers in the affected regions in China while 938 of those companies are in the Fortune 1000 list of companies.
The study predicted that more than 5 million businesses worldwide could get affected by the outbreak of the novel coronavirus and the resultant shutdown of factories as well as regions in China.
The analysis of the firm was based on those areas which have reported at least 100 cases of coronavirus infection as of February 5. The report also noted that the regions that were analyzed also accounted for over 90 per cent of active businesses in China. The report further noted that about 49,000 businesses that are currently operating in these regions are either branches or subsidiaries of foreign companies.
According to the latest government figures, at least 70,000 people have been confirmed to have been infected by the virus in China as of Monday. According to the Chinese National Health Commission, the total death toll because of the virus outbreak has touched 1,770.
The global economic growth forecast has already been dragged down because of the impact of the virus on the business operations in China and elsewhere.
The forecast for global growth for 2020 was reduced by two-tenths of a percentage point by Moody’s in a research note published Monday. The firm said that it now expects that an annual rate of 2.4 per cent in 2020 for the G-20 with the growth rate of China potentially dropping to 5.2 per cent for the same period.
The basis of this prediction is that authorities across the world would be able to contain the spread of the virus by the end of the first quarter and “normal economic activity” would restart in the second quarter. The firm however noted that there can be “severe” toll on the global economy if the infection continues to grow along with deaths. That would disrupt international supply chains which would amplifying the shock for the global economy.
“There is already evidence albeit anecdotal - that supply chains are being disrupted, including outside China. Furthermore, extended lockdowns in China would have a global impact given the country’s importance and interconnectedness in the global economy,” Moody’s Vice President Madhavi Bokil said in the research note.