Brazilian companies operating in China already anticipate the impact on business with Beijing's measures to contain the spread of the coronavirus, which has killed 132 people in the Asian country and infected almost 6,000 as of Tuesday (28).
In addition to employee travel restrictions, as is the case at giants like Vale, companies that sell to China are facing delays in delivery and a potential reduction in sales.
Just as the Chinese government decided to extend the Lunar New Year holiday until February 2, some industrial areas can only resume operations between February 8 and 10.
Coronavirus and Business
Although Vale has suspended business trips to the country indefinitely and has also determined that employees from China cannot travel to any other unit of the company.
Employees are working remotely, but activities at Asian ports continue as normal, the company said.
Electrical materials manufacturer WEG, from Jaguará do Sul (SC), advised that trips only be made after February 8th.
WEG units are currently closed, and operations will only resume on that date, following guidance from local authorities.
WEG is one of the Brazilian companies with the largest presence in China. In 2019, it opened its fourth unit in the country, where it has operated since 2004.
The manufacturer said in a statement that it worked early on Saturdays to compensate for the Chinese New Year holiday. It is also monitoring the situation and says it will reassess the situation as necessary. According to the company, there are no Brazilian employees in the Chinese operation.
Less Consumption
Leaders believe it is too early to predict the impact of the coronavirus on numbers, but they are on alert because the reduction in the movement of people is expected to lead to less consumption in the region.
"Since in some cities it's impossible to leave the house and shop outside, there's an impact because our products aren't selling. We haven't seen a drop in sales yet, but this puts us on alert," Rodrigo Nunes, export manager at Kidy, based in Birigui, São Paulo, told reporters.
Kidy manufactures shoes in Brazil and exports to China monthly. "The restrictions impact third parties, such as delivery. Online business is very strong in China. Even if the purchase is made online, without leaving home, in some places the guidance is that delivery is not possible," adds Nunes.
Kidy delivers e-commerce purchases throughout China, according to the manager.
CMMY Assessoria, which has been providing consulting services to Brazilian companies with business ties to China since 2008, was prepared for the interruption of services during the New Year. However, it did not anticipate the extended interruption.
It's during this period, he says, that companies purchase goods that arrive in time for the holiday season. "We've led business missions, and we're seeing that it's going to be difficult," he adds.
Order delays
Cristian Martins, director of the consultancy, emphasizes the problem of late deliveries.
"We expected to ship raw materials and products at the end of the holiday, but there will be delays. This will have an impact both in Brazil and the rest of the world. It changes the schedule for those who need the supplies or for those who resell the product," he says.
Regarding exports – China is the main destination for Brazilian sales – the sector says that despite the siege on the city of Wuhan, ports, such as Shanghai, are receiving goods from Brazilian companies.
Meats
The meat sector estimates that sales will continue, but with price adjustments, according to Antonio Camardelli, president of Abiec.
The problem, however, is already accentuated in American and European companies.
Starbucks has announced it will close more than half of its stores in the country. The world's largest coffee chain also stated it will revise its 2020 forecast once the impact of the outbreak can be estimated. By the end of 2019, the chain had 4,292 stores in the country.
Analysts already predict that Apple's plans to increase iPhone production by 10% in the first half of the year will be impacted by the epidemic.