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Virus Spreads Havoc on Businesses
From: Dave Farber <dave () farber net>
Date: Thu, 03 Apr 2003 06:50:52 -0500
Virus Spreads Havoc on Businesses April 3, 2003 By KEITH BRADSHER HONG KONG, April 2 - As the highly contagious respiratory disease that began in China continues to spread, its impact on business activity is stretching from Hong Kong around the globe, disrupting complex supply chains and forcing industries from airlines to banking to adjust their operations. UBS, the Swiss bank, is ordering employees returning to its European offices from trips to Asia to stay home for 10 days before reporting to work. Intel is canceling two major conferences in Asia for suppliers, customers and computer programmers. And KLM Royal Dutch Airlines has warned that the disease, known as severe acute respiratory syndrome, or SARS, is hurting international air travel more than the war in Iraq. Further disruption seemed probable after the World Health Organization yesterday urged travelers to avoid Hong Kong and Guangdong Province in China, the first time the W.H.O. has ever issued a global warning against travel to an area because of an infectious disease. The warning from the W.H.O. came as the Centers for Disease Control said there were 85 suspected cases in 27 states, and China admitted yesterday that it had 1,190 suspected cases, not 806, and 46 deaths instead of the 34 it had previously acknowledged. Health officials still do not know if SARS will spread further throughout the world or burn out on its own. At the moment, the number of cases is relatively small compared with some other respiratory diseases. During an average year in the United States, influenza kills about 36,000 people, most of them elderly or with underlying diseases. As far as health officials can calculate at the moment, the death rate from SARS is about 3 percent, about half that of West Nile fever. But because so little is known about the highly contagious disease and because, aside from standard nursing care and help in breathing, there is no treatment or vaccine, health officials here and around the world remain deeply concerned. Fears about SARS are affecting so many businesses that economists at many of the big investment banks reduced their estimates today for economic growth in East Asia, especially in Hong Kong and Singapore. Goldman Sachs, for example, estimated that the disease would reduce economic output in the current quarter by seven-tenths of a percentage point in Hong Kong, half a percentage point in Singapore, three-tenths of a point in Taiwan, and two-tenths of a point in Thailand. The immediate impact is most severe in the travel and tourism industries. In a survey released Tuesday by the Business Travel Coalition, an advocacy group for business travelers, 27 percent of the respondents were banning travel to Asia and 8 percent were considering a ban. Kevin P. Mitchell, president of the advocacy group, estimated that the survey's participants spend an average of $734,000 a day, or $268 million a year, on air travel to Asia. Entertainment in Asia is also being affected. The Rolling Stones, Moby and Carlos Santana have canceled or postponed concerts. Businesses across East Asia, especially here in Hong Kong at the epicenter of the SARS outbreak, are being forced to develop a new approach to workplace health. J. P. Morgan Chase has split some important departments into two shifts that take turns working a week in the office and then a week at home, in the hope that if one shift becomes contaminated with the virus, the other shift can take over. The hardest-hit company here appears to be HSBC, a bank so dominant in Hong Kong that it used to be said that its branches were more common than rice shops. Five HSBC employees - one each in treasury, trade finance and private banking and two in branches - have fallen ill here with SARS. On the advice of its doctors, HSBC is sending home only those workers who had close contact with workers who became ill, and it is not clearing out an entire floor each time. As a precaution, however, HSBC sent 50 fixed-income bond traders home last Thursday with instructions that all those who stay healthy for seven days - the disease's usual incubation period - should then report to a backup site at the other end of the harbor from the bank's headquarters. Fears about the disease are affecting many companies in other parts of the world as well. Intel, the computer chip maker, has decided to cancel two conferences it planned to hold this month in Taipei and Beijing for about 1,000 suppliers, customers and computer programmers, according to Chuck Malloy, a spokesman. In Switzerland, the government barred visitors from China, Vietnam, Singapore and Hong Kong from working at exhibitions at the 86-year- old World Watch and Jewelry Show in Basel and Zurich. Of 650 stands registered for the Zurich fair, 400 were closed because the employees of the stands, most of whom were already in Switzerland, were not allowed to work. In Canada, where more than 100 people have been infected with SARS, Chinese restaurants and shopping areas in Toronto were shunned today while face masks and thermometers were big sellers. For a few businesses, however, the SARS outbreak is proving to be a boon. "We've seen a reasonable increase in sales," said John Mozas, general manager of Grocery Gateway Inc., which operates an online supermarket. But Grocery Gateway, too, has made changes to accommodate customers' concerns. For the time being, all its delivery people are required to wear gloves and to leave orders at customers' front doors. The biggest question now is how much the SARS outbreak will affect China. Taiwan in particular has been strongly discouraging its citizens from visiting the mainland after a spate of SARS illnesses among recent arrivals from there. Taiwanese companies working with mainland factories produce much of the world's desktop, laptop and notepad computers and dominate the market for wireless local access network equipment, for example. But because few factories on the mainland have many engineers of their own, Taiwanese and other companies fly in engineers to oversee the design of products as well as the construction and equipping of new factories. Manufacturers have tried to accomplish the same tasks through videoconferencing and the Internet, but they have mostly been unsuccessful. If the current difficulties cause a delay in tight schedules for the introduction of new computer models and the construction of factories, multinational companies may seek additional sources of supply. "One of the imponderables here is how this will affect perceptions of China," said Russell Craig, the research director for semiconductors at the Aberdeen Group, a market research firm in Boston. "Until this happened, it was the absolute hot spot in terms of the electronics industry." http://www.nytimes.com/2003/04/03/business/03IMPA.html?ex=1050353608&ei=1&en =8d920151c5c174fd HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales () nytimes com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help () nytimes com. 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- Virus Spreads Havoc on Businesses Dave Farber (Apr 03)