SARS begins to disrupt business around world
Keith Bradsher/NYT The New York Times Friday, April 4, 2003
From travel to trade shows, demand slumps
HONG KONG As the highly contagious respiratory disease that began in China continues to spread, its impact on business activity is widening from Hong Kong around the globe, disrupting complex supply chains and forcing industries from airlines to banking to adjust how they operate.
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On Thursday, Japan's largest travel agency, JTB Corp., said it would cancel package tours to Hong Kong and the southern Chinese province of Guangdong for at least two weeks. Sony Corp. has told employees not to travel to either place and to limit their stays in Singapore and Vietnam.
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UBS AG has ordered employees returning to the bank's European offices from trips to Asia to stay home for 10 days before reporting to work.
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Intel Corp. has canceled two major conferences in Asia for suppliers, customers and computer programmers. And KLM Royal Dutch Airlines NV has warned that the disease known as severe acute respiratory syndrome, or SARS, is hurting international air travel more than the war in Iraq.
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Further disruption seemed likely after the World Health Organization on Wednesday urged travelers to avoid Hong Kong and Guangdong, the first time the United Nations agency has ever issued a travel warning because of health concerns.
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Health officials still do not know whether 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, and some hopeful signs on Wednesday suggested the spread of SARS might be slowing.
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During an average year in the United States, influenza kills about 36,000 people, most of them elderly or those with underlying diseases.
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As far as health officials can determine, 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.
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Fears about SARS are affecting so many businesses that economists at many of the big investment banks reduced their estimates on Wednesday for economic growth in East Asia, especially in Hong Kong and Singapore. Goldman Sachs Group Inc., 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.
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The immediate impact is most acute in the travel and tourism industries.
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In a survey released on Tuesday by the Business Travel Coalition, an advocacy group for business travelers, 27 percent of the respondents were banning travel to Asia, with 8 percent more considering a ban.
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The group's president, Kevin Mitchell, estimated that the survey's participants spend a total average of $734,000 a day, or $268 million a year, on air travel to Asia.
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Businesses across East Asia, especially in Hong Kong, the epicenter of the SARS outbreak, are being forced to develop a new approach to disaster.
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J.P. Morgan Chase Co. 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.
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"The people don't have to move, the functions can move," said Peter McKillop, a spokesman for J.P. Morgan.
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The hardest-hit company here appears to be HSBC Holdings PLC, a bank so dominant in Hong Kong that it used to be said that its branches were more common than rice shops.
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When one employee fell ill last Friday at HSBC's headquarters, HSBC immediately sent home 30 co-workers for a week and announced that it would thoroughly disinfect the floor.
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But more illnesses have occurred since then, and the company has become less forthcoming about the details.
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David Hall, a spokesman, said Wednesday night that four more employees had fallen ill, including some who worked at the bank's headquarters.
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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 back-up site at the other end of the harbor from the bank's headquarters.
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Fears about the disease are affecting many companies in other parts of the world as well.
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Intel, the computer chip maker, has decided to cancel two conferences that it had planned to hold this month in Taipei and Beijing for about 1,000 suppliers, customers and computer programmers, a company spokesman, Chuck Malloy, said.
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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.
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Of 650 stands registered for the fair, 400 were closed because the employees of the stands, most of whom were already in Switzerland, were not allowed to work there.
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Officials at the fair estimated that from 5,000 to 7,000 people were affected by the ban.
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In Canada, where more than 100 people have been infected with SARS, Chinese restaurants and shopping areas in Toronto were shunned on Wednesday while face masks and thermometers were big sellers.
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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.
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