By Isabel Wong
It is a virus that stopped most people in China from celebrating the Lunar New Year, the country’s most important festival. Instead of travelling home and visiting relatives’ houses to exchange festive greetings and red envelops, banners that caution people not to go out during the Spring Festival were seen in many local towns in China.
The new coronavirus outbreak is already larger than the Severe Acute Respiratory Syndrome (SARS), and extreme measures are in place to control it. All museums in China are forced to temporarily close their doors due to the Wuhan coronavirus outbreak, including the world-famous Forbidden City that is celebrating its 600th anniversary this year. But after a special meeting convened by the Chinese National Cultural Heritage Administration (NCHA) back in January, some of the most visited museums in the country will begin putting their exhibitions online.
NCHA said the move would “encourage cultural heritage museums and institutions around the country to utilise existing digital resources and launch online exhibitions as appropriate, providing the public with safe and convenient online services.”
That means the Spring Festival-themed exhibition at Beijing’s Palace Museum can now be accessed online. The museum is also offering a virtual tour “The Panoramic Palace Museum” for visitors to browse around the 720,000 square-metres complex.
Of all the Chinese museums that open their doors virtually, the Nanjing Massacre Memorial Hall lets online visitors access the museum from the entrance to create a realistic virtual experience, while the Emperor Qinshihuang’s Mausoleum Site Museum allows users to zoom into the faces of each of the terracotta.
E-Commerce Expects Boost
While museums and galleries in China think of ways to use technology to reinvent experiences and continue operations, shoppers are expected to boost online sales as most Chinese citizens are advised to stay at home due to health and safety concerns.
But the first challenge e-commerce companies have to tackle is keeping up with a sudden jump in demand for medical and cleaning supplies as consumers race to buy protective equipment as well as disinfectants. Leading online retail platforms such as Alibaba’s Taobao and Tmall, JD.com and Pinduoduo are rushing to manufacture medical products including masks, goggles, hand sanitiser and scrubs with many of which have already sold out. To make matters more complicated, counterfeit and second-hand masks have been found in the market as sellers take advantage of the global health emergency.
Further delay in shipments is also expected as the global transportation and logistics industry faces more headwinds ahead. Hong Kong’s flagship carrier Cathay Pacific has announced plans to reduce flights to mainland China by 50 percent through the end of March, while UPS had cancelled 22 flights to China.
Starbucks Close Mainland Stores
Seattle-based coffee chain Starbucks also announced it would close more than half of its stores in China. While the company expects the closure to be temporary, it did not give a timetable for when it would reopen stores. China is the coffee chain’s largest market outside the United States and has been seen as a major area of growth in its international business, Starbucks said it could not estimate the duration of the disruption or how it would reduce customer traffic, but expected the outbreak would “materially affect” its financial results for the second quarter and the full year.
Meanwhile, the retail industry is expected to experience setbacks also. Nike Inc. closed about half of its company-owned stores in China while the stores that remain open are operating at reduced hours. Rival brand Adidas also announced that it has closed a significant amount of stores in China and franchisees are doing likewise. But the German company said it’s too early to assess the negative impact on its operations in China.
“Brands need to be cautious right now. If you are seen as being too promotional, then that could result in a backlash,” said Chloe Reuter, Reuter Communications Founding Partner in an interview with Bloomberg. Reuter also said international brands such as LVMH, Estée Lauder and Swarovski are setting good communications strategy examples by donating to non-profit organisations in China to help curb the virus outbreak as well as providing health advice to customers on social media.
Potential Global Supply Chain Disruption
With most cities in China coming to a standstill, factories in the country are also shut down temporarily. This is already causing disruption in the manufacturing of products such as face masks, car parts and phones.
The global auto industry is expected to be affected by the outbreak as production halts at China factories lead to worldwide shortages in components. Hyundai Motor became the first major automaker to halt its assembly lines outside of China as the car manufacturer announced it will suspend production in South Korea due to shortage of parts supply. IHS Markit projected the outbreak may reduce vehicle output by more than 1.7 million cars because of plant closings.
The global phone industry might also face negative effects on output and profits. Factories of the world’s largest contract electronics manufacturer Foxconn are heavily dependant on migrant workers from rural China, but road closures might halt or further delay the resumption of operations as workers are not able to get back to work.
In some cities in China, authorities are asking companies to put workers returning from other provinces under a three-day quarantine, which adds to the challenge for businesses to cope with production delays.