Brazilian companies with operations in China already foresee an 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 this Tuesday (28).
In addition to restrictions on employee travel, as is the case with giants such as Vale, companies that sell to China are working with the scenario of delays in the delivery of goods and a possible reduction in sales.
Just as the Chinese government has decided to extend the Lunar New Year holiday until February 2nd, and some industrial areas can only resume operation between February 8th and 10th.
Coronavirus and Business
Although Vale suspended business trips to the country indefinitely and also determined that employees from China should not travel to any other company unit.
Employees are working remotely, but activities in Asian ports continue as usual, the company said.
The manufacturer of electrical materials WEG, from Jaguará do Sul (SC), advised that trips should only be made after February 8th.
WEG units are stopped, and the activity will only resume on that date, following the guidance of the local authorities.
WEG is one of the Brazilian companies with the greatest presence in China. In 2019, it opened its fourth unit in the country, where it has been operating since 2004.
The manufacturer said in a note that it worked early on Saturdays to compensate for the Chinese New Year holiday. It also monitors the scenario and says it will reassess the situation as necessary. According to the company, there are no Brazilian employees in the Chinese operation.
Less Consumption
The leaders consider that it is too early to predict the effect of the coronavirus in numbers, but they are on the alert because the reduction in the movement of people should lead to less consumption in the region.
“As in some cities it is not possible to leave the house, you cannot buy outside, there is an impact because our product does not rotate. We haven't had a reduction in sales yet, but that puts us on alert”, said Rodrigo Nunes, export manager at Kidy, from Birigui, in São Paulo.
Kidy manufactures shoes in Brazil and exports to China on a monthly basis. “Restrictions impact third parties, such as delivery. Online business is very strong in China. Even if the purchase is made on the internet, without leaving home, at some points the orientation is for there to be no delivery”, adds Nunes.
Kidy delivers e-commerce purchases throughout China, according to the manager.
CMMY Assessoria, which since 2008 provides consultancy to Brazilian companies with commercial relations with China, was prepared for the interruption of services during the New Year. However, it did not count on the extension of the interruption of work.
It is during this period, according to him, that companies buy goods that arrive in time for year-end sales. “We took missions from businessmen and we can see that it's going to be complicated”, he adds.
Order delays
Cristian Martins, director at the consultancy, reinforces the problem of late deliveries.
“We had expected the shipment of raw materials and products at the end of the holiday, but there will be a delay in goods. This will reflect both in Brazil and in the rest of the world. Modifies the programming for those who need inputs or for those who resell products”, he says.
Regarding exports – China is the main destination for Brazilian sales-, the sector says that despite the siege of the city of Wuhan, ports, such as Shanghai, are receiving goods from Brazilian companies.
Meat
The meat sector estimates that sales will continue, but with price adjustment, according to Antonio Camardelli, president of Abiec.
The problem, however, is already accentuated in American and European companies.
Starbucks has indicated that it will close more than half of its stores in the country. The world's largest coffee chain also said it would revise its forecasts for 2020 as soon as it is possible to estimate the impact of the outbreak. 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 will be impacted by the epidemic.
