Case of wait and see for business on hold from Covid-19

JORDAN MOSHE

He is feeling the pain of watching his business, which has an office in Shanghai, grind to a halt since December because of this devastating virus. He has a cattle-hide business, and his office in China processes transactions and fills orders. Since December, he has been left waiting for things to return to normal.

“There’s been no activity at all for the past three weeks,” he says. “We’ve been at a complete standstill. We usually mostly sell to factories in the Hubei region, all of which have remained closed since the end of the Chinese New Year.”

Slier is certainly not alone. As the two-month mark since the outbreak of the coronavirus approaches, businesses across the globe are weighing up the impact the disease has had on trade. From Apple to Estée Lauder, companies are reporting a decline in sales, with demand down and supplies dwindling.

According to MarketWatch, Apple isn’t expected to meet its second-quarter financial guidance targets because production has slowed or been halted in China. Apple generates about 15% of its revenue from China, and many of its products are made there. Similarly, toy manufacturer Hasbro reportedly continues “to have office and third-party factory closures” in China as a result of the outbreak. The company said China is responsible for about two-thirds of its global sourcing.

Smaller businesses like Slier’s are potentially even worse off.

His operation involves the procurement and supply of hides to various buyers, primarily tanneries in China’s Hubei province. He also deals in finished leather products with buyers beyond China, but all his business lines remain inactive.

“We usually sell between 60 and 90 containers of hides every month. In the past month, we’ve sold only four, and have received no deposit on them either. This is just one indication of how bad things have really been.”

Slier has been operating out of Shanghai for the past 11 years, commuting between China and South Africa for the past two years. He left China on 20 December to visit his sister in England before travelling to Johannesburg, where he first heard news of the outbreak. Since then, he has been staying in Oaklands, keeping up to date on developments in China and trying to get business back to normal.

“The New Year celebrations should have ended on 3 February, and I’d have returned to Shanghai,” he says. “Staff at the office contacted me that week to say that they had received notice that our building could not reopen until the 17th. The holiday was basically extended, and during that time, the virus became more intense and spread through China and beyond.”

He says not even the Chinese population itself knows how intense the issue really is, pointing out that the Chinese government censors information about the real rates of infection.

“The government can’t tell people that 5 000 have died. It would cause chaos and panic. Even the Chinese themselves are unsure how significant the virus is, and the actual number of fatalities is definitely being withheld.

“The Chinese government is trying to make matters seem normal. The national government is insistent that it’s business as usual, while regional governments are segregating whole towns, even neighbourhoods. It’s far from normal.”

Most unnerving, says Slier, is the conflicting information being broadcast across China. “Some reports say that people are recovering and some sort of initial cure has been found. There was even a case of a 97-year-old man who had been ill for two weeks and was said to be cured. Other reports have talked of people dying within two days.”

In terms of business, he says the lack of certainty has left many buyers wary of dealing with China. “Shipping companies are very hesitant to take orders from China,” he says. “Containers have arrived in Chinese ports, and are just sitting there causing congestion because they’re not being cleared. Many manufacturing plants are also out of action, with workers afraid to gather in groups for fear of catching the virus. Domestic and international business has been badly affected.”

Slier is in regular contact with staff at his Shanghai office, and says the consensus seems to be that things will return to normal towards the end of March or April.

“The Chinese authorities are definitely trying to get things back to normal, “he says. “Two state tanneries have been reopened but are struggling to get workers there. We still get conflicting reports, and don’t know when things will be completely back to normal.”

Until then, Slier has no choice but to stay here, tracking shipments that are still on the water, and forging ahead with an e-commerce project to pass the time. While some deposit and balance payments have trickled through, there has been no new business, and he has had to rely on his savings to support himself.

“It’s literally a day to day existence with daily assessment,” he says. “I speak to colleagues regularly, and they mostly complain of boredom. These people are stuck in their hometowns, literally confined to their apartments.”

While some remain confined, others have braved the outdoors and ventured out. “It depends on the region,” says Slier. “Some are worse than others, but some people take their chances. It leaves companies in a difficult situation: if they call their workers back, are people obliged to return if they’re scared? Can they be sacked? It’s hard to say.

“One doesn’t really feel the impact of the virus here unless one has business ties to China – that really gives you a sense of what’s actually going on. People in China are nervous, and the uncertainty makes it worse. It’s all a matter of time, but no one can be sure of when.”