COVID-19 Causes Sharp Decline in Corporate Sales... Chinese Retail Companies' Sales Halved

Damage Inevitable Following Supply Chain of 5 Million Chinese Trading Companies
Apple Unable to Achieve This Quarter's Performance Due to Product Supply and Demand Disruptions

[Asia Economy Reporter Naju-seok] Due to the novel coronavirus infection (COVID-19), sales of Chinese retail companies are expected to drop by more than 50%. This is the result of halted economic activities such as production and demand within China, and it is analyzed that not only Chinese companies but also overseas companies related to Chinese-made parts are all within the impact zone.

On the 18th, China's state-run Global Times cited analysis data from the Chinese Academy of Social Sciences, reporting that sales in the fast-food industry, such as KFC and Starbucks, are expected to decrease by more than 50% in January and February of this year. Zhao Jinsheng, a senior researcher at the Chinese Academy of Social Sciences, said, "As stores in the COVID-19 outbreak areas close, the sales of these companies will sharply decline." Due to COVID-19, more than half of Chinese retail companies have been shut down, and the effects have begun to appear in earnest.

This impact is expected to expand to companies worldwide. On the 17th (local time), the US economic media CNBC cited the latest report from the global business research company Dun & Bradstreet, stating that 5 million companies worldwide could be affected by COVID-19. According to this report, companies located in the regions most severely affected by COVID-19 are closely connected with global companies.

The report analyzed that companies supplying first-tier deliveries to 51,000 companies, including 163 of the global top 1,000 companies, are located in COVID-19 affected areas within China. Considering second-tier suppliers, the scale of damage increases significantly. Among the global top 1,000 companies, 5 million companies, including 938 companies, have at least one second-tier supplier in the COVID-19 affected regions.

With both production and consumption halted within China, the production outlook for global companies has also darkened. Apple stated in a letter on the same day that due to a global iPhone supply shortage and deteriorating demand within China, achieving this quarter's sales targets has become difficult.

Apple explained, "Factories in China have begun to resume operations, but normalization is proceeding more slowly than expected," adding, "The temporary shortage of iPhones will affect global sales." It further stated, "Product demand within China has been hit," and "Many Apple stores and partner stores in China have all been closed."