In the longer term, the covid-19 epidemic could dampen the relationship between China and multinational firms
impact of the new coronavirus on global businesses, consider Apple. Such is the American tech titan’s reliance on the Chinese mainland for parts and assembly that United Airlines typically shuttles some 50 of its executives between California and China each day. But not at the moment. United and other carriers have suspended flights to and from China.
Investors are punishing companies for this failure. The shares of American firms with strong exposure to China have underperformed theThere are three reasons to think the coming months could prove even more unpleasant for many firms. First, big multinationals have left themselves dangerously exposed to supply-chain risk owing to strategies designed to bring down their costs.
The third reason to think that big companies may experience a supply-chain shock is that the regions worst affected by covid-19 and the subsequent government lockdowns are particularly important to several global industries. The electronics industry is most at risk, according to Llamasoft, a supply-chain analytics firm, because of its relatively thin inventories and its lack of alternative sources for parts.
Fears of the virus are now affecting the global oil price. Chinese refiners are slashing output in anticipation of shrinking demand at home. Slowing Chinese demand is further darkening what was already a dismal outlook for natural gas. Chinese copper buyers have asked Chilean and Nigerian mining firms to delay or cancel shipments. Mongolia has suspended deliveries of coal to China.certificates”, which they hope will allow them to slip out of contracts without incurring penalties. They may not.
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