Indian firms based in China are bracing for an uncertain month ahead amid the coronavirus outbreak, which has brought factories and the services sector to a grinding halt.
Several company executives told The Hindu they expected the month of February — and perhaps the entire first quarter of this year — to be a write-off because of the outbreak, which has, as of February 6, infected more than 28,000 people and killed 560.
While there is little presence of Indian firms in the epicentre of Hubei province, a spreading lock-down reaching across China and limiting travel has constrained businesses, with current focus of the Chinese government on stopping the spread of the epidemic.
Most Indian companies in China are based in the south and east, in Shanghai, Jiangsu, Zhejiang and Guangdong provinces.
According to the Indian Consulate in Shanghai, Shanghai tops the total investment from India, and is home to IT majors, including TCS, Infosys and NIIT. Zhejiang and Jiangsu are home to manufacturing units, including Dr. Reddy’s Laboratories, Mahindra & Mahindra, Laxmi Machine Works, Tata Jaguar Land Rover and Sundram Fasteners.
Factory workers and employees remain largely cloistered in their home towns, where they had returned over the Lunar New Year, and face a 14-day quarantine if returning to work. Major trade fairs, including the Canton Fair scheduled for April, have been put on hold.
“Everything is at a standstill,” Madhav Sharma, who heads CII’s China office in Shanghai, told The Hindu. “Businesses are expecting to come back to work on February 10 as of now, but schools have been told to close until the end of February. While the spread of Indian companies is mainly in Shanghai, Zhejiang, Jiangsu and those that are into sourcing down south, their customer base is across China so business will be affected. We can, perhaps, only look at Q3 this year to get stabilised.”
Bright spot
One bright spot, he said, is that provincial authorities have been keeping foreign firms regularly up-to-date with the situation in their provinces, through English notifications sent through apps such as WeChat.
“We can see how they are using technology to deal with this, and to a large degree, people are closely following the guidelines, from wearing masks to maintaining hygiene, so there is a sense they are bringing this under control.”
Kamal Dhuper, who heads NIIT China that runs training centres and on-campus training facilities in several Chinese provinces including Guizhou, Shandong, Ningxia and Heilongjiang, said one immediate concern for companies was providing masks. Even major cities like Shanghai are facing a shortage, leaving unclear how employees will be able to come back to work on February 10.
“What most of us are doing is looking at ways to minimise risks, for instance by getting people to work from home when possible,” he said, adding that the timing over the new year was a mixed blessing since many people had already travelled back home and universities were closed.
The bigger concern is for start-ups in China that could start facing cash flow problems if the slowdown continued beyond February, said Sujit Chatterjee, co-founder of Shanghai-based IT firm Zeta-V and former head of TCS China.
Despite the concern, one long-time Indian businessman said the outbreak wasn’t as severe as SARS in 2003. “Then, for two months, people had no idea what was happening or how to deal with the outbreak unlike now,” noted Mehernosh Pastakia, who runs restaurants in Beijing. Restaurants, for instance, are still providing delivery services, although workers are being checked for their temperatures every day and food deliverers are required to write down their temperatures while making a delivery.
“Yes, the situation is bad now but not as catastrophic as people are making it out to be,” he said.
