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Effects of Coronavirus on the Global Business Ecosystem – Analysis
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The disruption in business due to COVID is beginning to be felt globally. Let's us discuss the effects of CoronaVirus on the global business ecosystem.

Substantial advancement has been made since the Ebola epidemic in West Africa in 2014–2016, although the world is yet under-prepared for serious outbreaks of other emerging infectious diseases. No health system of any country is fully prepared to handle an epidemic or pandemic — The Global Risks Report 2020.

Global markets have been plunged from the aftermath of COVID-19 and still trying to brace the impact in every possible way. Companies are striving to produce or manufacture their products as corona had ricocheted overseas. Various classes of industries are facing the wrath of the virus. Since this is similar to Severe acute respiratory syndrome aka SARS yet more dangerous, studies have shown. This has not only cost human lives but the global business also.

 

CoronaVirus might lead to a recession

coronavirus

Expert’s observations are indicating that global markets will lead to recession due to an exogenous wave. Real Estate, Entertainment, Tourism are the major markets that are radically influenced by COVID-19 inside the outskirts of China. Globally, E-commerce, Tourism, Importing countries have the biggest downfall because of this outbreak.

2020 reports say that

“If the outbreak gets out of control and spreads all over before being brought under control by mid-year, global GDP growth could dip to below 2%.”

Apart from going down on GDP growth, it also foresees the epidemic affecting the macroeconomic indicators like oil prices and rates of interest. Oil prices will gain reduction as a result of decreased demand from China, the world’s largest importer of oil, a lowered demand for jet fuel due to universal travel restrictions.

 

Coronavirus cutting down global businesses

The virus had made Chinese consumers buy less. And this had made major firms like Apple and Microsoft say that “Closing of big stores and factories in China would suppress the sales of iPhones, Windows, and other devices.” Additionally, people are taking fewer international trips; this move led MasterCard to cut its growth forecast. Panic of the virus has assisted companies like Amazon. Drop in the demand of customers, and their own concerns about the virus together have prompted American and other airlines in the United States, Europe, and other countries to abandon flights flying to Asia and particularly to China.

Damage has already arrived in Europe and has affected many industries in terms of production, manpower and profit rates. Germany, the largest economy of Europe, had recently gone through the slowdown of sales. Therefore, evidently making conditions worse for the continent.

Enormous volumes of petrochemicals and heavy machinery are supplied to Chinese factories from the German suppliers as this is what Germany is known for. For instance, automobile parts, fuel, some specific chemicals, glass, etc. However, things have taken a new turn which goes nowhere. In this way, coronavirus has worsened this for both European and Chinese companies. Issues will be kept on originating as long as this virus is alive.

The brunt can be seen in the start-up ecosystem as well. According to the investment data, the Chinese startups in 2019 raised 44% fewer funds than the previous year. With the outbreak of this devastating disease, financial markets across Asia are witnessing a bearish trend. Also, there is a sharp drop in stocks in China since investors are pondering on the potential impact of coronavirus.

 

The effects of CoronaVirus on the Indian Business Ecosystem – Good or Bad?

coronavirus

It has been many months since the outbreak of coronavirus in china. It is also named as COVID-19. Not only has the virus-infected many people globally but it has also shaken the nerves of businesses. Currently, it has been reported that the virus is spreading over India as well. Although the fatality rate of coronavirus is 3.4%, which is low and it has not been declared as a pandemic by the World Health Organisation (WHO), but the panic and chaos created on the social media through some erroneous information are affecting certain businesses at global as well as national level. Many precautions were taken by restricting the travel plans, canceling the flights even for important work and temporarily suspending the e- visa facilities in those country travelers where coronavirus was detected.

The Indian economy has been affected a lot because many industries were dependent upon Chinese products. Many sectors like electronics, toys, furniture, pharmacy, etc., have faced several issues due to the spreading of COVID-19. Many factories are facing shutdowns. The trade between India and China has grown to $93 billion and with this over-dependency on its northern neighbor; India has faced many economic challenges. The electronic market might face an increase in prices because Chinese brands (OPPO, Vivo, Realme) owned nearly 70% of the Indian markets. Smartphone and electronics companies could face a possible shortage of products or raw materials and launch delays. Many components for TVs, smartphones and consumer goods (washing machines, refrigerators and air conditioners) are imported from China. Nearly half of the gross merchandise value (GMV) of Amazon and Flipkart is accounted for by these products and nearly 47% of online sales in India. The shortage of supplies is likely to disturb the sales and revenues of these e-commerce sites.

Not only the electronics sector but the other industries face huge losses as well. Many organizations like Tata Consultancy Services (TCS), Wipro and HCL Technologies have asked their staff to avoid unnecessary travel so as to safeguard their employees against this deadly virus. Twitter has also asked around 5,000 employees to work from home. This remote working will affect the productivity of the company up to some extent. 80% of Active Pharmaceutical Ingredients (APIs), which is an essential raw material for the manufacturing of medicines, is imported from China. The supply restrictions will not only affect the shortage of medicines but will also raise the prices of many medicines. This, in turn, can increase the common diseases (like fever, cold, cough, etc.) in India as many poor people cannot afford costly medicines. Even if the government subsidies some medicines still the economy will be affected.

The tourism industry has been affected by this virus. Due to restrictions on visas and flight cancellations, many people were not able to travel either for professional work or for personal work to many parts of the world. Many trips were canceled and vacations were spent indoors due to coronavirus outbreak. Also, many people who were rescued from those countries where coronavirus cases were detected, were seen through cold eyes simply because they were part of those countries. Tourism contributes a significant part to the Indian economy and also provides employment to many. But due to the coronavirus outbreak, the immigration of tourists from many countries has been banned and many people were afraid to travel, thereby affecting the economy. Till the situation becomes normal, people will avoid any travel so as to be safe from this deadly virus. This would affect the tourism department at a huge loss. Many major events have been canceled and people have stopped going to places of mass gatherings like malls, movie theatres, etc.

The food and beverage industry has also been affected. It has also been said that this virus came from bats that were eaten by people in China. This has frightened the people around the globe which in turn prompted them to reduce the consumption of meat, eggs, etc. Out of many companies, the Corona is one such company that has been affected. Although there is no relation between coronavirus and corona beer, however, still some customers are not buying it, thereby affecting the stock price of corona beer, although it is not an Indian company.

However, some people might say that this is a great or a golden opportunity for India. This outbreak of CoronaVirus can give a chance to India for extending its trade relations with other countries which were dependent upon China for many products. There can be many opportunities for India to build and assemble products, thus, expanding the exports.
Therefore, it depends upon us to think of this situation as an opportunity or a setback.

China exports worth $69 billion of goods to India which includes almost every industry from minor items like plastic items, toys to major items like electrical machinery, medical equipment, etc. China is India’s second-largest trade partner. India imports goods more than they export to China. Thus, making it a liability for a cause.

Dependency on China has lowered in value over the last five years. Even though it not up to the mark but it is reduced. From the importation of finished products, India is now assembling products and developing the “Make in India” ecosystem here as well. Investments from global companies are helping boost the local ecosystem.

 

Conclusion

There is an infinite number of ways a circumstance could go wrong. The virus might spread more than expected, lighten up in countries that are less capable or less willing than China to impose a stringent cordon sanitaire. Businesses built to survive brief disruptions will go bankrupt if the epidemic continues. Eventually, this plague will come to an end. It will leave behind scars though, especially in China. Therefore, it depends upon us to think of this situation as an opportunity or a setback.

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An enthusiastic content writer with zeal and impetus to work towards excellence

Disclaimer: The views, thoughts, and opinions expressed in the article have been curated for our audience and does not warrant a 100% accuracy. All the information mentioned in the article is subject to change according to the changing viewpoints. Feel free to reach us at [email protected] for any change or copyright issues.

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Deepish Mahajan
Deepish Mahajan
An enthusiastic content writer with zeal and impetus to work towards excellence

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