SARS: Doing Business in Asia – or Not

12th May 2003

Much has changed in Asia since the outbreak of SARS last November in the Guandong province of China.

The rapid growth of the epidemic has led to a global death toll of over 500 and the number of infected people is now more than 7,000. 120 bureaucrats in China have been fired or punished for mishandling or concealing cases of the disease.

The economic impact is being felt more each day in many different ways.

The slowdown of throughput at the container port in Shenzhen, the port city on the Hong Kong border of China; credit card spending in Asian cities, especially Hong Kong where shoppers have spent up to 50% less than the same period last year; pleas for reduced airport fees and charges following plummeting passenger numbers on airlines - these are just some of the problems being blamed on the epidemic.

As fewer deaths are being reported elsewhere, China still remains the hotspot, where bringing the epidemic under control is a mammoth task.

Three provinces have been identified by WHO as the next major outbreak locations. Guangxi, a relatively poor province next to Guandong, Anhui, where one million migrant workers have fled after working in Beijing and which lacks adequate medical services, and Henan which already has a high proportion of Aids sufferers, making them more vulnerable.

So what effect is this having on businesses in Asia? How has business adapted to the new environment?

Firstly, handshaking is being replaced by the traditional Chinese greeting usually only seen at Chinese New Year of crossing the fingers in clasped hands in front of your chest, elbows in at your side and bowing very slightly towards the other person. Or a simple ‘Hello, how are you’ will suffice.

Mask wearing is now seen only as necessary in crowded places and on public transport. While companies initially enforced wearing of masks in the office, and anyone visiting the office was made to wear a mask, this practice is being replaced by alcoholic hand wipes and medicated soap dispenses. Many businesses display “Have You Washed Your Hands?” signs.

Disaster recovery measures are being put in place as quarantine may force an entire office or building to close down. In order to quickly restart operations in such an event, some companies take additional premises in another location so staff can be placed in more than one building. Or they may be asked to work from home. The effects on resources such as IT departments, budgets for laptop computers, communications and telecommunications have put financial and productivity burdens on many businesses.

Staff absences caused by SARS-related quarantine have been met with mixed reactions from businesses. Some companies have forced the employee to take the quarantine period as either unpaid leave or annual holidays. This in turn creates a negative effect on staff morale. But since SARS-related quarantine is enforced by the police, avoidance is not an option. SARS insurance is burgeoning and may or may not cover quarantine. Action taken by companies is being monitored and modified as necessary on a daily basis.

Corporate travel and meetings are being postponed or cancelled and teleconferencing has largely taken its place. Executives who usually spend their time in the air have been grounded as cities and even countries are now ‘off limits’. If an Executive travels into an affected area he runs the risk of being quarantined for 10 days when returning to his home destination or to another location on his itinerary.

WHO has issued a directive that people planning to travel to certain areas of China should consider postponing all but essential travel. These areas are: Beijing, Hong Kong, Guangdong, Inner Mongolia, Shanxi, Tianjin and Taipei in Taiwan.

Even the lure of cheap labour has dampened the enthusiasm of businesses keen to set up in China; many have pulled out expatriate staff pending the end of the outbreak. Many families have been separated as the spouse, with or without children, leaves the affected areas. This puts further strain on the remaining husband, used to spending his life on planes, in hotels and meetings, suddenly finding himself grounded and alone.

Rosalie Lennard is an Australian who has lived for many years in South East Asia and China. She joined going-there in 2001 and is now Pacific Rim Co-ordinator