Chinese technology majors are scrambling to prepare for a public health crisis stemming from a deadly strain of coronavirus that is beginning to spread across the country ahead of a major holiday travel season.
Why it matters: Fears about the outbreak are compounded by its timing just ahead of the Spring Festival holiday, when millions in Asia plan to travel. The impact on consumption levels is another concern, as many are expected to remain home to avoid crowded areas.
- Spread of the virus has sparked panic for items such as protective masks and hand sanitizer, and driven up prices in brick-and-mortar shops and e-commerce platforms alike.
“While we seek to ensure quality supply at speed, JD is also rigorously regulating our third party platform to forbid unfair price hikes, with penalties to third party sellers if unfair price hikes are discovered.”
—a statement from JD.com on Wednesday
Details: The new coronavirus epidemic is pressuring share prices for major Chinese tech companies including Alibaba, JD, Baidu, and Ctrip, which all traded down on Tuesday. Share prices for Ctrip fell the most sharply, declining 10.3%.
- In a Wednesday letter addressing merchants on its e-commerce marketplaces like Taobao and lifestyle services platform Ele.me, Alibaba called on vendors to maintain “stable” pricing of virus protective devices such as masks and disinfectant. The company said that it will offer subsidies for merchants in order to keep pricing down and maintain supply.
- Inventory for virus protection masks were running low on mainstream Chinese e-commerce platforms such as Taobao, JD.com, and Pinduoduo. Some masks, including those rated N95 and recommended by manufacturer 3M, were sold out and are expected to be back in stock in early February, based on a TechNode reporter’s observations on Tuesday.
- JD.com said that it is actively working to ensure adequate supply of face masks and other health protection products. Its efforts include sourcing, warehousing and delivery, and controlling sales to avoid consumer stockpiling.
- Online travel platforms may be hit the hardest. Chinese online travel platforms including Trip.com, Alibaba-backed Fliggy, Qunar, and Mafengwo are waiving cancellation fees for trips to the central Chinese city of Wuhan.
- Travel platforms are offering customers free cancellation on all hotels, car rentals, and tickets for tourist attractions in Wuhan until Jan. 31. The platforms are pledging to cover the cost if the hotels refuse to cancel.
- The government is leveraging popular social media platforms like microblogging platform Weibo and short video apps Douyin and Kuaishou to educate the public about the new virus and disclosure information.
Context: The fallout from this new virus recalls for many impact from the severe acute respiratory syndrome (SARS) epidemic which originated in Asia in 2003 and spread throughout the world. More than 5,327 of the 8,098 global infections were in China, where nearly half the 774 deaths worldwide took place. The epidemic took an economic toll of RMB 93.3 billion ($13.5 billion), according to government data.
- The current strain of coronavirus originated in the central Chinese city of Wuhan. There are more than 440 confirmed cases in China in Hubei province, Guangdong province, Beijing, Tianjin, and Shanghai, as well as abroad in Thailand, Japan and more. Nine death cases were recorded as of Wednesday early afternoon.
- Concerns about the virus reached new heights Tuesday after China confirmed that the disease can be transmitted between humans.