SARS Impact on Chinese Industries
CCTV.COM (06.01 2003 14:31)
Since the outbreak of the Severe Acute Respiratory Syndrome or SARS in China late last year, not only has it shaken up the routines of everyday life for ordinary citizens, but it has also re-shaped businesses. Industries such as aviation, transportation, tourism, entertainment, catering, have almost ground to a halt in the midst of the all-encompassing gloom, while at the same time, business opportunities have popped up in areas including E-commerce, drive-in theaters, pharmaceuticals, which have reaped the profits lost by the other sectors. Economists assert that SARS is far from pervasive, and it is not here to stay, so in today's Market Analysis, we check out the latest situation in China's major industries as well as the new business opportunities in China.
It's hard to believe that this is the ever bustling and overcrowded Beijing Capital Airport, where hundreds of planes used to take off and land every day, and tens of thousands of passengers arrive or depart here. However, now the hall seems too empty, only dozens of flights remain per day in Mid-May.
The spread of the Severe Acute Respiratory Syndrome or SARS beginning late last year has changed people's daily lives in many ways, and businesses have met an unexpected and sudden slack season. The first pains of SARS were felt in the sky, in aviation and air transportation.
China's airlines have seen great losses since the outbreak first occurred in Guangdong province late last year. Analysts from Leon Stock predict that the profits of China's leading airline companies will definitely plummet this year: China Southern Airline by around 15 percent to 20 percent and China Eastern Airline by 20 percent to 25 percent.
Similar to air transportation, tourism is also a key victim of SARS, what's more, the impact on tourism spreads to other related industries such as hotels, catering and entertainment.
A survey conducted by Peking University predicts that the tourism revenue from overseas travelers would fall by 50 to 60 percent nationwide in 2003, amounting to 11 million US dollars, while domestic tourism revenues would drop by 50 percent, 70 percent of the May Day holiday trips were cancelled. Thus the total direct loss of China's tourism industry in 2003 will reach 17 million US dollars, and another 8.5 million US dollars of indirect losses are expected.
Indirect losses mainly come from industries such as hotels and catering. The occupancy rate of 20 hotels above four-star has shrunk by 30 percent compared with 2002. The data in Beijing is even more astonishing: the occupancy rate of four and five-star hotels is as low as 10 percent while the number was nearly 100 percent for the same season last year. Aside from the hotel industry, catering industry is also a key one to suffer: the average decrease in business for the catering industry is around 30-40 percent, some as high as 80 percent, it's not surprising some eateries have chosen to close.
As time goes by, the virus is becoming better known and understood, and citizens have begun to face SARS with less fear but more calm. Drawing comprehensive experience in disease from successful countries and districts, the SARS-led panic and scare is fading, China is now beginning to control the disease.
Many restaurants now have more customers, a reflection on the society's revitalization. What's more, it is widely believed that the tourism and entertainment industries will see a busy midseason soon after the containing of the virus.
Aside from the big rush expected in certain industries after SARS, now at the same time, new opportunities have presented themselves.
When we see the impact on tourism, catering, transportation, we should also pay attention to the stimulus effect on telecom, pharmaceuticals, real estate and automobiles. So from now on, we should study on the investment direction of government, foreign business people as well as the people towards SARS.
The automobile industry is one of those to benefit from SARS. Taking full advantages of the privacy and better air quality offered by private vehicles, people now tend to prefer self-drive to lower the risks of catching the disease, hence the recent car sales boom.
Data from the Beijing Statistics Bureau shows that private car sales in Beijing have experienced an upsurge of late, with a total volume of 34,000, 21.4 percent up on March. Twenty-three thousand of the total are new cars and 11,000 are second-hand.
The outbreak of SARS has prompted many who were still choosing and waiting for price-reductions, it has made them make up their minds quickly. Rather than a luxury, private cars are now becoming a necessity in people's daily lives. Thus the disease not only stimulates short term car sales, but also changes people's perceptions of private car ownership, serving as a long-term boost to the private car market.
We should study the subtle change of the people's consumption attitudes that have taken place during the period of SARS, in order to explore and grasp the economic growth areas and new consumption hotspots post-SARS. It is true that it is the time for business people and investors to grasp new opportunities and investment areas. I predict that there will be lots of new industries and enterprises coming forth during the post-SARS period.
Just as Mr. Long said, many industries now are experiencing a real summer; online business is one of them. E-commerce web sites have reported a soaring number of orders in Beijing, especially since early April when concerns about SARS gripped the city.
Since the SARS outbreak, I have been making a lot of purchases over the Internet. This enables me to keep away from crowds in stores and I can reduce the potential danger of SARS infection.
China's major E-commerce website companies were delighted with the business boom in April, compared with the same time last year.
We have disinfected all of our goods for safety concerns. After the May Day holidays the sale of disinfectant products has gone back to normal. I think this means the SARS panic has gradually receded.
With shopping malls deserted in the city, revenues for online stores have surged, making up some of the loss to the retail industry. Analysts say the Internet is bringing about changes in business-as-usual, as the Internet ushers in new opportunities for online businesses.
It is true that SARS is posing a threat to people's health and daily life now, but the state has done much to conquer it, and the results are remarkable. With less and less new cases reported everyday, citizens no longer flee in fright over the very mention of SARS.
Thanks to the comprehensive economic structure China has, the loss is yet slight up to now, and the multi-industry economic system means China has many ways to control and remedy the losses.
With business now in recovery, the most heavily affected sectors are being given a new lease of life, some others have unexpectedly found the silver lining in the cloud. In the midst of the new and mysterious disease, many new business opportunities are lying right in front of investors and ripe for the picking.
Editor:Liu Baoyin
