How Are Global Companies Dealing with the Coronavirus?
A new survey from the American Chamber of Commerce in China shows that coronavirus woes are bringing economic gloom and uncertainty to international businesses, many of which say it's simply too soon to know how bad things will get.
The American Chamber of Commerce in China has released the results of a study that provides some new insights on the impact that the coronavirus is having on its member companies, a roster of global firms that includes Boeing Co., General Motors Co., IBM Corp., and Microsoft Corp.
Of the nearly 170 companies that participated in the survey earlier this month, 44 percent said they now have a negative outlook on the U.S.-China bilateral relationship as a result of uncertainty swirling around the COVID-19 outbreak.
For some companies, the economic outlook under the coronavirus cloud appears to be bleak: Ten percent reported that they are losing about $71,500 a day; 12 percent expect project delays to continue through the summer; and one-fifth said their 2020 revenues will decline more than 50 percent if the outbreak extends through August 30, according to the report.
The unpredictability of the situation has many companies staying in wait-and-see mode. More than 40 percent said it is simply too soon to determine how the virus will affect their industry’s forecasted market growth this year, though 48 percent are bracing for some level of decrease.
Half of respondents also believe that it is too early to know how the situation will affect their planned investments, while 25 percent reported that they are going to stay the course and maintain existing investment plans.
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“There is, in the short term, a clear and significant negative impact to member-company operations, through travel disruptions, reduced staff productivity, increased costs, significant drops in revenue, and more,” AmCham China chairman Greg Gilligan said in a statement. “However, for most of our members, it is still too early to tell how significant the long-term impact will be.”
Julie Nevins, special counsel at Stroock & Stroock & Lavan in Miami who was familiar with but not involved in the study, noted that companies might also be grappling with another unknown: whether their insurance policies cover losses from coronavirus-related business disruptions.
“The hurdle is that most business interruption policies require as a trigger for coverage physical damage to property,” she said. “It’s hard to see how the coronavirus causes physical damage to property.”
Companies might argue that the property in question was contaminated, which could constitute physical damage. Some courts, Nevins said, have held that Legionnaires’ disease, a form of pneumonia that can affect water and heating, ventilation, and air conditioning (HVAC) systems, constitutes physical property damage for the purposes of insurance coverage.
“Time will tell whether those arguments are raised and how they fare in the context of the coronavirus,” she added.
Despite all the unknowns at the moment, companies, especially public firms, still need to figure out how to properly disclose the risks that they’re facing.
“We live in such a litigious society that there may be investor claims down the road” for nondisclosure, Nevis said. “That could be another thing to consider.”
From: CorporateCounsel