Caixin
Feb 26, 2020 09:32 PM

U.K. Firms in China Predict Double-Digit Revenue Drop This Year

British businesses in China expect to see their revenue drop significantly this year amid the Covid-19 outbreak, with nearly half predicting revenue will be cut over 10% and more than a quarter expecting it to decrease more than 20%, according to a survey conducted by the British Chambers of Commerce in China.

After surveying 135 companies last week, the chamber said Tuesday that the deadly novel coronavirus epidemic has been weighing heavily on British businesses based in China, 22% of which expect their revenue this year to drop by 10% to 20% as a direct result of the outbreak, while 27% expect a decrease of more than 20%.

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The 4% of surveyed companies headquartered in Wuhan, epicenter of the outbreak in Central China’s Hubei province, are unsurprisingly seeing the biggest impact, with 80% estimating their revenue will decline more than 20%, the chamber’s report said, adding that the creative and hospitality sectors are the two worst-hit industries in the country.

The surveyed firms said the biggest impacts of the virus came from reduced demand, global travel disruption and ongoing uncertainty. More than half of the businesses’ offices in China remain closed and about one-third have postponed investment decisions, although 70% said they had not shuttered their Chinese mainland manufacturing facilities.

This is the second survey conducted by the British Chambers of Commerce in China on the impact of Covid-19, which has killed more than 2,700 people and infected nearly 78,200 in China.

“Two weeks on from our initial survey on the impact of Covid-19, British businesses continue to feel the effects of this challenging situation, and they will need support in order to recover. The majority of businesses are seeing a direct hit on their revenue as a result, and this is especially acute among smaller companies,” said John Moore, the chambers’ chair.

“Nonetheless, we remain confident in China’s ability to rebound from this crisis and in the long-term prospects of the market. We are proud to say that British businesses have contributed significant resources to help contain the outbreak, and we will continue to offer support in the battle against the virus,” he said.

In early February, a survey conducted by the American Chamber of Commerce in Shanghai found 87% of 127 U.S. companies operating in China expected their 2020 revenues to suffer as a result of the outbreak, with almost one-quarter expecting them to drop 16% or more.

Twenty-nine percent of the U.S. respondents said their corporate headquarters did not fully understand the outbreak’s potential economic impact. About 10% expected to relocate jobs out of China, but most did not, with one-third saying it was too early to know.

Contact reporter Lu Zhenhua (zhenhualu@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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