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Coronavirus to lead to delays, increased pricing and slowed spending, says expert

A China expert believes retailers will feel the effects of the Australian Government’s ban on tourists entering the country from China, which went into effect on Saturday, February 1, despite the fact that federal treasurer Josh Frydenberg says it is too early to gauge the economic impact of the coronavirus epidemic.

“It’s too early to give a definite view about the economic impact because we don’t know how severe and how sustained the virus outbreak is,” the treasurer told the ABC’s Insiders program.

“There are things that we can control and things we can’t control.”

However, Australian shares nosedived on Monday morning amid fear and uncertainty of what the virus means for both domestic and global economies. ASEAN countries are tipped to be the hardest hit, due to strong trade and tourism ties shared with China.

Reach China chief executive Dr Matt McDougall told Inside Retail the travel ban alone would undoubtedly have an impact on retailers that sell to Chinese tourists, who, together with Chinese students spend an estimated $16 billion in Australia annually.

“The financial impact to this sector will be felt immediately… we will see an increase with Chinese daigou/travellers sending items to China, specifically products like hand sanitiser, facemasks and vitamins,” Dr McDougall said.

He believes the impact will also be felt in China’s manufacturing industry, with many Chinese workers restricted to their homes, and others being asked to extend Lunar New Year holiday plans.

“I’m expecting delays on new product releases, increased pricing and consumers slowing down on buying,” he said.

While the international response to the virus has been quick, so have the effects. Swedish furniture chain Ikea has closed all of its stores in China temporarily due to the outbreak, while Starbucks has closed more than 2000 locations

Similarly, Apple has closed all 42 of its China stores, and McDonalds has suspended business across five cities. Levi’s has shut half of its stores in the region, and is gearing up for a financial hit.

“The international response to this crisis has been swift and reflects a universal concern about the health impact to their citizens – what will be less swift will be gaining the confidence of consumers, travellers, international students and the like post-coronavirus,” Dr McDougall said.

“This virus will change the way some businesses operate and indeed exist moving forward.”

How to make a bad situation worse

Last week, the World Health Organisation declared coronavirus a global health emergency, and though many have trusted officials with the role of curing the epidemic – others have been more forceful in their attempts to maintain the virus’ spread.

For example, last week a Woolworths employee “aggressively” ordered customers of Asian appearance from a store under the guise they were doing so keep other customers from being infected. 

While Woolworths condemned the staff members’ actions, it isn’t an entirely isolated incident, with reports of people of Asian appearance being treated with suspicion coming to light worldwide.

“It is unfortunate and completely unacceptable that people of Asian appearance are being racially singled out,” McDougall said. 

“It is not in line with our Australian values and beliefs, and anyone being caught doing this should be prosecuted.

“Clearly, there are broader implications to our society should we allow this to occur unpunished or remain passive in our response.”

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