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SARS puts an end to business as usual in Asia

SARS puts an end to business as usual in Asia

It's not business as usual in some parts of Asia anymore.

The outbreak of Severe Acute Respiratory Syndrome (SARS), a potentially deadly disease that is caused by a previously unknown and highly infectious virus, has disrupted the operations of companies in Hong Kong, Singapore and China. And analysts have warned that the spread of the disease, if unchecked, could limit the supply of some key electronic components, affecting the availability and pricing of some hardware systems.

SARS first appeared in China's southern Guangdong province, which is home to much of the country's low cost electronics and IT hardware manufacturing industry, before spreading to other parts of the country as well as to Hong Kong, Singapore and Vietnam. Other Asian countries have also reported SARS cases, albeit in far lower numbers, including Taiwan, Thailand, Malaysia and Indonesia. The disease has spread as far as North America, Europe and Australia.

South Korea and Japan, which rank with Taiwan, Singapore and China as important hardware manufacturing centres, have so far not reported any cases of SARS.

"At a minimum, the SARS epidemic will cause schedule slippages and disrupt the aggressive growth plans that global electronics companies have for the affected geographies," Aberdeen Group analysts, Russ Craig and Peter Kastner, wrote in a report. "Worst case, it could result in major supply chain disruptions and another downdraft for an already challenged industry."

The United Nation's World Heath Organization (WHO) put the total number of worldwide SARS cases at 1804 - with 62 deaths - on April 1. Over the previous day, the number of cases climbed by 182 - with four deaths - it said. Hong Kong has shown the greatest increase in SARS cases with 155 new cases reported - and three deaths - between March 31 and April 1.

The fourth death reported during the same period occurred in Singapore, WHO said.

China had the largest reported number of SARS cases with 806 people diagnosed with the disease and 34 deaths, WHO said. In Hong Kong, which was an important transportation hub for air travel between China and Taiwan, there had been 685 cases of SARS and 16 deaths, it said.

At Intel's Hong Kong office, an employee recently began to show symptoms that were considered to be consistent with the SARS virus, company spokesperson, Josie Taylor, said.

As a precautionary measure, Intel has asked all of its employees that work on the same floor - one of three floors occupied by Intel in a Hong Kong office tower - to work from home this week, extending a similar offer to employees that work on the other floors, she said.

Fears of SARS have caused many companies to cancel travel for executives and postpone meetings, research director at Gartner, Dion Wiggins, said. For example, Sun Microsystems indefinitely postponed its SunNetwork 2003 conference, originally scheduled to be held in Shanghai from April 8-9, citing health concerns.

At Intel, employees had been told to avoid non-essential travel and a planned visit to Taipei by Intel's chief executive officer, Craig Barrett, had been cancelled, Taylor said.

Taiwan has not seen the high numbers of SARS cases reported in China and Hong Kong and has not been included in SARS-related travel warnings issued by the US Department of State and US Centres for Disease Control and Prevention. Nevertheless, the Intel Developer Forum (IDF) conference in Taipei, at which Barrett had been planning to give a keynote speech, hadbeen cancelled as a result of health concerns, Intel said in a statement. The IDF planned for Beijing had also been called off.

IDF conferences planned for Tokyo and Bangalore, India, would go ahead as planned, Intel said.

The IDF conferences in Taipei and Beijing would be replaced by a series of smaller events over the next few months, it said.

At the Advanced Micro Devices (AMD) office in Hong Kong, employees have also been advised to avoid non-essential travel.

"If you really need to travel, OK. But if you don't really need to travel then they have told us stay in our own office," a spokeswoman for the company, Carol Mui, said.

No AMD employees had been diagnosed with the disease, she said.

"We still may postpone some (business-related) events, but we haven't decided yet," Mui said.

In Taiwan, Acer has issued a notice to employees banning travel to Hong Kong, Macau and two cities in China's Guangdong province, Shenzhen and Guangzhou. Employees were told to make use of other means to conduct business, such as holding meetings via video-conferencing equipment.

Acer also instructed employees travelling to other cities in China to arrange their itineraries so that their flights from Taiwan to China go through Tokyo rather than Hong Kong or Macau. There are no direct flights between Taiwan and China.

To cope with health concerns, companies in Hong Kong had been scrambling to set up virtual private networks (VPNs) that allowed their employees to work from home, Wiggins said.

"A lot of companies, when they created their business continuity plans, they didn't plan for this type of thing [where they would ask their employees to work from home]," he said.

But while technology, such as VPNs, is helping Hong Kong companies to deal with the SARS crisis, the ability to disseminate inaccurate information over the Internet had presented a challenge for the Hong Kong government, Wiggins said.

On Monday, a rumour, which originated online, that Hong Kong would be declared an infected area and quarantined from the rest of the world sparked a run on food stores and prompted the Hong Kong government to issue a public denial that such measures were being considered.

To get word out quickly, the government turned to mobile operators in Hong Kong, asking them to send SMS (Short Message Service) messages stating that the rumour was inaccurate, Wiggins said.

"They wanted to make sure they quelled the rumour quickly and I think they were quite effective," he said.

Alongside the growing cost in human lives, the SARS outbreak may have lasting consequences for how hardware makers and investors see the Chinese government, which has been slow to reveal the scale of the SARS outbreak in China and has delayed efforts by WHO investigators to visit Guangdong province.

"The PRC (People's Republic of China) has not been forthcoming about the situation, and until recently claimed that the outbreak had been contained," Craig and Kastner wrote.

"The deceit of the PRC government in hiding what has become a serious global health threat will not be quickly forgotten," they said. "A new level of suspicion by investors of the government’s ability to protect investments will take years to dispel. After all, low-cost manufacturing and disrupted supply are oil and water in a just-in-time world."


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