Coronavirus Update: Covid-19 Outbreak Could Disrupt Global Supply Chain, Affecting 5 Million Companies

A recent study published by commercial data firm Dun & Bradstreet indicates the ongoing coronavirus outbreak in China could dramatically impact the global supply chain, affecting 5 million companies worldwide.

The report, titled “The Worldwide Business Impact of the Coronavirus,” looked at the 19 Chinese provinces that have had 100 cases or more of coronavirus -- officially dubbed Covid-19 -- as of Feb. 5, and analyzed their influence on the global economy. Five of the Chinese provinces in the impacted area -- Guangdong, Jiangsu, Zhejiang, Beijing, and Shandong -- make up 50% of total Chinese employment and 48% of total sales volume in the country.

There are currently 49,000 businesses in the impacted region that are branches or subsidiaries of companies headquartered outside China. Nearly half of these global companies are headquartered in Hong Kong while the U.S. has 19%. Japan accounts for 12%, and 5% of the companies there are headquartered in Germany.

Around 51,000 global companies have “tier 1” suppliers in the impacted regio, while at least 5 million companies have “tier 2” suppliers in the area.

A “tier 1” supplier refers to a manufacturer that provides a good to a company without a middleman. A “tier 2” supplier is a company that provides a product to the “Tier 1” firm, as part of a larger supply chain.

The coronavirus originated at an animal and seafood market in the Chinese city of Wuhan and has put millions of Chinese on lockdown and infected more than 73,000 people around the world, with the death toll standing at 1,873.

The outbreak already had had a significant impact on global companies in China, with Apple saying the virus would curb Chinese demand for its popular iPhone. Apple, along with Google, has closed down its stores and corporate offices in mainland China. Gaming giant Nintendo has said the coronavirus would impact the production of its popular Switch gaming console.

Nike, Adidas and Versace are three major consumer brands face a possible major impact from the virus.