The American Chamber of Commerce in China said that more than one-fifth of American companies are back to normal operations in China, after the COVID-19 pandemic all but shut down business activity in China at the beginning of the year. Nearly a quarter of survey respondents said they expected operations to return to normal by the end of April, while another fifth expect delays through summer.
However, half of the companies that responded to the American Chamber of Commerce survey have also experienced revenue declines of over 10 percent. About 14 percent of respondents reported losing over $70,000 a day due to delays in reopening because of their reliance on China’s small and medium-sized enterprises (SMEs), which are the most vulnerable to the coronavirus shutdown and also the slowest to recover. Eight in 10 respondents said that SMEs contributed up to half of their annual revenue, and over one-tenth said that SMEs make up at least 75 percent of their supply chain.
Large companies like Apple and Sony have also seen a number of their production facilities in China reopen, but concerns over a coronavirus resurgence could still cause further delays to the supply chain. Suppliers outside of China are also still dealing with their own COVID-19 outbreaks but have less established infrastructure in place, which means that many manufacturers in China are likely to see supply shortages.
As of April 1, foreign firms can now set up their own money management firms and investment banks without needing a joint venture (JV) partner, or can buy out their existing partners. As China pushes ahead with opening up its $45 trillion finance industry, JPMorgan announced that it is buying out its Chinese partner’s 49 percent stake in their mutual fund JV, making JPMorgan the first foreign asset manager to seek full control of its mutual fund.
China has also granted approval to Morgan Stanley and Goldman Sachs to take majority control over their Chinese securities JV units. Both banks had filed for approval last year.
Morgan Stanley will be raising its stake in its JV, Morgan Stanley Huaxin Securities, from 49 percent to 51 percent, and Goldman Sachs will be increasing its stake in Goldman Sachs Gao Hua Securities from 33 percent to 51 percent.
Just a few days after more than 500 theaters reopened, China suddenly closed all movie theaters again. Although the Chinese government didn’t explicitly state reasons for the closure, it’s speculated that it was due to fears over another potential COVID-19 outbreak. Before China decided to close theaters again, they had planned to rerelease a number of blockbusters, including Hollywood hits like the “Avengers” movies.
China’s theaters have been closed since the Lunar New Year holiday, which is usually the biggest box office weekend in China. China is the world’s second largest box office, and its closure forced many Hollywood studios to delay releases even prior to the novel coronavirus outbreak becoming more widespread in the United States. According to analysts, the global box office could take a $5 billion hit due to the unprecedented number of theater closures not only in China, but the U.S., Japan, South Korea, France and Italy.
Although Nike had to close all of its stores in China during the COVID-19 outbreak, the company said that online sales offset much of the lost retail sales. Digital sales helped Nike beat analysts’ estimates, although the company’s earnings still fell.
According to the Wall Street Journal, about 80 percent of stores that sell Nike products have reopened in China. Nike CEO John Donahoe also reported that digital sales in China are approaching triple-digit growth, and that they will use what they learned during China’s coronavirus closures to inform how they tackle closures in the United States and abroad.
The United States Trade Representative office has granted Apple’s request that the company’s Apple Watch be exempt from tariffs on China, the latest round of which had been halved to 7.5 percent in January. According to the New York Times, Apple had said that it couldn’t find another way to manufacture the watch outside of China that would meet demand over the next year.
Although President Donald Trump had said that Apple would not receive tariff exemptions for its products, many of which are assembled in China, products like the iPhone, iPad and MacBook were not subject to tariffs, while others later received exemptions.