A DUN & BRADSTREET WEBINAR The Worldwide Business Impact of the Coronavirus and How to Safeguard Your Supply Chain MARCH 16, 2020
Today’s Panel of Experts Brian Alster Markus Kuger Andrew Wu General Manager Chief Economist General Manager Third-Party Risk & Dun & Bradstreet Mainland China & Compliance Solutions Hong Kong SAR Dun & Bradstreet Dun & Bradstreet
Agenda – Supply Chain Impact – Macroeconomic Impact – Recovery in Greater China – Q&A and Closing Comments DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 3
Supply Chain Impact Brian Alster, General Manager Third-Party Risk & Compliance Solutions
Overview: Business Impact CONFIRMED CASES OF THE CORONAVIRUS • The World Health Organization (WHO) has now declared the coronavirus outbreak a pandemic • Dun & Bradstreet has been performing ongoing analysis of cities and locations most impacted by government-enforced restrictions to determine supply chain and customer portfolio risks Source: World Health Organization, Esri | WHO; as of March 15, 2020, 4pm CET DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 5
What Does This All Mean For Supply Chains? SUPPLIERS BUSINESSES IN MOST IMPACTED LOCATIONS: DISTRIBUTION BY INDUSTRY In locked down cities 30% and territories 26.2% 25% 21.7% 1M+ 5.6M 20% 15% 11.6% 10.6% companies companies 9.8% worldwide have one or 8.5% 10% 7.1% have one or more Tier 2 more Tier 1 suppliers 4.3% 5% suppliers 0.2% 0% Source: Dun & Bradstreet; March 12, 2020 DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 6
Impact via Corporate Linkage Remains Significant GLOBAL HEADQUARTERS DISTRIBUTION OF BUSINESSES IN THE MOST IMPACTED REGIONS: TOP 5 COUNTRIES ≈32K 16.4% USA businesses in businesses operating France 10.0% impacted areas have in impacted areas are 49.8% Germany corporate ties branches or subsidiaries throughout the globe of companies 9.3% Spain headquartered UK elsewhere 8.4% 6.2% Others Source: Dun & Bradstreet; March 12, 2020 DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 7
Shipment Patterns Reveal Products that Run the Risk… TOP 10 EXPORTS TO THE WORLD FROM THE MOST IMPACTED LOCATIONS AS A PERCENTAGE OF TOTAL EXPORT VALUE 1.9% Toys, games and sports requisites 2.0% Organic chemicals 2.2% Iron or steel articles 2.3% Optical and photographic equipment 2.5% Vehicles; parts and accessories 2.6% Plastics and articles thereof 3.2% Furniture and related articles 4.8% Apparel and accessories 17.6% Nuclear reactors, boilers and parts 21.8% Electrical machinery, equipment and parts 0% 5% 10% 15% 20% 25% Source: Dun & Bradstreet; March 12, 2020 DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 8
…of Shortages as the Outbreak Has Become a Global Pandemic U.S. IMPORTS FROM THE MOST IMPACTED LOCATIONS AS A PERCENTAGE OF TOTAL IMPORTS 62.8% Plastic or Rubber Footwear 65.7% Articles and Equipment for Physical Exercise 69.0% TV Receivers, Video Monitors and Projectors 69.5% Plastic Articles 73.0% Electric Water, Space, and Oil Heaters 75.5% Hand tools and parts 84.2% Floor & Wall Covers 84.7% Toys, Scale Models, Puzzles, and Parts 85.0% Tableware & Household Articles 86.4% Light Fittings Source: Dun & Bradstreet; March 12, 2020 DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 9
How Can Businesses Prepare? Develop a risk- Monitor your full Understand and based assessment supply chain – both identify alternative process for your Tier 1 and Tier 2 suppliers – limit supply chain – both dependencies onboarding and ongoing monitoring DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 10
An Insight Into Alternative Suppliers TOP PRODUCTS IMPORTED FROM CHINA AND POSSIBLE ALTERNA TIVE SUPPLIER COUNTRIES Product Possible alternative supplier country Electrical machinery, equipment, and parts Brazil Nuclear reactors, boilers, and parts Chile, Singapore Furniture and parts Mexico T oys, games, and sports requisites Mexico, Brazil Plastics and articles made of plastic Mexico, Brazil Motor vehicles and parts Chile, Colombia, India Apparel and clothing accessories Brazil, Canada Optical, medical, and surgical instruments Colombia, Brazil, India Source: UN Comtrade and Dun & Bradstreet; February 5, 2020 DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 11
Macroeconomic Impact Markus Kuger, Chief Economist
Recent Updates Regarding the Coronavirus “What we’ve actually done is utilize our supply chain data and we’ve found that over five million companies around the globe have a direct, or a second tier supplier in the impacted region, Besides supply chain impact, Several central banks have cut which really goes to tell you how impactful this has become.” coronavirus pandemic is a interest rates (including the US – Brian Alster, General Manager, Third-Party Risk & Compliance, Dun & Bradstreet severe demand shock Federal Reserve and the Bank of England) "A special briefing issued by global business research firm Dun & Bradstreet analyzed the Chinese provinces most impacted by the virus, and found they are intricately linked to the global business network." Dun & Bradstreet has Governments have announced downgraded country risk fiscal stimulus packages and ratings for several economies measures to help ailing “A Chinese quarantine applying to roughly 60 million people – more than the population of Spain – interrupted routine in response to the recent businesses business operations for almost every member of the Fortune developments 1000 list.” – Dun & Bradstreet DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 13
What Impact is the Coronavirus Pandemic Having on the Markets? ADDITIONAL FACTORS ADDING STRAIN TO SYSTEM Pandemic comes at Stock markets are Exchange rates: US Oil prices dropped a time when global highly volatile with dollar is gradually by more than 20% on economic headwinds airlines, tourism, and losing its interest 9 March (biggest drop were already high . banks currently seeing rate advantage since 1991) Economies like Italy above-average drops in as the US Federal Other commodity prices and Japan are probably share prices Reserve has cut rates, also falling (except gold) already in recession thereby creating upward with others to follow pressure on currencies like the Euro and the Swiss Franc DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 14
Recovery in Greater China Andrew Wu, General Manager Mainland China and Hong Kong SAR
Recovery is Underway in China CURRENT CONFIRMED CASES/SUSPECTED CASES/ CURRENT CONFIRMED CASES CUMULATIVE CONFIRMED CASES MAR 12: MAR 12: Current Confirmed Cases: 13,607 National: 13,607 Suspected Cases: 147 Hubei: 13,171 Cumulative Confirmed Cases: 81,003 Non-Hubei: 436 National Hubei Non-Hubei Current Confirmed Suspected Cumulative Confirmed (Data as of Mar 12) (Data as of Mar 12) Data Source: https://voice.baidu.com/act/newpneumonia/newpneumonia/?from=osari_pc_1 Chinese Only DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 16
Recovery is Underway in China CUMULATIVE CONFIRMED CASES BY PROVINCE CURRENT CONFIRMED CASES BY PROVINCE (Data as of Mar 13) (Data as of Mar 13) Data Source: https://voice.baidu.com/act/newpneumonia/newpneumonia/?from=osari_pc_1 Chinese Only DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 17
Strong Measures Taken to Restrict Movement of People Chinese authorities implemented agile “social distancing” measures across the entire country to contain the spread of the coronavirus Low Risk Medium Risk City Lockdowns: Self Quarantine: Social Distancing in other regions: High Risk RISK LEVEL IN HUBEI PROVINCE Mar 3 rd Mar 9 th Low Risk • No confirmed cases or no new confirmed cases for 14 consecutive days Medium Risk • New confirmed cases, but cumulative confirmed cases ≤ 50 • Cumulative cases > 50 but no cluster outbreak in 14 days High Risk • Cumulative cases > 50 and have cluster outbreak in 14 days Data Source: Wechat Article DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 18
National Efforts: Fighting the Coronavirus while Calling for Production Resumption China has rolled out China is meticulously D&B China’s Efforts: • Medical Supplier Directory: D&B China perhaps the most expanding business ambitious and agile operations with a provided 10,000+ overseas medical suppliers disease containment precise approach that directory to public • Free Credit Check: D&B China also provided effort in history prioritizes regions a free credit check offering to the public to help organizations and companies mitigate foreign trade risks as our contribution to battling the coronavirus in China DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 19
Population is Returning to Work Locations Baidu Migration scale index reflects the size of the population moving in, and can be compared between cities Wuhan 2020 Migration scale index (2020 CNY Holiday Travel Season) Beijing 2019 Migration scale index (2019 CNY Holiday Travel Season)) Shanghai Data Source: Shenzhen https://qianxi.baidu.com/?from=shoubai#city=0 Chinese Only DUN & BRADSTREET WEBCAST | CORONAVIRUS IMPACT | MARCH 2020 20
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