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News 13.02.2020

Business Finland looks into the impact of the coronavirus outbreak on Finnish companies

Travel restrictions between China and the rest of the world resulting from the coronavirus outbreak will also have an extensive impact on Finnish companies. The first to be affected by the outbreak will be travel companies, which will suffer direct financial losses. If the crisis continues, its impact will also spread to other areas of the economy. Business Finland, which is analysing the overall situation among Finnish businesses, recommends that companies prepare for challenges in the availability of materials imported from China.

In addition, measures taken to restrict the spread of the coronavirus in China and elsewhere will affect international trade directly and indirectly. The Finnish economy and companies will also be affected.

- One of the first direct effects, and the most obvious one, will be the financial losses suffered by the tourism industry because of cancellations by Chinese travel companies. Business Finland's Visit Finland unit is closely monitoring developments in this area. Direct trade by other companies will also slow down due to disruptions in supply chains from China. If it continues, the impact of the crisis will also spread to other areas of the economy. The knock-on effects will be felt by a large number of companies. The actual overall impact of the outbreak on the global economy will only become clear over several months, says executive director of Business Finland, Kalle Kivekäs.

- In today's business world, supply chains are dependent on the global flow of goods. Any sudden changes in global supply nodes, such as China, will have a widespread impact. In addition to China being a major export market for numerous companies, it is also an important manufacturer of parts and materials used in the production of intermediate goods and finished products the world over, adds Kivekäs.

Business Finland recommends that companies prepare for challenges in the availability of materials imported from China

Several scheduled flights between mainland China and the rest of the world have been cancelled because of travel bans. These flights are important not only to tourism, but also in terms of air freight. Even though air traffic to China has not come to a complete standstill, the air freight capacity has decreased because of the cancellations, which is reflected in air freight costs.

- To contain the outbreak, the Lunar New Year holidays were extended, and quarantines were imposed on people who travelled during the holiday, which has affected the availability of workers. These precautionary measures are having a direct impact on production and transport operations in China. Production facilities located in Hubei province, particularly in Wuhan, have been hit the hardest because of the lockdown in the region.

Kivekäs says that it may come as a surprise to some companies that the availability of parts they need for their production is affected because of dependence on Chinese manufacturers.

- Companies should take steps to determine how dependent they are on China and consider measures to manage risks related to the availability of parts, when necessary.

- We monitor the situation in the business sector, and we sent a survey to companies this week, with a view to analysing the impact of the coronavirus on clients' operations. At the same time, we asked what kind of expectations businesses had with regard to our response to the situation. We want to determine how we can best help companies weather this crisis, for example, via our global network, explains Kivekäs, who is a member of Business Finland's executive team.

Measures to support research into the coronavirus are also being planned. The EU's Horizon 2020 programme has allocated EUR 10 million a year for the mobilisation of research funds in case of public health emergencies, and this funding will now be made available. The European Commission is inviting applications from research projects related to the coronavirus. The deadline for applications is 12 February 2020.

Companies can send questions related to the matter to Business Finland by email to coronavirustaskforce@businessfinland.fi.

Links related to the topic

The Finnish Institute for Health and Welfare (THL) publishes the latest updates on the coronavirus in Finnish, and similar information is available in English, for example, on the WHO's coronavirus webpage.

The international research and advisory company Gartner provides information related to supply chains

News related to shipping is available on the website of Port Technology

Applications related to coronavirus research (in Finnish)

For further information, contact

Kalle Kivekäs, Executive Director
kalle.kivekas (at) businessfinland.fi
+358 50 482 1095

Business Finland is a public organisation that offers innovation funding as well as internationalisation, investment and travel promotion services. Business Finland employs 600 specialists in 40 locations round the world and in 20 regional offices in Finland. Business Finland is part of the Team Finland network. www.businessfinland.fi

Measures to support research into the coronavirus are also being planned. The EU's Horizon 2020 programme has allocated EUR 10 million a year for the mobilisation of research funds in case of public health emergencies, and this funding will now be made available. The European Commission is inviting applications from research projects related to the coronavirus. The deadline for applications is 12 February 2020.

Text: Maria Arruda