How Coronavirus Could Impact Promo Products Industry

By Sean Norris

The following article was originally published by Print & Promo Marketing. To read more of their content, subscribe to their newsletter, Print & Promo Marketing Headlines.

As of January 31, there were more than 7,700 confirmed cases of coronavirus (2019-nCoV) in China, with 170 deaths. Multiple other countries, including the U.S., India, Japan and several European nations, reported confirmed cases, as international airlines suspended service to China and travel restrictions took hold across the globe. In the promo industry, which relies on China for the majority of its products, the situation is causing some anxiety, with some wondering how coronavirus could impact business.

First, let's allay some fears. According to the Centers for Disease Control and Prevention (CDC), it's highly unlikely this coronavirus can spread via promo products shipped from China. In a FAQ on its website, the CDC noted that neither SARS nor MERS—two other, similar coronaviruses that reached epidemic levels in the past—spread in this way. While this doesn't necessarily guarantee that 2019-nCoV will behave the same, it's a good sign.

“In general, because of poor survivability of these coronaviruses on surfaces, there is likely very low risk of spread from products or packaging that are shipped over a period of days or weeks at ambient temperatures,” the CDC said in the FAQ. “Coronaviruses are generally thought to be spread most often by respiratory droplets. Currently there is no evidence to support transmission of 2019-nCoV associated with imported goods and there have not been any cases of 2019-nCoV in the United States associated with imported goods.”

Still, the industry will likely feel the impact of coronavirus in other ways—notably in factory disruptions in China as the country works to contain the virus. This time of year, production periods are already affected by the Chinese New Year, but China announced on Monday that it would extend the holiday by a few days in attempt to prevent the spread of the coronavirus. That means Chinese factories will not resume production until, at the earliest, Thursday, Feb. 6. If the situation doesn't improve, the Chinese government could extend the holiday even further.

"The coronavirus is impacting China's factory production in varying degrees depending on the province and/or city where the factories are located," said Dan Taylor, president and CEO of BamBams. "In the Fujian Province, where our office and a few of our factories are located, the provincial government is delaying when workers can or should return to their jobs following the Chinese New Year holiday by about five days. My best guess is that the beginning of production post CNY will be delayed by about one week."

"Yes, we have been talking closely with all of our factories," Yuhling Lu, vice president of Ariel Premium Supply, told Promo Marketing. "They are having some concerns of the extension of the official Chinese New Year. This will impact every sector of their economy and will delay them getting back to work quickly. It is also possible the government could extend CNY longer. Our factories are concerned about possible delays with their employees too. They are worried that even when the travel restrictions are lifted, some still may not come back fearing the virus. This will leave them very short handed to produce orders."

Lu noted a few other potential related issues, as well.

"Overall, our factories are worried about production deadlines, a backlog in shipping logistics, their employees' health and what kind of health precautions the government will make them do," she said. "So we are working with all of them to prioritize orders and try and be as flexible as possible. For all of these reasons we are pretty sure there will be some disruption to all of our supply chain."

The CDC also issued a level 3 travel notice, the agency's highest, advising against any nonessential travel to China. This could have secondary impacts for North American promo suppliers with staff and offices in China, limiting their ability to travel freely (or at all) between sites. It could also impact travel to the Canton Fair and Hong Kong Gifts & Premium Fair, two major Chinese promo products trade shows scheduled for April.

CDC recommends travelers avoid all nonessential travel to #China due to the ongoing #2019nCoV (#coronavirus) outbreak. The outbreak is growing and there is limited access to adequate medical care in affected areas. https://t.co/Km38IKxIAs pic.twitter.com/NHboTImlyr

— CDC Travel Health (@CDCtravel) January 27, 2020

Jing Rong, vice president of supply chain for Hub Promotional Group, told Promo Marketing that the supplier had already ramped up inventory levels in preparation for the usual production slowdown around the Chinese New Year, and doesn't expect any significant issues as long as the coronavirus situation improves over the next month. But she pointed out that the toll from the virus extends well beyond economic concerns.

"That said, as Chinese New Year is the largest annual human migration in the world (with an estimated 3 billion people traveling to be reunited with their families during this once-a-year ritual), many migrant workers have not seen their children for an entire year," she said. "So, while the economic impact has been an obvious concern, the widespread quarantines are causing an emotional toll on many families. Please keep them in your thoughts and prayers."

We reached out to other industry suppliers and will update this story (or continue our coverage) as more information becomes available.