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Covid19 and the Chinese Private sector

23rd January 2020

By now everyone has heard about this new coronavirus that originated a few weeks ago in the city of Wuhan, the capital city of Hubei in Central China (the 6th largest city of China with 11 million people including 2 million migrant workers) and that has led to the shutdown of the city’s airport, the train station, the subway network, the ferry pier and all bus stations to avoid further virus spread.

The purpose of this communication is not to repeat what is already covered by western newspapers, but to highlight what most likely has not been disseminated out of China, which is the reaction of the private sector to this situation. We are flagging these private initiatives as they are new to us and as we believe they reflect to some extent the recent evolution of Chinese society in terms of social responsibility as the country is gradually becoming less individualistic, in our views. Specifically, the following announcements were made by various companies over the past 24 hours:

 ·       In response to the rise in mask prices and out-of-stock situations caused by the new coronavirus pneumonia epidemic, mainstream e-commerce platforms including Taobao [Alibaba], JD.com and Pinduoduo collectively stated that masks sold by platform merchants are not allowed to see their prices rise.

·       Eleme and Meituan, the two largest food-delivery companies have announced having taken anti-epidemic prevention measures in delivery and have suspended delivery services to some hospitals in Wuhan.

·       Taobao Ticket and Maoyan, two cinema ticketing online platforms are providing free cancellation of all movie tickets in Wuhan during the Chinese New Year holiday

·       Cainiao Logistics and Tmall Supermarket [both subsidiaries of Alibaba] will guarantee the supply of various protective supplies such as masks, disinfectant, hand sanitizer, etc. to 300 cities over the Chinese New Year holiday. Cainiao Logistics has already distributed nearly 10,000 masks, thousands of sulfur soaps and other preventive materials to staff including front-line distribution staff in Wuhan.

·       From January 22 to January 31, Amap, an Alibaba company, the Google map of China with car-hailing feature among many other valued-added services embedded, will refund all ordinary bookings and transfer bookings in Wuhan (no limit to the starting and ending points, including round-trip airport and train station) if such bookings are cancelled.

·       Meituan, Ctrip and Fliggy, three online travel platforms provide a free cancellation policy for bookings of hotels, tickets and cars in Wuhan during the Chinese New Year holiday

·       JD Logistics has launched an emergency plan to ensure uninterrupted logistics services in nearly 300 cities and thousands of districts and counties during the Chinese New Year holiday, with priority given to orders designated by medical institutions.

We also want to highlight that even though it’s still difficult to gauge the impact of the Wuhan coronavirus, the Chinese government is much more prepared to handle similar situations. They have learned from the lessons during SARS in 2002-2003 and understood the cost of staying in denial. As such, we don’t give any credit to market rumours that the Chinese government intentionally covered up the reality for the sake of saving face this time again, as it has started being suggested by certain media.

As far as Hong Kong is concerned, two persons have been identified so far and sent to hospital. Hong Kong having been at the epicentre of the SARS outbreak of 2002/2003, local health authorities are quite likely well trained to handle the situation should it deteriorate. Other than spotting an increasing number of people wearing masks in the street, life is normal.

 

Fabrice Jacob

The information contained herein is issued by JK Capital Management Limited. To the best of its knowledge and belief, JK Capital Management Limited considers the information contained herein is accurate as at the date of publication. However, no warranty is given on the accuracy, adequacy or completeness of the information. Neither JK Capital Management Limited, nor its affiliates, directors and employees assumes any liabilities (including any third party liability) in respect of any errors or omissions on this report. Under no circumstances should this information or any part of it be copied, reproduced or redistributed. 

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