Medical workers help the first batch of patients infected with the novel coronavirus move into their isolation wards at Huoshenshan (Fire God Mountain) Hospital in Wuhan, central China's Hubei Province, Feb. 4, 2020. (Xinhua/Xiao Yijiu)

A report by Tsinghua University said the novel coronavirus outbreak could negatively impact China’s medium to large-sized enterprises, with over half of interviewed companies by the university cutting their Q1 2020 revenue forecast by 20 percent. 

Although short-term impacts such as a disruption of cash flow or permanent closures are deemed unlikely for medium and large-sized companies, they may face longer-term losses from high operation costs, diminished order numbers, delay of production and supply chain disruption, which many lead to credit and debt defaulting risks, according to research conducted by the China Research Center for Enterprise M&A and Development at Tsinghua University.

Delays in production are among the most prominent concerns of companies. From February 15, less than 27 percent of these companies can survive more than a month if they do not resume production quickly. And 26 percent of companies may last merely a week. 

Companies are reporting they will need a week to a month to resume full operations, further weighing on their operation costs. 

Unlike small to medium-sized enterprises, cash flows can sustain larger for the large companies, but 23 percent of interviewed companies still say their cash flows will be drained within three months. 

The coronavirus outbreak is pushing new trends in different industries. Over half of the interviewed companies say the epidemic will speed up the digitalization of their operations, and around 37 percent are set to increase investment in the mid to long term. 

However, industries that still rely heavily on offline production, such as manufacturing, are more susceptible to disruptions in supply chains, the report said. Finance and investment businesses as well as those in the customer service industry are more prone to credit and debt defaulting risks.

To buffer the impact of the coronavirus outbreak, medium and large sized companies are anticipating more preferential tax measures to ease the burden on their operations. Interest rate cuts and financial aid are also among the most needed supportive policies, according to the report. 

Global Times