- When it comes to combatting the coronavirus outbreak, Apple has a key advantage that other companies may lack: its close ties to China.
- While Apple’s reliance on China has made the coronavirus particularly troublesome for the company, it also means it has been keeping a close eye on the situation and has likely been preparing for a worst-case scenario far earlier than many other businesses.
- Apple took the latest step in its battle to combat the coronavirus outbreak by closing all stores outside of Greater China until March 27.
- Apple’s actions could serve as a blueprint for how other retailers can contain the outbreak, says Wedbush securities analyst Dan Ives.
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For much of the world, the severity and ongoing ramifications of COVID-19, the coronavirus disease, have come as a shock. For many, the pandemic has uprooted business operations and social norms, as companies across the United States are grappling with new remote-work policies and the general public adapts to social distancing – disruptions that the Centres for Disease Control and Prevention warned about several weeks ago.
But while the ramifications of the virus will undoubtedly have strong impacts to Apple’s business, kneecapping its March quarter, the tech giant also has a key advantage that others may lack in this scenario: its close ties to China.
Apple’s reliance on China, its third-largest market and home to most of its supply chain, has put the company in a unique position when it comes to handling the coronavirus pandemic. Namely, Apple’s closeness to the situation from the beginning has left it preparing for a worst-case scenario far earlier than most other businesses.
Its responses throughout the outbreak, like announcing late Friday it would temporarily close all retail stores outside of Greater China, are worth watching as a sign of what may be to come for the rest of the world.
Last month, the company made the decision to keep its stores in China closed for longer than it had initially intended to on February 7, just days before the number of new daily COVID-19 cases in China peaked, as shown in the chart below. It gradually re-opened stores with limited hours in the country as the outbreak in China began to slow. On February 24, for example, more than half of Apple’s stores in China had reopened, coming as the number new daily cases had dropped from more than 2,000 on February 17 to 415 on February 24. All stores in China were opened again by March 12, just after the number of new cases in China had dropped to single digits on March 9.
Apple’s quick response was not isolated to China. The company restricted employee travel to Italy and Korea on March 3, as Bloomberg first reported, just days before the number of new daily cases began to jump significantly in Europe and the rest of Asia. On March 11, Apple closed all of its stores in Italy as the country reported its highest death toll in a single day from the virus.
Most recently, Apple announced late Friday that it would close all of its retail stores outside of Greater China until March 27 – a move that comes as countries around the globe besides China are struggling to contain the spread.
The company’s other actions as well, like moving global employees to remote-work arrangements when possible and previously encouraging social distancing at stores, could serve as a blueprint for how to handle the outbreak in other markets. Apple’s decision to close all stores in the United States and Europe, in particular, signal that those regions may be at moments of continued escalation.
“They’re going to use the same playbook that ultimately helped China navigate this unprecedented outbreak,” Daniel Ives, an analyst with Wedbush Securities, told Business Insider.
Apple CEO Tim Cook also acknowledged this in a letter announcing the company’s latest efforts.
“What we’ve learned together has helped us all develop best practices that are assisting enormously in our global response,” he wrote.
According to Ives, Apple’s store closures will likely service as an example for other retailers to follow in the coming days and weeks.
“By Apple ripping the Band-Aid off sooner rather than later from a containment perspective,” he said, “it’s going to open up the floodgates for more to do this.”
The coronavirus outbreak started in Wuhan, China, before spreading throughout the country and the rest of the world. It has now killed more than 5,400 people worldwide and sickened more than 145,000. In the US, the virus has killed 50 people and infected 2,300, with cases being reported in at least 49 states and Washington, D.C. The coronavirus has impacted 115 countries and nearly 1,500 people have died outside of mainland China.
The closures will likely have a tremendous impact on Apple’s business in the near-term, according to Ives, although he added that most investors have already written-off the March quarter and are looking ahead to the next six to 18 months. Apple will be in a position to deliver its long-anticipated 5G iPhone by the end of the year if its supply chain can be fully recovered by early May, Ives said.
That may indeed be the case as conditions are starting to improve in China. In early March, the Chinese government released figures that indicated the outbreak was coming under control in the country, saying that the number of people who had recovered from the sickness had now outnumbered those who had fallen ill.
“Right now, in the US there’s a panic for toilet paper and soup,” Ives said. “In China they’re buying iPhones today.”
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