The new coronavirus (nCoV) pneumonia outbreak that began in Wuhan has reached 7000 cases and has killed more than 100 people in China. As a result of the delayed start of work, the related enterprises in Wuhan, which is one of China’s six main cluster development cities of the auto industry, may experience risks of reduced orders, lower revenues, and growing debts.

 

    Based on the interface news report, Wuhan is one of China’s six main cluster development cities of the auto industry and its manufacturing's total output value accounts for more than 20% of the city’s total manufacturing output value. In addition to the auto manufacturing industry, the communications electronics and biomedical industries are also important local industries. However, these industries are currently facing the risk of the Wuhan pneumonia epidemic.

 

    Dongfeng Motor Corp. is particularly considered as the second-largest vehicle manufacturing company in China and its headquarters are located in Wuhan. In 2019, 3 of China’s top 10 manufacturers for passenger cars had factories in Wuhan, namely SAIC General Motors Co., Ltd (SAIC-GM), Zhejiang Geely Holding Group Co., Ltd (ZGH), and Dongfeng Honda Automobile Co., Ltd.

 

    Since the Wuhan Economic & Technological Development Zone has the world’s most densely occupied auto plants besides Dongfeng passenger cars, Dongfeng New Energy, Dongfeng Honda, Dongfeng Renault, Dongfeng Fengshen, Shenlong, Geely, and other auto corporations, the area has also gathered 500 auto parts companies and more than 14 provincial-level R&D institutions, including Dongfeng, Valeo, and the Cummins East Asia R&D Center.

 

    In 2018, Wuhan manufactured a total of 1.7 million passenger cars and the auto industry contributed a total output value of RMB 320 billion. In the first half of 2019, the city’s top 5 passenger car enterprises produced a total of 76.23 million in vehicles, amounting to the total output value of RMB 94.065 billion.

 

    Wuhan’s communications-electronics and biomedical industries have also been successful in recent years. According to the Wuhan Municipal Government, Wuhan has developed three major industrial chains, namely communications optoelectronics, energy optoelectronics, and consumer optoelectronics. The city’s production scale of fiber optic cables is also the largest in the world while accounting for 2/3 of the domestic market and 1/4 of the international market. The city’s local market shares of optoelectronic devices and optical transmission equipment are 60% and 10%, respectively.

 

    Biomedical is also an important industry in Wuhan. Its national bio-industrial base has gathered more than 1500 biomedical companies. Based on the data of the Ministry of Science and Technology in China, the comprehensive strength of Wuhan’s national bio-industrial base ranked 3rd in the country in 2018. In October 2019, Wuhan’s biomedical industrial cluster was selected as one of the first 66 national strategic emerging industry clusters in China.

 

Given Wuhan’s significant industrial standpoint, such as auto manufacturing, communications electronics, biopharmaceutical, etc., the examination considered that the outbreak may have a significant impact on the industry chain for these businesses. As a result of the delayed start of work, these enterprises may experience the risks of reduced orders, lower revenues, increasing debts, etc. (News source: CNA）