With Coronavirus causing concern, we thought it might be instructive to see how the industry was affected by SARS back in 2003.

Here’s the analysis we wrote then:

While SARS  is dealing devastating blows to service industry in China, its damage to the electronics industry in the country appears to be limited in the short-term.

Long-term, however, huge question marks remain.

The most disruptive part is at the moment is that most companies have put on hold all business trips and are reducing face-to-face meetings.

While the spreading of the virus is abating after the much-delayed governmental efforts,industry exec- utives are watching the development with care,speeding up damage conteol measures and pondering alter- native solutions.

Greg Collins,president of electronic manufacturing services(EMS) firm Flextronics’China operation, said he doesn’t see SARS posinga big problem for his company.

“Due to the precautions we have taken, no employee has been hit by the virus,” he says, “production in China is not scaled back at all because most of the orders we are working on are from worldwide. Except for some single-source components,which are supplied by a single supplier,we have not built up inventory.”

Flextronics operates factories throughout China, employing a total of 34,000 people.Most are in the southern Guangdong province,a manufacturing centre where Flextronics builds most of Microsoft’s X- box game consoles.

It’s also where SARS first emerged and still infects several people a day. So far the virus hasn’t stalled expansion plans here.

Five more factories are on the drawing board. But this clearly is not business as usual.

In early May, Motorola, which has a $1.2bn investment in China, had to re-deploy its 1,000-strong staff at its China headquarters in Beijing to work from home when one Chinese employee in the head office huilding contracted the disease.

Some of the foreign customers of the ENS companies reportedly are wary of accepting shipments from Guangdong.

They are afraid that the deadly virus might survive a 10-day sea journey. But Collins said Flex-tronics has not seen this happen lately.

“Several months ago,some of our customers were very concerned. Now this is not a problem anymore,” he says.

It seems that the bigger EMS players with a global customer base are faring better than the smaller companies, which have to sign up new customers quickly as they expand production.

Hong Kong-based Surface Mount Technology(SMT)has been operating in Guangdong for several years,but its factory in Suzhou only started operation last December.

SMT’s Winald Liu, the operations manager of the Suzhou factory, says many potential foreign customers have cancelled trips to China for on- site inspection and contract negotiation, which makes it more difficult to win new contracts.

“So far none of our new production lines are idle. But our staffers don’t work overtime anymore,” Liu says.

He also expects new additions to production capac- ity to slow down.

At Primax, a Taiwanese manufacturing outfit with extensive operations around Guangdong, Huang Kunyong, manager of the firm’s Dongguan operation, said output is only prone to the ups and downs in the overseas market.

“So far,except the precautions we have taken against the disease, SARS has almost made no difference to our business,” Huang adds.

Investment bank Morgan Stanley predicts that SARS will bring down China’s GDP growth by 0.8 per cent to 5.8 per cent in Q2,but the whole year target will go up to 8 per cent growth.

Since the SARS breakout is still continuing,though waning in China, some overseas investors are reviewing their long-term strategy