Economies have also suffered in other countries with large SARS outbreaks, according to assessments issued this week. Taiwan's Council of Economic Planning and Development reported steep declines in many industries this week, while Morgan Stanley warned that Singapore appeared to be headed into another recession.
Andy Xie, a Morgan Stanley economist, said that companies ranging from sausage makers to paper makers had been complaining to him that stores in China had stopped ordering new supplies because of bulging inventories of unsold goods.
At Lee Fung China Ware, a large store in downtown Hong Kong selling porcelain vases and bone china plates in many hues, sales are deeply depressed, said Lily Wong, a sales representative. Foreign tourists used to account for a third of sales, yet not one has come to the store since March.
Sales to local residents leaped on May 23 in the euphoria that erupted when the World Health Organization lifted its advisory against travel here, Wong said. But these transactions plunged again a day later and remain 40 percent below their pre-SARS levels; the store has told its supplier, a factory in southern China, to halt shipments.
Multinationals' long-term enthusiasm for investing in China, from building factories to setting up new sales networks, appears to have survived the SARS outbreak this spring.
But company officials warn of delays in negotiating deals and performing due diligence inspections in China, however, which could easily reduce the pace of investment flows through the rest of the year.
A few businesses are still entering the market. Heller Ehrman White & McAuliffe LLP, a San Francisco-based law firm with 660 lawyers, has just hired 19 lawyers from a firm here in order to expand substantially its Hong Kong practice.
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