China bird flu: business catches a cold

By Stefan Wagstyl in Hong Kong and Leslie Hook in Beijing

Chinese businesses from rural poultry farms to the luxury Shanghai Four Seasons hotel are beginning to feel the impact of a bird flu outbreak that has killed nine people.

Taobao Marketplace, the ecommerce platform of the Alibaba internet group, confirmed that as of Thursday it had banned online trading of live poultry in the Shanghai region.

The Four Seasons was among several upmarket Shanghai hotels to take chicken off the menu. Some international schools in the city have removed eggs and poultry from their cafeterias and started doing temperature checks on people entering their campuses. And the KFC fried chicken chain, one of China’s most successful foreign restaurant chains, has seen a fall in sales.

The outbreak of a new form of bird flu – H7N9 – has seen 33 people fall ill including the nine who have died, according to the government.

Aware of public anger over the secrecy that surrounded the handling of the SARS epidemic a decade ago, the authorities have this time been more forthcoming with information. They have taken well-publicised counter-measures, notably in closing poultry markets in Shanghai this month.

But Chinese citizens have still questioned on the internet whether they are getting the full story about the new virus.

The World Health Organization has said that there is, as yet, no evidence that the virus is being passed from one human to another.

The reported cases have been confined to eastern China and concentrated in Shanghai, the country’s financial capital.

Taobao said that, for now, poultry products sold online in other provinces in China outside Shanghai were not affected by its ban. But the company said that if it received any new directives from the government, they would be implemented, including suspending poultry sales in other areas.

The poultry is sold by farms, mainly to individual buyers. Producers claim the birds are live at the point of order; they are then slaughtered and shipped in vacuum-sealed packaging. One farmer in rural Zhejiang province, near Shanghai, said his sales had fallen from 100 birds a month before the outbreak to “almost zero now”.

Yum! Brands, which owns KFC, said in a statement on Wednesday:

Within the past week, publicity associated with Avian flu in China has had a significant, negative impact on KFC sales.

KFC had already been struggling after a media storm over antibiotics found in its chicken. In March, prior to reports of H7N9, KFC’s monthly same store sales were down 16 per cent from the previous year, according to Yum.

Some Chinese companies are starting to cancel business trips or ban meetings. Online retailer JD.com sent a letter to staff over the weekend asking them not to meet clients or go on business trips. However, with no human-to-human infections yet confirmed, most companies are conducting business as usual.

Meanwhile, the latest outbreak may be an opportunity for ecommerce as fears of infection prompt more people to stay home and shop online. Cao Lei, a director at the Hangzhou-based China e-Business Research Center, told Bloomberg that the 2002-2003 SARS outbreak helped make ecommerce popular just as it was getting started.

Additional reporting by Patti Waldmeir in Shanghai, Li Wan in Beijing and Julie Zhu in Hong Kong

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