Minnesota companies in China finding ways to work around coronavirus’s impact
ST. PAUL — It’s business as usual, almost, for Minnesota companies in China, despite travel restrictions over the coronavirus.
“Our plants remain operational, but we have asked our employees in our Cargill Beijing, Shanghai and Nanjing offices to extend their holiday leave until Feb. 9, in alignment with CDC guidance,” said Daniel Sullivan, spokesman for Minnetonka-based Cargill, which employs 10,000 people in 50 locations in China.
As news broke Tuesday that Hyundai Motor will suspend production in South Korea because the coronavirus outbreak has disrupted the supply of parts (making it the first major car maker to do so outside of China), Minnesota companies remained cautiously optimistic.
“I don’t hear that it’s affecting businesses at this point,” said Larry Mahoney, founder and CEO of St. Paul-based Asia Direct Resource Inc. “The unknown is how bad will it get and how long will it last, but I think businesses can weather this storm pretty well.”
Latest travel restrictions
Company reps who travel frequently between China and the U.S. are finding ways to work around the U.S. State Department’s restrictions by relying more on technology for communication, depending more on in-country management and shuffling start dates for new installations.
On Sunday, the U.S. State Department announced stricter travel guidelines as China struggles to stem the spreading virus which has infected more than 20,600 people in Asia and killed at least 427.
Any U.S. citizen returning to the states who has been in Hubei Province — ground zero for the virus — in the previous 14 days could be held in a mandatory quarantine for up to two weeks. Any U.S. citizen returning to the states who has been in other parts of mainland China will be screened and released to quarantine themselves.
Additionally, President Trump has suspended the entry into the U.S. of foreign nationals who pose a risk of transmitting the virus. All those other than immediate family of U.S. citizens and permanent residents will be denied entry.
Restrictions just inconvenience for now
Travel to and from China is critical for several Minnesota companies, such as Medtronic, Ecolab, Hormel, Cargill, Target and Best Buy, who exported $2.8 billion in goods to China in 2018 and supported 26,900 American jobs in 2017, according to the U.S.-China Business Council.
For Mahoney, whose company pairs factories in China with customers in the U.S., the travel restrictions are inconvenient, but not a deal-breaker.
“Right now I’m in the process of installing three new projects in China,” he explained. “Typically I would travel to China and be part of that installation process. It would be very common for my customer to come over to China and see the factory that will be making his products. Those kinds of things will stop. I’m not going to China, but I don’t need to. I’ve got a big staff there and they can handle it all very well remotely. The technology is there to support the transfer.”
Keeping employee healthy
What companies are concerned about is the health of their employees. None of the Minnesota companies interviewed for this article knew any employee that had been infected with the virus thus far. The extreme restrictions China has put on its own people traveling around the country gives them hope that this crisis will not last unbearably long.
“Our top concern at Medtronic is the health and well-being of our employees across the globe,” said Ben Petok, spokesperson for Medtronic, a medical device company with executive offices in Fridley. “There is currently no known impact of the virus on Medtronic employees, and we continue to monitor and assess business impact daily as events evolve.”
Optical and medical devices are Minnesota’s biggest export to China, totaling $808 million in 2018 alone, according to the Minnesota Department of Employment and Economic Development.
Being good neighbors in China
Some companies are using their resources to help those affected by the virus.
“We are offering support services for any employees who have been exposed to coronavirus or have traveled to Wuhan, and are working to procure face masks for our employees, their families and local communities as a preventative measure,” Sullivan said.
The company has pledged nearly $300,000 to relief efforts through the Chinese Red Cross.
St. Paul’s Ecolab, which has more than 3,000 associates in China, is using its know-how to help.
“We are actively offering our expertise in infection prevention and providing information and products, including hand hygiene solutions and cleaners and disinfectants to help our customers in China reduce the risks associated with this coronavirus outbreak,” said company spokesman Roman Blahoski. “We have also taken several steps to help ensure the safety of our associates in China, including shipping large quantities of face masks and other personal safety products for their use. And we have put our own travel restrictions in place.”
3M, headquartered in Maplewood, makes hygienic face masks many are seen wearing to protect themselves. Because of growing demand, the company is increasing the production of respirators and other personal protective equipment.
3M also has more than 6,000 employees in China.
“3M has donated medical supplies such as respirators, surgical masks and hand sanitizer in affected areas in China,” the company said in a statement. “We will continue to work with our humanitarian aid partners such as Wuhan Red Cross, Direct Relief and MAP International to provide needed equipment.”
Tariff dispute didn't help
It’s been a tough couple of years for companies doing business in China. Besides the coronavirus headaches, the Trump administration first implemented steel and aluminum tariffs in March of 2018, followed by more tariffs on billions of Chinese goods in a retaliatory back-and-forth with the country. The 2018 state figures show an estimated $2.2 billion in exports may be affected by the tariffs.
Those numbers may be overestimated, state officials said, especially now since relations seem to be quelling.
Earlier this month, both sides signed the Phase One Deal, which officially agreed to rollback tariffs, expansion of trade purchases, and renewed commitments on intellectual property, technology transfer, and currency practices.