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By SAMANTHA MARSHALL
It may be halfway around the world from China, but the impact of severe acute respiratory syndrome is already being felt in midtown Manhattan. Call volume has surged 50% at the Third Avenue headquarters of BChinaB, a company that manages a sprawling network of factories and distributors in China. Nervous potential clients are calling to see if they can use BChinaB to replace their own networks of suppliers and save themselves the necessity of traveling to Asia. "In this kind of emergency we can step in and help," says Jeremy Haft, a co-founder of the Manhattan-based outsourcing agency. A handful of metro area businesses that are in similar positions are reporting a surge in inquiries about their services. It comes as industries from investment banking to garment wholesaling struggle to find ways around business travel to Hong Kong, China, and now even Toronto. Manufacturing middlemen like BChinaB and Li & Fung USA, as well as technology companies and videoconferencing-call centers, are noticing increased interest from reluctant business travelers, as they search for long-term substitutes for face-to-face business meetings and visits to the factory floors in SARS-threatened areas. The interest signals a dawning realization that SARS is here to stay. Two weeks ago, most business travelers believed that the contagious respiratory disease would be contained, and business would resume as usual. Trips to Asia were postponed rather than canceled. Companies calculated that they could rely on overnight shipping to check on sample quality and webcams to monitor production and ensure all was on track for deliveries by the Christmas sales season. But the latest headlines suggest that the SARS crisis is far from over. "As time goes by and SARS doesn't go away, businesses are suddenly realizing that they need a backup plan," says William Xin, a former Chinese dissident and Mr. Haft's partner at BChinaB. Letting others look Instead of traveling to the epicenter of the disease themselves and risking infection, companies with production in China are turning to agencies like BChinaB, which has been fielding hundreds of inquiries from potential new clients over the past month. BChinaB works with 1,500 factories, tool and die shops, materials suppliers and plastic molders in China. There, it has 15 workers, mostly quality assurance engineers, on the ground. Its clients include manufacturers of medical supplies, auto parts, home appliances and plumbing fixtures. By using an outsourcer, U.S.-based executives can get a price quotation and sample made in less than half the time than it would take if they dealt with Chinese makers directly, and without leaving U.S. soil. Not all calls to BChinaB will lead to new business deals, which can take months to negotiate. In fact, outsourcing to an agency with its own production resources in China is just one of many possible solutions, short of switching production to Mexico or elsewhere far removed from SARS. But to date, more than 15 potential BChinaB customers are mulling $60 million worth of price quotations as they await their first production samples. Many New York area companies hesitate to attribute the increased client interest in their services directly to SARS. Instead, they talk about a confluence of circumstances, including the war in Iraq and terrorism threats, as leading production-based businesses to consider alternatives that will limit the necessity for overseas travel. "It's almost like the perfect storm," says Rick Darling, president of Li & Fung USA, a Manhattan-based production outsourcing agency that focuses mostly on the consumer goods industry. Mr. Darling is also getting more calls recently. In the last year, the company has doubled its size to 110 employees. Sellers of technology such as videoconferencing and quality assurance software report an uptick in inquiries, too. Calls to Glen Rock, N.J.-based Radvision, which installs the infrastructure to support videoconferencing, have spiked at least 30%. The company doesn't sell the cameras and monitors for videoconferencing. Most firms, says Rich McKay, Radvision's director of strategic accounts for the Northeast region, already have such hardware lying in a corner somewhere collecting dust. Signs of seriousness Instead, Radvision provides networks to make the equipment more user-friendly, producing sharper images and eliminating the slight lag between voice and video. When customers come to Radvision, where installation prices range from $50,000 to $2 million, it suggests that they're planning to use the technology as a long-term replacement for business travel, says Mr. McKay. Smaller companies, meanwhile, are turning to videoconferencing centers like Rudin Management Co.'s Digital Sandbox Network Event Center on Broad Street. Call volume has gone up 15% to 20% in the last several weeks. In the last few days, Mr. Gilbert has been considering expanding his marketing efforts to reach out to businesses such as toy and garment companies. He says, however, that he is reluctant to do so for fear that he might be seen as turning a deadly disease into a marketing opportunity. With more and companies following the lead of such multinationals as AIG and Goldman Sachs, and prohibiting their employees from traveling to China, firms like Mr. Gilbert's may have all the business they can handle even without marketing. |
