The Severe Acute Respiratory Syndrome (SARS) is cutting a swathe through the operations and profitability of the market research industry in Asia as overseas clients cancel travel for briefing meetings, observing focus groups, and finalizing new contracts, often with just a few days notice. This has been caused by a dramatic increase in the number of overseas countries such as the US, Australia and European countries posting travel advisories against travel to most severely affected countries such as Hong Kong, China, Singapore and Vietnam. This effectively bans all government or quasi government authorities from travel to affected countries, passing through affected ports, or even a blanket ban on travel to Asia.

For at least two weeks many major companies in Singapore, Australia, the US and Europe have placed a ban on almost all travel, including that to relatively risk free countries such as Thailand, South Korea, Indonesia, and Malaysia. Just yesterday, the World Health Organization (WHO) finally issued a statement discouraging all travel to Hong Kong and China.

In our quick survey yesterday covering 14 mid-to-top executives in the same number of multi-national Asian offices or local market research and advertising agencies (China, Japan, Korea, Singapore, Malaysia and Thailand), 12 respondents reported that they saw SARS as a "much greater" threat to medium term business sustainability than the Iraq war, or a possible North Korean conflict. 2 respondents saw it as a "greater threat".

13 respondents reported cancellations or "indefinite postponements" of market research projects where the reason given was specifically related to SARS. 8 of these reported 3 or more projects postponed or canceled within the past 7 days. Almost all cited urgent communications from overseas clients asking for their advice on the affect of SARS on results of research currently being undertaken or the advertising and communication strategies being tested or developed. This was particularly the case for research on the tourism or transportation industries, though not limited to those industries. IT clients were also very concerned on the effect of the SARS virus issue on consumer and industrial attitudes and usage. (U&A).

Other negative consequences include an overall decrease in new Requests for Proposals (RFP), reported by 10 companies.

On the positive side, some executives said they had seen an increase in inquiries relating to web based surveys or phone surveys, where human contact is much more limited than social methodologies such as focus groups, face-to-face interviews and observational methodologies.

While the War of Iraq was seen as the major external threat to the market research and advertising industries up to 2 weeks ago, the SARS threat is now seen by all Asian industry executives polled in a quick telephone survey yesterday as far more impactful already.

While the Iraq war still dominates news in the Western world, in Asia the spread of the SARS virus relegates the War on Iraq to inner pages.

Of course some industries are more highly affected, such as the tourism, airline, and conference/meeting/PR sectors. Regional and international meetings and conferences throughout Asia, and to a less extent the rest of the world where delegates are expected from affected countries are being canceled at an astronomical rate. Airlines from Cathay Pacific to Singapore Airlines to many airlines worldwide have cut Asian routes and frequencies dramatically, stopping dead an industry already limping from the affects of international terrorism and the War on Iraq. Asian airlines have been less affected by the decline in international tourism due to terrorism concerns because of continued strong regional demand, but SARS has put an end to that. Same for a relatively healthy (compared to non-Asian regions) tourism industry.

Hong Kong, the first country outside the Chinese mainland to be affected, has closed their schools for 2 weeks. Yesterday a whole major apartment block on the mainland was evacuated and a floor of a hotel where some early Canadian and Singapore cases stayed has been closed and disinfected.

In Thailand, arrivals from Singapore, Hong Kong, Taiwan, China and Vietnam are all being screened at the airport by the taking of temperatures, and all on a flights where a suspected case if identified are either quarantined or sent home. Visitors from these countries are required to wear a face mask for the first 2 weeks of their stay. Singapore, one of the first to be badly affected outside China/Hong Kong, in their well known efficient way, attacked the problem seriously and aggressively from the start, closing schools and recently a major university, and quarantining suspected cases. It would not be exaggerating to say that if this early fast response was not implemented the problem would be far bigger in Singapore right now.

As Malaysia eventually announced their first suspected cases earlier this week, the government jumped into action and issued a letter to the editors of all major newspapers asking them not to feature Malaysian cases as it may affect tourism arrivals. Malaysia has a strong record of suppressing what is seen as "negative" news on Malaysia in their own press. A few years ago, newspapers were banned from reporting air quality ratings and last year the 2 major English language newspapers were castigated by no less than Prime Minister Mahathir for publishing reports on poor water quality in Kuala Lumpur. The reason? Both may "deter tourists from visiting Malaysia".

In a development just today, Malaysia Airlines announced they were canceling all flights to Singapore and Hong Kong from today.

In China, where SARS is widely believed to have originated, the government has been widely criticized for downplaying the dangers of the virus, a charge the Chinese government strongly denies. However, given the culture of Chinese society and all levels of government, informal control of information though an unwillingness of local officials to report "bad news" from their patch to their supervisors, and concerns of causing "panic" in the rural and less educated populations among high levels of government, does have an impact.

Apart from the human tragedy, the effect on Asian business is significant. Already growth estimates have been revised down-wards for the most affected countries, and consequently the region as a whole. Moodys is widely expected to downgrade Hong Kong very soon. Make no mistake this is increasingly becoming a global crisis however. WHO reports that more than 200 "infections" are already present in Canada, the USA, Britain, Ireland, France, Germany, Romania, Italy, Australia and Switzerland, yet the only deaths outside Asia at present have been in Canada. In Asia, infections are over 2000 and deaths approaching 100 fast, though around 90 to 95% of these are on the Chinese mainland, including mainland regions of the Hong Kong SAR.

The next few weeks may well determine whether 2003 will be just an average or disastrous year for market research, advertising, tourism, airline and many other industries in Asia.