fortune--2020-03-15--SARS taught Taiwan how to contain the coronavirus outbreak

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This story is one in a three-part series on how Greater China regions—Taiwan, Hong Kong, and Macau—have responded to the coronavirus outbreak.
In late December, news reports began trickling out of China about an unknown pneumonia-like virus infecting a few dozen people in the city of Wuhan.
At the time, officials in mainland China had not yet confirmed that the disease was transmissible between humans, and most countries did not yet recognize the threat the novel virus would pose. Taiwan, however, was an exception.
By Dec. 31, Taiwanese officials had already begun screening passengers on flights from Wuhan for flu-like symptoms, according an article published in the Journal of American Medical Association (JAMA). By Jan. 12, Taiwan had sent a team of medical professionals to Wuhan to inspect the situation.
The government of Taiwan was among the quickest to recognize and counteract the potential dangers of the coronavirus, which causes the Covid-19 disease, while being one of the regions in closest proximity to it.
Taiwan’s capital of Taipei is a three hour flight from Beijing, yet the two sides remain at odds over unresolved tension from a civil war in the 20th Century. Taiwan considers itself a self-governing country, while China sees Taiwan as a Chinese province that’s gone rogue.
The coronavirus so far has infected over 156,000 people around the world and killed over 5,800, according to Johns Hopkins University. Taiwan, which received over 2.7 million Chinese visitors in 2019 and has up to 850,000 of its citizens living in China, has confirmed only 53 cases of coronavirus and one death as of Sunday, according to Taiwan’s Centers for Disease Control.
Experts assessing Taiwan’s response to the coronavirus so far give it a glowing critique. “No country (was) better prepared than Taiwan in facing this epidemic,” said Chunhuei Chi, the Director for the Center of Global Health at Oregon State University, who’s studied the Taiwanese health care system. With forward-thinking governmental policies, widespread public adoption of prevention and control measures, and a sophisticated epidemic-response infrastructure, Taiwan is less at risk to the dangers of the coronavirus pandemic than perhaps any other place on Earth, Chi said.
Taiwan’s SARS legacy
It’s important to note that Taiwan had a recent run-in with a different outbreak. In 2003, the epidemic of severe acute respiratory syndrome or SARS, a viral disease with a similar genetic make-up to the coronavirus that also originated in China, infected 346 people and killed 73 in Taiwan, making it the third hardest-hit after mainland China and Hong Kong.
A man wearing a face mask walks past wigs on display in Ximen district in Taipei on March 4, 2020. Taiwan has so far fended off a major Covid-19 crisis because it’s been preparing for a large-scale outbreak since the last one in 2003. SAM YEH—AFP/Getty Images
Taiwan “learned [its] lesson” from the SARS experience and “became more self reliant” in making its own assessments of the potential dangers of new diseases, rather than simply trusting reported data from other places like China, says Jason Wang, director of the Center for Policy, Outcomes, and Prevention at Stanford University, who authored the JAMA report on Taiwan’s response to the epidemic.
The Taiwanese government established the National Health Command Center (NHCC) in 2004, an entire agency tasked with preparing for and responding to potential outbreaks. In response to the coronavirus outbreak, the NHCC mobilized a unit called the Central Epidemic Command Center, which “rapidly produced and implemented a list of at least 124 action items,” according to Wang, which included border control, case identification, and quarantine of suspicious cases.
“The memory (of SARS) is still fresh…,” Chi said. “[T]hey know too well what is at stake.”
Taiwan’s wider response
Another action Taiwan took early was border monitoring. It banned visitors from Wuhan on Jan. 26, and soon after began requiring that all travelers scan their travel information via QR codes at border checkpoints. The Taiwanese government then linked the travel histories to its national health care system’s online platform so authorities could search for potential cases of the virus, monitor those under quarantine, and collect information about potential outbreaks.
Despite the close ties between Beijing and Taipei, the actual number of Chinese travelers in Taiwan in January was likely low compared to past years. In mid-2019, China restricted some travel to Taiwan, amid the ongoing Beijing-Taipei tension.
Taiwan also took proactive measures in allocating resources and addressing potential shortages. In late January, Taiwan banned the export of surgical masks and ramped up its own production. It is now producing (with the help of prison labor) more than 8.2 million surgical masks per day, and has instituted strict rations on supplies to citizens of two per person every week.
Scientists and researchers in Taiwan started working on developing new tests and vaccines for the virus in February. A group of them claims they have a developed a new test that can screen for the virus in just 15 minutes. The test is still three months away from being deployed; once that happens, it would provide a quicker turnaround than the fastest test currently in use in the world, which shows results in three hours.
Public opinion
Equally striking has been the public response to Taiwan’s measures. Citizens have largely complied as Taiwan has instituted regular fever checks, carried out sanitation sweeps of public buildings and infrastructure, and established some extreme quarantine measures. Though there is a risk in not complying, with violators facing fines up to $5,000.
What’s more, Taiwan has kept citizens abreast of its response with daily press briefings by the command center and through updates to a government-run public information app.
A mask-clad worker disinfects an area to prevent the spread of the Covid-19 coronavirus in Xindian district in New Taipei City on March 9, 2020. Taiwan’s government was arguably the quickest to act as early reports of the coronavirus trickled out of mainland China. SAM YEH—AFP/Getty Images
“Ordinary people are taking these precautions very, very seriously as their responsibility,” said Harry Harding, a professor of public policy at the University of Virginia and a China expert, who spoke to Fortune from Taiwan. “You have so many masks on the street, and going into any building everyone is now scanned for fevers.”
Taiwan’s response has not been perfect. Wang notes that authorities allowed the Diamond Princess cruise ship, which later became a coronavirus hotspot, to dock in Taiwan. Passengers from the ship disembarked and visited tourist locations on Jan. 31. Government communication has also largely been available only to Chinese-speaking audiences, leaving foreign travelers and residents who speak other languages with less information.
Going without WHO
An interesting wrinkle in Taiwan’s response is that it’s carried out its measures without aid or input from the World Health Organization.
The WHO has excluded Taiwan since 1972, when the U.S. switched diplomatic recognition from Taiwan to mainland China. Taiwan was granted WHO “observer” status in 2009 during a period of friendlier Sino-Taiwanese relations, but in 2017, Taiwan was not invited to WHO meetings. Taiwan blamed the rejection on China, an influential WHO member, with Taipei accusing Beijing of seeking retribution for Taiwan’s election of President Tsai Ing-wen and a more anti-China government.
Taiwan’s exclusion from the WHO means that it does not have a formal voice in how the world should respond to the pandemic, and it can’t access the channels through which countries share information and strategies for combatting the disease.
Taiwan’s exclusion from the WHO might have actually benefited the self-governing territory in this instance, Chi said. Because Taiwan was forced to draft a unilateral response to the outbreak, it may have put less stock in the early assessment from China that the virus couldn’t transmit human-to-human. China didn’t confirm human-to-human spread until Jan. 20, the same day WHO acknowledged limited transmission of the disease that way. At that point, Taiwan had already been screening passengers from Wuhan for three weeks.
Taiwan didn’t “trust information provided by China,” Chi said, and that early skepticism might have positioned it better than neighbors like South Korea and Japan, which currently have 8,086 and 773 cases, respectively.
The WHO says it has been communicating with Taiwan during the outbreak, and China says information about the outbreak can “flow readily” without Taiwan’s inclusion in the organization. But, to some experts, this might not be enough.
“Not being at the table delays information sharing,” said Wang. “The WHO, more than any other organization, should know the importance of being inclusive.”
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—How coronavirus is affecting the global concert industry
—Politicians around the world are going into quarantine
—Some of the most extreme ways companies are combating coronavirus
—How Europe is adapting to the coronavirus outbreak
—What Xi Jinping’s visit to Wuhan says about China’s coronavirus recovery
—Conferences go online amid coronavirus fears—minus the hallway schmoozing
—Coronavirus may not be all bad for tech. Consider the “stay at home” stocks
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-15--Hong Kong gets thousands of mainland Chinese visitors each day. How it’s kept coronavirus at bay

Nike and Apple lead ranks of retailers temporarily closing U.S. stores during coronavirus crisis

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This story is one in a three-part series on how Greater China regions—Taiwan, Hong Kong, and Macau—have responded to the coronavirus outbreak.
In China, where the novel coronavirus now known as Covid-19 began, contagion spread at an exponential rate, rocketing from a handful of cases in Wuhan at the end of December to over 80,000 cases nationwide as of mid-March.
In other countries, such as South Korea, Italy and Iran, the virus has transmitted readily, infecting thousands in a matter of days. Yet in Hong Kong, the number of cases so far has crept to 141 since the virus was identified on Dec. 31.
Hong Kong’s low infection rate comes despite it sharing a 19-mile-long border with mainland China, as well as a connecting bridge, an airport, and several seaports. Over 300,000 people percolate between Hong Kong and the mainland every day and—thanks to a new high speed train line—tourists can race the 25 miles from Shenzhen in mainland China to Hong Kong in a little over 15 minutes.
While new cases continue to be reported and Hong Kong remains vigilant, the small region of 7.4 million people seems so far to have kept a large outbreak of Covid-19 at bay.
Hong Kong’s early response
Hong Kong was among the first regions outside of mainland China to recognize the Covid-19 outbreak as a public emergency—doing so on Jan. 25, two days after the city confirmed its first two cases. But the government had begun preparation for incoming infection as early as Dec. 31, when China first reported the novel coronavirus to the World Health Organization.
That day, Hong Kong implemented temperature screenings at border points and began warning medical staff of the new SARS-like virus. On Jan. 7, Hong Kong’s Legislative Council moved to introduce new laws that would qualify the unidentified virus as a “notifiable” disease, giving the government the right to quarantine suspected cases.
Passengers wear face masks, as a precautionary measure against the COVID-19 coronavirus, as they commute on a tram in Hong Kong on March 12, 2020. The city has largely been spared from a major outbreak. ANTHONY WALLACE—AFP/Getty Images
Since January, the government has opened three sites for quarantining likely coronavirus patients, including the 244 Hong Kong residents recently repatriated from Hubei and the more than 300 returning from the Diamond Princess cruise ship in Japan.
“Most people in the epidemiologist world point to Hong Kong as the gold standard for epidemic control,” Hong Kong University dean of medicine Gabriel Leung said, listing the city’s “open and transparent communication” and “vigorous application of public health principles” as reasons why.
Hong Kong’s SARS legacy
Hong Kong appears to have developed all those positive approaches since it was struck by the severe acute respiratory syndrome or SARS epidemic in 2003—another novel coronavirus outbreak that infected 1,755 people and killed 299 locally. At the time, the government came under criticism for its poor management of the crisis, including lax communication and a failure to ensure patients were properly isolated.
Of the 1,755 SARS patients in Hong Kong, 386 were health care workers, indicating that the safety of hospital staff had been jeopardized. The disease spread easily between patients at hospitals, too. The facilities lacked proper isolation wards, leaving SARS-carrying patients lying beside the uninfected.
Since then, Hong Kong public hospitals have added around 1,400 isolation beds and the city’s Princess Margaret Hospital opened a special infectious disease center in 2007.
However, even now, the public has an unfavorable view of the government’s response to the Covid-19 epidemic.
Open border debate
Hong Kong’s first coronavirus case arrived from Wuhan, crossing into Hong Kong at its border with the mainland city of Shenzhen sometime in January. In response, the government implemented temperature screenings on all arrivals from China and, on Jan. 25, announced flights and trains to Wuhan were cancelled.
However, this was a bit of political showmanship: Wuhan was already on lockdown, authorities had closed its airport and train station two days earlier. For many in Hong Kong, the government action seemed too little too late.
Hong Kong pro-democracy district councillor Eason Chan pushes a cart of face masks and cleaning products in Lam Tin in Hong Kong on March 14, 2020. Hong Kong’s rival political camps have embraced free face masks as a tactic to woo potential voters as protest-era politics color the city’s response. ISAAC LAWRENCE—AFP/Getty Images
On Feb. 3, a new union of public sector health care workers, called the Hospital Authority Employees Alliance, organized a series of strikes to demand that Chief Executive Carrie Lam close the border with China entirely. Lam had suspended operations at six border points already, beginning Jan. 30.
After the second day of the strike, Lam conceded and shut four more border points, leaving just three open: the airport, the Hong-Kong-Zhuhai-Macau bridge, and the Shenzhen Bay ferry port. Lam said it would be discriminatory to block all mainland China visitors from entering Hong Kong, but critics were quick to point out the hypocrisy when Lam’s administration unilaterally blocked arrivals from South Korea on Feb. 24 as Covid-19 cases on the Korean peninsula skyrocketed.
“Closing the border earlier is something the government could have done,” Leung said. This week, Hong Kong reported nine new cases in patients who had returned to Hong Kong from other cities experiencing Covid-19 outbreaks. Once again, the public and even members of government are calling for stricter border controls.
Masking public sentiment
The government’s approval rating was driven to an all-time low last year by months of protests and that underlying discontent continues to politicize the public’s perception of the Covid-19 outbreak. For instance, Lam was slow to encourage people to wear surgical masks in public, a move some viewed as her administration trying to uphold a controversial mask ban it enacted amid the protests last year. (Courts had deemed the rule unconstitutional.)
Donning a face mask to protect public health was normalized in Hong Kong during the SARS outbreak. The city’s residents, like many across East Asia, often wear face masks when suffering from any illness—even the common cold. So, despite no official instruction to do so, Hong Kongers began stockpiling and wearing surgical masks in late January.
Unlike governments in Singapore and Macau, which ordered new shipments of masks and rationed their distribution, the Hong Kong government failed to secure mask supplies, and the shortage ignited public panic. On Feb. 5, a line of an estimated 10,000 people appeared over night to purchase two boxes of masks each from an importer that had made a special shipment.
Visitors wear face masks, as a precautionary measure against the COVID-19 coronavirus, as they walk on a Kowloon promenade overlooking Victoria Harbor and the skyline of Hong Kong Island on March 13, 2020. ANTHONY WALLACE—AFP/Getty Images
In Hong Kong, the public has adopted some elements of social distancing, too—leaving seats on subway trains empty and holing up at home on weekends. Public schools have also been suspended by government edict since the Lunar New Year break, which began Jan. 25, and students won’t return until late April.
It’s hard to determine what the key factor has been in keeping Hong Kong’s infection rate so low, Leung said, but the “whole package” of open communication, social distancing, good hygiene procedures and effective hospital treatment is having an effect.
“Policy makers need to look and see what…other places with effective control have done and ask, ‘Which of those approaches would be feasible in my own region and accepted by [my]society,'” Leung said. “But that is not a trivial task, and it’s something we’re all working towards at the moment.”
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—Let’s remember what we learned in WWII, as well as in 2008
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fortune--2020-03-15--10 cases, 10 recovered: How the world’s most densely-populated region fought off the coronavirus

Stay in the know on how the coronavirus outbreak is impacting the global business economy with our daily newsletter Outbreak.
This story is one in a three-part series on how Greater China regions—Taiwan, Hong Kong, and Macau—have responded to the coronavirus outbreak.
Macau is the world’s most densely-populated region, with 680,000 people living on a landmass 26-times smaller than Singapore, and it’s just a stone’s throw away from mainland China. Yet, remarkably, the Special Administrative Region of China, a gambling mecca, has only reported 10 cases of coronavirus and, as of March 6, all 10 of those patients had recovered. With no new cases reported since Feb. 4, but with roughly 230 still under observation, Macau can tentatively claim to be free of Covid-19.
“Macau’s response to the outbreak has been very strict but very effective. They have restricted movement heavily, both at the border and within Macau, and the communication with the public was also very good,” says Edwin Cheung, a professor of health science at the University of Macau.
Macau’s new chief executive Ho Iat-seng has driven that firm response, having taken office just 11 days before China notified the World Health Organization of the coronavirus outbreak on Dec. 31.
Ieong Meng-U, a professor of political science at the University of Macau, says the change in leadership was timely since it meant Ho was looking for a way to prove himself and rose to the occasion. “I must say in this case at least Ho appears to have done a good job and has impressed the society,” Ieong says.
Macau’s early response
Immediately after confirming the first infection within Macau on Jan. 22, Ho’s administration stopped all travel between Wuhan, the outbreak’s epicenter in China, and the territory and ordered all tour operators to report where tourists from Wuhan were staying. Days later, police task forces began rounding up tourists from Hubei province for deportation or mandatory two-week quarantine, expelling 150 Hubei residents on Jan. 27.
Ho’s government also implemented widespread shutdowns of public places, ordering cinemas, theaters, nightclubs and spas to close and canceling Lunar New Year celebrations, too. Schools have been closed indefinitely as of Jan. 24. Then on Feb. 4, with most gathering points under lockdown already, the government took the monumental step of closing Macau’s 41 casinos.
“This is not a holiday. It’s not for you to go out, go to gatherings, go jogging or do exercises, it’s not for this, but for people to stay at home,” Ho said as he announced the closure, urging the local populace to “do their civic duty” and stay off the streets so as to not “cause harm to others.”
Macau’s economic aid
Macau’s casinos generate $37.6 billion in revenue a year while gaming taxes constitute up to 50% of government coffers. During the mandatory 15-day closure, the casinos lost an estimated $2.24 billion. The Macau government, however, runs a huge surplus and can afford to support aid for the local economy.
A man wearing protective mask walks across a street in front of the Grand Lisboa Hotel in a residential district on February 5, 2020 in Macau, China. The Macau government announced it would close casinos for two weeks after a hotel worker was infected. Anthony Kwan—Getty Images
Similar to Hong Kong, Macau has released over $1 billion in stimulus packages, including loans, tax breaks and direct payments. Over $270 million in vouchers were issued to the general public to encourage spending. Unlike Hong Kong, however, Macau also managed to secure a supply of face masks for its population, launching a scheme that distributed ten masks to residents every ten days.
Meanwhile, Ho’s government continues to pile travel restrictions on other regions where the virus has taken hold. As of March 11, arrivals from South Korea, Italy, Iran, Germany, France, Spain, Japan or Norway are required to undergo a 14-day quarantine.
Targeting mainland visitors
Those restrictions came on top of a rule enacted on Feb. 20 that targeted visitors from mainland China, who numbered 2 million in January alone. The rule forced visitors from Beijing, Chongqing, Guangdong, Henan, Shanghai, and Zhejiang province to submit to a medical examination before gaining entry.
The tiny territory’s border with mainland China—which includes several pedestrian crossings, an airport, ferry piers and a motorway—remains open despite the restrictions on specific countries and Chinese regions. The local economy relies heavily on workers commuting across from neighboring Zhuhai, Guangdong province, which is connected to the Macanese headland.
Foreign workers crossing from mainland China are subject to a 14-day quarantine, however, so some casinos and construction sites are offering mainland Chinese employees temporary accommodation within Macau to alleviate the quarantine burden.
“With the fact that we’ve had no new infections for over a month I think there’s a sense of normality returning to Macau,” said Ben Lee, managing partner at Macau-based gaming consultancy IGamix. “The streets are full of people again.”
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—A Q&A with WHO special envoy David Nabarro on COVID-19
—The best Twitters to follow for reliable information on the coronavirus outbreak
—After SXSW cancellation, Austin hotels and restaurants are bracing for a rough road
—While canceling mass gatherings, the U.K. is still aiming for deliberate “herd immunity”
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—Let’s remember what we learned in WWII, as well as in 2008
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-15--Taiwan, Hong Kong, Macau: How mainland China’s closest neighbors have kept coronavirus cases so low

Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.
Cases of Covid-19 are spiking around the world in regions as far flung from the pandemic’s origin as Italy, with 21,157 infections, and Iran, with 12,729. Yet across the smaller constituents of Greater China—Taiwan, Hong Kong, and Macau—infection rates have remained shockingly low, despite close proximity and intimate ties to the outbreak’s mainland epicenter.
In this series, Fortune examines each region’s coronavirus response:
Taiwan: SARS taught Taiwan how to contain the coronavirus outbreak
Hong Kong: Hong Kong gets thousands of mainland Chinese visitors each day. How it’s kept coronavirus at bay
Macau: 10 cases, 10 recovered: How the world’s most densely-populated region fought off the coronavirus
In Hong Kong, which shares a land border with mainland China, case numbers have only crept to 141 this week with four deaths and 81 recovered. In the densely-populated gambling enclave of Macau, cases peaked at 10, all of which are now clear. Meanwhile in Taiwan, across the 140-mile long Taiwan Strait that separates the island from mainland China, there have been 53 cases to date.
Each of these three regions has reacted in different ways to the virus, but there are parallels in the steps they’ve taken. Border checks have been tightened, events have been cancelled, schools have been closed, surgical masks are vogue. What’s more, they didn’t delay in implementing such measures; they all went into effect relatively soon after cases of the coronavirus started appearing in the mainland.
Another common thread is that the three regions—Taiwan and Hong Kong in particular—share painful memories of a past novel coronavirus outbreak—of so-called Severe Acute Respiratory Syndrome of SARS that gripped Asia in 2003—and appear to have learned from that episode. Perhaps there’s something to be learned from their current responses, too.
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—How coronavirus is affecting the global concert industry
—Politicians around the world are going into quarantine
—Some of the most extreme ways companies are combating coronavirus
—How Europe is adapting to the coronavirus outbreak
—What Xi Jinping’s visit to Wuhan says about China’s coronavirus recovery
—Conferences go online amid coronavirus fears—minus the hallway schmoozing
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Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-14--4 lessons from the coronavirus

4 lessons from the coronavirus

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As of this writing, there have been 127,863 confirmed cases and 4,718 deaths from the COVID-19 pandemic worldwide.
In the U.S., there have been over 1,200 cases and 38 deaths. In three short months, a novel coronavirus has captured global consciousness and changed day-to-day life in large parts of the world, in the process becoming a public health emergency that is testing, like perhaps no event before it, our global capacity to respond to large-scale infectious threats.
As public health agencies like the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC) work around the clock to coordinate a local, national, and global response to the rapidly changing situation, we are, collectively, learning how to better grapple with this epidemic.
While there will be much to learn when (we hope) this epidemic is over, I think there are some key lessons that emerge clearly that are worth highlighting even now, when the epidemic is at the very forefront, dominating all our conversations, sharpening our thinking.
Lesson one: public health is political
It is difficult to find any discussion about COVID-19 that does not mention the actions of a government—whether it is the Chinese government’s handling of disease containment or the American government’s efforts to keep COVID-19 from spreading to its shores.
When large-scale, sudden health challenges strike, political leadership is essential for coordinating response and communicating to the public accurate, up-to-date information about the threat. It is on the latter point, especially, that the Trump administration has struggled. The president has contradicted CDC officials, mischaracterized the nature of the threat, and attempted to portray virus fears as a hoax by political opponents.
These actions do not help efforts to stop this outbreak. In fact, they hinder them, by muddying the waters when clear communication can mean the difference between sickness and health, life, and death.
The Trump administration has also cut critical public health programs created to protect populations during disease outbreaks, further undermining response.
In addition to coordinating public health response and controlling the budget of key health organizations, politics shapes health at a fundamental level, influencing the social, economic, and environmental conditions that create a context for health or disease.
COVID-19 has exposed just how lacking investment in improving these conditions has long been in the US. We have not done enough to prevent pockets of marginalization from emerging within the broader population. This has increased certain groups’ vulnerability to COVID-19—older adults, in particular, and those living with underlying chronic disease.
The choice to help or ignore such populations is deeply political, and it extends to other groups facing marginalization, from LGBT populations, to immigrants, to people of color. There is ample research showing how the conditions of marginalization undermine health.
For example, laws allowing businesses to deny services to same-sex couples have been linked to a 46 percent increase in mental distress among sexual minority adults. Socioeconomic status is one of the key drivers of health, and this status is inseparable from the world of politics.
Lesson two: science matters
In this age of “fake news” and “alternative facts,” it is possible to think science is somehow less relevant than it once was.
Denial of climate change and the safety of vaccines are examples of how science can be pushed aside when it conflicts with a political agenda. President Trump’s dim view of health authorities is another reflection of this anti-science trend.
Yet science matters. This is especially clear during a disease outbreak. For example, social distancing—the practice of preventing the spread of disease by limiting the interaction of individuals and groups—may seem like an obvious action to take during outbreaks of disease.
But there is much we are still learning about the science of why and how social distancing works. Research like this study of social distancing during the 1918—1919 flu pandemic helps inform our understanding of the efficacy of this approach. The study found a strong link between “early, sustained, and layered application” of measures such as school closures and bans on public gatherings and mitigating the effects of the pandemic.
Such research is just as important to pandemic response as the science of vaccines, helping us chart a course through shifting circumstances. It is important to listen to what science tells us—not just about responding to COVID-19, but about what we can do to build a healthier world every day.
Lesson three: education of the public matters
Infectious challenges shine a light on a central concern of public health: that it is about public health—about improving the health of populations. This is not what we tend to think about when we think about health in this country.
Instead, we think about the health of individuals, of the doctors and medicines that help us recover when we, as individuals, get sick. We do this instead of thinking about the public health steps we should take to prevent disease in populations—to keep from needing doctors and medicines to begin with.
Preventing disease in populations takes robust, responsive health systems, cities and communal spaces that are built with health in mind, economies that do not generate the poverty and income instability that feed poor health, and cooperation at the local, national, and global level in creating the conditions for health.
All of this requires long-term planning, and a willingness to invest in health as a public good worthy of collective by-in. This begins with educating the public about what really matters for health. The reaction to Covid-19 has shown how much we still must do in this regard.
In the weeks since the disease was first directed in Wuhan, Hubei, China, anti-Chinese sentiment has been part of the narrative about Covid-19. This is not only unfortunate in itself, it undermines our ability to address the disease. Navigating infectious threats—and promoting public health in general—depends on our ability to work together, which we cannot do if we are willing to tolerate marginalization, bigotry, and the reflexive building of walls.
Lesson four: we should always be talking about public health
In the film Glengarry Glen Ross, there is a famous scene where a character tells a group of salesmen that the key to their profession is “ABC,” or “Always Be Closing.”
The key to a healthier world, where we are far less vulnerable to infectious threats, could be said to be “ABTAPH,” or “Always Be Talking About Public Health.” This means talking about public health not just in times of challenge, but at all times.
Imagine, for a moment, what our country would be like if we placed a concern for public health at the heart of all we do. If we poured money into the public health programs the Trump administration has cut. If we refused to accept certain groups facing disproportionate vulnerability to disease, understanding that their vulnerability is our vulnerability, especially during an epidemic.
COVID-19 is a novel challenge, but it is not the first large-scale health threat to show us why we need to make this better world a reality. The destructive hurricanes of recent years are another warning of how disasters can be far worse when we neglect public health.
When hurricanes strike, a population’s ability to “bounce back” is shaped by the conditions that influence public health in a region prior to the disaster. For example, a 2010 study found that poverty, housing, and immigrant and minority status all played a role in creating vulnerability among populations prior to Hurricane Katrina, and increased the potential for suffering after the storm.
When hurricanes strike, we are quick to mobilize aid for the affected, just as we demand rapid response from government and health authorities in the event of a disease outbreak. Yet, in both cases, we are less likely to address the “preexisting conditions” that can worsen these acute challenges. Disasters happen. We need to have the public health infrastructure in place so that, when they do, their effect is as minimal as we can make it.
COVID-19 has revealed weak points in how we think about health and how we prepare for disease. Many questions about COVID-19 remain. Perhaps the most important one is: can we engage in the uncomfortable conversations we need to have that can lead to a healthier world?
It is only by having these conversations, and by learning the lessons of challenges like COVID-19, that we can build a world that is less vulnerable to challenges like what we now face.
Sandro Galea, MD, DrPH, is Professor and Dean at the Boston University School of Public Health. His latest book is Pained: Uncomfortable conversations about the public’s health. Follow him on Twitter: @sandrogalea
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—Coronavirus may not be all bad for tech. Consider the “stay at home” stocks
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-16--Global markets tumble despite the Fed’s best efforts to restore confidence

How early GPS gadget maker Garmin mapped out success against the likes of Apple and Google

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Good morning, everyone. Buckle up. It’s looking like another historic trading week. If you were hoping the Fed’s Sunday surprise—an emergency rate cut to just above zero—would lift the markets, I have some bad news for you.
Let’s go right to the action.
Markets update
We start in Asia where China reported a bigger-than-feared collapse in industrial production and retail sales during the first two months of the year, an ominous sign of what the rest of the world could see as Covid-19 creeps westward. The major Asian indexes are all in the red.
Europe looks even worse with the familiar sectors—energy, financials and airlines—driving bourses lower. Europe’s flag-carrying airlines Air France-KLM, Lufthansa and AIG are all down significantly as global travel stalls and analysts are beginning to throw around the B-word (bankruptcies).
The U.S. futures, meanwhile, briefly hit their limit-down not long after the Fed’s rate cut decision yesterday. The Dow looks set to open 1,000 points lower, as I type.
It’s clearly a risk-on day. This morning, the dollar is flat, gold is up, and crude is down significantly. WTI even briefly fell below 30 bucks a barrel. Investors, meanwhile, are putting their spare cash into U.S. Treasurys and German bunds. The U.S. 10-year has a 0.75 handle, shedding 25 basis points since Friday’s close.
As for equities, Goldman Sachs offered some insight into where they might be heading. In a grim note to investors, it says the S&P 500 bottom could drop all the way down to 2,000 as GDP, and earnings, sink.
But the big story this morning is the Fed’s 100-basis point cut overnight. The size of the cut was more or less expected. But the timing—on a Sunday—might give investors an eerie flashback to September, 2008 when central bankers worked round-the-clock to keep the credit markets then from freezing up, and to save the biggest financial institutions in the world, while letting others collapse.
We’ve been stuck in a cheap-rates world ever since. Fed Chair Jerome Powell’s attempts to reverse course in 2018 are now history (see today’s chart).
***
The race to zero
The glass-half full view of the global economy goes like this: cheap interest rates and cheap petroleum are usually an ideal time to spend, invest and build for the future.
But the two have fallen so far so fast that it’s hard to focus on anything but the trigger: the collapse in economic activity caused by the coronavirus pandemic. Analysts at Berenberg call it the “lockdown economy” in which there are now over 100 million of us, from Los Angeles to my neighborhood in Rome, largely confined to our apartments and homes for the coming future.
“While these lockdowns last, they may well curtail economic activity by more than the Great Financial Crisis of late 2008 and early 2009,” Berenberg said in a note it published a few hours before the Fed rate decision.
This curtailment will lead to bankruptcies, job losses and recessions, the thinking goes. That is unless governments and central bankers take extraordinary measures. The Fed did just that on Sunday. We’ll get a verdict on that action from the markets shortly.
Postscript
I was staring blankly out the window of my apartment onto a dead-quiet corner of Rome early Saturday morning when my wife came into the kitchen. “You’d better go while you still can,” she said. There was a radio report that city officials would be locking down the big (gated) parks. If I was going to get one last spin in on my bike it had to be now. The Ministry of Fun and Leisure would not rob me of this moment of freedom, I vowed.
Minutes later, I was on my bicycle, solo, heading on a familiar route, towards the Appia Antica, the main southern route out of town as of the third century B.C.
Original Photography: Bernhard Warner
You could describe the Appian Way as one of the world’s oldest supply chain lines, transporting people and materials south to Magna Grecia, the Greek-governed south of the country, and later, to its far-flung outposts around the Mediterranean.
Once you pedal past the early Christian churches, the ancient mausoleums and villas, the road gets wilder. I spotted beekeepers and two locals foraging for wild asparagus.
Original Photography: Bernhard Warner
This is a road that’s seen all kinds of booms and busts—periods of great prosperity and deadly disease outbreaks—over the millennia. On Saturday, it was nearly deserted. In the still quiet (all of Rome is quiet these days) I couldn’t help but reflect on how this public infrastructure project, a true engineering marvel, is still such a vital piece of modern-day Rome. I love that it has the power to transport me to another place and another time. If only for a few hours.
There are similar such places all across this great city. I’m looking forward to getting out to fully exploring them again.
Have a good day, everyone.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
Circuit breakers. Halting trade in the world's stock markets because of plunging share prices used to be a once-in-a-generation event. No longer. After U.S. stock trading was halted twice during last week’s coronavirus-inspired rout, Adrian Croft explains in Fortune why some analysts think stopping trade can fuel a market panic.
Warning sign. History shows that stocks make the wrong call on future recessions almost as often as they prove a bellwether. But in this coronavirus-driven selloff that's already infecting the economy's fundamentals with brutal contagion to come, the stock market is getting it right, says Fortune’s Shawn Tully.
Ray of hope. More optimistic than most, Morgan Stanley believes global financial markets are now in a bottoming phase, and investors should start to add risk and sell the U.S. dollar. “That’s not to say we’re ‘calling the bottom’ or we’ve seen the lowest prices in risk assets,” the bank’s strategists wrote. “But it is to say that we’ve entered the final phase of this severe, acute bear market.”
Market candy
Today’s quiz.
Which asset has dropped by 50% from its recent high?
A: The S&P 500.
B: Gold
C: Bitcoin.
D: Germany’s DAX blue-chip share index.
The answer is C: Bitcoin.
The cryptocurrency is currently trading at around $4,900, down from around $10,400 on Feb. 12. For the record, the S&P 500 is down nearly 20% from its February high, gold is down 8% from its March 9 high and the DAX is down 38% from its Feb. 19 high.


fortune--2020-03-16--How early GPS gadget maker Garmin mapped out success against the likes of Apple and Google

OK Boomerang : Why return CEOs are usually bad news for a company ’ s stock

For all the time, effort, and money companies plow into the endless hunt for innovation, many of their best ideas come from within. A Procter & Gamble chemist in the 19th century figured a bar of soap that floated in the tub would enliven the bathing experience, and Ivory Soap was born. In the 1970s, a 3M employee, craving a better way to mark pages in his hymnal, modified an uncommercialized adhesive invented a few years earlier by a colleague; Post-it Notes became an iconic 3M success story. And at Garmin, a suburban Kansas City maker of navigational devices for boats, planes, and cars, a group of running-obsessed employees applied their know-how to their hobby—a move that revitalized the company when it badly needed a win.
It was the early 2000s, and Garmin had grown from its niche of making consumer devices utilizing the government’s global positioning system, or GPS, technology. Together with rival TomTom, Garmin dominated the market for in-car navigational devices, game-changing gadgets that marked the beginning of the end for foldable maps. GPS for personal fitness wasn’t popular before the Garmin jogging klatch began noodling. “They said, ‘We do all these GPS things. Why don’t we have a GPS product for runners?’ ” recalls Cliff Pemble, Garmin’s CEO and a 31-year company veteran.
In 2003, Garmin offered its first fitness wearable, the Forerunner 101. What began as an employee side project has come to define the company nearly two decades on—especially after a lethal technology combination of the iPhone and Google Maps laid waste to Garmin’s core automotive business. Today, Garmin is a rare example of a company far from Silicon Valley that not only took a punch from the tech behemoths but has thrived in competition with them. Watches and other wearables made up about a third of Garmin’s $3.8 billion in revenue last year. It sports a $15 billion valuation, making it a minnow compared with rivals Apple, Alphabet, and Samsung—but a substantial player in its own right.
How Garmin withstood the onslaught is a case study of a company sticking to what it knows best—in its case, products pegged to one key technology, GPS devices—and proof that not all innovation comes from a sun-kissed strip of land in Northern California. Indeed, Garmin’s aw-shucks Midwestern nature and its stick-to-itiveness in the face of adversity go a long way in explaining its staying power. It’s hard to imagine the company’s mega-cap rivals acknowledging, for example, that they more or less lucked into what would become a killer app. “What we probably underestimated was the importance of the wearables,” says Pemble. “We were dabbling with it way back when. But nobody could foresee that it would become the category that it is today.”
The big tech companies remain an existential threat for Garmin, of course. Apple and Samsung are the two biggest players in smartwatches, and Alphabet’s Google is in the process of buying rival Fitbit. “Selling the watch to the masses requires a different product and a whole different mindset than what [Garmin is] doing today,” says Stephen Baker, an analyst with market researcher NPD Group. “There aren’t a lot of instances where companies have been able or even tried to make those kinds of leaps.”
Garmin didn’t set out to conquer mass markets, focusing instead from the beginning on niche products for enthusiasts like boaters, pilots, and off-roaders. Its founders, Gary Burrell and Min Kao, were engineers at Allied Signal who started the company in 1989, shortly after GPS became available for civilian use. (The muscular-sounding Garmin is simply a mashup of the duo’s given names.) Affordable navigation systems were a revelation for hobbyists, giving them access to the same technology previously reserved for users of sophisticated military equipment.
The company released its first product, the unglamorously named GPS 100, in 1991. It targeted small boats and planes, and it was so popular that by the end of the year, Garmin was profitable. Seven years later it would introduce the product that didn’t just put Garmin on the map, it put digital maps in people’s cars. In-car navigation “was a category that we pioneered,” says Pemble, who is 54 and was Garmin’s sixth employee. “That gave us rocket fuel. It made Garmin a consumer brand.”
Along the way, Garmin played to its Midwestern strengths of stressing a corporate culture based on hard work and humility. “They knew how to get the best out of people,” says Josef Reed, a former systems engineer often tasked with briefing senior management. “They’d give praise and critiques at the same time.” Says Stephanie Mountain, a former Garmin marketing analyst: “They were constantly pushing people to their limits.”
ROLLER COASTER: Garmin’s stock price soared on the strength of its in-car navigational device. Apple’s iPhone and Google Maps erased those gains. GPS-enabled fitness watches sent shares soaring again.
The company had permission to push, in part, because it was so tight-knit. Burrell, a devout Christian who died last year at age 81, referred to himself as a “servant leader,” and his presence was felt throughout the company. “He literally knew my wife and kids’ names,” says Rick Evans, who worked for Garmin from 2000 to 2016. “And he knew that about everybody.”
Such tightness would come in handy when times got tough in the late 2000s. The company was soaring in 2007, when it had some 40 different in-car GPS models for cars, trucks, and motorcycles. The automotive segment had become a $2.3 billion business, more than doubling its revenue from the previous year and representing nearly 74% of overall sales. Then came the iPhone, which Apple released in the middle of that year with Google Maps loaded on all phones. The first version of the iPhone lacked a GPS chip, relying instead on more rudimentary technology to pinpoint locations. But within a year, Apple incorporated GPS, making its phone a multifaceted replacement for Garmin’s stand-alone devices.
Garmin’s business took an almost immediate hit, and its problems were exacerbated by the financial crisis. In 2008, the stock price collapsed, falling below $16 a share from highs of more than $120 in 2007. As Wall Street had feared, revenue declined by $500 million in 2009, to $3 billion. Though Garmin remained solidly profitable—it earned $704 million that year—investors were rattled. “Back then, [investors] would come in and say, ‘They’re going to get put out of business,’ ” says Ron Epstein, a Bank of America analyst who has covered Garmin for 15 years.
Real money
15,000 THE NUMBER OF GLOBAL EMPLOYEE AT GARMIN, WITH OFFICES IN MORE THAN 30 COUNTRIES, INCLUDING AT ITS HEADQUARTERS, IN OLATHE, KANS., AS WELL AS IN TAIWAN, THE U.K., AND OREGON. HEADCOUNT GREW 15% IN THE PAST YEAR.
$1.05 billion REVENUE GENERATED IN 2019 BY GARMIN’S LARGEST AND FASTEST-GROWING CATEGORY, FITNESS, WHICH INCLUDES MULTI-SPORT WATCHES AND SMARTWATCHES. SOURCE: GARMIN
Kao, who remains Garmin’s executive chairman and was CEO at the time, kept calm and focused investments on the nonautomotive parts of the company’s business. Over the next decade, for example, Garmin bought more than 25 companies around the world, mostly distributors of navigation equipment that broadened its geographic reach. It also bought access to weather information as well as contactless payments technology it would embed in its wearable devices. Pemble, the CEO, says Garmin never lost sight of the need to grow. “The most efficient thing to try is to double down on growth and opportunity,” he says. “Saving money and cutting expenses never really works.”
Garmin’s product innovation was hardly flawless. In 2008 it debuted the Nüvifone, its own GPS-enabled smartphone that eventually used Google’s Android mobile operating system. Expensive for its day at $300 retail, the phone had a touch screen that wasn’t very responsive and often confused swiping and tapping. Its camera was low-quality and didn’t include video. And Garmin charged users $6 to check the weather, traffic, and local events—things Apple and other phonemakers offered for free. The company exited the smartphone business after two and a half years.
Garmin proved to be at its best when it plodded along at product development, the antithesis of Silicon Valley’s mantra of moving fast and breaking things. It helped that the company made products for regulated industries, particularly aviation, where precision is more important than time-to-market. “I had worked for Apple and seen how quickly they could move,” says Matt Ronge, a former Garmin software engineer. “Seeing the pace at which things moved at Garmin was very different.”
Nowhere was the company’s slow progress more apparent than in fitness watches, which gradually became favorites of hard-core athletes eager to use GPS to pinpoint the accuracy of their events. “Having the GPS is so important,” says Ray Maker, a runner and fitness gadget blogger, who was an early convert to Garmin’s Forerunner line. “Your heart and legs don’t really know what pace you’re doing.” He says Garmin’s strength is its multiple features, which may also be intimidating for casual athletes.
PERSONAL NAVIGATION: Clockwise from top left: the Forerunner, Impact bat swing sensor, Vívosport, and Striker 7. Courtesy of Garmin
Garmin’s fitness segment, which extends beyond watches and into devices like a baseball bat–swing sensor and indoor smart bike trainers, was the company’s top revenue generator last year. That helped the company surpass its 2008 revenue mark of $3.5 billion for the first time, sending its shares soaring as well. While the automotive segment has shriveled relative to its fitness offerings, its aviation line has become one of its fastest growers.
Will Power, an analyst with brokerage Robert W. Baird, credits Garmin’s “blocking and tackling” for its staying power. “They build really strong defensive positions in areas that, by and large, have less competition.”
In a way, Garmin never stopped being a niche player, albeit a multibillion-dollar one. “What we like about Garmin is the way they position deep expertise around the customer group they’re serving,” says Edzard Overbeek, CEO of HERE Technologies, a mapping company that provides location data to Garmin. “The team that is responsible for their cycling watch are professional cyclers. The aviation team are pilots. The secret sauce is understanding what the expert user wants.”
A company can go only so far catering to enthusiasts, of course, and at the CES gadgets show in January, Garmin showed off its mass-market aspirations around fitness products—displaying more than 30 watches and wearables ranging from a $70 kids’ fitness tracker to a $2,500 Marq Driver watch that boasts a stylish look and multiple motor-sport functions. In all, Garmin offers about 90 wearable products made for runners, swimmers, boaters, pilots, and people who just want to track their steps.
“The biggest challenge is getting that mass market to understand we have the perfect watch for them,” says Susan Lyman, the company’s top marketing executive. “It kills me when I see people walking their first 5K or running with nothing on their wrist.”
Going after every segment inevitably means challenging the beasts of Silicon Valley, the same companies that knocked Garmin off its perch a decade ago. The Apple Watch, mocked as a less-than-innovative offering when it debuted in 2014, now commands 38% of the smartwatch market. Fitbit, soon to be part of Google, has 7.5% share. All of Garmin’s watches combined add up to just under 6%.
Garmin, ever the good Midwesterner, plays down the necessity of beating the unbeatable competitor. “We’re not trying to out-Apple Apple,” says Pemble. “We’re trying to be Garmin. We only focus on what we can control. So we prepare our business and structure our business in a way that best suits it for the next crisis.” After all, you don’t need a fancy navigational device to know that crisis eventually will arrive.
A version of this article appears in the April 2020 issue of Fortune with the headline “Garmin Goes the Distance.”
More must-read stories from Fortune:
—Why investors suddenly turned on pot stocks
—How the trouble-ridden debut of a vaccine sparked a panic
—This yachting adventure might be the world’s most exclusive escape
—The man behind some of Napa Valley’s most acclaimed wineries
—WATCH: Best earbuds in 2020
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-16--OK Boomerang: Why return CEOs are usually bad news for a company’s stock

Edward Breen’s four-year tenure heading DuPont was one for the corporate history books. He reshaped the centuries-old industrial giant through a series of acquisitions, including a merger with Dow Chemical. Then he engineered the slicing of $86 billion DowDuPont into three separate public entities.
In June 2019, after the splits were finalized, Breen relinquished the CEO role, becoming chairman of DuPont de Nemours, the newly formed specialty chemical company. But shares in the new DuPont soon tanked, as weak demand for auto parts and U.S.-China trade tensions ate into earnings. The board’s solution? Bring back Breen. He’s CEO again, as of Feb. 18.
It’s a common tactic among companies in dire straits: rehiring an old friend. CEOs who return for a second stint don’t have a learning curve, the thinking goes, and maybe they can spark magic. The iconic example is Steve Jobs, who famously came back to Apple, the company he founded, after 12 years away and transformed the computer maker into the world’s most valuable company.
Round 1: Shares in Michael Dell’s eponymous company soared during his first stint as CEO… Round 2: …but they have lost value and trailed the market during his “boomerang” stint. Robert Daemmrich Photography Inc/Sygma/Getty Images;Alexandra Valenti—The Forbes Collection
But Jobs was an exceptional leader—and for second-time-around CEOs, success is more the exception than the rule. That’s the conclusion of researchers at the University of North Carolina who tracked “boomerang CEOs.” In a recent study, the authors reviewed 6,429 CEOs who led S&P 1500 companies between 1992 and 2017, and found 167 cases when a former CEO ricocheted back to the head role. Executives who went from CEO to co-CEO and back at the same company were counted as boomerang leaders.
In general, investors would have been better off if the boomerang hadn’t come back. Companies with such CEOs garnered annualized stock returns (including dividends) that were, on average, 10% lower than those of non-boomerang companies. Their shares also lagged their industries.
What accounts for the disappointing reunions? Some boomerang CEOs returned under unusually tough conditions. A.G. Lafley of Procter & Gamble and Steve Ells of Chipotle each enjoyed great runs in the 2000s, then were overmatched by new crises (e-commerce and E. coli, respectively) in second stints in the 2010s.
But rehiring a familiar face is often a sign of broader management dysfunction. “It’s a failure of CEO succession planning,” says Travis Howell, a researcher on the study. Companies bring in ex-chiefs in part because they have no one else to turn to. (The numbers also show yet another sign of gender imbalance in the C-suite: Only two of the 167 boomerang CEOs were women.)
Boomerang CEOs are also unusually likely to be founders. Founders made up 44% of the UNC study’s boomerang CEOs (compared with only 4% of all CEOs in the sample). And on average, they performed even worse than non-founders. Often a founder’s entrepreneurial vision no longer meshes with the mature company’s needs, Howell notes; the skills involved in growing a new business don’t necessarily translate well to managing a behemoth. (Here again, Jobs is a rare exception.)
By the numbers
167 Companies in the S&P 1500 that rehired one of their former CEOs, 1992–2017
-10% Average annual amount by which their stocks trailed companies run by first-stint CEOs
Michael Dell’s tenure at his eponymous company illustrates the phenomenon. The stock was a world-beater in its early years. But its shares languished (along with Dell’s personal-computer business) after Dell the man returned as CEO in 2007, falling 43% before Dell took the company private in 2013. (Dell shares have also trailed the market since the company went public again in 2018.) Indeed, boomerang CEOs are particularly unlikely to replicate their past success in tech: The UNC study found that in industries in which the rate of change is rapid, such as technology, returning CEOs perform far worse than in relatively stable sectors, like industrials.
CEOs who aggressively innovate seem more likely to buck the downward trend. Ron Shaich led Panera Bread in the 2000s, then returned as CEO in 2012 after a two-year break. He tore down the organization, investing heavily to reorient the chain around fast-casual service. By 2017, when Panera was sold to private equity firm JAB Holding, its stock had soared. Starbucks’ Howard Schultz was similarly bold when he reoccupied the corner office in 2008, closing stores, retraining staff, and introducing mobile ordering across the company.
The bad aggregate track record notwithstanding, there are a few boomerang CEOs on the current scene who have earned investors’ confidence. Since founder W. Kent Taylor returned in 2011 as CEO of the Texas Roadhouse (TXRH, $52) restaurant chain, the stock has returned 264%, compared with 159% for the broader market. Taylor has earned kudos for keeping price increases modest, allowing the $2.8 billion chain to underprice competitors. Texas Roadhouse’s recent willingness to more efficiently deploy labor at its 611 locations is a positive development for the stock, says KeyBanc analyst Eric Gonzalez.
Then there’s DuPont (DD, $40). Breen’s knack for restructuring remains acute: In early 2021, DuPont will spin off its struggling biosciences and nutrition unit, enabling it to focus on stronger industrial businesses. Its shares trade at valuations far below those of its industrial peers and have been driven even lower by the coronavirus crisis. But many investors believe DuPont’s woes are cyclical and will recede in the long term. “Valuation should be higher,” says Jonas Oxgaard, an analyst at Bernstein. Put another way: Breen could deliver the boomerang effect investors like, where fallen share prices return to normal.
A version of this article appears in the April 2020 issue of Fortune with the headline “OK Boomerang.”
More must-read stories from Fortune:
—Why investors suddenly turned on pot stocks
—How the trouble-ridden debut of a breakthrough vaccine sparked a panic
—This yachting adventure might be the world’s most exclusive escape
—The man behind some of Napa Valley’s most acclaimed wineries
—WATCH: Best earbuds in 2020: Apple AirPods Pro Vs. Sony WF-1000XM3
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-16--Hong Kong will start charging quarantined travelers rent to stop coronavirus freeloading

As it continues to battle the global coronavirus outbreak, Hong Kong, the world’s most expensive property market, is going to start charging people quarantined in government housing after it found some were abusing the system.
Starting March 17, Hong Kong — which has some of the highest rents in the world — will charge a daily fee of HK$200 ($26) if people returning to the city opt for the government’s temporary housing, where they are also given meals. The financial hub previously mandated that people coming back from mainland China self-quarantine for 14 days, a measure that has since been extended to incoming visitors from the U.S. and Europe.
Hong Kong’s government announced the new arrangement Monday after it discovered people were taking advantage of the system, and to ensure access for those who can’t afford alternative quarantine arrangements at home or in a hotel.
Authorities are “aware of suspected cases of people abusing the temporary accommodation,” the government said in a statement.
“For example, some Hong Kong residents frequently traveled between the Mainland and Hong Kong after the compulsory quarantine arrangement took effect on February 8, and stayed in temporary accommodation repeatedly,” it said. “Some Hong Kong residents, despite having local residences, still insisted staying in temporary accommodation.”
Hong Kong is the most expensive city in the world in which to rent a mid-range two-bedroom apartment per month, according to Deutsche Bank AG’s 2019 “Mapping the World’s Prices” report. That type of home would cost $3,685 in Hong Kong, compared to $2,909 in New York City.
More coronavirus coverage from Fortune:
—How to get a refund on your Broadway tickets after coronavirus shut down
—A Q&A with WHO special envoy David Nabarro on COVID-19
—The best Twitters to follow for reliable information on the coronavirus outbreak
—After SXSW cancellation, Austin hotels and restaurants are bracing for a rough road
—While canceling mass gatherings, the U.K. is still aiming for deliberate “herd immunity”
—Walmart, Target, CVS, and Walgreens will loan space for coronavirus test centers
—Let’s remember what we learned in WWII, as well as in 2008
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-16--How A.I. is aiding the coronavirus fight

Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.
On the last day of 2019, an artificial intelligence warning system run by Toronto startup BlueDot flagged a news report from China about a mysterious pneumonia strain in the city of Wuhan. The system, which sifts through 100,000 articles and online posts daily in 65 languages, alerted BlueDot’s human employees, who immediately saw parallels to the deadly SARS outbreak in 2003.
After switching to a system based on data from billions of airline passenger itineraries, BlueDot was able to determine almost instantaneously which cities worldwide were most at risk if the mystery illness spread. The company quickly sent out warnings to health authorities and other clients about what would come to be called the coronavirus outbreak, which has so far infected almost 100,000 people and killed more than 3,000 as of early March.
“Outbreaks don’t care whether it’s New Year’s Eve or not,” says Dr. Kamran Khan, CEO at BlueDot and a medical professor at the University of Toronto. “In order to get in front of these diseases and threats, we have to move even faster than they do.”
It’s a far cry from when Khan started BlueDot about seven years ago. Back then, mapping the potential spread of a virus and alerting authorities could take several weeks. And reluctant governments would sometimes sit on the data for weeks or months after that.
But the era of A.I. and big data has revolutionized tracking and forecasting the path of infectious disease outbreaks like that of the coronavirus. Fueled by algorithms that can translate languages and distinguish between different meanings—Anthrax, the heavy metal band, versus anthrax, the infectious disease—BlueDot and its rivals suck up all the data they can to uncover potential epidemics.
The earlier and more detailed their warnings are, the better health authorities can tell where to screen for infected people and allocate resources. A brief head start can save thousands of lives.
With the coronavirus, A.I.-based alerts helped the World Health Organization and China’s officials react more quickly than they did during previous outbreaks like that of SARS. Still, early warnings can do only so much: China’s government has been criticized for moving too slowly, while the U.S. stumbled over a lack of test kits.
The systems created by the startups feed off information generated by an ever more interconnected and mobile world, using everything from search keyword data to the location of people clicking on Wikipedia pages.
Much of the data comes from the world’s largest Internet companies, including Google, which supplies search keyword and location data to some pandemic-detection startups. Meanwhile, Facebook has shared aggregated data about users’ movements as well as posts mentioning the coronavirus from Facebook Groups and Instagram. Anonymized data from Twitter, China’s Tencent, and others also fuels the algorithms, which typically run not on the monitoring firms’ own computers but on servers managed by Amazon, Microsoft, and Google that use chips specifically designed for A.I.
To be sure, pumping huge amounts of information into A.I. and machine-learning systems is no guarantee of success. For example, Google shuttered a project that forecast the severity of seasonal flu outbreaks after it wildly overestimated the 2013 cycle. One problem was that Google’s own efforts to help people search for health care information fooled the system into forecasting that more people were getting sick.
The challenge for companies developing pandemic-detection systems is to ensure that they focus only on relevant bits of information, without getting misled by hysteria that’s unrelated to actual illnesses. That’s why all of the systems still rely on humans to look deeper into each case and why they frequently adjust the sources of information that their technology relies on. “You have to recognize that data is constantly changing based on what people are doing online and always have to retune your algorithms for that,” says John Brownstein, chief innovation officer at Boston Children’s Hospital and cocreator of another A.I. alert system, HealthMap, which warned about the coronavirus a day before BlueDot.
HealthMap’s A.I.-generated warning about the coronavirus was backed up by intel from local physicians in Wuhan who were sharing their concerns in an online forum called ProMed. Such posts are the “early canaries in a coal mine that can provide data pointing to do a deeper dive,” Brownstein says.
Using fresh data is also important. Initial simulations of how the coronavirus may spread relied on past air travel itineraries. But once the outbreak became known and governments began banning movement in certain regions of China, travel patterns changed, notes Mark Gallivan, director of data science at Metabiota, another startup using A.I. to detect pandemics. As a result, the San Francisco company updated its library of historical passenger information with real-time location data from millions of mobile phones. “The first four countries that showed the highest importation risk on Jan. 14 were actually the first four that ended up receiving cases,” he says.
Another approach is to eschew all the online chatter and news reports and instead use actual medical data. San Francisco startup Kinsa sells smart thermometers that work with an app to help people decide when to see a doctor. With about 1 million households and more than 1,000 schools using Kinsa gear, those thermometers provide clues about the spread of the seasonal flu in the U.S. The eight-year-old company claims to have exceeded the accuracy of the Centers for Disease Control’s flu forecast for some years and hopes to develop a system that could predict flu outbreaks in local areas up to three months in advance.
“The difference is the quality of the data,” Kinsa CEO Inder Singh explains.
Of course, the Kinsa method works only where people use its devices. In the U.S., that means most cities but not so much in rural areas. And the company has yet to expand to other countries, where even a $20 smart thermometer may be too pricey for most people.
Ultimately, though, more medical devices reporting directly to A.I. systems could make for the quickest and most accurate early-warning system, says Metabiota’s Gallivan: “For earlier detection, it’s about creating a much smarter public health and medical system.”
The data fueling A.I. pandemic predictions
Smart, connected medical devices
Millions of patients are treated with thermometers and other devices that send data to an app. The aggregate information can provide early warning of a cluster of patients with fever, for example.
Search keywords and locations
The questions people want answered at a particular time and place can signal an outbreak. But the data must be filtered carefully, as search queries can reflect hysteria as much as a real epidemic.
Local news articles
Reporters on the ground often write stories about unusual medical problems or virus outbreaks. The articles can be translated and analyzed using natural-language processing.
Air travel patterns
Airlines generate about 4 billion travel itineraries annually. That historical data can be used to predict how an outbreak may spread to other cities based on the most popular destinations from the source city.
A version of this article appears in the April 2020 issue of Fortune with the headline “Bringing A.I. to the Coronavirus Fight.”
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—Let’s remember what we learned in WWII, as well as in 2008
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fortune--2020-03-16--Inside Xerox’s audacious quest to buy much bigger rival HP

John Visentin is speaking with the simmering impatience of someone who’s 100% sure his opponents are 100% wrong. “They want to block us with a poison pill, telling their investors they aren’t bright enough to make up their own minds,” he fumes. “That really annoys me!”
The “they” here is HP Inc. And Visentin, CEO of venerable printer-maker Xerox Holdings, is building a case for one of the most audacious takeover quests in recent memory. In November, Xerox made a guppy-devours-the-whale bid to buy HP, an offer now set at $35 billion. Today, with a cliffhanger proxy battle looming, HP’s countermoves are irking the takeover architect.
Visentin, a plainspoken 57-year-old from a blue-collar Canadian family, is the antithesis of a swashbuckler. He’s a career tech guy whose résumé includes a few stellar years in private equity and a stint as an executive vice president at the old Hewlett-Packard. But he’s capable of waxing passionate about his plans. “Printing is long overdue for consolidation,” he says, during an interview at Xerox’s anonymous glass-cube headquarters in Connecticut. “The potential for cutting costs, for investing for the future, is tremendous.” HP, he says, is thwarting Xerox by promising huge share buybacks: “How is that investing for the future?”
Xerox’s Visentin argues that steep expense reductions and bets on big digital printers like the Iridesse (shown here) would make an HP-Xerox merger pay off. Photograph by Reed Young for Fortune
Thirty years ago, a Xerox-HP takeover battle might have dominated the headlines. Today, these aging giants operate far from the spotlight. But they still run richly profitable printing businesses, generating cash that could finance the kinds of transformation that Visentin envisions. What makes his bid particularly bold is that it has been decades since a company Xerox’s size has succeeded in buying a rival that’s so much bigger. In 2019, Xerox posted sales of $9.1 billion—less than one-sixth of the $58.8 billion HP tallied in its most recent fiscal year.
One person’s “bold,” of course, is another person’s crazy. To finance the merger, Xerox would take on $24 billion in new debt. “It makes no sense because all that debt would make the combined company much riskier,” says Bill George, former CEO of Medtronic and a professor at Harvard Business School. HP brass, who oppose the merger, argue that the leverage would threaten the companies’ survival. “You can’t work through economic cycles with that level of debt,” says CFO Steve Fieler, who calls Visentin’s $2 billion in planned annual savings “unachievable.”
Real money
15% Combined share of Xerox stock controlled by Carl Icahn, 84, and Darwin Deason, 80
$20.1 billion Annual revenue of HP’s printer division (for fiscal year ending 10/31/19)
$24 billion Debt that xerox would incur to acquire HP. Source: Company filings
Xerox’s offer—now $24 a share, a premium of about 20% over HP’s mid-March stock price—will face a vote at HP’s annual shareholder meeting, expected in May. Rooting for a deal is activist titan Carl Icahn. He’s Xerox’s largest investor, with an 11% stake, worth about $750 million; he also owns 4.4% of HP, worth some $1.3 billion. Icahn led a campaign in 2018 that blocked Japan’s Fujifilm Holdings from purchasing Xerox. He then backed a new management team headed by Visentin, who became Xerox CEO that May. Icahn claims that a combination promises huge gains for both sides. “I want to own the stock of the merged companies,” he tells Fortune, “and Visentin is a tough guy and the right guy to run it.”
If Xerox wins the proxy battle, a new HP board will likely approve the deal. But HP may persuade its shareholders to rebuff Xerox, or even turn around and buy Xerox—a deal proposed by, among others, Carl Icahn. Whatever the outcome, Visentin’s bid could shake up a backwater of the tech world by highlighting a strategy that has revived mature industries from autos to airlines: consolidation.
Printers may be unglamorous, but they’re also a $206-billion-a-year industry. Though revenues are shrinking as clients turn to digital documents, those boxy appliances produce enormous cash flow, as customers keep paying for years for paper, maintenance, and pricey toner cartridges.
The field encompasses 12 major players, including HP, Xerox, and eight Japanese companies. Mergers could offer this gaggle some advantages: Combined, companies could slash costs by reducing headcount and winning lower prices on outsourced parts and services. They would then have more cash to invest in faster-growing arenas, including 3D printing and customized digital printing.
If such a strategy succeeded, it could pay off disproportionately for investors. HP and Xerox trade at a dirt-cheap 7.5 and 5.4 times free cash flow, respectively, reflecting investors’ belief that they’ll keep shrinking. The average multiple for the S&P 500, by contrast, is 19, and a growth surge could help their shares close that gap.
The best outcome may well involve HP buying Xerox because the combined company would carry much less debt.
Boosters of an HP-Xerox merger point out that each focuses on different parts of the market. HP’s $20.1 billion printing business specializes in desktop printers, a category called A4s. Xerox relies mostly on A3s, the huge multipurpose models used by businesses. In most cases, it leases them on contracts through which it provides supplies and maintenance.
Last year, Xerox produced free cash flow of $1.3 billion and HP of almost $4 billion. Visentin argues that he can produce $2 billion in new yearly savings—and the healthier margins and investment opportunities that come with them—by combining Xerox and HP. At Xerox, Visentin has delivered on the cost cutting: The company has sharply reduced what it spends on outsourcing such functions as IT management and payroll and medical claims management, lowering total expenses by almost 10% in 2019. The question now is whether HP’s investors will let him take his shears to their company.
To woo investors, HP is taking a cash-is-king approach. On Feb. 24 it unveiled a plan to buy back $15 billion in stock over three years and pledged to return 100% of free cash flow to shareholders. CEO Enrique Lores tells Fortune that Visentin’s bid both undervalues HP and would leave it overleveraged. HP is open to acquisitions, he says, but can expand sales and profits without them, by shifting the product mix to faster-growing business lines—including, yes, 3D and digital printing.
While Wall Street analysts are skeptical of that claim, HP’s countermoves have won some converts. “The cash return program probably moved HP from a disadvantage to a slight advantage,” one institutional shareholder says. This investor believes Xerox could regain its edge by raising its offer price by $2 to $3 a share. But that could mean taking on even more debt, a precarious proposition.
If Xerox looks like the winner as the vote approaches, it’s possible HP will bid for Xerox. Indeed, in a Feb. 27 proxy filing, HP gave a detailed narrative of negotiations on just that topic. According to the filing, Icahn and Visentin proposed selling Xerox to HP at around $45 a share—a huge premium over Xerox’s early March price of $32. But even at that price, it’s a move that HP, with its much larger revenue stream, could afford.
The best long-term outcome for shareholders may involve HP buying Xerox. The combined company would carry much less debt, probably less than $10 billion net of cash holdings, leaving more cash to invest in R&D and acquisitions, even as it reaches more customers. The problem, in some shareholders’ eyes: If HP is the buyer, Visentin and his “Let’s not copy, let’s reinvent” mindset might be sidelined. And the benefits of consolidation may mean that a Xerox acquisition is better than none.
If HP becomes the buyer, the boardroom maneuvering will undergo some fascinating twists. HP would need to convince institutional investors that it isn’t overpaying, lest they flip their support to Xerox. It would also likely need to propose a friendly merger to the same Xerox management that it has been trashing as irresponsible. The deadline for HP to unseat Xerox’s board in a hostile takeover at its annual meeting has passed for 2020, a scenario that Jim Woolery of King & Spalding, Xerox’s lawyer, says gives his client an advantage.
Darwin Deason knows who he’s cheering for. The 80-year-old Texan sold an outsourcing services company to Xerox in 2010 and still owns 4% of its stock; it was Deason who teamed with Icahn, 84, to block the Fuji takeover. Deason says he’s amused to be “at my last rodeo, fighting for the little guy to buy the big guy, when it almost always goes the other way around. But here I am riding the bull!” If that bull breaks some dishes in the sleepy china shop of the printer industry, the two octogenarians won’t be the only ones who profit.
A version of this article appears in the April 2020 issue of Fortune.
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fortune--2020-03-16--Why dog walkers make more than childcare and eldercare workers

A capitalist society measures value by what it’s prepared to pay for people’s time. So, what to make of the fact that when it comes to the hard work of care, Americans pay the most—$14.80 an hour—to the people who walk their dogs? Those who tend to children and the elderly make considerably less, according to PayScale, a compensation data and software company.
But don’t blame free-market forces, says Sudarshan Sampath, PayScale’s director of research. Dog walking is a competitive business, while roughly 70% of home health workers are paid by Medicare and Medicaid. The government caps reimbursement for the service at a rate that—given operating costs and margins—makes for paltry wages, says Jeounghee Kim, an associate professor at Rutgers who studies the care economy. Parents, meanwhile, tend to pay for childcare and often rely on family members or unlicensed providers; for regulated services to compete, they have to keep wages low.
With a senior population that is expected to double in the coming decades—not to mention a shortage of professional caregivers already—Sampath sees the artificially low wages as a real issue: “The economic case doesn’t make sense anymore.” Kim calls it a crisis that has so far proved “too expensive to fix.”
How they compare
(Median annual pay)
Dog walker: $31,300
Senior caregiver: $26,200
Childcare provider: $23,300
A version of this article appears in the April 2020 issue of Fortune with the headline “Are We Caring for Carers?”
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Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-16--Batten down. We could be dealing with this all year

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
A good friend wrote over the weekend that he would like to see “more optimism” in CEO Daily. What he misses is that I am being optimistic. I have great confidence that governors, mayors, sports executives, concert producers, ski resort owners, and even, after a few false starts, the federal government, are doing the right thing. The American people will make the necessary sacrifices to reduce the human toll of this virus.
But what does that mean for the economy? Take a look at the model that Nicholas Kristoff wrote about over the weekend, here. The “social distancing” policies being enacted can “flatten the curve.” That reduces strain on the health care system, and ultimately saves lives. But it also prolongs the need for “social distancing,” since the virus will take longer to reach its natural peak and dissipate, after a sizable segment of the population—experts say 30% to 70%—has been infected. Under the model Kristoff is using, under the best scenario, we will be playing social distancing games into 2021—which of course will extend the economic impact. This is exactly what China is dealing with now. The Chinese have effectively slowed the spread of the virus; but they don’t know how to reignite their economy without reigniting the virus as well.
There is, of course, the oft-cited hope that warm weather will curb the virus. But the most knowledgeable experts—Tom Frieden and Michael Osterholm top my hit list—say that’s only a hope, not a known fact. And even if it does recede for the summer, it could come roaring back in the fall, as the 1918 Spanish flu did and as we witnessed with the H1N1 influenza pandemic in 2009. So batten down. There’s a decent chance we will be dealing with this all year. That’s why former Treasury Secretary Lawrence Summers said yesterday the coming recession could be as bad as in 2008.
By the way, here’s one problem that needs to be addressed urgently. In order for optimistic scenarios to come true, sick people should aggressively self-quarantine. But assuming that they can get tested and determine if their illness is from Covid-19, what if they can’t afford to? A report out last week from my former colleagues at the Pew Research Center finds 24% of U.S. civilian workers—or roughly 33.6 million Americans—don’t have paid sick leave. That should be priority number one for government and business. Walmart and Uber are moving in the right direction; McDonalds, Subway and others need to do the same. (By the way, that doesn’t even address the strain put on parents when their children are not in school.)
Separately, big business has moved into the lead position in the U.S. in responding to the climate crisis. I’ve written here about the efforts of Microsoft, Starbucks, and others. But how far can business go, and how big a difference will it make? That’s the issue Fortune explores in a package of stories in its April issue, available to subscribers online this morning here. This is the kind of deeply reported dive that only Fortune can do, and it deserves your support. Please subscribe, and read. It pays to know.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
The markets
Today will not be pretty. The Fed may have cut its benchmark interest rate to almost nothing yesterday, while also pumping $700 billion into the economy, but central-bank action is not impressing the markets. Asia was a sea of red today, with the Nikkei 225 down 2.5%, the Hang Seng down 4%, and the ASX 200 down 9.7% (that's down around 30% from its recent peak). Europe then rose and did not shine with a roughly 9% plunge in the Stoxx 600, only a bit of which has been recovered at the time of writing. U.S. futures are around where you'd expect them to be in this context. New York Times
European borders
The European plunge is likely related to the fact that borders are slamming shut between the bloc's member states—the EU isn't quite like the U.S. in that it's not a united country, but it largely operates like one, so this is roughly analogous to American states sealing themselves off. Germany is the latest, partly closing its borders with France, Switzerland, Austria, Denmark and Luxembourg; no need to do the same with its Polish and Czech borders, as those countries have already shut them down. BBC
Universal CEO
Following the news last week of BT CEO Philip Jansen's coronavirus infection, another major chief executive has come down with the bug: Universal Music Group's Lucian Grange, who has been hospitalized—and who reportedly partied with Apple's Tim Cook and Eddy Cue a couple weeks back. Bloomberg
British Airways
British Airways owner International Airlines Group is cutting its capacity by at least 75% during April and May, in line with the travel restrictions that are being erected everywhere. And IAG CEO Willie Walsh—who was supposed to be retiring as group CEO this month—will defer his handover to Iberia CEO Luis Gallego for a few months, again to deal with the crisis. Irish Times
Apple antitrust
The French antitrust authority today hit Apple with a $1.2 billion fine for putting illegal restrictions in its contracts with French wholesalers Tech Data and Ingram Micro, thus harming resellers. It is by far the heaviest fine ever implemented by the Autorité de la Concurrence. Reuters
AROUND THE WATER COOLER
Stores shut
Nike, Apple and Abercrombie & Fitch are among the latest retailers to announce massive temporary store closures in the U.S. and elsewhere, in response to the pandemic—all three of the companies will continue to pay their staff regardless. Fortune
Vaccine play
One of the most mind-blowing stories out there—and competition is strong these days—involves an apparent attempt by the White House to take over the German biotech CureVac, to create a coronavirus vaccine exclusively for the U.S. German politicians are outraged, as well they might be considering that the German government has partly funded CureVac's research. The company's investors are reported to have rebuffed Trump's offer, and CEO Dan Menichella, who told President Trump about the company's work, has abruptly left the company. Politico
Google screening
President Trump may have told the world that Google is building a website to help Americans get coronavirus testing ("It’s going to be very quickly done, unlike websites of the past") but actually that wasn't true—another Alphabet division called Verily has been working on "a tool to help triage individuals for Covid-19 testing" in the Bay Area only. The Verge
TikTok turns
The Chinese-operated short-video app TikTok will stop using China-based moderators for content from outside the country. The move appears intended to allay official concerns about TikTok's Chinese ties, given that the app has become extremely popular. Wall Street Journal
This edition of CEO Daily was edited by David Meyer.