Coronavirus Impact on Chinese Manufacturing Economy

The date I am writing this article is 10th February 2020 and the Coronavirus death toll has risen to over 900 people with almost 40,000 confirmed cases. The deadly virus has caused global disruption and fear – so much so that the national Chinese New Year holiday has been postponed. Will the growing outbreak cause permanent damage to the global economy?

What is happening in Wuhan?

Home to over 11 million people, the city is currently quarantined with very limited access to and from the city. Non-essential vehicles have been banned from the roads to prevent spread of the virus. Things have got so serious in Wuhan that at the Hubei border, workers are checking people’s temperatures before allowing them into the city – according to BBC. Along with this, the government announced it is sending an additional 1,200 health workers – along with 135 People’s Liberation Army medical personnel – to help the city’s stretched hospital staff – a quote from CNN. However, it is not just Wuhan that is in crisis, there have been global efforts to reduce the spreading of the virus along with funding.

What is the situation with manufacturing in China?

China is the capital for manufacturing globally and supports many companies. According to South China Morning Post: retailers, manufacturers are shutting doors, letting employees work from home as Wuhan viral outbreak spreads. If the manufacturing of products decreases – so will the global economy. According to South China Morning, Coronavirus originating in Wuhan has sent agriculture commodity prices tumbling and led to extended shutdown of Chinese factories and markets. Conditions have got so bad that Starbucks has closed 2,000 Chinese outlets and Apple has closed one retail store due to the outbreak. Tim Cook, Apple’s CEO, has said the company is worried about the outbreak because China is both a major market for its products and a location for large amounts of its manufacturing. According to BBC, Australia plans to quarantine its 600 returning citizens for two weeks on Christmas Island – some 2,000km (1,200 miles) from the mainland. The global manufacturing sector seems to be slowly deteriorating due to this outbreak. Independent quoted that German auto parts maker Webasto has said it has temporarily shut its headquarters near Munich after four members of its staff were confirmed to have been infected earlier this week. According to Financial Times, Nissan will halt production at the Japanese plant due to the coronavirus outbreak.

The coronavirus outbreak is quickly spreading to other regions. Hong Kong has reported 38 cases of the virus so far while Macau has ten. But Guangdong province has reported 1159, according to data released by the Hong Kong health authority. A large number of factories in China remain closed due to the the danger of the virus spreading much more and causing more casualties.

World Wide Effects

According to the BBC, Sony and Amazon are the latest major companies to pull out of one of the world’s largest tech shows because of risks posed by coronavirus. We can expect many events like these to have fewer people attend due to this virus outbreak. For many events, there has been suggestive ways for attendees to avoid spreading / catching the virus.  The GSMA says it will suggest participants should not shake hands with each other at the show, and microphones used by speakers will be disinfected and changed. According to The Verge, earlier this month, major tech companies announced they would temporarily shut down all corporate offices, manufacturing factories, and retail stores across China. These companies include Apple, Samsung, Microsoft, Tesla, and Google. The virus is expected to cause delays of product launches and manufacturing worldwide.

Transportation on Lock down

Confirmed today, British Airways, Lion Air and Seoul Air have cancelled all flights to Beijing and Shanghai due to the virus outbreak. Not only this, according to The Guardian, Hong Kong cuts Chinas transport links as Coronavirus toll mounts. Hong Kong’s leader, Carrie Lam, said high-speed trains and ferries that cross the border would be suspended.

What can I do to prevent catching the virus?

1. Wash your hands often with antibacterial soap
2. Avoid close contact with people who are sick
3. Avoid touching your eyes, mouth and nose with unwashed hands
4. Cover your coughs and sneezes with a clean tissue and then immediately discard it
5. Regularly clean and disinfect frequently touched surfaces

How does this impact you as our customer?

Many of our manufacturers in China have been affected and are yet to resume operations. We have received several reports from factories some of which have returned but are experiencing workforce shortages of up to 70% and are therefore limited by what can be produced. Having Communicated with several factories, it seems most expect delays extending to April in order to get back to 100% capacity; which is impacting on our ability to satisfy some of our orders on our original promised date.

Although we are doing our utmost to meet our customers requests, we feel its our duty to forewarn you of probable delays in goods being delivered on time.We will keep monitoring the situation and update you on the latest information we have, but please bear with us while we work through the issue to get the products to you as soon as possible.

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