Joao
Account Manager
B.S. degree in Computer Engineering at West Virginia University
5-year experience in QC industry
Fluent in Portuguese, English, Spanish, Mandarin

Feb 21, 2020

The Coronavirus Outbreak and Its Impact on Your Supply Chain

Chinese government has implemented effective measures to contain the spread of the CoVid-19 and these measures have already shown positive results as there has been lower increase rate of new cases outside Hubei province in the past two weeks.

 

Authorities from the Health Department have forecasted that the outbreak will peak sometime this month and will be over by April. With the outbreak now being under control as a result of the efforts Chinese government has made to reduce the impact of the CoVid-19 epidemic, importers worldwide are more optimistic and factories started to resume its operations with the majority of them at a slower pace, and some even at its full capacity.

 

Those companies that are already fully operational as well as those who are still awakening from the sudden collapse of its normal operations, will soon count on new tax policies and other fiscal measures introduced by provincial governments to help injured industries cope with the burden.

 

Some Chinese factories, however, remain completely shuttered in the midst of quarantine coronavirus efforts. With provinces and cities reporting different dates for a prolonged closure as the coronavirus epidemic still continues, confusion over work resuming at factories around Hubei province is breaking in.

 

According to the American Chamber of Commerce in Shanghai which recently released the results of a survey conducted on 109 manufacturers in Shanghai, Suzhou, Nanjing and the Greater Yangtze River Delta region, 78% of companies don’t have sufficient manpower for full production, while 30% said logistical challenges will be their biggest concern.

 

Officials had previously said that activities could pick up again on Monday, but for some factories — including Apple's largest manufacturer Foxconn — the already lengthy pause in reopening could be further stretched out.

 

Even if companies were to be fully operational now, workers would then have to meet about two weeks of quarantine requirements, and with a further delay, which by now is a reality for many factories across China, importers have still not completely ruled out the possibility of a big hit to be on the way not just to the Chinese manufacturing industry, but their business’ supply chain.

 

Strict traffic controls and road blockages at region and county levels are other major problems that even if factories had enough workers to resume production, they’d still need supplies from certain regions to resume production at the fullest.

 

China’s neighbor Vietnam, a country that has recently experienced a rapid increase in the number of manufacturers flooding in from China due to the trade war between China and the US, and which many could see as an alternative to China for this sensitive time, has also been affected by the coronavirus epidemic once though it can provide cheaper labor and better tariffs, it strongly relies on China for raw materials and components.

 

While things have yet to be back on track as they were before factories closed their doors for the Chinese New Year, importers have been advised to pay much attention to,

  • Possible delays in factories reopening after CNY;
  • Possible reduction in the number of workers returning to factories after CNY;
  • Travel restrictions impacting fulfillment of current orders or placement of new orders;
  • Possible impacts on ports and airlines.

 

Meanwhile, a quality control company can help importers

  • Track if the production of their orders is on schedule and keep in touch closely with their factories to know their real production schedule and report back to them;
  • Ensure that the quality of raw materials and components remains as satisfactory as per previous orders;
  • Ensure their products meet local market standards and regulations;
  • Have an update on their supplier’s capabilities, systems, management and operating procedures during the recent outbreak.

 

More updates are available on how the coronavirus outbreak can have an impact on your current supply chain and how your business can overcome this sensitive period of time. Contact us at info@v-trust.com and we’ll be more than happy to assist you.

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