Monday, June 1, 2020

‘Frost on Top of Snowfall’: Virus Piles Pressure on China’s Industrial Machine

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SHANGHAI/BEIJING—The coronavirus is threatening to disrupt large parts of China’s manufacturing machine and its global supply chains as the spread of infection and strict public health measures force companies and workers to remain idle.

China’s most important holiday was due to end on Jan. 31, when many companies planned to get back to work after a week-long vacation, but authorities have ordered businesses in many areas to stay shut longer in a bid to contain the disease.

Widespread travel restrictions, meanwhile, mean millions of migrant workers may be unable to return to what has often been called the world’s factory floor.

The World Health Organization on Thursday declared the outbreak a global health emergency.

Brian Miller, 32, owner of Easy China Warehouse and a bluetooth speaker company in the southern city of Shenzhen, said labor and production disruptions could ripple through supply chains, from raw materials to final assembly.

“If we can’t get back to production quick enough, I’ll run out of inventory, and I’ll have a few months where we won’t be able to sell anything. And that’s the catastrophe that we all don’t want,” Miller told Reuters.

In Eastern China’s Suzhou, one of the country’s largest manufacturing hubs, companies have been told to stay shut until at least Feb. 8 and in Shanghai until Feb. 9. Factories in the southern manufacturing hub of Dongguan in export-oriented Guangdong Province have also been told not to open before Feb. 10.

The threat of significant disruptions comes as China was already undergoing the biggest supply chain shift in a generation as companies grappled with the impact of the Sino-U.S. trade war and an economic slowdown.

A woman surnamed Chen, who co-owns a garment factory in Huizhou in Guangdong Province, described the virus and shutdowns as being like “frost on top of snowfall.”

Her domestic focused factory already had to lay off almost half its workers from over 70 to around 40 due to the slowing economy, and she fears more jobs may be lost in coming months.

“The outbreak is definitely causing great damage to our…

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