Update on the commercial situation in China on 19 February 2020 The effects of the corona virus outbreak (or COVID-19 as it’s now called) continue to be felt across China. There are however some positive signs. Both the number of new cases and the number of fatalities is falling and has done so for the past 4 days suggesting we are past the peak of infection and that the measures put in place by the government are working. However this is by no means certain, information remains patchy and no one is sure what will happen once restrictions are lifted.
ON the manufacturing front meant factories were planning to return to work this week. In a few cases this has actually happened but in many areas this has not been possible. One reason for this is the virtual lock down of many areas of china affecting at least 150 million people who are effectively quarantined in their homes and not allowed to go out to work. This has meant for many factories even if they were to open they would have no workers. Many more factories are contactable this week through their admin and sales staff many of whom are managing to work from home. The information they are providing about the situation in their factories is however inconsistent and we advise caution accepting the information about operational status of their factories at the present time.
The affect of manufacturing doesn’t just affect the end manufacturer however. Supplies of components is also severely restricted leading to shortages and disruption to supply chains.
Logistics is also being affected, particularly air cargo and courier services. Many airlines have suspended direct flights to China and as a result their is a lack of supply and what is available is patchy. Goods are taking a long tome to arrive and some appear last in the system Prices have increased considerably as a result. Our advice is to avoid sending parcels by air for the time being. Sea shipping is still running but again many shipping lines have significantly reduced the number of sailings leading to less choice and often increased sailing times. Getting goods to the port is also a problem as there is a shortage of lorries on the road at present.
Looking to the future things do seem to be improving slowly with slow being the key word. We expect more factories to open over the coming week but it may be the end of the month before many factories truly get back up to speed. There will continue to be regional differences with of course Hubei being particularly affected and slow to recover.
Our advice – keep talking to your supplier so you remain updated, be vigilant about false claims of factories returning to work and manage your customers expectations – it is going to take time to get back to normal.-