A poll conducted by Shanghai’s American Chamber of Commerce (AmCham) has found that an impact of the business shutdowns due to the coronavirus epidemic is already being felt in the global operations of almost half of the American companies in China.
The fact that there is not enough staff to restart operations to full capacity at their Chinese factories was conceded to by about 78 per cent of the companies polled. Millions of Chinese workers are unable to come back to the cities because of the public health restrictions imposed on travelling by Chinese authorities in order to curb the spread of coronavirus.
The survey included 109 companies that have manufacturing operations in Shanghai, Suzhou, Nanjing and the wider Yangtze River Delta.
The survey also found almost 48 per cent of the respondents claiming that their global supply chains have already been impacted by the shutdown of plants in China. On the other hand, almost all the companies felt that there will be an impact of the shutdown in the next one month.
“The biggest problem is a lack of workers as they are subjected to travel restrictions and quarantines, the number one and number two problems identified in the survey. Anyone coming from outside the immediate area undergoes a 14-day quarantine,” said AmCham President Ker Gibbs.
“Therefore, most factories have a severe shortage of workers, even after they are allowed to open. This is going to have a severe impact on global supply chains that is only beginning to show up.”
Since extended Lunar New Year holiday last month, a large number of cities across China have been in lockdown mode as the authorities try to curb the spread of the deadly coronavirus. Authorities have also restricted travelling while putting a number of cities under quarantine.
This has led to a severe disruption in the economic and business activities in the second largest economy of the world. Businesses and factories have found it hard to reopen there which has consequently disrupted global supply chains.
Those industries and sectors that are worst hit because of the coronavirus will be given government support in China – with special emphasis on manufacturing industries. The Chinese authorities have already instructed banks to provide loans at lower rates of interest to those companies that quality for such special treatment. The banks have also been asked to tolerate higher levels of bad loans. The government has also promised a reduction in taxes and fees.
About one third of the companies that participated in the survey wanted to shift their manufacturing bases outside of China in the eventuality of further delay of opening up of the factories, the survey showed. On the other hand, more than two thirds of the responding companies foresee a lower than normal demand for their products.
Over the next two to four weeks, the major challenges for their business will be logistics problems and the need to find alternative supplies, most of the respondents said.
(Adapted from Nasdaq.com)