Business group finds coronavirus disrupting supplies in South China

Roughly one-third of companies in South China are suffering from a shortage of components or supplies, trade group says

The pandemic caused by the coronavirus is disrupting supplies. (Zhang Peng/LightRocket via Getty Images)
The pandemic caused by the coronavirus is disrupting supplies. (Zhang Peng/LightRocket via Getty Images)
Posted March 18, 2020 at 2:50pm

Roughly one-third of companies in South China are suffering from a shortage of components or supplies due to the coronavirus disruptions, according to a survey released Wednesday by a trade group based in Guangzhou.

The survey of 237 companies, more than half of which are American and three-quarters are in manufacturing, also showed that 15 percent of those facing shortages already have run out of a component, while 80 percent said they could run out within 90 days.

“The human toll of the virus is not the only major problem at hand,” said Harley Seyedin, president of the American Chamber of Commerce in South China, in a statement. “It is becoming increasingly clear that restarting China, the world’s largest manufacturer and a giant of global trade, will be difficult even as the country makes major strides to contain the outbreak.”

Not all the news in the group's survey was bad. Just over half of respondents said their operations had been disrupted only slightly, another 42 percent reported moderate disruptions and only 6 percent saw severe impacts.

“According to our recent polling of members as of March 6, 95 percent of our companies and 93 percent of factories were operational,” Seyedin said in a special report on the state of business in South China that accompanied the coronavirus report. “About 80-85 percent of workers have returned to work. Many companies are working overtime, and companies with offices in office buildings are implementing staggered shifts to manage people flow.”

The companies surveyed separately by the chamber from March 9 to 14 also cited transportation and logistics as the key factor causing shortages in 45 percent of responses, while 23 percent cited labor shortages and about a third reported problems with missing components or supplier delays.

While the bulk of logistics problems could be attributed to issues in China, about 18 percent of companies reported problems in obtaining components or supplies from the United States, the European Union or other Asian sources. And 22 percent of respondents reported that the issues affected availability of products in the U.S. market.

In the special report, the group also said that U.S. companies generally reported that revenues, profitability and return on investment in the Chinese market was stable.

While most of the respondents in a separate survey presented in the special report expect the trade dispute between the United States and China to escalate this year, Seyedin used the release to promote the urgency of negotiations on a phase two trade deal.

“It remains clear that business as usual has not fully resumed,” Seyedin said in the report. “One thing that can help would be a Phase II deal between the US and China. This would supply a needed boost to international economies as they restock necessary inventory.”

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