Let’s get straight to the point:
Chinaimportal.com: The situation is currently stable in Hong Kong. We are operating as usual. If things take a turn for the worse, our employees will be instructed to work from home, but we are not suspending operations.
When are most factories operational again? I’ve spoken to a few suppliers over the weekend. The current plan, for most of them, is to resume operations this weekend or early next week. This is in line with what would have been the case even without the outbreak. However, that can quickly change.
1. Even if the factories open “on time”, expect delays as many factories will be understaffed. Most “export factories” are not based in Hubei, but many of their employees (including managers) and material suppliers are.
2. This situation will likely remain for at least a few months. It’s possible that limited outbreaks may occur in other parts of the country, which in turn will force the authorities to restrict movement in affected areas. This would be especially problematic if it happened in Shenzhen, Dongguan, Ningbo or other major export hubs. Hopefully, it will not come to that.
3. Many Chinese factories have been under severe financial stress in the last year. Some factories may not recover from this hit, which increases the risk of supplier bankruptcy.
4. It’s unclear how/if this situation will affect quality inspections and lab testing.
5. Material and components delays will not only impact Mainland China but also manufacturers in Vietnam and elsewhere in Southeast Asia. Further, rapidly shifting to factories outside of China can make sense, but only if you have the buying power to reach the MOQs.
6. The April-May 2020 trade show season may also be impacted. We’ll simply have to wait and see at this point.
7. Airlines are cutting flights to and from Mainland China. This will likely result in higher air freight costs.
Do you have any questions?
Feel free to write your comments below if you have questions about the situation.