Coronavirus outbreak and impact on your China business

I am sure by now everyone has heard of the novel coronavirus. Many of you do business in China and you are probably already feeling the impacts/effects of the current outbreak. In this post I’d like to help you to figure out what is happening and how it will impact your import business from China, selling products on Amazon or your eCommerce store in general. And more importantly what you can do to avoid major disruption in your supply chain. We’ll look at these three topics today:

  1. CORONAVIRUS QUICK FACTS
  2. IMPACT ON YOUR CHINA BUSINESS
  3. WHAT ACTIONS YOU CAN TAKE

1) CORONAVIRUS QUICK FACTS

First things first, what is a coronavirus? Coronaviruses are a large family of viruses found in both animals and humans. Some infect people and are known to cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS).

What is the coronavirus COVID-19 cause? The most recent coronavirus very likely came from a local seafood market in Huanan, China in late 2019. It was also suggested that bats were responsible for the virus but this has not been officially confirmed. Many of those initially infected either worked or frequently shopped in the Huanan seafood wholesale market in the centre of the Chinese city, which also sold live and newly slaughtered animals. As of February 2020 there have been more than 75,000 confirmed infections (74,000 in China alone)

 

2) IMPACT ON YOUR CHINA BUSINESS

What is happening in China right now? More specifically what is happening to factories at the moment? 

You probably heard already that the Chinese government has been actively taking strong measurements to contain the situation. At the moment the most affected area is Hubei province where the outbreak occured. The government is widely informing the general public via Television/Newsmagazines and Radio how to protect themselves. The Chinese government is working around the clock to contain and further improve the situation. 

 Many people have emailed me and asked me about the current situation and are obviously concerned not only about the virus but what it means for their importation business. What’s more, the Chinese New Year holidays just came to an end and the situation in some factories is chaotic to say the last. Many workers were not able to return because of restrictions or in some cases because of fear getting infected with the virus. Emailing or calling suppliers has resulted in no reponse in many cases. I also hear from many suppliers that are reachable, that buyers do not show concern or don’t understand the situation. 

 I also do understand buyers, not hearing about their production, thousands or millions of $ in product value in limbo, not knowing what is happening. What is making things worse for buyers is that they often can’t reach their suppliers. 

At this stage I can only recommend to keep contacting your suppliers, try to be understanding and possibly get some confirmation that things will resume normal once the situation is more clear. 

Some buyers are also concerned that products coming from China by cargo contain the virus. According to the WHO the virus may survive a few hours or more only. Considering that cargo from China takes anywhere from 7 days (air cargo) to 30+ days (via sea shipment) I believe it is safe to say that there shouldn’t be any concern. 

Let’s look at some facts and the possible impacts to your business:

 
  • Provinces Shanghai, Jiangsu, Zhejiang, Guangdong and Hubei have governmental order that prohibits work for the general population until 24/2 preliminarily
  • 80% of factories of consumer products are in these provinces 
  • The majority of suppliers cannot be reached so in most cases you won’t get full facts on delays or how long it will take for things to return to normal.
  • The suppliers that I was personally able to reach told me that the returning workers will be quarantined for 14 days before they can resume work. 
  • Chinese New Year just ended making the situation even worse as many workers did not return to factories
  • Travel restrictions for citizens in China, meaning some workers/staff cannot return to the factories. 
  • Logistics companies equally affected meaning that this will cause a bottleneck when things return to normal. 
  • Inspections cannot be carried out in the next few weeks as many inspection companies/test labs are working on minimal staff also
  • Sea ports and airports face the same issues as above.

 

What do I expect to happen?

Due to these unusual circumstances I anticipate a delay of 21 days for all shipments from week 7 to 15. This is an estimation based on my current knowledge and subject to change.

 

3) WHAT ACTIONS CAN YOU TAKE? 

  • Keep contacting your suppliers until you reach them. Try to get an update on the situation from them. 
  • Don’t panic about your production/order. If you have been working with a supplier for some time things should resume as soon as the situation is contained. 
  • Be mindful and don’t get aggressive. Many families / parents are affected and most people are worried about their health.
  • Try to plan accordingly. E.g. Send out newsletters to your customers and inform them about the situation (if you can) and about the delays. 
  • Inform yourself on official sites like the WHO here: https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports/
  • Possibly look into other production countries like Vietnam, Thailand, Indonesia, Taiwan etc. that are less affected. 
 
Lastly if you are personally concerned or If you are unsure and want to inform yourself about the novel coronavirus, get more information you can do so here on how to prevent coronavirus. If you are feeling ill, had contact with people from the affected area or have coronavirus symptoms consult a doctor.

 

I hope this post has been informative and helpful. Let me know what you think in the comment section below.

All the best,

Manuel 

ImportDojo

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