New Delhi (NVI): The coronavirus outbreak that has hobbled China’s economy is increasingly affecting the world economy and supply chains.
As COVID-19 spreads, its effect on business is amplified. Not only are Chinese factories affected by lockdowns and quarantines, production sites in other countries are already running low on parts because of shortages from China.
Apple works with suppliers in forty-three countries, all of which receive components from the company’s contract manufacturers in China and as a result, is facing a considerable shortage these days.
Another example of disruption is that ships carrying refrigerated cargo containers of chicken from the US to China are being diverted to ports in Hong Kong, South Korea, Taiwan and Vietnam as ports are running out of space for refrigerated containers that need to be plugged into electrical sources.
With regards to the Indian perspective, the outbreak of the virus in China has hit manufacturing and exports sectors, particularly medicines, electronics, textiles and chemicals. This is not insignificant as China is India’s biggest source of intermediate goods, a sector worth $30 billion a year. Up to 70 per cent of active pharmaceutical ingredients and close to 90 per cent of certain mobile phone parts come from China.
Global efforts to control the epidemic are underway by multiple nations and coordinated international initiatives are being undertaken. It is advised that basic hygiene be followed such as washing of hands regularly and wearing masks in public spaces like airports and train stations.
Commercial data and analytics company, Dun and Bradstreet, estimate that there are around 22 million businesses (90% of all active businesses in China) within the regions impacted by COVID-19. This is likely to impact at least 56,000 companies around the world with suppliers either directly or indirectly.
Another major concern has been that US buyers had already started moving their sourcing away from China before the spread of the virus. Much of the manufacturing moved to Southeast Asia and Taiwan, with the onset of nCoV, this shift has increased its pace.
The effects of coronavirus on supply chains is already evident and much rests upon the international scientific and healthcare response to the outbreak. Countries are not taking the issue lightly and are making concerted efforts to quarantine, provide medical access and control the spread of the disease.
