FORBES: Coronavirus And China Manufacturing: Why The Risk Is Far Larger Than Just Wuhan’s Factories

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Many thanks to AAPN member Rakhil Hirdaramani for sending us this article. Based in Sri Lanka, Hirdaramani Group is attuned to issues in China, SEAsia and South Asia. 

Forbes: Jan 30, 2020
Coronavirus And China Manufacturing: Why The Risk Is Far Larger Than Just Wuhan’s Factories

Apple’s earnings forecast range for the current quarter is “wider than usual,” thanks to the uncertainty around the Wuhan coronavirus (2019-nCoV) outbreak. That is because the vast majority of Apple’s assemblers and suppliers are in China, as is the case for many firms. Even if you don’t assemble finished product in China, you might be dependent on a supplier based there for components. Many people have been looking at whether firms have suppliers in Hubei Province where Wuhan is located, because they think these will be the supply chains that are impacted first.

But that’s not the right way to look at this problem. The right question is who has a factory in their supply chain for which there are employees who went home to Wuhan or any of the other cities with significant numbers of infected people for the Lunar New Year? And what will happen when they start to come back, whenever that turns out to be?

The answer is probably everyone. I would guess that just about every factory in the great coastal manufacturing hubs of Guangdong Province and Shenzhen, the Shanghai – Suzhou – Nanjing corridor, or around Chongqing in Sichuan Province has some workers who went home to Wuhan or another contagion area for the holiday.

The Chinese manufacturing model of the last three decades has been powered by migrant workers who come from inland provinces like Hubei, Shaanxi, Anhui, Hunan, and others. They are recruited to come to the factories, where they live in dormitories, in an environment that is much like a small city. They work for the whole year, and then around this time, the factories close down and everyone goes home to celebrate the Lunar New Year with family. Read More