The coronavirus is threatening to disrupt large parts of China’s manufacturing machine and its global supply chains as the spread of infection and strict public health measures force companies and workers to remain idle.
China’s most important holiday was set to end yesterday, when many companies planned to get back to work after a week-long vacation, but authorities have ordered businesses in many areas to stay shut longer in a bid to contain the disease.
Widespread travel restrictions, meanwhile, mean millions of migrant workers may be unable to return to what has often been called the world’s factory floor.
The World Health Organization on Thursday declared the outbreak a global health emergency as the death toll in China reached more than 200, with over 9,000 infected.
Brian Miller, 32, owner of Easy China Warehouse and a bluetooth speaker company in the southern city of Shenzhen, said labour and production disruptions could ripple through supply chains, from raw materials to final assembly.
“If we can’t get back to production quick enough, I’ll run out of inventory, and I’ll have a few months where we won’t be able to sell anything. And that’s the catastrophe that we all don’t want,” Miller told Reuters.
In Eastern China’s Suzhou, one of the country’s largest manufacturing hubs, companies have been told to stay shut until at least February 8 and in Shanghai until February 9. Factories in the southern manufacturing hub of Dongguan in export-oriented Guangdong province have also been told not to open before February 10.
The threat of significant disruptions comes as China was already undergoing the biggest supply chain shift in a generation as companies grappled with the impact of the Sino-US trade war and an economic slowdown.
A woman surnamed Chen, who co-owns a garment factory in Huizhou in Guangdong province, described the virus and shutdowns as being like “frost on top of snowfall.”
Her domestic focused factory already had to lay off almost half its workers from over 70 to around 40 due to the slowing economy, and she fears more jobs may be lost in coming months.