Expect Production Delays, Adjust Accordingly
As of this week, most production facilities in China are back to work, though with a reduced capacity. Furthermore, most white collar workers are now back to work in their offices after a prolonged period of working from home. The below map offers a regional breakdown of how each province isaffected:
Map of China’s provinces and their anticipated start dates, Courtesy of Dezan Shira & Associates
Despite signs that China is slowly returning to normalcy, buyers should continue to anticipate delays. Dezan Shira and Associates, a global consulting company with several offices in Mainland China, currently estimates a 20% annual national downtime for workers with this number being much higher in cities closer to Hubei Province: overall they estimate factories to be operating at 80% capacity by February 24.
Dezan Shira also advices contract holders with Chinese suppliers to be mindful of force majeure clauses, in which a business may not be held responsible for a part or whole of their obligations due to unforeseen circumstances.
For more information about how force majeure applies in China, Dezan Shira does an excellent job of explaining it and other financial measures to help businesses in China here:
https://www.china-briefing.com/news/china-ease-financial-pressure-businesses-coronavirus-outbreak/
China’s Ports Function as Normal
The coronavirus outbreak did not significantly impact the volume of cargo moving through China’s ports in January, according to Seatrade Maritime News. Furthermore, 16 Chinese port corporations are offering reduced charges including exemptions and reductions as a countermeasure to the outbreak. These include:
- Guangzhou Port
- Shanghai Port
- Ningbo-Zhoushan Port
- Jiangsu Port Group
- Shandong Port
- Fuzhou Port
- Zhuhai Port
- Wuhan Port
- Xiamen Port
- Chongqing Port
- Zhangjiang Port
- Liaoning Port Group
- Hebei Port Group
- Beibu Gulf Port Group
- Anhui Port Group
Source: Seatrade Maritime News
China’s Supply Chain Slowly Returning to Normal
As mentioned in our previous post, China’s major couriers went back to work last week. Overall the supply chain in China is returning back to normal, though buyers should continue to expect delays. Please continue to check back regularly for more updates.
