China’s silent fac­tory work­ers caught be­tween virus fear and needs

Muscat Daily - - BUSINESS -

Beijing, China - Janey Zhang, the owner of an um­brella fac­tory in China’s east coast city of Shangyu, spends her days watch­ing the news for coro­n­avirus up­dates and field­ing calls from cash-strapped em­ploy­ees ask­ing when they can go back to work.

“I don’t know,” says Zhang, whose Zhe­jiang Xing­bao Um­brella Co em­ploys about 200 work­ers. “We await gov­ern­ment in­struc­tions. If it’s just me, I can tighten my belt for a few months. But if the epi­demic lasts a long time, China’s econ­omy will slump. That will be hor­ri­ble.”

Across China’s vast east-coast man­u­fac­tur­ing heart­land, the story is the same. Thou­sands of busi­nesses are in limbo, wait­ing to hear from lo­cal au­thor­i­ties on when they can re­sume op­er­a­tions. Even when they get the all­clear, it might take days for them to climb back to full staff, as many work­ers who trav­eled home for the Lu­nar New Year hol­i­days are stuck there be­cause of travel re­stric­tions. Com­pleted or­ders would pile up any­way, be­cause the lo­gis­tics com­pa­nies that de­liver them aren’t work­ing ei­ther.

China’s ef­forts to con­tain the coro­n­avirus are rip­pling far be­yond Hubei province, the epi­cen­tre of the dis­ease. At 4.6tn yuan (US$660bn) in 2019, Hubei’s econ­omy is big­ger than Poland’s or Swe­den’s and ac­counts for 4.6 per cent of China’s na­tional gross do­mes­tic prod­uct.

Dis­rup­tions there scale up to na­tion­wide im­pact, which at peak last week saw prov­inces ac­count­ing for al­most 69 per cent of China’s GDP closed for busi­ness, ac­cord­ing to Bloomberg cal­cu­la­tions.

And while Hubei is not it­self an ex­port pow­er­house, the fac­to­ries along China’s east coast are tightly em­bed­ded in global sup­ply chains, so plant clo­sures there could dis­rupt assem­bly lines in South Korea and In­dia.

Bloomberg Eco­nom­ics es­ti­mates that if the out­break is suc­cess­fully con­tained, the im­pact on China’s econ­omy will be se­vere but short-lived - with growth slow­ing to 4.5 per cent in the first quar­ter, fol­lowed by a re­cov­ery and then sta­bil­i­sa­tion in the sec­ond half.

Lost or­ders

“We are miss­ing our peak sales sea­son,” laments David Ni, the chief ex­ec­u­tive of Jiangsu Si­borui Im­port and Ex­port Co head­quar­tered in the Yangtze port city of Nan­jing, the com­pany buys alu­minium al­loy wheels for cars from Chi­nese pro­duc­ers and ex­ports them to re­tail out­lets in the US.

None of its sup­pli­ers have gone back to work yet, and it’s un­clear when they will, says Ni, who’s based in Los Angeles.

“There’s lit­tle fac­tory own­ers can do ex­cept wait. On and off, the epi­demic could de­lay pro­duc­tion for at least two months. Most fac­to­ries this year wouldn’t be able to make any money.”

For fac­to­ries in China that make lower-end goods such as fur­ni­ture and cheap phones, the coro­n­avirus is the lat­est in a se­ries of ex­is­ten­tial threats. Al­ready op­er­at­ing on pa­per-thin mar­gins be­cause of ris­ing la­bor and ma­te­ri­als costs, these busi­nesses sus­tained an­other blow from the tar­iffs the Trump ad­min­is­tra­tion levied on US$360bn worth of Chi­nese ex­ports to the US.

For oth­ers, the coro­n­avirus

out­break is a more se­vere threat. “The im­pact of the epi­demic is even worse than the trade war,” says Zhou Xinqi, owner of Cixi Jin­shengda Bear­ing Co in Cixi city. The com­pany gets 60 per cent of its 100mn yuan an­nual sales from abroad.

“The trade war just de­creased our mar­gin, but at least we were still mak­ing money,” said Zhou.

“Now we are not mak­ing money. We are los­ing more than a mil­lion yuan.”

About 90 per cent of the 300 em­ploy­ees at Cixi Jin­shengda come from other prov­inces. Zhou has told them not to come back to the city un­til the gov­ern­ment an­nounces a res­tart date, and he doesn’t ex­pect to re­sume pro­duc­tion un­til Fe­bru­ary 25 at the ear­li­est. Any­one who does re­turn early would have to pay ho­tel fees to quar­an­tine them­selves, he says.

In a sur­vey of 995 small- and medium-size com­pa­nies by Ts­inghua and Pek­ing uni­ver­sity pro­fes­sors, 85 per cent said they would be un­able to sus­tain op­er­a­tions for more than three months un­der cur­rent con­di­tions, and 30 per cent ex­pect rev­enue to plunge by more than half this year be­cause of the virus.

The epi­demic could de­lay pro­duc­tion for at least two months. Most fac­to­ries this year wouldn’t be able to make any money

Newspapers in English

Newspapers from Oman

© PressReader. All rights reserved.