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THE CORONAVIRUS - HOW IT THREATENS CHINESE ELECTRONICS MANUFACTURING


As the Coronavirus outbreak spreads across China and beyond, it’s important to consider how it might affect transnational electronics transactions. Amy Leary, marketing manager at eBOM, offers an overview of the situation


T


he date is 29 January 2020 and the Coronavirus death toll has risen to 132 people, with almost 6,000 confirmed cases. The deadly virus has caused global disruption and fear – so much so that the national Chinese New Year holiday has been postponed. The relevant question on the industry’s mind: will the growing outbreak cause permanent damage to the global economy?


WHAT IS HAPPENING IN WUHAN? Home to over 11 million people, the city is currently quarantined with very limited access to and from the city. Non- essential vehicles have been banned from the roads to prevent spread of the virus. Things have gotten so serious in Wuhan that at the Hubei border, workers are supposedly checking people’s temperatures before allowing them into the city. Along with this, the government has announced that it is sending an additional 1,200 health workers - along with 135 People’s Liberation Army medical personnel - to help the city’s stretched hospital staff. However, it is not just Wuhan that is in crisis - there have been globally funded efforts to reduce the spreading of the virus.


WHAT IS THE SITUATION WITH ELECTRONIC MANUFACTURING IN CHINA? Working within the electronics industry, many companies’ sales and profits are already slipping due to the Coronavirus affecting manufacturing lead times. But, according to Bloomberg, not all companies are suffering because Avnet, the distributor of computer products and semiconductors, said it hadn’t seen an


impact so far. “But if it gets worse and they start shutting down airplanes, for example, then that will have a wholly different effect on shipments out of China,” said CEO Bill Amelio. China is often regarded as the capital for manufacturing globally, supporting many companies. The South China Morning Post reported that retailers and manufacturers are shutting doors, letting employees work from home. The concern is that if the manufacturing of products decreases, so will the global economy. Consider how the Coronavirus originating in Wuhan has sent agriculture commodity prices tumbling, and has led to the extended shutdown of Chinese factories and markets. Conditions have worsened to the extent that Starbucks has closed 2,000 Chinese outlets and Apple has closed a retail store. Tim Cook, Apple’s CEO, has affirmed that the company is fearful for the longevity of the outbreak, as China is both a major market for its products and a location for large amounts of its manufacturing.


TRANSPORTATION ON LOCKDOWN The BBC says that Australia plans to quarantine its 600 returning citizens for two weeks on Christmas Island, some 2,000km (1,200 miles) from the mainland. Furthermore, confirmed today, British Airways, Lion Air and Seoul Air have cancelled all flights to Beijing and Shanghai. Not only this, but according to The Guardian, Hong Kong cut China’s transport links as the Coronavirus toll mounts. Hong Kong’s leader, Carrie Lam, said high-speed trains and ferries that cross the border would be suspended from Thursday.


WHAT CAN BE DONE TO PREVENT CATCHING THE VIRUS? 1. Wash your hands often with antibacterial soap


2. Avoid close contact with people who are sick


3. Avoid touching your eyes, mouth and nose with unwashed hands


4. Cover your coughs and sneezes with a clean tissue and then immediately discard it


5. Regularly clean and disinfect frequently touched surfaces


For the time being, there’s a manifest hesitation over purchasing any products that are manufactured and/ or supplied within China. According to CNBC, the Coronavirus prompts automakers to evacuate workers, and consider production delays at Chinese factories. While this would result in slower production timescales, along with lengthy delivery delays, the risk outweighs the demand.


eBOM www.ebom.com


4 FEBRUARY 2020 | ELECTRONICS


/ ELECTRONICS


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