Clock is ticking for companies that depend on China imports
At a time when China is doing its best to fight the coronavirus and contain its spread, such articles like the one linked above do not help. China knows the economic impact to its own economy from the steps it has taken to stop the spread. Imagine if China had decided to prioritize its economy over containing the spread.
Also, while the article talks about companies switching to suppliers in other countries, any reader with some common sense will recognize the scale difference between China and these other countries. These other countries will not be able to replace China; they can serve as temporary replacements in the short term, but a lot more will need to be done to allow these countries to significantly increase production capacity to be able to replace China in any significant manner. So making it sound like China is going to be replaced because of this virus is just... playing to feelings instead of showing the facts.
The issue of short-term production capacity also serves as a further limit on just how much companies can do to switch to replacements in the supply chain. Yes, any production plant with a proper manager will have some spare capacity on hand. But such spare capacity is limited, and usually unsustainable. For increase production over longer periods of time, capital investment is needed. More labor is needed. It will take time to buy/build equipment, and the labor market imposes a limit to the extent that companies can hire to increase production.
And finally, any company worth anything would have in place a business continuity plan to handle contingencies like a problem with a supplier. This means a certain amount of inventory on hand, stockpiles of parts, and short-term alternatives. This plan should buy them enough time to work out other arrangements for the short-term and maybe even medium-term.
Anyway, it seems workers in China are starting to get back to work. Maybe there will be a short-term decrease in production output because not every worker can get back to work in time, due to quarantine and transportation issues. But if anything, this is a people which has survived several millennia of disasters. Let's have some confidence in them, and give them due credit for taking the steps to help contain the spread.
At a time when China is doing its best to fight the coronavirus and contain its spread, such articles like the one linked above do not help. China knows the economic impact to its own economy from the steps it has taken to stop the spread. Imagine if China had decided to prioritize its economy over containing the spread.
Also, while the article talks about companies switching to suppliers in other countries, any reader with some common sense will recognize the scale difference between China and these other countries. These other countries will not be able to replace China; they can serve as temporary replacements in the short term, but a lot more will need to be done to allow these countries to significantly increase production capacity to be able to replace China in any significant manner. So making it sound like China is going to be replaced because of this virus is just... playing to feelings instead of showing the facts.
The issue of short-term production capacity also serves as a further limit on just how much companies can do to switch to replacements in the supply chain. Yes, any production plant with a proper manager will have some spare capacity on hand. But such spare capacity is limited, and usually unsustainable. For increase production over longer periods of time, capital investment is needed. More labor is needed. It will take time to buy/build equipment, and the labor market imposes a limit to the extent that companies can hire to increase production.
And finally, any company worth anything would have in place a business continuity plan to handle contingencies like a problem with a supplier. This means a certain amount of inventory on hand, stockpiles of parts, and short-term alternatives. This plan should buy them enough time to work out other arrangements for the short-term and maybe even medium-term.
Anyway, it seems workers in China are starting to get back to work. Maybe there will be a short-term decrease in production output because not every worker can get back to work in time, due to quarantine and transportation issues. But if anything, this is a people which has survived several millennia of disasters. Let's have some confidence in them, and give them due credit for taking the steps to help contain the spread.
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