Via Financial Times

Chinese factories face components shortage: business association

Kathrin Hille reports from Taipei

Even as factories in China are gradually returning to work, a significant portion of them expect to face component and material shortages caused by disruptions due to the coronavirus epidemic for months to come, according to a major western business association.

The American Chamber of Commerce in South China said that all 237 foreign and Chinese companies it surveyed between March 9 and March 14 were suffering disruptions to their business, and one-third of them were facing such shortages.

The figures suggest that although China said it had turned the corner on the epidemic, its economy will keep feeling the pain.

On Monday, the National Bureau of Statistics said industrial output fell by 13.5 per cent in the first two months of this year and fixed asset investment plummeted by 24.5 per cent, the worst such official data China has ever reported.

According to the AmCham survey, 15 per cent of those affected have already run out of certain supplies. It indicated that 80 per cent expect the shortages to last three months, and another 11 per cent foresee longer than that.

“[The] world’s supply chain shows signs of being overstretched,” said Amcham South China President Harley Seyedin, urging the US and China to repair their badly strained trade relationship.

“As it is stated in our White Paper research, it will take $2tn-$3tn to replace the current supply chain,” Mr Heyedin said in a message sent with the survey results.

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“It will require a coordinated international series of actions to minimise the impact of disruption in the supply chain. Today’s events prove we need each other as no one country can do it alone.”

Transport and logistics disruptions were the biggest factors blamed by the surveyed companies for the shortages of components, supplies or material, followed by labour shortages.

Forty-eight per cent of respondents, three quarters of which are in manufacturing, said their ability to manufacture was affected moderately or severely by the disruptions.