Coronavirus could be ‘death blow’ for many of China’s small manufacturers if not under control by April

The impact of the outbreak adds to rising costs and trade war uncertainty for many Chinese businesses

Manufacturers fear foreign customers will shift orders to other countries if the situation is not brought under control by April

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The rapidly spreading virus has prompted authorities to close factories, shopping malls and tourist attractions. Photo: AP

Published: 6:15am, 3 Feb 2020Updated: 12:47am, 15 Feb 2020

Concerns among small and medium-sized manufacturers in China over the impact of the coronavirus outbreak have risen sharply, with many worrying about going bust if the situation is not brought under control soon.

Anxiety is most acute among labour-intensive manufacturing firms, as local governments have restricted business where numerous people congregate in an effort to contain the deadly virus.

If the outbreak is not brought under control by March or April, when many foreign customers place orders for the rest of the year, some Chinese companies fret business will shift to suppliers outside China, accelerating a move to alternative manufacturing bases, especially in Southeast Asia.

“Foreign customers will definitely wait and see how the epidemic situation develops and may place new orders in other regions, instead of China,” said Tom Wang, who runs a footwear factory in the city of Dongguan in Guangdong province.

Foreign customers will definitely wait and see how the epidemic situation develops and may place new orders in other regions, instead of China

Tom Wang

Small shops, restaurants and local logistics firms have suffered most from government controls, with many saying they can only hold out for two or three months before they are forced to close for good.

The rapidly spreading virus, which has killed at least 304 people and infected more than 14,000 in mainland China, has prompted authorities to close factories, shopping malls and tourist attractions, as well as put severe curbs on transport. Several governments have extended the Lunar New Year holiday, ordering firms not to reopen until at least February 10.

In Guangdong province, one of China’s manufacturing hubs, small business owners, who are already grappling with rising costs and the effects of the trade war, are bracing for a downturn should the epidemic continue.

“The number of workers resuming work [at factories] in Dongguan will definitely be affected in the coming couple of months, as well as at logistics operations and supply chain firms,” Wang said.