Every day over the past week, Sunwill human resources director Felix Luo has been busy sending long-distance coaches to neighbouring provinces to pick up employees from their hometowns to bring them back to their factory in Guangdong that produces air conditioner fans for the likes of Panasonic, Toshiba and Gree. The chartered buses, sent to the likes of Guangxi and Jiangxi, mean workers will be able to return to the production lines in five days, and not the mandatory 14 days quarantine required by the authorities for those using public transport. Sunwill has so far been able to restore its staffing levels to around 60 per cent, after around 700 workers returned from an extended Lunar New Year holiday and nationwide lockdowns to control the spread of the coronavirus. Sunwill has brought back more than 100 workers by coach over the last week, with the company cautious about recruiting new employees due to the risk still posed by the coronavirus, which has infected over 75,000 people in China, Luo said, during a round of factory visits organised by the Guangdong provincial government. The biggest difficulty to fully restoring production capacity is the lack of workers. We have thought of a lot of ways [to find workers] Mo Yiyan For new employees, some villages in China have not even allowed workers to leave unless they find an employer who will cover transport costs, while others have warned workers that they will not be allowed to return if they choose to leave in search of work. The period following the Lunar New Year is a traditional a time for migrant workers to go in search of new manufacturing jobs, often forming queues outside factory gates, however, the outbreak has made this tradition impractical. “The biggest difficulty to fully restoring production capacity is the lack of workers,” said Sunwill chief executive Mo Yiyan, who hopes to restore full production capacity by the end of February. “We have thought of a lot of ways [to find workers]. For example, we sent two coaches to the villages and towns where our workers live to bring them to the factory. Charted buses will be safer than public transport, helping to ease the worries of both the workers and their families, and even their village officials.” Small factories and workshops in China’s main manufacturing hubs around the Yangtze River Delta and Pearl River Delta, though, are unable to afford chartered buses, rail travel or even flights to boost their staffing levels back to normal. Local governments across China are relaxing restrictions on resuming of work and focusing on pushing major industrial firms, mostly those with an annual revenue of more than 20 million yuan (US$2.8 million), to restart production, leaving a large number of small and medium-sized enterprises still struggling to restart operations. These small plants, though, are needed by the larger manufacturers to produce components as part of their supply chain. In Guangdong, as of the start of last week, around 26,000 or half of the provinces major industrial firms with annual revenue of more than 20 million yuan, had restarted production, although the authorities did not release figures for small and medium-sized enterprises. Blue Moon, China's leading brand of liquid laundry detergent located in Guangdong’s largest city of Guangzhou, said the local government had provided help, including tax breaks, low-interest loans, discounted cash subsidies and a supply of masks, to help resume production. “However, our production capacity also depends on the recovery capabilities of downstream suppliers,” said Xu Yuling, the company’s vice-general manager, who has noticed a rise in the cost of raw materials, logistics and labour amid the outbreak. “If the output of our suppliers cannot catch up, our production capacity will still be limited.” Galanz, one of China's biggest appliance makers that sends 70 per cent of its goods overseas, is still missing 20 per cent of its labour force despite needing to be at full capacity to deliver current orders on time. According to president Liang Zhaoxian, Galanz is aiming to maintain the production capacity of most components and parts by relying on automation and partly paying suppliers up to a month in advance to reserve parts. Our small and medium-sized enterprises are still losing blood. But the virus situation now is too complicated, and a small factory like mine cannot handle it at all and meet the authorities’ requirements Tan Xinggang In Galanz’s 110,000 sq ft highly-automated plant, only around 400 workers are needed to operate 30 production lines, although this level of automation is hard to achieve for most small and medium-sized enterprises. “Galanz can certainly meet all the conditions required by the government to prevent the spread of the coronavirus, plus it has so many policies supported by the government so they can quickly restore production, but how can we have such a condition in our small and medium-sized factories?” said Tan Xinggang, who runs a footwear factory in Guangdong that is yet to open. “Recruitment, price increases of raw materials, and the supply of masks must be paid for by ourselves. I had to cancel all the original orders as the workers could not come out from their hometowns. I don’t dare to restart production, although I still need to pay rent, taxes and other costs. “Our small and medium-sized enterprises are still losing blood. But the virus situation now is too complicated, and a small factory like mine cannot handle it at all and meet the authorities’ requirements.” Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.