Coronavirus: China’s small factories brace for ‘big hit’ as pandemic erodes overseas demand
- China says 60 per cent of small firms back at work, but many report orders from Europe and US are drying up as virus spreads around the globe
- Others fret that the outbreak may prompt multinational companies to reduce their reliance on Chinese-made products
Most Chinese manufacturers are on track to resume normal operations in April after months of crippling coronavirus restrictions, but the rapid spread of the pandemic is sapping international demand and presenting new challenges for under pressure businesses.
Weeks of quarantine and transport limitations that forced the closure of businesses across the country are gradually being lifted as the number of new infections drops, indicating Beijing's unprecedented controls have helped stem the spread of the virus.
While this has allowed Chinese firms to begin ramping up production, some contract manufacturers that rely on overseas customers say orders from the United States and Europe have started to dry up as the virus ripples through the global economy.
Claudia Luo, an executive with a Guangdong-based manufacturer of automotive parts and industrial moulds, said the situation in Europe was “very worrying”.
“Last month, we were mainly worried about the problems on the production side, thinking that the problems would be solved if Chinese factories resumed production. But now that the epidemic has spread across the world, we are beginning to worry that international demand will take a big hit as a result,” said Luo, who asked that her company not be identified.
“We originally set a sales target of 200 million yuan (US$28.6 million) for the first quarter of this year, and now we are at less than half of that,” she said. “Most of the orders are from Southeast Asia, there are no orders from the US and Europe yet.”