Sneezing? Let's Hope it's Just a Cold

February 18, 2020 | 10:33
Sneezing? Let's Hope it's Just a Cold
Sneezing? Let's Hope it's Just a Cold
In an effort to contain the spread of the new corona virus officially known as COVID-19 or 2019-nCoV there are  at least 48 cities in four provinces in China operating lockdown policies. In these areas public transport systems are shut down and the movement of citizens is restricted; it is thought that around 500 million people are now subject to these restrictions. As well as slowing the spread of the virus these measures have throttled industrial production in the country. Delivery bottlenecks are impacting many major technology sectors worldwide.

Many European pharmaceutical producers rely on supply sources in China and the high-tech sector has been massively affected, because China is the world's workshop. Apple is likely to be particularly badly affected because its contracted iPhone manufacturer Foxconn is a Taiwanese multinational electronics manufacturer who recently announced they would postpone reopening their factory in Shenzhen.

A side-effect of globalization

Supply chains that span the globe and the use of just-in-time production methods make industries around the world vulnerable when any link in the process falters. If the supply of a single important component dries up it will take a while before an alternative supplier can be found. The Wuhan district in China at the centre of the outbreak is a major hub for automotive manufacturing and many of Europe’s carmakers with Chinese partners have still not reopened factories based there. Honda also postponed the reopening of its Wuhan plant, while a shortage of components has caused Hyundai to shut its huge factory based in Ulsan, South Korea.
 
The manufacturers of consumer electronics and mobile devices rely on components such as sensors and screens which are now predominantly made in China. Not only will the shortage affect large companies but also many small companies around the world who depend on products and parts from China.

Supplies of smartphones to dry up?

It is difficult to think of any manufacturer of high-tech devices who will not be affected by the shortages; it’s likely we will soon see the evidence of the scarcity on the shelves of retailers and stores where prices will inevitably go in the wrong direction. The situation is a wakeup call, it would be prudent to put in place alternative supply sources but such measures will now come too late to solve the current crisis.

The old saying goes that when America sneezes the World catches a cold, it’s clear now how this applies to the situation in China also… let’s hope the measures put in place by the authorities will effectively stem the outbreak and help minimise suffering while work on a vaccine is ongoing.
 
Loading comments...
related items