Global Supply Chain Braces for Coronavirus Impact

As you may be aware, China and its Special Administrative Territory Hong Kong are struggling against the Wuhan Coronavirus. With almost half the world’s goods being made in China, this is forecast to have a significant negative effect on the global supply chain. The true scope of this impact is yet to be seen, given that many buyers will have accounted for the usual disruption of the Lunar New Year. President Xi Jinping made a plea to businesses to avoid lay-offs as the nation returned to work. However, as of February 10 - the date Chinese workers are scheduled to return - many workplaces remain closed and some businesses are extending holiday or making work-from-home arrangements.

In Wuhan two new hospitals have been set up to handle the outbreak at its epicentre, but the Hubei province, of which Wuhan is capital, still struggles with a rising death toll. The virus outbreak has also spurred an increase in popular demand for surgical masks, creating an unfortunate shortage of supply for front-line health workers. At Commerce-Connections our thoughts and prayers go out to those infected and their families in this difficult time.

From today, the global market should see the impact and begin to prepare for the long-term consequences of the Coronavirus on the supply chain. It is understood that through the recent turmoil of Trump’s trade war with China, US businesses have begun to insulate themselves from unexpected risk. There are reports that those businesses who have prepared better risk management will be able to cope more effectively with the impact on the supply chain. Some businesses have begun looking elsewhere to source their goods and materials.

We will be keeping an eye on the situation as it develops and posting updates. Please check back regularly for more information.