As many have seen, China has been focusing on containing the spread of the corona virus (COVID-19) while working on measures in order to allow companies to resume work. As the disease spreads around the world, other nations are facing the same issues and the Corona virus has not reached peak outside of China, meaning things may just get worse.
How do we best prepare for the ongoing repercussions of this virus?
What lessons can we learn from the way China has contained and dealt with the virus?
How do we get back to business in the best possible way to help ourselves and others?
We can take a cautious approach, but keep moving forward:
Step by Step
If you are doing business with China, it’s important to resume business as early as possible. Some businesses in China are resuming slowly, and time is needed to ramp up. It’s important to know that this will vary region to region and will be subject to inspections and approvals from local authorities. Keep up in constant communications with suppliers and manufacturers, and where possible partners in Free Trade Zones and Bonded Warehousing could assist in maintaining some aspects of your value chain running. For the majority, there is limited production capacity and limited staff, and many employees are home-based.
Staff Shortage and Challenges
As we know, In order to contain the spread of the corona virus , authorities implemented measures such as travel limitations across provinces and cities and local quarantine regulations. These measures however also result in a shortage of qualified staff for many companies. The staff shortage has had a high impact on production, we have spoken with some of our Australian partners who rely on manufactured supplies, they are now 55 days behind schedule for any new manufactured product.
Companies that have started production are currently operating on a limited staff capacity, ranging widely from 10 to 80 percent. Where the nature of the work is appropriate, working from home is a practice which can be implemented, students can take lessons online etc. Another complication is also the shortage of protective gear, masks and disinfectants, yet these are vital to ensure a healthy work environment.
Materials and Production
One of the reasons quoted by our Australian partner importing LED lighting for example, is that the manufacturers they deal with may have capacity for production but are held back by the lowing supply of raw material.
Another challenge is indeed the shortage of materials for production. Quite a number of suppliers and sub-suppliers have not resumed work due to local regulations, or resumed work on limited capacity, causing delays in material deliveries. In the current situation, it is unclear when they will be fully operational. Some companies still have goods on stock; however, they are very likely to face bottlenecks soon. Other companies increased production at their other sites, which are partly located outside China.
We have several interests and experience in logistics in China. Another challenge many companies reported is delays or complications in logistics. Drivers experienced entry restrictions between provinces or cities, some of which could not be anticipated beforehand. Quite simply, there are many roadblocks and checks. Apart from body temperature checks for drivers – and more importantly, reported checks of re-work permissions on some highways – some areas only allow access when specific local requirements are met. For example, in parts of East China, companies experienced problems due to regions only accepting local drivers or trucks with local license plates to enter certain areas. As these demands vary from region to region, it is crucial to check with the national and local authorities for updates regularly.
Additional challenges in logistics that were reported are among others: logistics providers having limited their operation radius; a shortage of available drivers; international container shipments being partly postponed as deliveries cannot be made on time, and more. These challenges will have an effect on supply and distribution – both in China and worldwide.
Flexibility is Key.
Resume work the best way you can without increasing exposure to risk, adapt and change if at all possible, use technology to help you in keeping teams local without the need for travel. For employees, providing additional support is a way of helping, and for business partners, relaxing some tight deadlines and terms as a way to show support and ease any operating difficulty.
For companies that can offer location-independent work, a common solution is the implementation of home office practices for certain business functions until further notice. Additional measures include establishing a crisis team, setting up a hotline for employees, and conducting a daily (digital) health status query of employees (e.g. via the WeChat work app), self-quarantine measures, etc. Non-mandatory business travel has been postponed.
One thing is for certain, the corona virus has caused chaos, and chaos can give rise to innovation and opportunities, overall, let’s keep a positive mindset to take up the challenges and opportunities emerging.