US companies in China report a scarcity of staff, blame coronavirus for hurting worldwide operations
Almost one-half of all U.S. organizations in China claim that their worldwide business activities are feeling the effects from business shutdowns due to the newly named Covid-19 (coronavirus) pandemic, as indicated by a survey from Shanghai's American Chamber of Commerce (AmCham).
Some 78% of the respondents reported that they cannot adequate staff their Chinese plants and subsequently are unable to run them at maximum capability. This comes as a direct result of the local government’s public health mandates, which make it harder for laborers to come back to work after an extended federal holiday break.
The survey took data from 109 US manufacturers which run their businesses in Suzhou, Nanjing, Shanghai and the wider Yangtze River Delta.
The data also showed that 48% of respondents have observed that the factory closings, albeit temporary, have affected their global supply chains, while practically all other companies anticipate that the effect will be felt in the coming weeks.
"The biggest problem is a lack of workers as they are subjected to travel restrictions and quarantines, the number one and number two problems identified in the survey. Anyone coming from outside the immediate area undergoes a 14-day quarantine," said AmCham President Ker Gibbs. "Therefore, most factories have a severe shortage of workers, even after they are allowed to open. This is going to have a severe impact on global supply chains that is only beginning to show up."
Urban communities across China have been in locked down after the prolonged Lunar New Year holiday in January, as travel restrictions and mandatory quarantines have been implemented around the nation in hopes of stopping the infection fr om spreading. Some workers who have managed to come back were reportedly quarantined at the factory wh ere they work.
This has upset business activities all throughout the world's second largest economy as factories and organizations try to regain their footing as global supply chains plunge into chaos.
The nation’s governmental bodies have issued promises of support for enterprises and industries that were hit the worst, particularly the manufacturers. The government has also advised banks to bring down financing costs for qualified firms and bring up the tolerance for risky loans, justifying the move by promising to lower taxes and fees.
Meanwhile, Beijing officials have mandated a 14-day self-quarantine in a Friday announcement for every individual that comes back to the city warned that those individuals who refuse to follow virus containment protocols will be punished.
In contrast the Jiangxi officials have posted an announcement stating that mandatory quarantines workers coming back to factories would be lifted apart fr om individuals that are coming back from Hubei province, wh ere the outbreak is believed to have originated, or other seriously affected regions. The announcement also stated that workers would not have to provide a certificate of good health for those that are coming back to work from Monday onwards.
The AmCham survey provided other interesting data as well, indicating that about 33% of the polled organizations plan to move their business out of China if their industrial facilities are not able to properly reopen, while almost 66% of companies anticipate that demand for their products will dramatically decrease.
Aside from staffing issues, the respondent companies additionally blamed logistics issues and the need to seek alternative suppliers as the primary challenges for their business in the coming weeks.
Another, earlier AmCham poll demonstrated that most of the U.S. firms with businesses in China anticipate that the Covid-19 outbreak will dramatically cut into their revenue streams this year, with some quickly ramping up plans to move their supply chains out of the nation.