Although many factories in China have gradually started operating, the suspension of flights between Vietnam and mainland China will not resume until May, and a chain disruption crisis in Vietnam’s manufacturing industry is about to begin.
Since the outbreak of the epidemic and the suspension of flights to Vietnam and China, it has been difficult for many mainland Chinese managers to enter the country In Vietnam, there is also a shortage of raw materials from mainland China. Some large factories have warned that the manufacturing industry in Vietnam is facing a chain crisis.
According to the latest survey by Labor Bank, 15% of employees said that the company has started to take unpaid leave, 14.5% will not make up for the shortage, and 10% will shorten business hours to reduce costs.
According to expert Xu Zunci: “About 40% of the raw materials or spare parts for the textiles, clothing and shoes produced in Vietnam must be imported from mainland China. The electronics and communications industries This is even more true, so one of the difficulties we are facing in Vietnam now is that factories will gradually begin to discover that the raw materials or spare parts may be broken.”
Chinesemanagerscannotenterthecountry
VietnamordersarefullagainIt’salsoimpossibletoproduceatfullspeed!
Astheepidemicspreads,Vietnamesefactorieshavealsobeenaffected.
Ataround3pmonFebruary1,theVietnamesegovernmentannouncedwithoutwarningthatitwouldrefuseentrytoflightsfromTaiwan,China.ThousandsofTaiwanesewhowereabouttoreturntoVietnamtopresideoverthestartofconstructionintheNewYearbusiness,soitwasstuckatTaoyuanandKaohsiungairports.TheVietnamesegovernmentalsomadethedecisiontoreject”allflightsfrommainlandChina”beforeMay1.
Thethree-monthsuspensionofflightsbetweenmainlandChinaandVietnamstillcausesheadachesformanyinvestors.InareasofSouthVietnamsuchasHoChiMinhCity,BinhDuong,andDongNaiwheretraditionalproductionisthemainfocus,manycompanieshavemovedtheiroriginalproductionlinesinChinatoVietnam.Mostoftheproductionmanagementsystemsaredominatedbymainlandcadres.ManyTaiwaneseproductionlinedirectorsarefromTaiwan.”LuGan”.
A large number of cadres were unable to return, resulting in the factory being unable to start operations smoothly
One A Taiwanese businessman who moved a factory from China to Vietnam estimates that there are as many as 50,000 Taiwanese businessmen with Chinese passports in the Ho Chi Minh City area. If we add in the direct investment from the mainland in Vietnam in recent years and the transfer of establishments to Vietnam due to the Sino-US trade war, Factory and many other mainland-funded enterprises, the total number of mainland cadres in Vietnam should be no less than 100,000.
The management team of a factory relocated from the Pearl River Delta to Vietnam has more than 100 mainland cadres. When Wuhan pneumonia was reported in the mainland before the Spring Festival, the Taiwanese business leader who had experienced the SARS epidemic immediately became alert and asked his mainland colleagues in important management positions to return to work in Vietnam early.
When Vietnam issued a flight ban on February 1, Lu Qian was immediately arranged to fly to Cambodia, which is friendly to China and can apply for a visa on arrival, and then return to Vietnam by land. Mainland Chinese The cadres were then quarantined for 14 days and thus were able to avoid Vietnam, which immediately closed land customs clearance the next day. Since these cadres are the focus of production management, in order to avoid affecting production quality, we had to reduce production capacity and switch to two-shift production during this period to overcome this difficulty first.
A listed electronics manufacturer moved its production capacity from China last year to diversify risks due to the Sino-US trade war. Going to Binh Duong Province in Vietnam, a factory has been recently completed, many foreign orders have been finalized, and hundreds of mainland officials have obtained visas. They are just waiting for the start of construction in the New Year. Now Vietnam has suddenly announced a suspension of flights, and mainland officials cannot come, causing chaos in the production line planning. The industry owner said helplessly: “Customers will understand such a temporary situation!”
A global brand underwear foundry with 10,000 employees in Haiphong, North Vietnam, employs more than a hundred mainland workers. At the start of construction, we also encountered the same situation of whether all management cadres could be in place.
Wuhan pneumonia has also brought an impact on logistics. A director of a Taiwanese bank who has worked in Vietnam for many years assessed that the industrial chain of Taiwanese businessmen in Vietnam interacts very closely with the mainland, and they provide a lot of mutual support. Although some industries have relatively complete supply chains in Vietnam, in terms of price and output, It will be difficult for Vietnam to completely replace China for a while.
Most manufacturers will maintain inventory for an extra month, and its impact will depend on how long it takes for the epidemic to be controlled.
I can’t bear it anymore!
The global supply chain is eager to resume operations in Chinese factories!
We will stop production if you don’t resume work…
China’s advantage is that we are the only one in the world with a full industrial chain The country has 39 major industrial categories, 191 medium categories and 525 small categories. It is the only country in the world that has all industrial categories in the United Nations Industrial Classification, thus forming an industrial system with complete industries.
Quality and competitiveness aside, we can independently produce all industrial products from clothing, footwear and aerospace, from raw materials and minerals to industrial machines, which can meet people’s livelihood, The needs of all fields such as military, infrastructure and scientific research.
Only China in the world can resist such large-scale economic losses as this epidemic. Other countries are simply unable to resist and can only resign themselves to fate. In other words, as long as China does not fall, people around the world will be saved.
For the textile and clothing industryThe same is true for �. Please look at the cases of the following countries to see how strong China’s influence is on the global supply chain——
Some garment factories in Cambodia will temporarily suspend production
The reason is the lack of Chinese fabric accessories
The Garment Manufacturers Association of Cambodia (GMAC ) published a notice on February 11 explaining the lack of raw material production in Cambodia’s garment and shoe factories.
The notice stated that about 60% of the raw materials for Cambodia’s garment and shoemaking industry are imported from China. Some garment and shoe factories in Cambodia will suspend production for one month or two starting from the end of this month because of insufficient raw materials imported from China to Cambodia. The reason is the ongoing outbreak of new coronavirus pneumonia in China. Some factories have not yet Return to work.
GMAC also said: “The raw material stocks of some factories are estimated to be used up next week, or the next week, and then a temporary suspension of production will be announced. Due to the suspension of production of some factories in China, it may cause the production of Cambodian factories next week. The production line lacks raw material supply every month. Due to this problem, the factory has no choice but to temporarily suspend production for 1 or 2 months.”
Cambodian garment manufacturers The meeting also explained in the announcement that the temporary suspension of production in some factories has nothing to do with the EU or the withdrawal of the “Everything But Arms” (EBA) granted to Cambodia.
The notice also stated at the end that for the problems that some factories are about to temporarily suspend production, all factories will be resolved through negotiations between workers and factory management under the supervision and approval of labor inspectors and in accordance with current legal procedures.
At least four garment processing factories in Cambodia may suspend production due to delays in the supply of raw materials imported from China due to the novel coronavirus outbreak, the Labor Ministry said on Monday. Labor Ministry spokesman Heng Sour said the supply of raw materials for clothing, yarn, buttons and shoe soles is currently experiencing delays.
Heng Sour told Reuters: Four factories have expressed concerns to the government. The four factories employ a total of approximately 3,000 workers. Heng Sour did not disclose the names of the factories or the brands they process.
The garment production industry is Cambodia’s largest industry, generating US$7 billion in revenue for the Cambodian economy every year.
Cambodia’s Ministry of Health said in a statement that the country’s only confirmed case of the new coronavirus was a Chinese citizen living in the coastal city of Sihanoukville who recovered and was discharged from hospital on Monday.
At the same time, Cambodia’s garment industry also faces the threat of the EU withdrawing trade preferences.
Cambodia benefits from the EU’s “Duty Free All Goods Except Arms” trade plan, which aims to promote the economic development of developing countries around the world and allows Cambodia to export most goods to the EU , without paying customs duties. In 2017, the total value of Cambodian exports to the EU was 5 billion euros. In 2016, EU countries accounted for about 40% of Cambodia’s export market. Cambodia’s main export products are clothing, and about 700,000 people in the country are employed by clothing companies.
In September 2018, the United Nations Human Rights Council investigation team issued a report accusing the Burmese army of carrying out genocide against the Rohingya minority. Therefore, the EU is considering revoking the preferential trade treatment granted to Cambodia on the grounds of serious human rights violations. The EU will make a final decision on Wednesday.
International clothing and footwear brands such as Adidas, PUMA and Levi Strauss have written to Cambodian leader Hun Sen, stating that the country Concerns over labor and human rights could lead the EU to withdraw trade preferences for the garment industry.
The European Union may not completely remove all trade preferences and is expected to maintain some support for the garment industry to help protect the livelihoods of factory workers, people familiar with the matter said.
Why are Indian shoe factories complaining when Chinese shoe factories have not started operations?
According to media reports on February 6:
Since Chinese shoe factories have not yet started operations, the Indian shoe industry has also been affected. .
Harkirat Singh, general manager of Woodland, a shoe manufacturer in India, said that 10% of Woodland’s shoes and special shoemaking raw materials come from China. Now it is also affected by the epidemic. If China’s raw material exports continue to be interrupted, Woodland may suffer a business loss of 5% to 10%.
Singhe pointed out that Woodland is working hard to shift orders for Chinese production elsewhere, but this will take time.
The Indian automobile industry has also been affected, and the supply of parts and components has been interrupted. Rajeev Chaba, president of MG Motor India, said that China is on a long holiday and it is not known yet. The extent of the impact of supply disruption on the business, but if the supply disruption continues, it will have an impact on the Indian automobile industry.
All affected industries are looking forward to China’s full resumption of work, which will alleviate the problem of supply disruptions.
Resuming work can alleviate the problem of supply interruption.
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