Business Dynamic (2) — The Covid-19 Triggers A China’s Economic Collapse And Influences The Global Supplier Chain Simultaneously
As the Covid-19 outbreak spreads, the Chinese authorities saturated the media with it and to shut down for containing the virus outbreak getting worse. It seems the prudent solution, but it has caused an unprecedented impact on the global supply chain. If your company or its key suppliers carry limited raw material inventory and rely heavily on Asian sources of supply, you are at high risk of disruption. Some of the companies even go to declare bankruptcy and lay the number of people off this time.
The Covid-19 has left an overwhelming production to crank up for the supplier outside of China since the manufacturing moving away from China in order to keep it going. The supply chain is complicated. If a part has been damaged that will affect the whole chain. Since half of the companies in China have stopped running from December until couple of days ago, it would cause additional factories in Asia to suffer from running out of supplies and can’t source from China, so will the factories outside of Asia experience the same soon or later.
Recently, China is returning to work. Even if China comes back online, there will still be a crack from it. In the factory in Zhuhai, China owns by the company I work for, the majority of employees are getting back to position slowly. However, the problem we are facing now is the delay status. The clients have declared that they will shift their orders to different factories in Asia, like in Vietnam if we can’t crank up the product rate smoothly. That will cause and ask for a breach of contract from our side. No one wants to win the jackpot that comes from the force majeure.
Several companies have ended its ephemeral life span. If the declarations of the clients are going to be executed, I believe there will be another round of collapse with more people get laid off. This aftermath will not only cause widespread job losses, and also trigger the financial crash in the global stock market. That reminds me of the recession back to 2008 caused by the collapse of Lenham Brother or Black Swan caused by the bursting of the bubble in the Chinese stock market. The nightmare may be going to repeat itself.
Now the Chinese authority has corroborated releasing its capital for lenders of small and medium-sized companies to lend for minimizing the risk of declaring bankruptcy. What A Boon! The Chinese Black Swan would upgrade to the Gray Rhion caused by the collapse if it didn’t loosen the pressure of the broken cash-flow system. Under the catastrophe this time in which the companies may have either defaulted or close to it or even went to bankruptcy, that could seriously examine the wisdom of the Chinese authority.