China's factories reopen, only to fire workers as virus shreds global trade




China
China's factories reopen, only to fire workers as virus shreds global trade  

By Stella Qiu and Ryan Woo

BEIJING (Reuters) - Shi Xiaomin, who used to export suits and blazers by the thousands to South Korea, the Netherlands and the United States, was luckier than many other Chinese factory owners.

When his factory in the eastern city of Wenzhou reopened last month after an extended shutdown due to the coronavirus outbreak, the local government sent a bus to a nearby province to ferry back more than 20 of his stranded workers. Staff with cars volunteered to fetch colleagues.

Shi's optimism was short-lived.

In the past week, requests to cancel orders or delay shipments from his European and U.S. clients have flooded in.

Early in the outbreak, China imposed tough travel restrictions and factory suspensions to curb the spread of the virus, squeezing labour supplies and sending exporters scrambling to fulfil orders.

Now, the reverse is happening - overseas orders are being scrapped as the pandemic ravages the economies of China's trading partners.

"The unprecedented shutdown of normal economic activity across Europe, the U.S. and a growing number of emerging markets is certain to cause a dramatic contraction in Chinese exports, probably in the range of a 20-45% year-on-year drop in the second quarter," said Thomas Gatley, senior analyst at research firm Gavekal Dragonomics.

Shi said his fabric supplier in hard-hit Italy suspended operations on Sunday, meaning no fresh raw materials from May. His stockpile of fabric will last until the end of April.

Shi said he would slow production and might suspend all output soon if business does not improve.

He also told the 50-odd workers who have yet to return from Hubei province, the epicentre of the outbreak in China, to find jobs elsewhere.

"We know this year is bad and next year would be better, but the question is how many factories can make it to next year?" Shi said.


SLUMPING EXPORTS

Economists had initially anticipated a V-shaped recovery for China's economy, similar to that seen after SARS epidemic in 2003. But analysts have since slashed their forecasts to levels not seen since the Cultural Revolution ended in 1976.

China's net exports accounted for 11% of economic growth last year.

"The last overseas orders we received were for April," said Zhu Hongping, chairman of Hangzhou Hongli Food, a supplier of precooked food to restaurants in Japan, South Korea, Australia and New Zealand.

Normally, at this time of the year, orders can stretch to June and July, Zhu said, adding he may have to suspend production in three months.

Even when they do have orders, exporters are worried about constantly changing restrictions countries have adopted to curb the spread of the virus.

"Even if we finish the products, we don't know if the countries we are shipping to will be locked down," said Yi-Cheng Sung, who helps manage a factory that produces makeup brushes and accessories in Shenzhen.

On Tuesday, state-owned Securities Times reported Good Will Watch Case Manufacturing, a supplier to the U.S. watch brand Fossil, would put its more than 600 workers on leave for at least three months.


UNEMPLOYMENT

China's manufacturing sector, accounting for about 40% of gross domestic product and over 20% of jobs, was already suffering from the U.S.-China trade war.

More big layoffs would be a concern for the ruling Communist Party and its focus on social cohesion and economic stability, particularly in a year when Beijing aims to double GDP and disposable incomes from a decade ago.

China's urban jobless rate hit 6.2% in February, up one percentage point from the end of 2019, and a record since the statistics bureau started publishing the data in early 2018.

Dan Wang, an analyst with the Economist Intelligence Unit (EIU), said the jobless rate could go up by another 5 percentage points this year, which corresponds to an additional 22 million in urban unemployment, on top of an estimated 5 million jobs lost in January-February.

Another 103 million workers could be affected by salary cuts of 30%-50%, Wang said.

A 23-year-old salesman at a mirror factory in Yiwu in Zhejiang province said U.S. clients cancelled over $500,000 of orders on Saturday alone.

Some of the factory's more than 1,000 workers have since been suspended while others are given more days off per week, the salesman said, declining to be named.

"I think the company will start to lay off people soon," he said.

(Refiles to remove extraneous word "now" in par 6)


(Reporting by Stella Qiu and Ryan Woo; Additional reporting by Lusha Zhang, Josh Horwitz, Cheng Leng and Beijing Newsroom; Editing by Lincoln Feast.)

COMMENTS

More Related News

Alarm, Denial, Blame: The Pro-Trump Media
Alarm, Denial, Blame: The Pro-Trump Media's Coronavirus Distortion

On Feb. 27, two days after the first reported case of the coronavirus spreading inside a community in the United States, Candace Owens was underwhelmed. "Now we're all going to die from Coronavirus," she wrote sarcastically to her 2 million Twitter followers, blaming a "doomsday cult

The US intelligence community has reportedly concluded that China intentionally misrepresented its coronavirus numbers
The US intelligence community has reportedly concluded that China intentionally misrepresented its coronavirus numbers

US officials have accused China of spreading disinformation, and even some Chinese residents have expressed skepticism about the numbers.

China Concealed Extent of Virus Outbreak, U.S. Intelligence Says
China Concealed Extent of Virus Outbreak, U.S. Intelligence Says

(Bloomberg) -- China has concealed the extent of the coronavirus outbreak in its country, under-reporting both total cases and deaths it's suffered from the disease, the U.S. intelligence community concluded in a classified report to the White House, according to three U.S. officials.The officials asked

McConnell: Impeachment
McConnell: Impeachment 'diverted attention' from coronavirus

Senate Majority Leader Mitch McConnell says President Donald Trump's impeachment trial distracted the federal government from the novel coronavirus as it reached the United States in January, despite warnings at the time from public health experts and members of Congress about the spread of the virus. The Trump administration has been severely criticized for its slow response to the spreading pandemic, especially for the shortage of coronavirus testing kits when the infection first spread to the U.S. from China.

Why Taiwan has become a problem for WHO
Why Taiwan has become a problem for WHO

Taiwan is effectively locked out of the World Health Organization - and tensions are rising.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • ZaraPiext
    (2020-03-30 07:43:14Z)

    n coronavirus size
    http://chloroquine-treatmentforcoronavirus.com/# - coronavirus antiviral drugs
    coronavirus 8000
    order chloroquine
    - coronavirus qatar
    nj coronavirus

    REPLY
  • ZaraPiext
    (2020-03-30 19:03:36Z)

    coronavirus 3rd
    http://chloroquine-treatmentforcoronavirus.com/# - coronavirus antiviral drugs
    coronavirus quarantine
    chloroquine for covid-19
    - coronavirus john hopkins
    coronavirus in texas

    REPLY
  • ZaraPiext
    (2020-03-31 16:04:58Z)

    coronavirus pandemic
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine online
    coronavirus oklahoma
    chloroquine
    - coronavirus 7-14 days
    coronavirus vs flu

    REPLY
  • ZaraPiext
    (2020-03-31 16:29:46Z)

    coronavirus 5th case in us
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine phosphate 250mg
    coronavirus on cruise ship
    buy chloroquine
    - coronavirus 6th case
    coronavirus 01/27

    REPLY
  • ZaraPiext
    (2020-03-31 20:57:54Z)

    coronavirus arizona
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine phosphate 250 mg
    coronavirus in nj
    buy chloroquine 250mg
    - coronavirus 043
    coronavirus 10000 infected

    REPLY
  • ZaraPiext
    (2020-03-31 22:15:17Z)

    coronavirus quarantine period
    http://chloroquine-treatmentforcoronavirus.com/# - buy chloroquine 250mg
    coronavirus thailand
    chloroquine online
    - coronavirus under microscope
    coronavirus from

    REPLY
  • ZaraPiext
    (2020-04-01 00:34:48Z)

    coronavirus zombie
    http://chloroquine-treatmentforcoronavirus.com/# - order chloroquine
    n coronavirus china
    chloroquine for covid-19
    - coronavirus examples
    coronavirus how to say

    REPLY
  • ZaraPiext
    (2020-04-01 11:18:18Z)

    a coronavirus outbreak
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine 250 mg
    coronavirus 3rd case usa
    chloroquine for covid-19
    - coronavirus new hampshire
    coronavirus 90000 video

    REPLY

Top News: Economy