More than 50 million Chinese citizens in 16 cities are in lockdown. Airlines around the world – including Australia – are cancelling flights to China while the number of novel coronavirus victims continues to climb
But the deadly disease with 14,000-plus confirmed cases is infecting far more than humans.
Its impact is spreading just as quickly through the Australian economy creating a potential crisis for Australian importers.
Enter any Australian home or business and the number of products imported from China is simply breath-taking. According to statistics, topping the list is: clothing, communications equipment, computers, prams, toys, games and sporting goods, furniture and televisions.
In fact, more than $86 billion worth of goods were imported to Australia from China in 2018.
So with China, the world’s largest manufacturer in lockdown, could the impact of the Coronavirus be just as deadly for Australian importers?
According to China Blueprint’s Lisa Goodhand communication is the key to mitigating any impact on your import business.
“The first step is to reach out to all the parties involved in your supply chain to ensure you get your facts straight,” she said.
“For importers, this means talking to your factories, agents, shippers, customs agents, AQIS and anyone else involved in the process.
“But be aware: your factory’s will want to sell you a good news story because naturally they don’t want to lose business and in all likelihood they don’t really know themselves what is going to happen.
“The key to getting truthful, accurate information is to ask specific questions so you get the answer you need, not what they think you want to hear.”
While the impact of the coronavirus is widespread, digital communication lines are fortunately unaffected.
Skype and WeChat are still operating as normal but Ms Goodhand warns there will be close monitoring of certain keywords and large file attachments so be cautious about what you send.
“As well, many people will be working from home in China while the Government restrictions are in place,” she said.
“This means internet security could also be an issue. Think about where you are sending any private or confidential information and don’t be tempted to use social media for sensitive communications as it is not safe.”
The timing of the coronavirus outbreak couldn’t be worse. It comes on the back of nationwide business closures for Chinese New Year.
In order to contain the spread of the disease, the Chinese Government has officially extended the Lunar New Year holiday.
Businesses across China have been ordered not to resume work until February 10. Hubei, the province where the outbreak started will remain in lockdown until February 14.
The delay in return-to-work means ports will not operate during this time including: Shanghai, Ningbo, Suzhou, Nanjing, Chongqing, Qingdao, Lianyungang, Zhengzhou, Tianjin, Dalian, Xiamen/Fuzhou, Shenzhen, Guangzhou and Zhongshan. The port of Wuhan, in the city where the outbreak originated, is closed until further notice.
Stockwells International, Director of Sales and Marketing Angela Gambell warns business to expect delays.
“There are no restrictions per se to manufacturing,” she explained. “However delays should be expected because of local material supply delays to factories. These are inevitable, caused by the ripple effect.”
Hong Kong and Taiwan are both operational again.
But it’s important to determine if there will be any restrictions on goods departing from certain provinces and ports
“All this information can change daily, so be sure to stay in contact with your customs agent, who will receive regular reports from your shipper,” Ms Goodhand urged.
“On the flipside, port authorities in Australia are also taking measures to protect their workers. Ships that arrive from China that have been on the water for less than 14 days (the incubation period for the virus) will remain in a quarantine state until 14 days has passed.
“The crew are also required to declare any crew members that are showing symptoms. So, expect delays.”
It’s not just the Chinese ports that are affected. Travel between provinces has also been affected and in some areas shut down completely.
“There are currently a number of cities in Wuhan in lockdown which means buses, subways, ferries, airports and long-distance buses can neither go in nor out,” Ms Goodhand explains.
“If you have a mobile workforce in China they may not be able to complete certain tasks until the Government has lifted the bans.”
If your factory cannot meet a production deadline, it might be because of delays in receiving local materials.
Again communication is the key.
“In my experience, sometimes you can solve this problem through dialogue with them,” Ms Goodhand said
“Find out where the materials are coming from and see if they can be sourced elsewhere
“In some cases, factories are reticent to do this because of a price differential. But if you can bare the cost of changing the materials supplier, you should let them know.
“It might be financially sensible to pay a little more than miss an important deadline.”
Think twice about sending your staff to China until the virus has been contained and check the www.smartraveller.gov.au for travel advice updates.
Thanks to technology and the availability of video conferencing there’s no point in travelling to China and perhaps being unable to return home, or worse, getting sick.
If you can, avoid or delay your trip.
Flights to China will be difficult if not impossible to arrange with many airlines shutting down their services. Qantas has announced it has suspended its Sydney-Beijing and Sydney-Shanghai service from 9 February until 29 March 2020.
Instead of sending staff to China, consider using your inspection agency which can usually do more than final article inspections. Most agency’s return on the 10th February.
“Rather than going to China yourself when you need to check samples, send them to your inspection agents office or book an inspector to go onsite to do your job,” Ms Goodhand said.
“My best advice is to road map your order process. That is, if you are relying on express deliveries for example, you may need to rethink your timelines as the Chinese government has put a lockdown on Express Freight companies.”
If your factory is in Wuhan or Hubei province and you need to outsource your business to an alternate factory, don’t forget about due diligence.
Talk To Your Customers
Once you have a broader picture of where you delays are and how they will impact your business, you should consider your customers at home.
Being proactive in sharing delays and problems with them can help avoid disappointment and manage their expectations.
“Given this very serious situation, whilst customers may not be happy, they should be understanding,” Ms Goodhand said.
“But remember, communicating with them sooner rather than later, is always best practice.”
Use this step-by-step plan to minimise damage to your importing business during the coronavirus.
- Make sure you have open and regular communication with every member of your supply chain. Ensure you ask specific questions.
- Understand your supply chain and identify blockages.
- Support your factory with problem-solving where you can.
- Factor in time delays, as they are likely.
- Work out how these delays will impact your customers in Australia. Be honest and open with them in order to manage expectations.
Here are some useful links to help you gather information