The coronavirus, in disrupting the global economy, is highlighting the downside of U.S. reliance on a supply chain — with China playing a central role.
Beyond short-term economic disruptions and increased recession worries, the spreading coronavirus is sowing the seeds of a broad transformation of the global supply chains that for years brought low consumer prices and high corporate profits on products such as cellphones, computers and household goods.
Supply lines have been crippled by quarantines, factory closings, travel restrictions and other stringent measures taken by China and other countries to contain the outbreak. Some companies that previously relocated parts of their operations to Vietnam and elsewhere have been able to offset some of their lost production capacity. But the sharp decline in China’s globally leading manufacturing economy has had widespread knock-on effects.
Masterwork contracts with about 100 factories in China. Before the virus outbreak, the company could place an order and have it confirmed in two to four days. Last month, Mathur said, it was taking two to three weeks — and even then, they couldn’t say when the products would be shipped. Still, there have been growing worries that supply chains were too concentrated or getting stretched thin.
With Japan, South Korea and Italy now dealing with rising caseloads of the disease, there could be more and longer disruptions to global supply lines. China does a lot of manufacturing for Japan and South Korea, but Chinese factories also depend on them for parts.In recent days China has largely reopened for business, although employees remain wary of returning. Companies in hard-hit Hubei province — epicenter of theU.S.
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