(This series is original by Southern Weekend and Southern People Weekly, and is being read for free for limited time)
takes the industrial chain as the link, and enterprises from all over the world overcome difficulties together, which is unprecedented. "If it weren't for this epidemic, many people wouldn't know how important China is in the global industrial chain."
The progress of the recovery of production capacity of Hon Hai Technology Group's Zhengzhou factory largely determines Apple's revenue this quarter and the time when global consumers get new mobile phones.
"In just three months, Chile generally sells 1 billion US dollars of cherries, 90% of which are sold to China."
Before the Spring Festival, Japanese living space nikoand opened the world's largest flagship store in Shanghai. On the day of opening, hundreds of consumers lined up in batches on Huaihai Middle Road, with the expected waiting time exceeding 2 hours. (IC Photo/Photo)
As the world's largest exporter and second largest importer, China is making every effort to curb the new coronavirus. Many provinces and cities have temporarily decided to postpone the Spring Festival holiday and push the start of construction to February 10, some even later. This also caused the global economy to "sneeze".
Not only is China's supply chain stuck, but the original strong consumption power of the Chinese people has also temporarily disappeared.
According to the Associated Press on February 9, 2020, in Montnapolon, luxury shopping area in Milan, Italy, dozens of luxury brands have decorated their windows just to welcome the Chinese New Year. But Chinese consumers did not arrive as scheduled.
About one-third of the world's luxury goods consumption comes from China. In Italy, they consume more than the Russians, Arabs and Americans combined.
Brent crude oil price, as the benchmark for international oil trading, fell from $70 a barrel in early January 2020 to around $55 on February 10, partly due to weak Chinese demand. China is the world's largest importer of many commodities, including oil.
htmlOn February 19, according to the press conference of the State Council’s Joint Prevention and Control Mechanism, the resumption rate of industrial enterprises above the scale in some major economic provinces (cities) such as Guangdong, Jiangsu, and Shanghai exceeded 50%.On October 4, 2018, there were Chinese tourists shopping in front of a luxury goods store in Istanbul, Türkiye. But during the Spring Festival in 2020, these luxury stores did not wait for Chinese consumers. (IC Photo/Photo)
consumption: delay import
As the world's second largest importer, China is the main buyer of food, movie tickets, cars and other goods. Over the past period of time, these commodities have had to slow down their pace into China.
Xu Hongbin is the head of a medium-sized import and export trading company in Beijing. His company has begun to import various agricultural products such as wheat, milk, honey, sour cucumbers from Russia in recent years.
"Unlike most wheat-producing areas in the world, the best wheat in Russia grows at 50 degrees north latitude (mostly growing at 40 degrees north latitude), and the soil there is equivalent to the black soil in the northeast." Xu Hongbin was very excited when talking to Southern Weekend reporters about these imported products.
Before the Spring Festival, Xu Hongbin arranged his itinerary to Russia after the festival. But due to the impact of the epidemic, he had to cancel these plans. Several Russian suppliers asked him every day via WeChat and email when the demand would be restored.
Xu Hongbin was a little helpless, and he couldn't import more products for the time being. On the one hand, the inventory before the Spring Festival is still lying in China's warehouses. Because transportation and logistics have not completely returned to normal, they cannot be sent to supermarkets across the country.
He just went to Tianjin because he wanted to import from Tianjin Port , and his warehouse was located there. He learned that Tianjin Port is also facing a "depot explosion" situation, and imported goods are still coming in continuously, but all terminals are full of containers but cannot be shipped. Tianjin Port is the largest port in Beijing, Tianjin and Hebei and North China.
The China Food, Local and Animal Import and Export Chamber of Commerce issued a news on February 10 that it had received an announcement from the Water Transport Bureau of the Ministry of Transport that the capacity of refrigerated containers piled in Tianjin and Shanghai ports is currently full. It is recommended that enterprises do not choose Tianjin and Shanghai when they arrive at the port in the near future, and posted other ports that may still be able to accept goods.
Fortunately, some logistics have been restored, so Xu Hongbin hired some high-priced temporary workers to ship goods to retail customers through e-commerce first. “Temporary workers cost 300 yuan a day."He said that in the past, only half the price was, while truck drivers were more in short supply, and even higher prices were difficult to find.
This is also the second reason why Xu Hongbin gave up imports. Because of the rise in costs such as manpower and logistics, the prices of goods naturally rose, so consumers will only buy daily necessities during this period and give up some imported goods with higher prices.
During this period, the import price will drop, but Xu Hongbin dare not take risks. For example, Russian milk has a shelf life of 6 months, and it takes 45 days to transport it from sea to China, but once it exceeds 3 months, no supermarket is willing to purchase goods.
"The global interconnection is too frequent, and now China has a cold. "Xu Hongbin told Southern Weekend reporters, "Other countries are very uncomfortable. ”
According to the Asian Fruit magazine, the Chilean government and the Chilean Fruit Exporters Association recently released evaluation data, saying that the current loss of Chilean fruit exports may be as high as US$100 million.
Among them, the biggest loss is cherries. Within 48 hours since the Chinese wholesale market reopened during the Spring Festival holiday, there are estimated 1,500 containers of cherries on the market, but only 249 containers were sold.
Xia Fei explained to the Southern Weekend reporter that in this season, fruits in South America and Southeast Asia are the peak sales season, so they are the most affected. Especially cherries, the peak sales season starts from the end of November to late February. Xia Fei was once the procurement director of a leading fruit e-commerce company.
"In just three months, Chile generally sells 1 billion US dollars of cherries, and 90% of them are sold to China. "Xia Fei said, "There are too many people living on cherries, packaging workers, dock workers, etc. "
cherries are unsold because the Chinese wholesale market has been closed for a while and traffic has been blocked, so it cannot reach Chinese consumers. Xia Fei said that in the past, these cherries were generally sent from the port to Guangzhou Jiangnan, Shanghai Huizhan, Jiaxing and Beijing Xinfadi, but now most of them are backlogged in ports.
Ronald, chairman of Chile Fruit Exporters Association Bown said that he would continue to donate fresh fruits to Chinese hospitals and sanitary departments. The first batch was completed last week, including donating 1,000 boxes (1.5 kg/box) of blueberries to a hospital in Shanghai.
Xu Hongbin said that foreign suppliers are more anxious and communicate with him every day. Due to the jet lag, sometimes he has to work online until late at night.
However, these consumer demands are only temporary suppression. With the recovery of logistics, life is gradually on the right track, and Chinese consumers who are "suffering" will reward the market again.
On January 27, 2019, citizens purchased cherries at Guizhou Shuanglong Fruit Wholesale Market, Longli County, Qiannan Buyi and Miao Autonomous Prefecture, Guizhou Province. (IC Photo/Photo)
Supply Chain: Global Integrated
World Manufacturing Center unexpectedly shut down, and the chain reaction was quickly transmitted to the global industrial chain.
South Korean and Japanese auto companies close to China were the first to feel the link between the automobile industry chain.
Due to the delay in resumption of work in China, the wire harness products produced by automobile harness suppliers Kyungshin (Jingxin) and Yura (Yura) in China could not be supplied to South Korea in time, and some of Hyundai's factories in South Korea had to temporarily stop production from February 7.
Nissan's Kyushu factory in Japan and Renault's Busan factory in South Korea also announced that it had temporarily stopped production due to interruption of parts supply in China.
Southern Weekend reporter It was learned from an insider of Jingxin Company that Jingxin and Yuluo supply South Korean wire harness products, mainly produced by their factories located in Shandong Province. At present, they have resumed production and are in a hurry to work.
The epidemic has even affected Africa. On February 2, 2020, the China Council for the Promotion of International Trade issued the first factual certificate of force majeure for COVID-19 to a Zhejiang auto parts company, Huida Machinery Manufacturing (Huzhou) Co., Ltd., for a factual certificate of COVID-19. Affected by the epidemic, the company was unable to fulfill the previously signed contract on time - delivering 1,000 sets of steering machine housing to the French Peugeot Group African factory every week.
Southern Weekend reporter learned from the Hexi community where Huida Machinery Manufacturing (Huzhou) Co., Ltd. is located that the company has resumed work on February 12, but the current return rate is about 30%.However, community director Ding Xinquan told Southern Weekend reporters that starting from February 17, with the help of Alipay health code and trajectory inquiry, foreign employees who meet health requirements do not need to be quarantined at home and can go to work directly if their body temperature is normal.
The "China Automobile Trade High-Quality Development Report (2019)" prepared by the Foreign Trade Department of the Ministry of Commerce and China Automobile Technology Research Center Co., Ltd. mentioned that China's automobile parts exports in 2018 were US$72.5 billion, and its main export markets were developed countries such as the United States, Japan, and Germany. Major automotive parts companies are accelerating their integration into the global supply chain, have strong international competitiveness in some sub-sectors, and have entered the OEM procurement system of multinational automotive companies.
Many Chinese auto parts manufacturers have gone overseas to invest, such as CITIC Deca, the world's largest supplier of aluminum wheels and aluminum chassis parts. Since 2008, CITIC Deca's sales of automotive aluminum wheels have ranked first in the world, selling 54.01 million wheels in 2018. This means that one in every 7 cars around the world uses the wheels of the CITIC Deck.
The 2018 financial report of its parent company CITIC Co., Ltd. (00267.HK) shows that CITIC Deka’s wheel customers include 12 overseas car companies and 6 Chinese car companies. "Currently, customers are very sensitive to the impact of the epidemic. We have made promises and replies one by one with customers based on actual conditions." CITIC Dika did not want to disclose more information about resumption of work and supply chain based on the silence period before the release of the parent company's financial report.
The upstream and downstream of the industrial chain are transmitted to each other. Due to the delay in resumption of work by Chinese vehicle factories, Toyota's local engine factories in Japan have to suspend some production lines that were originally supplied to the Chinese market.
If China does not resume work, global consumers will also feel the butterfly effect caused by Chinese factories in the field of consumer electronics.
Due to the impact of the epidemic, Japanese game console company Nintendo recently announced that its "Nintendo Switch" and its supporting equipment will be postponed.
htmlOn February 17, Apple filed a document with the SEC (US Securities and Exchange Commission) saying that due to the impact of the epidemic, Chinese partners cannot resume work as expected on February 10, and the global supply of iPhone will be temporarily restricted, which will affect its revenue in the first quarter of 2020. The resumption of work inis the most inquired question in Hon Hai Technology Group recently. On February 8 and 10, 2020, Hon Hai Technology Group issued two consecutive statements, stating that it will not comment on a single factory, customer, or product, and that it is resuming work in various factory areas in mainland China.
Honghai Technology Group Zhengzhou factory is the main assembly base of iPhone. The progress of the Zhengzhou factory's production capacity recovery largely determines Apple's revenue this quarter and the time when global consumers get new mobile phones.
In order to resume work as soon as possible, Foxconn (601138.SH), a subsidiary of Honhai Technology Group, even started mask production. Masks are one of the important epidemic prevention materials for resuming work. Hon Hai Technology Group has nearly one million employees and the demand for masks is huge. To this end, they introduced a production line in Longhua Park, Shenzhen and began trial production of masks on February 5. It is expected that the daily output of 2 million pieces will be achieved by the end of February, which will be used for internal production and epidemic prevention guarantee for employees. In the future, external support and output can be supported and exported depending on the situation.
Regarding more details on the resumption of production, FUCCI told a reporter from Southern Weekend that it is inconvenient to accept interviews during a special period.
On January 8, 2017, THE MALL, a luxury discount village in Florence, Italy, entered the discount season, and Chinese tourists and international students have become one of the main consumers of the "village". Affected by the epidemic, the number of Chinese tourists in 2020 has decreased significantly. (IC Photo/Photo)
Raw materials: It is both a major exporter and a major importer
The epidemic has also made Indian pharmaceutical companies feel nervous, worried about insufficient inventory of raw materials.
According to the Financial Times, the head of a large Indian pharmaceutical group warned that Indian drugmakers may face serious production pauses. India is the world's largest generic drug exporter, and 70% of its raw materials depend on China.
China is the world's largest producer and exporter of raw materials, and has a competitive advantage in vitamins, antipyretic and analgesics, antibiotics and corticosteroids.
Data from the China Medical and Health Products Import and Export Chamber of Commerce shows that in 2018, China's raw material products exported 9.3 million tons and exported 30.048 billion US dollars.In the first half of 2019, the export volume of raw materials was US$17.247 billion, an increase of 6.64% year-on-year.
Shiyao Group (01093.HK) is one of the largest export companies for raw materials in China. The company's public relations person told Southern Weekend reporters that after the outbreak of the epidemic, Shijiao Group also received concerns from overseas customers about the safety and supply of raw materials. Because the group is a leading position in international raw material suppliers, and most of the customers are high-quality long-term order customers accumulated over the years, and they have sufficient stockings, and the order sales are not affected at present.
As a key anti-epidemic drug manufacturer, during the Spring Festival, the production lines of anti-epidemic drug Abidor hydrochloride tablets produced by Shiyao Group have been continuously produced. Other production lines have resumed work in full, and most of the products have basically returned to normal production capacity.
The situation of Shiyao Group is not an exception. Many pharmaceutical companies have undertaken anti-epidemic drug protection functions during the epidemic and resumed production soon. On February 14, 2020, another major raw material exporter, Prolo Pharmaceutical (000739.SZ), also announced that the company's resumption rate was close to 90%.
China is the largest exporter of pharmaceutical raw materials and the most important consumer of raw materials in the world.
Since the emergence of the virus, the prices of key industrial raw materials such as copper, iron ore, nickel, aluminum and liquid natural gas have fallen sharply. Brazil , South Africa and Australia, which export these goods at high exchange rates, have currency exchange rates close to their lowest levels in recent years.
On February 18, 2020, iron ore giant BHP.US released its half-year financial report as of December 31, 2019. Supported by China's demand and high iron ore prices, BHP Billiton's revenue in the first half of the year was US$22.29 billion and net profit of US$4.9 billion. On the same day that the financial report of
was released, Huw McKay, vice president of market analysis and economic affairs at BHP Billiton, released the "Economic and Commodity Outlook (2020)", believing that the epidemic will pose a risk to commodity demand and prices. If the epidemic is "not significantly controlled" in this quarter, they will lower their expectations for economic and commodity demand growth.
overcomes the difficulties together
has been engaged in foreign trade for more than ten years, and KEDO has been acting as the customs clearance for the first time in 2020.
Previously, the mask business he handled was exported. China is the world's largest mask producer, and occasionally imports gas masks. But this epidemic has caused China's demand for masks to surge and become a major importer.
In the first week of February 2020, KEDO cleared more than 800,000 disposable medical masks. They belong to about 10 companies, some of which are Chinese companies asking foreign customers to help purchase, while others are actively purchasing and donating them to Chinese suppliers to ensure production.
takes the industrial chain as the link, and enterprises from all countries overcome difficulties together, which is unprecedented. An electronics business owner located in Bao'an, Shenzhen lamented to him that foreign customers are more anxious to start construction than themselves.
Some companies are concerned about the transfer of the industrial chain.
KEDO does not think so. Clothing, shoes, etc. have been transferred to Southeast Asia. Most of the remaining Chinese manufacturing is very distinctive and irreplaceable. He told the Southern Weekend reporter, "The cost-effectiveness is too high, and there is no similar supplier found overseas."
"If it weren't for this epidemic, many people wouldn't know how important China is in the global industrial chain." Gao Ting, the market leader of a wasabi planting company in Yunnan, told the Southern Weekend reporter.
Gao Ting's company processed the wasabi and sold it to an American health care product company. After the outbreak of the epidemic, due to traffic hindered, they were unable to ship the goods normally and took the initiative to negotiate with American customers. At first, the other party was a little hesitant, but was still very rational. After checking the transmission channels of COVID-19, he gave suggestions on product packaging, disinfection, etc., and did not suspend the contract.
(At the request of the interviewee, Xu Hongbin is a pseudonym)
Southern Weekend reporter Huang Jinping
