Not only are we anxious, but many overseas companies are even more anxious than us, and they look forward to our resumption of work by counting their fingers. Because if you don’t resume work, everyone will stop production or go bankrupt.

Author | Mao Ge

Source | Big Cat Finance

This extraordinary spring, the world's factories in China have almost stopped. How can we resume work safely? How to ensure economic growth? Not only are we anxious, but many overseas companies are even more anxious than us, and they look forward to our resumption of work by counting their fingers.

Because if you don’t resume work, everyone will stop production or go bankrupt. global division of labor is fine, and the supply chain is cut off, which is particularly conspicuous in this epidemic.

01

As the center of the epidemic, Hubei Province is a low-key "car province".

Wuhan alone has gathered five major vehicle companies and factories, including Dongfeng passenger cars, Dongfeng Honda , Shenlong Auto , Dongfeng Renault , and SAIC-GM.

Among listed companies, three companies in the automobile industry are Hubei - Dongfeng Motor , Tuo Co., Ltd., and Xiangyang Bearing .

● Dongfeng Motor is very familiar with, and the other two are also important auto parts manufacturers in the automotive industry.

● Camel Co., Ltd. was previously designated as the supplier of Proton X70 batteries in Malaysia.

● Xiangyang Bearings can produce 12 types and more than 2,000 varieties of metric bearings and English conical bearings, with an annual production capacity of more than 70 million sets. It is the largest automobile bearing manufacturer in China, and its customers include enterprises in Europe, America, Southeast Asia and other regions.

html At the beginning of February, the announcements issued by Xiangyang Bearing and Camel Co., Ltd. were "preliminarily scheduled to resume work on February 14." However, according to the recent announcement issued by the Hubei Provincial Novel Coronavirus Pneumonia Epidemic Prevention and Control Command, all types of enterprises in Hubei Province will resume work no earlier than 24:00 on March 10.

There are also a large number of enterprises in the automotive industry chain that have not been listed, which has weak supply of spare parts.

There are more than 600 large-scale auto parts companies in Wuhan alone; Shiyan City has more than 600 large-scale auto parts companies, with a total assets of more than 100 billion yuan and 200,000 employees; Xiangyang City has more than 500 enterprises engaged in automobile and parts production, of which more than 200 enterprises exceed 100 billion yuan, and 4 enterprises exceeding 10 billion yuan.

Now, all these factories are in vain, and the car companies across the sea are suddenly confused:

● South Korea Hyundai plans to suspend the Palisade SUV models produced in South Korea due to the shortage of wiring harness components from the two key suppliers. At the same time, South Korea's Shuangyong Automobile also stated that it would close its factory in Pyeongtaek, South Korea in view of the interruption of parts supply.

● Fiat Chrysler also issued a "production suspension warning". Fiat Chrysler CEO Ma Mingkai said that if the interruption of parts production and transportation worsens, a European assembly plant may be forced to shut down within 2-4 weeks.

● Japanese car manufacturers are also very depressed. Car companies such as Toyota , Honda , Nissan are all assembled vehicles in Wuhan and are also purchasing parts from Zhejiang, Jiangsu and Hubei. Toyota publicly stated that some categories imported from China are currently unable to achieve alternative production.

● GM cars are also in danger, and the Federation of Arts Unions warned that if China continues to shut down work, at least three GM factories will face shutdowns.

● Indian vehicle manufacturer Tata Motor also said that the new coronavirus outbreak in China may hinder Jaguar Land Rover's production and may affect Jaguar Land Rover's profit expectations of about 3% in fiscal 2020.

"zero inventory" has always been the goal pursued by auto manufacturers. When they encounter black swans, they will be blind. Now they have been shut down for one day, which will bring about 20 billion yuan in the automobile industry. Now there is no chance to resume work in Hubei Province. Guangdong and Jiangsu, Zhejiang and Shanghai are all careful, and the global automobile industry is staring at China, and they are all very distressed.

02

In addition to cars, global mobile phone shipments have also been delayed by this epidemic.

Whether it is the major domestic mobile phone brands or Samsung and Apple, none of them are spared.

Wuhan alone has the Foxconn park that supplies Apple, Huawei Wuhan Research Institute (leading notebook project), Xiaomi Wuhan headquarters, and related product production lines for terminal companies such as Lenovo and DJI.

Fortune magazine published an article saying: "almost all important consumer electronic products are made in China." 's words are not exaggerated at all.

There are as many as 13 listed companies in Wuhan in the electronics industry, and there is no need to count the branches set up by other provinces or foreign companies in Wuhan.

Henan, which also cannot resume work, is close to Hubei and is also an important area in the global electronics industry chain, especially in photoelectric and assembly.

90% of the world's iPhones come from the Foxconn factory in Zhengzhou, but currently only about 10% of Foxconn's workers resume work. Currently, Foxconn predicts that by the end of February, the resumption of work will only recover to 50%.

In addition, in Guangdong and Zhejiang, there are also factories and suppliers of iPhone assemblers Foxconn, Pegatron, Samsung and LG, and their full resumption of work is still far from the end.

Now, Apple's new product production and delivery this year may be delayed, which will eventually affect sales.

In addition to the parts of the mobile phone itself, Luxshare Precision, Goertek and Intelligence are all from China, and their current status is also a large-scale shutdown. Now that AirPods are in stock, they cannot resume work, and Apple received 45 million orders in the first half of 2020, and it is likely that it will not be able to deliver on time.

03

Hubei is also a panel production capacity base in China and even the world. In Wuhan, five production lines of three top panel companies, BOE , TCL Technology, and Shenzhen Tianma, have gathered, including large-size production lines for the TV market, as well as small and medium-sized production lines for the tablets, mobile phones and other markets; there are both LCD production lines and flexible OLED production lines.

Mobile phones, pads, computers, TVs, dash recorders, ATMs, etc., all display screens are inseparable from these panel suppliers. The top five of the

TV panels are BOE, LGD (Korea), Samsung (Korea), Huaxing and Qunchuang, all of which are in China.

China's panel production capacity caught up with South Korea in 2018, forcing Samsung and LG to stop their new expansion plans. The market share is not low and many companies are affected.

Japanese electronic game company Nintendo said that the epidemic is expected to cause an "inevitable" delay to its production and transportation in China. The affected products include the Switch game console, controller Joy-Con and the recently launched peripherals of the game "Fitness Ring Adventure". Now the fitness ring has begun to rise sharply due to out-of-stock stock, which is even more crazy than shoe speculation, and the price has increased by three or four times in half a month.

04

In addition to the automotive mobile TV screen, there is also a high-tech industry that is very low-key - optical communication .

seems to have never been exposed to this industry, but all our network facilities and the 5G communications that are now vigorously developing, rely on this optical communication!

Wuhan Optics Valley, located at the site of the outbreak of this epidemic, is a gathering place for my country's optical communications industry. It has important companies and factories in the optical communications industry chain including Huawei, ZTE , Fenghuo, Guangxun, Huagong Technology , Changfei and other optical communications industry chains.

Several major companies in the communications industry are in Hubei Province:

like Changfei fiber is ranked first in the world in the three major fields of optical fiber and fiber prefabricated rods, FiberHouse Communications' optical cable production is second in China, and Guangxun Technology ranks fifth among the global optical device manufacturers.

The overall manufacturing capacity of other domestic optical communication equipment, optical modules, optical devices, optical fiber cables is distributed in Shenzhen, Dongguan , Suzhou , etc., and it is necessary to resume work and production in full.

At present, downstream optical communication manufacturers have not stopped production like automobile factories. They are fully using stock materials, but only 1-2 months is enough, and it is expected to face an emergency in March.

05

It is not too anxious to be out of stock for ordinary products, but I am anxious to be sick. Now the world's pharmaceutical companies are also pointing to China's supply of raw materials.

Most of the pharmaceutical ingredients of antihypertensive drugs commonly used by Americans, drugs for treating Alzheimer and Parkinson's treatment of drugs come from China, and insulin, antidepressants, blood thinners, etc. are directly or indirectly dependent on China's supply chain.According to the U.S. Department of Commerce data, 97% of the antibiotics in the U.S. are also produced in China.

It can be said that domestic raw materials and finished drugs are supplied worldwide.

Let’s give an example. There is a raw material called erythromycin , which is used to make various antibiotics such as azithromycin, erythromycin, erythromycin, erythromycin , etc. The global demand for this raw material is 9,000 tons, and Hubei's Kelun Pharmaceutical produces 3,000 tons every year, accounting for one-third of the world. The other two key manufacturers, Ningxia Qiyuan and Sichuan Dongyangguang, also have 3,000 tons each. These three companies have solved the global demand for this antibiotic raw material.

The United States is anxious, and Europe is also anxious.

German media "Spirit Jing" recently published an article titled "The New Coronavirus May End the Supply of Germany", pointing out that China is an important source of pharmaceutical raw materials for German pharmaceutical factories. A survey by the German Federal Institute of Drugs and Medical Devices (BfArM) showed that 19 drugs were produced from an active ingredient manufacturer in Wuhan, the center of the epidemic, and 17 were facing tight supply.

Although the supply shortage caused by the epidemic has not yet been received, incidents such as interruption of vacation quarantine logistics may lead to supply cuts in German pharmaceutical companies in the future.

Germany once called itself the "world pharmacy", but nowadays, most of the factories that make basic raw materials for medicines are located in China or India. These raw materials are indispensable materials for the manufacture of finished drugs such as antihypertensive drugs, painkillers, antibiotics, cardiotropic drugs, antidepressants, chemotherapy drugs and anesthetics.

The Financial Times also reported that China is the producer of key drug ingredients in the global supply chain of antibiotics, diabetes drugs, painkillers and antiretroviral drugs for treating HIV, and this epidemic may affect the global supply of drugs.

Now there is a shortage of vitamins. After the holiday, European vitamin E quoted 6.5 to 8 euros/kg, and traders' export quotes rose to 7 to 8 US dollars/kg, up 30% from before the holiday; vitamin D3 European market quotes rose to 9 to 11.5 euros/kg; vitamin A market quotes rose to 64 to 67 euros/kg.

listed company Xinhecheng, the world's largest vitamin A production capacity, Garden Bio's vitamin D3 accounts for 30% of the global market, Jindawei 's coenzyme Q10 ranks first in the world, vitamin A ranks sixth and vitamin D3 ranks second, Brother Technology is the world's highest manufacturer in vitamin K3 market, and Guangji Pharmaceutical is also one of the world's most important manufacturers in the field of vitamin B2.

is now all affected.

06

In addition to automobiles, mobile phones, TV screens, optical cables, and medicine, there are many manufacturing sub-sectors, and mechanical parts and components rely on Chinese manufacturers. For example, Shuangfei Co., Ltd., which rings the bell at the door of its own company in the past two days:

His bearings can not only be double-seat, but also do not put lubricant, and do not have to worry about wear. They are mainly exported and sold to more than 30 countries and regions such as the United States, Japan, Italy, Austria, and Germany, and supplying supplies to many large companies such as MISUMI (formerly Sanju Commercial Co., Ltd.), CCVISPA (Italy), FULLCO (USA).

Putting aside the upstream parts and materials in the manufacturing industry, China accounts for the highest share of the global market share of toys, clothes, luggage, shoes, small commodities and other categories at the end. Foreign manufacturers are waiting for parts, and consumers are also experiencing the torture of price increases in goods.

Due to the epidemic, the North American Hockey Professional League (NHL) is facing a serious shortage of stick production. NBC reported that about 75% of the clubs used by ice hockey players come from Chinese factories. During the pandemic, the trade suspension has prevented the league from receiving new bats from January, and the league has considered calling backup stocks.

The American Fortune magazine website reported on February 15 that it released a leaked email, which said Amazon is buying goods from China, stocking up inventory, and responding to the risks of the epidemic.

I hope the epidemic will pass quickly, spring will bloom, everyone can go back to work, the whole world will point at us~