CHINA’S FACTORIES REOPEN, ONLY TO FIRE WORKERS AS VIRUS SHREDS GLOBAL TRADE

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  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.

However Shi’s optimism was short-lived. In the past week, requests to cancel orders or delay shipments from his European and US 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 now 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 US 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.