Corona virus has infected 95416 people worldwide. Factories in China are shut and many UK retailers are running out of supplies. Can the UK manufacturers fill the supply gap ?
Years ago, many manufacturers shifted production to China. The paper cup industry was no exception. Since then, most paper cups, food sleeves, plates, and cutlery braced the tag “Made in China.”
Low labour costs, low taxes, weak regulations and a sound business environment meant production costs were down. China turned into a manufacturing giant until coronavirus hit the Asian nation from the City of Wuhan.
Manufacturers operating in China are now closing down to contain the spread of the virus. As a result, part of the global economy has stalled. Airlines have halted flights to the country, and businesses that rely on supplies from China are at a standstill.
Iris Pang, a China economist, says, “Every manufacturer faces the same problem. The shutdown affects all industries as a whole, and it’s unknown how many workers will return to work after the extended new year holiday.”
With the new infections popping the world, the situation remains unpredictable. Coronavirus has infected 95416 people worldwide. Since the outbreak in December 2019, over 3285 corona victims have passed away.
Supply Chain Crisis
Unfortunately, many UK companies that import from China are facing supply chain issues. Meeting demand may soon be a headache without supplies.
New research shows 50% of UK retailers have suffered a drop in sales because of the coronavirus. Many vendors fear a sharp slump in consumer confidence because of the corona outbreak.
“Businesses are suffering against a massive disruption in supply as the coronavirus has stifled off production in China,”, says UK retail Expert Richard Lim.
Coronavirus outbreak has brought forth many unexpected challenges to the business world. Besides the slump in supplies, some customers now avoid buying from vendors who ship from China.
China town in London is now like a ghost town after the reporting of coronavirus cases in the UK. What was once a buzzing tourist centre, looks deserted and soulless now. The increasing coronavirus panic may crumble more Chinese affiliated businesses and manufacturers.
Manufacturing Disruption Wounding Business
China accounts for a third of the world’s manufacturing. Many businesses rely on supplies from the country. Unfortunately, the small and medium-sized business may lack the capacity to handle the crisis.
The economic ripples of the coronavirus outbreak are still at the infancy stage. With factories closed in China, some businesses can’t run or withstand the pressure for a long duration. The virus may have more stressing impacts on businesses.
Many small businesses faced orders in progress halted as the result of the virus. That means tons of capital remain held up in the Asian country while markets remain stranded.
Alejandro Alvarez, Partner: Operations Performance at Ayming breaks down the possible effect of the Coronavirus on the small- and medium-sized businesses in the UK.
He points, “It’s hard for the mid-sized company to estimate their exposure. Global supply chains have become complex. It’s even hard for a company to trace the source of their product. For example, a UK manufacturer that imports from abroad may feel safe in the short run, not knowing their primary source has always been China. Mid-sized companies face an unprecedented risk here. Soon, they will get to the dead-end and scramble for the few supplies.”
Buying from China Has Never Been a Good Idea!
Despite the lure of producing in China, several manufacturers persisted in manufacturing in the UK. Over the years, they have struggled with many challenges.
The flooding of cheap Chinese imports almost crumbled the UK manufacturing industry. Between 2010 to 2016, the China-made products’ dominance bust from zero to reach 50% of the UK market.
Retailers and customers swarmed to China products. Alibaba and Aliexpress became an overnight hit, as consumers scoured for bargains. Today, you can grab anything from the two Asian E-commerce giants at steal prices. Paper cups can go for as little as $0.02.
Price remains as the only benefit of buying China. No one thinks of the product’s safety, production background and limited consumer rights. The repercussions on job losses and the UK economy at large are also immeasurable.
Businesses buying from China overlooked the long-run cost big-time. Lead times are long, and the quality of items has never been top notch. Majority of the cheap China products can not last six months. They quickly get discarded and pile the already packed landfills.
Corona Virus Turning Tables for the UK Manufacturer
Overreliance on abroad supplies has the UK market at a dangerous phase. No one can predict how the coronavirus outbreak will pan out. As new infections pop up, business stakeholders must think of a way to avert the supply crisis.
Meanwhile, the virus has awakened the market to a new reality. As supplies dwindle, the UK manufacturer could be the best clinging rope near the China reliant businesses.
UK manufacturers could reap from the outbreak. A new study says one in two customers will avoid companies that ship materials from China. Businesses can save their investments by switching to the “Made in the UK” brands.
Buying “Made in the UK” is Reasonable for Businesses
“We hope the medical fraternity can unpuzzle the coronavirus. Seven billion people are at risk, and the Global economy has stagnated. Yet, in the UK and Europe, we don’t expect the supply crisis to hit hard. Our manufacturers can meet the demand gap, besides our quality has always been the best globally.”— Leslie Carr, Director, Scyphus Limited (Bio Paper Cup Manufacturing )
Surprisingly, many businesses shifted to buy abroad. Despite the challenges in the UK manufacturing sector, the quality has never dropped. Companies that use a UK based manufacturer can attest to better quality controls and shorter lead times.
The effect of the coronavirus on the supply chain shows the need for close supply chain controls. There’s more consensus now that buying “Made in the UK” can significantly limit the witnessed supply chain issues and risks.