Half of Japanese manufacturers see supply chain disruptions from COVID-19
Half of Japanese manufacturers see supply chain disruptions from COVID-19
Around 53 per cent of Japanese companies from the manufacturing sector start to feel the bite of supply chain disruptions caused by the ongoing COVID-19 outbreak, according to the latest survey by the Ho Chi Minh City chapters of the Japan External Trade Organization (JETRO) and the Japanese Chamber of Commerce and Industry (JCCI).
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The survey, conducted between February 13 and 18, featured 426 member companies under the JCCI in Ho Chi Minh City. These included 209 companies from the manufacturing field.
Around 40 per cent of respondents said that supply chain disruptions are affecting their businesses amidst the COVID-19 outbreak. 76 per cent of surveyed participants experienced delays or disruptions in sourcing supplies and materials from China. 53 per cent of Japanese companies in the manufacturing sector and 28 per cent of Japanese non-manufacturing firms have been impacted by supply disruptions.
Specifically, Japanese firms are facing weeks of disruptions to secure input materials, which leads to a dramatic rise of material prices. At present, many firms have yet to be affected by the disruptions, but they predict that the impact will begin to be visible in March. Many firms continue their efforts to balance inventory, find alternative materials and goods supplies, seek new suppliers and change manufacturing locations.
The slowdown of manufacturing activities in Vietnam is attributable to the delayed restart of Chinese manufacturing activities, road closures, and transportation restrictions as well as restrictions on Chinese technical experts.
The impacts on the flow of goods include high transportation costs, delays in goods transport from China, and time-consuming procedures for importing goods under quarantine. These challenges have led to changes in transportation routes of materials and switching to alternative products.
When asked about the impact on their business performance in 2020, half of the respondents were unclear for now. However, about 30 per cent of Japanese firms said their businesses will be affected by COVID-19. Among them, 22 per cent of businesses said their business results will be "least affected" by the outbreak, 7 per cent of businesses expect to be "greatly affected, and 1 per cent are expected to be severely affected.
