Some Chinese factories have reopened by many still face a lack of staff © Feature China/Barcroft Media/Getty Images
Some Chinese factories have reopened by many still face a lack of staff © Feature China/Barcroft Media/Getty Images

Staff return to work following coronavirus outbreak

19 February 2020

Millions of workers have been allowed to return to offices and factories in China, following the coronavirus-induced extended break for the Lunar New Year.

However despite the government lifting restrictions, the numbers coming back are not nearly enough, according to data from the American Chamber of Commerce in Shanghai - with 78% of manufacturing operations in the country saying they do not have sufficient staff to run a full production line. 

More than two-fifths (41%) of organisations said lack of staff will still be their biggest challenge in the next two-to-four weeks. This is due to existing quarantines in the region. 

Recently opened plants include Foxconn - a key supplier to Apple - but it too has seen limited numbers of employees returning, with only around 10% of staff reported to have come back to work.

To help e-commerce giant, Alibaba, has just announced it is offering 20bn yuan ($2.86bn) in loans directly to businesses affected by the coronavirus outbreak. 

Up to 10bn yuan will be made available to firms based in Hubei, the region where the virus originated. Preferential terms of one-year loans with a zero percent interest rate bases for the first three months will be given, rising to a 20% interest rate discount for the remaining nine months. 

Firms across China can access the remaining 10bn yuan in one-year loans with a 20% discount rate on interest. 

Last week, Daniel Zhang, CEO of Alibaba told investors the outbreak is posing near-term challenges, adding the firm is “closely monitoring the challenge.”

Zhang said Chinese merchants and logistics firms had been prevented from returning to work following the Lunar New Year, while orders to restaurants, food delivery firms, and other local services have “declined noticeably.”

Separately analysts at IHS Markit warned the steel market is particularly vulnerable to changes in Chinese demand and production. The country produces more than half the world’s steel and consumes more than 64% of global seaborne iron ore each year. 

“The challenge steel mills will face is how to move iron ore from ports to the mills, given the disruption to transport and rail stemming from restrictions,” said IHS Markit. 

It added: “Shortage of material inside mainland China will boost port-side prices as mills scramble for ore. If Chinese mills are unable to get access to new iron ore feed, they will likely ramp down production, move to hot idling, or bring forward maintenance schedules, ceasing steel production altogether.”

The virus, formally named Covid-19, has killed more than 1,869 people in China so far, and with 72,000 infections.

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