We believe that within 10 days, people around the world are paying the most attention and searching for the large-scale coronavirus epidemic in China. This sudden epidemic has brought huge troubles to the lives of the Chinese people. All the people were kept in their own residences and could not go out. The period of time was about 14 days in order to release cross-infection.
China’s economy has recently been paralyzed and stagnated, and all administrative agencies and manufacturing enterprises have been shut down.
Coronavirus impact on traffic: The cities of Wuhan and Wenzhou in China are isolated and blocked. Personnel restricted access. Bring great distress to people’s lives.
At the same time, in less than a month, Wuhan’s coronavirus not only spread to the whole land of China but also spread to all corners of the world. It has caused panic to people all over the world, and you will see people traveling and wearing masks from all corners of the globe.
As of now, 62 countries and regions have adopted immigration control for Chinese citizens to prevent the rapid spread of the epidemic. Japan, the United States, South Korea, the United Kingdom, and the United Kingdom have gradually withdrawn from China, and Thailand and other countries have gradually prepared plans to evacuate and arrange charter flights Wuhan evacuated its citizens.
What is the Impact of Coronavirus in Wuhan, China on the Chinese Economy?
Today is Monday, February 3, 2020. Today is supposed to be the third working day after the Chinese New Year, but this sudden pneumonia epidemic of new coronavirus infection in Wuhan, China, continues to spread, leading to the suspension of production in many export factories throughout China.
People are concerned about the epidemic to Start to pay attention: How will the epidemic affect China’s economy? How does it affect China’s export manufacturers and factories, and how big are the losses in various industries? What difficulties have manufacturing factories encountered? How to save yourself? What assistance policies will the government introduce? When will economic vitality be restored?
“A small virus in Wuhan is equivalent to the power of 10 atomic bombs.” The impact of the epidemic was beyond imagination. A “butterfly” in Wuhan flapped its wings, causing shocks all over the world. It has a terrible impact on all humankind.
In the early morning of January 31, the World Health Organization announced that pneumonia outbreaks of the new coronavirus infection were listed as “public health emergencies of international concern”, but it was not recommended to restrict trade and personnel movements. “Now, global non-cooperation is impossible.
Fighting the epidemic also requires global cooperation.” But obviously, the spread of the epidemic has temporarily cast a shadow over China’s economic interaction with the world. Especially for global trade and shipping Market, especially China’s import and export trade and international logistics market，now much Chinese shipping company not return to work.
Apart from the epidemic itself, people are beginning to worry about the impact of the epidemic on China’s economy. The sudden epidemic caused many cities in Hubei to “close the city.” The Spring Festival holiday was extended throughout the country, and local enterprises delayed construction, and offline consumption in tourism, catering, transportation, and entertainment stalled. Production and operations are suspended, revenue and cash flow are interrupted. Can the most affected SMEs carry it? The service industry bears the brunt, and how much impact will the manufacturing industry suffer? Declared by the World Health Organization as a “public health emergency of international concern”, how much will the global industry chain and import and export trade be affected? The Chinese economy, which is already under great downward pressure, will suffer from this epidemic and enter the downward channel, or even shake it at all?
The answer, I believe that every Chinese entrepreneur and global entrepreneur need to work together to overcome them.
How does the coronavirus in Wuhan, China affect manufacturing in China?
The impact will be greater, but it depends on the time
The impact of the coronavirus epidemic from the service industry to Chinese manufacturing is unavoidable.
The current impact on the manufacturing industry due to coronavirus is as follows:
Holiday extension: From February 1st to February 10th, cities with severe epidemics such as Wuhan and Wenzhou can only be controlled according to the specific epidemic situation, and no specific holiday end date has been set.
In transportation: Many high-speed exits are currently closed and people and goods cannot be transported normally.
Flights: Flights are significantly reduced
High-speed rail: a large number of outages
Domestic: The express delivery industry is basically in a state of lack of vehicles and personnel
Due to transportation problems, labor in Chinese manufacturing factories has to be reworked on time, which has caused considerable pressure. Of course, the Chinese government will handle the China issue well, and it is still relatively strong confidence in China’s strong transportation hub.
Short-term lack of materials and rising raw materials cost in manufacturing
Below, a detailed explanation of how coronavirus affects China’s manufacturing industry:
First of all, rising manufacturing costs. Unlike SARS in 2003, the outbreak occurred during the Spring Festival holiday, the country extended the holiday, and the company stopped production and production. Beijing, Shanghai, Jiangsu, Zhejiang, Guangdong, and other places have announced that non-essential industries will be suspended until February 9, and Hubei will further Extend the Spring Festival holiday.
Delays in the rework of workers in Chinese factories will severely affect real estate, infrastructure, and China’s manufacturing and industrial production. Labor costs, rents, and inventory costs of Chinese export companies due to shutdowns will increase. “The shutdown and production will have an impact on various industries. Although the impact of each industry is different, the loss must be a very large amount. The follow-up impact remains to be seen.
Of course, we must also see that due to the delay in returning to the factory and the difficulty in recruiting workers, etc. Because of this, a large number of manufacturing companies also started construction after the Lantern Festival in the past years. According to the current situation announced in all places, except in Hubei, most areas can be resumed after the Lantern Festival. Optimistic estimates, if the epidemic prevention and control is not unexpected The actual impact of extended holidays and shutdowns is not as great as expected.
Second, the international market may be blocked. After the epidemic was classified as a “public health emergency of international concern” by the World Health Organization, people’s concerns about import and export trade have further intensified. Although the World Health Organization “does not recommend restricting trade and personnel movements”, many countries have subsequently issued travel warnings, closed borders with China, partially canceled flights to and from China, and even restricted the entry of non-national citizens who have visited China within 14 days. The physical connection between China and the world economy is inevitably blocked.
The most direct impact on manufacturing is China’s export of goods. What industries are behind China’s exports? Analyzing the export data of goods trade in 2019, it is not difficult to find that mechanical and electrical products, labor-intensive products, and private enterprises are the three major keywords: in 2019, the country’s export value of goods trade was 17.23 trillion RMB.
The top 20 countries that China exports in 2019 are below countries：
If you shipping or importing from China to below country，you should be more careful about your business:
China Hong Kong
Among them, the export of mechanical and electrical products was 10.06 trillion RMB, accounting for 58.4%; the export of seven major categories of labor-intensive products such as textiles and apparel was 3.31 trillion RMB, accounting for 19.2%. Among the mechanical and electrical products, exports of electrical and electronic products were 4.63 trillion RMB; machinery and equipment exports were 2.87 trillion RMB. From the perspective of exporters, private enterprises accounted for 51.9% of exports, which has become the largest exporter. The above-mentioned industries may be affected in the short term.
In addition to exports, global supply chains may also be affected. After the “closed city” in Wuhan, the chip industry began to focus on the operation of Yangtze River Storage, Wuhan Xinxin, and Wuhan Hongxin, the three major wafer fabs in Wuhan. If the three companies stop production, it will seriously affect the supply of the three most in short supply chips in the world. If the outbreak continues, similar concerns will spread to more areas. Measures taken by some countries to close borders, refuse Chinese entry, and cancel flights have also affected some industries that rely on imported equipment and accessories on the industrial chain. Even in the domestic market, because of epidemic prevention and control restrictions on logistics and human flow, many companies’ supply chains will be challenged.
“A large part of China’s economic structure already participates directly in global competition.” Blocked global trade will affect many industries and may even change the competitive landscape. “Made in China” is exactly what China does in the global market. The most competitive brand. US Secretary of Commerce Rose recently issued a statement that China ’s epidemic “helps the manufacturing industry to return to the United States”, which illustrates the serious challenges facing the manufacturing industry.
Of course, what deserves more attention is the impact on market confidence, which has affected the economy. “Confidence is an important factor affecting the market. Whether it is the initial panic of the epidemic or the subsequent fluctuations in confidence caused by the uncertainty of future development, the impact on the market is very great.” Before the epidemic, every market subject will adjust their economic behavior according to their own expectations. Whether such expectations are optimistic, rational or pessimistic will have different effects.
How much the epidemic affects the manufacturing industry depends on when the coronavirus epidemic can be controlled. It should be seen that the current coronavirus epidemic prevention and control measures are strong, Vulcan Mountain Hospital is put into use, Hubei has centralized treatment and isolation of “four types of personnel”, and the number of patients cured has exceeded the number of deaths … People’s confidence is gradually recovering. It is optimistic that after the Lantern Festival, all areas will resume work, and the epidemic will be effectively controlled within 10 days to two weeks, but the impact will be limited. Therefore, the top priority at present is to go all out to do a good job in epidemic prevention and control.
How does the coronavirus in Wuhan, China affect China’s shipping industry, international logistics, and freight forwarding?
1Some countries have started to stop importing some products from China
2 Many airlines cancel or suspend flights from China to their home country
3Cancellation of ports by Chinese shipping companies and carriers. Many vessels will not touch the China ports during these times.
4 China’s domestic warehouses and trucking company may need workers and drivers to return to work as soon as possible on February 10. It may not be until the end of the month that normal domestic warehousing and tracking will resume.
Advice for overseas importers and buyers who import and ship from China:
1 Keep close contact with suppliers, because China currently has different regulations for different cities. The delivery time of the goods may change at any time. It is also important to understand the pressures and challenges faced by Chinese suppliers in this outbreak.
2 Keep in close contact with your freight forwarders. At present, China’s freight forwarders have started quoting on February 2nd, but they still cannot make book cargo space. All shipping plans need to wait until February 10th.
The following are several FAQs recently received from Chinese factories and foreign importers:
1: How to deal with the delay in delivery due to the effect of coronavirus?
On the evening of January 30 local time, the World Health Organization announced that the new coronavirus epidemic was listed as a Public Health Emergency of International Concern (PHEIC). Although the World Health Organization emphasizes that travel and trade restrictions are not recommended, and reaffirmed China’s prevention and control measures, the outbreak is undoubtedly a huge test for Chinese export companies and trading companies. Affected by a new coronavirus-infected pneumonia epidemic, resulting in failure to perform on time or to fulfill international trade contracts, Chinese companies may apply to the CCPIT for factual proof related to force majeure.
2: How do Chinese export companies and factories use and apply for “force majeure” certificates?
“Force majeure” is an exemption clause, which means that after the sale contract is signed, it is not due to the negligence or negligence of the parties to the contract, but because of an event that the parties to the contract cannot foresee, cannot prevent, cannot avoid, and cannot control. If the contract cannot be performed on time, the party that has an unexpected event may be exempted from performing the contract or postponed. CCPIT’s factual proof related to force majeure is used to reduce the liability for breach of contract and minimize the losses caused by the epidemic situation. It has been widely recognized by governments, customs, chambers of commerce and enterprises in more than 200 countries and regions around the world. The Wuhan coronavirus epidemic is in line with the scope of application for certification.
3: In the face of PHEIC, what should Chinese export companies do?
On the evening of January 30, the World Health Organization (WHO) announced the definition of a new coronavirus outbreak as a public health emergency of international concern (PHEIC). Although the focus of this decision is to protect some countries with fragile medical systems, it is undoubtedly a huge test for risk management for Chinese exporters. In response to the impact of the coronavirus epidemic on China’s export companies and the possible risks, China Credit Insurance made the following four points:
Troubleshoot orders in hand and focus on compliance risks
It is recommended to comprehensively review and evaluate the orders in hand. For orders that may be delayed due to delayed resumption of work, communicate with overseas buyers in a timely manner, explain the relevant situation, and strive to communicate with the buyers in writing (email, supplementary agreements, re-signing contracts, etc.). Extended delivery. For orders that are determined to be unable to fulfill the contract due to the epidemic situation, it is recommended to terminate the contract with the buyer in a timely manner and obtain the force majeure factual certificate issued by the China Council for the Promotion of International Trade if necessary to reduce the risk of counterclaims by overseas buyers in the later stage.
Arrange transportation in advance and pay attention to international logistics risks
At present, traffic is temporarily blocked in some areas due to the Wuhan Coronavirus epidemic, so care should be taken to avoid late shipments due to logistics reasons. In particular, under the L / C payment method in trade, pay close attention to the latest shipment date, and if necessary, negotiate with overseas buyers to modify the latest shipment date, and reserve a sufficient shipment period to avoid discrepancies in the delivery of documents. point. At the same time, it is recommended that Chinese export companies should actively pay attention to the operation of important delivery places such as domestic ports and airports. If the situation is temporarily closed due to China’s coronavirus epidemic, change the logistics and storage in a timely manner. At the same time, it is necessary to find a freight forwarder with responsibility and rich experience to timely arrange domestic logistics arrangements and international logistics booking and delivery.
Sort out upstream customers and focus on supply chain risks
It is recommended that export companies actively maintain close contact with domestic suppliers, assess the extent to which suppliers have been affected by the coronavirus epidemic in Wuhan, and confirm the latest status of resumption of work and delivery arrangements. For the situation where the upstream supply is relatively tight, if necessary, formulate alternatives for domestic suppliers or appropriately increase inventory to ensure the safety of raw material supply.
Urge the buyer to fulfill the contract and pay attention to the risk of foreign exchange collection
In case of inquiries from overseas buyers, it is recommended that export companies actively communicate with overseas buyers, truthfully inform the status of the coronavirus epidemic and the latest developments, and dispel buyers’ doubts.
In the event of an overseas buyer’s refusal to accept the goods or arrears due to the epidemic, the Chinese export company should clearly indicate to the buyer that the temporary recommendations announced by the WHO do not include trade measures that may restrict exports, and strive to properly preserve relevant evidence.
If there is a risk of buyer default or rejection, please seek the assistance of China Credit Insurance in time, and China Credit Insurance will initiate recovery on behalf of the Chinese company from overseas buyers to protect the legitimate rights and interests of export companies.
Here are some general questions and answers to help overseas importers sort through the questions of Chinese exporters and factories:
How would Chinese exporters explain the extended holiday caused by Wuhan coronavirus:
Expressions from Chinese suppliers:
Affected by a novel coronavirus, our government announced all enterprises will remain closed till February 9.
our government announced it will delay the resumption of work to February 9. Your understanding and support will be highly appreciated.
Because of the outbreak of the Chinese coronavirus, overseas importers are concerned about how Chinese exporters usually express:
Expressions from Chinese suppliers:
China is determined and capable of winning the battle against the coronavirus. We all take it seriously and follow the government’s instructions to contain the spread of the virus. The atmosphere around remains optimistic to some extent. The epidemic will be eventually controlled and killed.
How will a Chinese manufacturer notify an overseas customer who has placed an order, regarding the delivery period may be delayed:
Expressions from Chinese suppliers:
Apparently the coronavirus issue will not be resolved in a short period, we are afraid that the schedule of your order may be changed due to the delay of production. We’ll keep you updated.
If the order has been postponed due to the coronavirus outbreak in China:
Chinese supplier expression:
We regret to inform you that the delivery will be delayed due to the novel coronavirus. We’ll keep tracking the status and try our best to expedite it. Sorry for the inconvenience caused and thanks for your patience.
The delayed shipment is not just from us but from the sub-vendors, logistics, and all other related support systems.
How can there be overseas customers who plan to come to China in February, Chinese suppliers will reply like this:
To avoid any negative impact, I suggest that you may consider delaying your trip to China.
More compliance issues
This is a problem from one Chinese exporter, a Chinese trading company, and the doubts of many Chinese exporters, because of the common trade concerns caused by the coronavirus:
Question: We are a foreign trade company, and the contract with foreign customers happened to stipulate force majeure including major epidemics, so I can’t perform the contract now, can I ask for the cancellation of the contract?
Answer: The stipulations in the contract shall prevail. If a major epidemic situation has been incorporated into the force majeure in the contract, the two parties may suspend performance within the scope of force majeure and its duration. At the same time, it should be decided according to the nature of the contract whether or not a result of the contract cannot be achieved due to force majeure. If the contract cannot be achieved, the contract can be terminated in accordance with the contract. However, if the epidemic situation affects the performance of the contract but does not affect the realization of the purpose of the contract, the contract cannot be terminated on the grounds of force majeure, and the contract obligations can continue to be performed after the force majeure situation is eliminated, or according to the results of the negotiation between the two parties. In any case, the contract counterparty should first be notified in a timely manner that such an outbreak has hindered the performance of the contract, and it is recommended that you take proactive measures to avoid the loss from expanding.
Question We are a foreign trade company. Due to the epidemic situation, international trade orders cannot be delivered. Is this a force majeure situation? Can I terminate the contract or release some of my obligations? What should I do now to reduce losses?
Answer: In international trade, the “autonomy of both parties” is particularly valued, so the focus should be on the contract text first. If the contract stipulates that a major epidemic situation is force majeure, it shall be handled as agreed;
if there is no agreement and the buyer is a party to the United Nations Convention on the International Sale of Goods, Article 79, paragraph 1, of the Convention may apply: Irresponsible, if he can prove that such non-performance is due to an obstacle beyond his control, and there is no reason to expect that he will consider or avoid or overcome it or it’s as a result of”. Whether the pneumonia epidemic is a force majeure generally recognized in international trade.
At present, there is no unified opinion among countries, and the United Nations Health Organization has not issued relevant resolutions. Therefore, it is still necessary to determine according to the three criteria of “unpredictable, unavoidable and uncontrollable”.
If an enterprise is located in an epidemic-concentrated area such as Hubei, it will be force majeure due to the government’s compulsory measures to suspend production, business, or traffic control, and may require delayed performance or termination of the contract.
It should be noted that Article 79 of the Convention also provides that: (3) The exemption provided for in this article is valid for the period during which the obstacle exists. (4) The party that fails to perform the obligation must notify the other party of the obstacle and its effect on his ability to perform the obligation.
If the notice has not been received by the other party within a reasonable period of time after the non-performing party has known or should have known of the obstacle, he shall be liable for damage caused by the other party’s failure to receive the notification. (5) Nothing in this Article shall prevent any party from exercising any right other than the right to claim damages under this Convention.
That is to say: first, the enterprise should inform the buyer of the impact of contract performance as soon as possible, and minimize the buyer’s losses; second, once the epidemic situation is over, it should be reworked in time without delay due to force majeure; again, force majeure The clause can only exclude the seller’s liability for damages.
The buyer still has the right to take remedial measures such as requiring the seller to deliver alternatives and reducing the price. If the company has not been forced by the government to overcome obstacles, it is not forced Majeure. In this case, the buyer can be dealt with by referring to the “hardship” of the General Principles of International Commercial Contracts.
The rules of difficult situation are derived from the principle of fairness, which refers to the situation in which an unforeseen event that cannot be controlled by the parties leads to an increase in the performance cost of one party or a decrease in the value of the performance obtained by one party and a fundamental change in the equilibrium relationship between the two parties. It doesn’t matter whether it can be overcome.
As a result, the buyer can be justified and the two parties can renegotiate, thereby changing the contract, reducing the number of performance targets, or changing the performance period.
4 It is listed as PHEIC, which does not mean “the affected country”, what is PHEIC?
Earlier in social media in China, there was an article saying that once the new crown virus epidemic was announced as PHEIC, it meant that China would be listed as an “endemic country.” Once it becomes an “infected area country”, it may lead to the disruption of tourism and trade with the international community, and its deterrent effect is no less than an international economic sanction. Such a metaphor is not appropriate. It is optimistic to say that being listed as PHEIC does not mean “the affected country.”
First, we need to know, what is PHEIC?
It is reported that PHEIC is an announcement made by the WHO on an individual epidemic or a public health crisis. After the SARS outbreak of the SARS and H5N1 influenza (avian flu) epidemic in 2003 and their control, WHO member states realized that population movement under globalization had never been faster and public health security was no longer a country Or the region itself has become a problem that requires global collaboration.
According to the International Health Regulations (IHR), which was revised in 2005 (revisited in 2007), when a major public health event meets the following two conditions, it can be officially declared as PHEIC :
First, the event could pose a public health risk to other countries due to the spread of the disease;
Secondly, because the incident has developed to a very serious degree, or it has developed in an unusual and unexpected direction, the international community must work together to resolve it.
Factors affecting whether the epidemic situation constitutes include: disease infection cases, death cases, infectiousness, treatment effect, the population density of the epidemic area; the speed of disease development; whether it is transmitted abroad; whether it is necessary to restrict international travel and trade. The release is valid for three months, after which it either expires automatically or continues to constitute PHEIC.
In the WHO, there is no definition and division of “endemic country.” In practice, the concept of an epidemic area country is generally targeted at animal epidemic countries. For example, China can define the United States as a country in the BSE-affected area, thereby imposing restrictions on US beef imports.
Therefore, even if the worst result is considered, the WHO has declared China’s new coronavirus epidemic situation to be included in PHEIC, and it is not a general declaration of China as an “epidemic area”.
After China ’s coronavirus epidemic is listed in PHEIC, what specific measures will it implement?
– No specific sanitary measures need to be taken;
– Review of travel history in affected areas;
– review of medical examination certificate and results of any laboratory analysis;
– need medical examination;
– review of vaccination or other preventive measures;
– need a vaccination or other preventive measures;
– Public health observations of suspected coronaviruses;
-quarantine or other sanitary measures against suspected coronaviruses;
-isolation and necessary treatment of coronavirus infected persons;
-tracking of persons in contact with the suspected or infected persons;
– Do not allow suspected or infected persons to enter the country;
– refuse entry of uninfected persons to the affected area;
– conduct exit checks and/or restrict the exit of persons from the affected area.
Besides this there is:
-No need to take specific sanitary measures;
-review of cargo manifests and navigation routes;
-review evidence of decontamination or pollution measures taken at departure or transit;
-handling of luggage, cargo, containers, vehicles, articles, Parcels or bones to eliminate coronavirus infections or sources of contamination (including vectors and hosts);
-take specific hygiene measures to ensure safe handling and transportation of bones;
-implement quarantine or quarantine;
-if all existing treatment or handling methods are unsuccessful, Then under surveillance, seize and destroy infected or contaminated or suspected luggage, cargo, containers, vehicles, items or parcels
Specifically: Once the epidemic situation is confirmed as PHEIC, public health observations may be conducted on suspects and luggage, cargo, containers, vehicles, etc. in the affected country;
-Additional health measures, such as intrusive and minimally invasive medical examinations, on suspected or infected travelers of the coronavirus;
-Quarantine the infected person and provide necessary treatment;
-Do not allow suspects or infected persons to enter, and refuse uninfected persons to enter infected areas;
-Quarantine and quarantine baggage, cargo, containers, vehicles, etc .;
-Unsuccessful methods, seal and destroy infected, polluted or suspected luggage, cargo, containers, vehicles, etc. under surveillance;
-Aircraft transiting at airports under the jurisdiction of a Contracting State may restrict aircraft to park in specific areas of the airport and may not board or load people or load or unload cargo (but fuel, water, food, and supplies are allowed);
-If the port of entry does not have relevant sanitary capabilities, the State party may order the ship or aircraft to sail to other ports of entry at their own risk;
-Travelers and transport operators should complete relevant health documents, such as vaccination, maritime health declaration, general aircraft declaration, and ship sanitation certificate
In fact, we don’t need to panic too much. Even if it is listed as PHEIC, the advice given by WHO is gradient, and it is not equal to everyone. For example, the 2015-2016 Zika virus in South America is listed as PHEIC, and Brazil is also included. However, in 2016, Brazil also hosted the Olympics …
It is hoped that Chinese exporters and overseas importers will treat the Wuhan Coronavirus epidemic objectively, remain optimistic, full of confidence, and overcome this huge difficulty together.