Fashion Companies: "Minimal Disruptions in Logistics and Production Due to New Coronavirus... Closely Monitoring for Prolonged Impact"

[Asia Economy reporters Yujin Cho and Minyoung Cha] The spread of the novel coronavirus infection (Wuhan pneumonia) is being closely monitored by related industries for potential disruptions in logistics and production among domestic fashion companies that have manufacturing bases in China. However, there is also a view that direct damage may be limited as many companies have diversified their production sites to Southeast Asian regions outside China in search of low-wage labor.

On the 30th, Samsung C&T stated, "Due to the extension of the Chinese Lunar New Year holiday caused by Wuhan pneumonia, there may be impacts on logistics and production," adding, "We are internally reviewing possible risks." Most of Samsung C&T’s major brands have some production sites in China. Following the Chinese government's recommendation, factories in China have postponed their reopening dates until the 10th of next month, raising concerns about prolonged production halts. A company official said, "There is a possibility of problems with the arrival of spring/summer new products, so we are monitoring the situation."

LF also expressed that it will closely watch the situation as the reopening schedule of its Chinese factories remains uncertain. An LF official said, "Spring/summer season inventory has already been fully delivered to Korea and is currently stored in logistics centers, so there is no impact at this time. However, since it is difficult to predict whether the situation will prolong, we are keeping a close eye on developments."

Companies that source raw materials such as uppers and buttons from China are also concerned about direct and indirect impacts. A representative from outdoor brand K2 said, "Currently, product deliveries are proceeding according to the set schedule, but we are monitoring the situation with the possibility of schedule delays depending on the return of workers and the reopening timing of Chinese factories."

The representative added, "Some shoes and summer new products have not yet arrived," and said, "We will need to wait until the first week of next month to confirm whether there will be any impact." Black Yak also sources some raw materials from China. BYC, which obtains raw materials such as buttons and fabrics from China, said, "The factories supplying raw materials are located far from the Wuhan pneumonia outbreak area, so there is no direct damage, but we are checking the situation daily in case the situation prolongs."

Large fashion companies have diversified their production sites beyond China and mostly operate logistics centers, so the arrival of spring/summer new products has already been completed. A fashion industry insider said, "As labor costs in China have risen significantly, domestic companies have diversified their production bases to countries like Indonesia and Vietnam in search of low-wage labor, so the impact from this incident is expected to be less severe."

However, the situation is different for low-cost small businesses. Many small and medium-sized enterprises without logistics centers have not yet started receiving new products, and they tend to have a high dependence on the Chinese market for clothing accessories supply. A representative from a domestic women's online platform expressed concern, saying, "With spring/summer new product arrivals imminent and all clothing accessories being imported from China, there could be an emergency in product procurement."

[Image source=Yonhap News]

This content was produced with the assistance of AI translation services.