After 9 Days of Holiday in China... Machinery Industry Also Alert to Parts and Materials Supply

The extended forced holiday for the Spring Festival (China's Lunar New Year) in most regions of China, caused by the novel coronavirus infection (Wuhan pneumonia) spreading across the country, will end on the 9th of this month, and local factories will resume production starting from the 10th.

According to industry insiders on the 8th, machinery-related companies operating factories in China are preparing to restart local factory operations from the 10th.

As the number of coronavirus infections and deaths continues to rise in China, there is also talk of the possibility that local governments may extend the holiday period. As of the 8th, confirmed cases of coronavirus infection in China have exceeded 34,000, and the death toll has risen by 81 from the previous day to 722.

Because of this, not only the machinery and electrical industries operating factories locally in China but also domestic companies that import parts from China to manufacture finished products remain on high alert. This is because they must maintain emergency preparedness considering the possibility of another extension of the Spring Festival holiday in China.

Domestic companies with production plants in China, such as Doosan Infracore, Hyundai Construction Equipment, and LS Cable, are monitoring the local situation in real time to prepare for various scenarios. A representative from Company A said, “Depending on the future speed of the epidemic spread, the possibility of extended production suspension cannot be ruled out,” adding, “There may be disruptions in production at local subsidiaries or in the supply of Chinese materials.” He continued, “We have activated an emergency response headquarters, are monitoring the situation daily, and have entered emergency management.”

Companies whose production lines are in Korea but import parts and materials from China are also paying close attention. According to the Comprehensive Information Network for Materials and Parts, from January to November last year, the import ratio of machinery parts from China accounted for 10-30% of the total by type. Based on January to November last year, 18.3% of general machinery parts such as internal combustion hydraulic equipment and cargo handling machinery parts, 23.7% of precision equipment parts used in medical devices, optical devices, and photographic equipment, and 35.8% of transportation machinery parts including automobiles, ships, and railroads were imported from China.

Companies importing parts and materials from China typically secure parts inventory to allow for 1 to 3 weeks of processing before the Chinese Spring Festival. However, since the holiday period has been extended, if the Chinese holiday is prolonged immediately, there is a possibility of disruption in product manufacturing.

However, the machinery industry believes that some parts with high dependence on Chinese imports have relatively simple manufacturing processes among the materials, so domestic self-supply is also possible. Nevertheless, industry insiders say even this is not reassuring. Considering the low cost of Chinese parts, if the situation continues for a long time, the price of finished products will rise, which is expected to cause harm in the long term.

Therefore, some companies are also considering increasing imports of materials and parts from supply chains established in countries other than China. A representative from Company B, which has entered China for local sales, explained, “We are considering importing materials and parts from third countries with the same product specifications as China.”

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