As this week’s outbreak of new coronary pneumonia spread rapidly around the world, while China’s outbreak prevention and control has improved, the global prevention and control situation has deteriorated – February 28, the World Health Organization (WHO) announced that the global risk level of the outbreak of new crown pneumonia from “high risk” to “very high.” In countries with more severe outbreaks of new coronary pneumonia, our eastern neighbors, South Korea and Japan, are of particular concern.
According to the latest statistics on the afternoon of February 29, 813 new cases of new coronary pneumonia were reported in South Korea within 24 hours, with a cumulative total of 3150 confirmed cases and 17 deaths, while a total of 945 people in Japan were confirmed to have contracted new coronary pneumonia and 11 deaths.
A number of South Korean giants, including Samsung Electronics and Hyundai Motor Co., have been forced to shut down as a result of the outbreak.
In the case of the spread of the outbreak in Japan and South Korea, the impact of bilateral trade has also aroused market concern. How will this affect the import and export between China, South Korea, China and Japan? China in the electronics, machinery and equipment and other industries on Japan and South Korea productdependence is high, from Japan, South Korea’s supply will not be risky? How should the relevant domestic industry deal with it?
More than 3000 cases confirmed in South Korea
In the past week, new cases of new coronapneumonia in South Korea have continued to climb. As of 16:00 on February 29, South Korea had 813 new cases of new coronary pneumonia in 24 hours, with a cumulative total of 3,150 confirmed cases reported. South Korean officials expect confirmed cases in Daegu to continue to rise.
The South Korean government has postponed the start of the 2020 school year for kindergartens, primary and secondary schools nationwide from March 2 to March 9, Yonhap reported.
The outbreak in Japan is also a cause for concern. On February 29, seven new coronal pneumonia patients were confirmed in Sendai, Niigata and other places. As of 3:30 p.m. that day, a total of 945 people in Japan have been confirmed to be infected with new coronary pneumonia, of whom 226 are infected in Japan, 705 are the crew and passengers of the “Diamond Princess” cruise ship, and 14 people returned to Japan on government charter flights.
The Japanese government has issued a number of policy measures for this purpose, Prime Minister Shinzo Abe said on the 27th, hope that the country’s primary and secondary schools, high schools and special education schools temporarily closed, the Ministry of Culture and Science 28 to the prefecture education committee, such as the notice, formally requested schools temporarily suspended.
Several Japanese and South Korean manufacturing giants announce shutdowns
Previously, China’s new coronary pneumonia outbreak is in the outbreak period, from China’s supply has been partially interrupted, many Japanese and South Korean enterprises have a certain impact. Now that the outbreak has worsened in the country, what operational risks do it bring to Japanese and Korean enterprises?
Nissan motored production the first Japanese automaker to suspend production because of the outbreak, the Japan Economic News reported. The company said in a statement on February 10 that its plant on the southwestern Japanese island of Kyushu began tightening its global supply chain because of a new coronavirus outbreak and would be temporarily shut down for two days on the 14th and 17th.
A lack of supply of automotive harness circuit boards as raw materials has led to the shutdown of hyundai’s factories in South Korea as a result of the outbreak in China. In a mid-February report, the Korea Association of Automobile Manufacturers said that the current resumption rate of Korean parts companies in China is about 60%, china’s domestic parts manufacturers alone, the shutdown, may lead to the loss of sales of Hyundai Motor Group will be more than 1 trillion won (about 5.88 billion yuan).
However, when the supply of raw materials from China gradually improved, Hyundai’s enterprises in South Korea just resumed work for a few days, but because of the domestic epidemic suddenly turned down, the production stopped again.
Hyundai Motor coined production at its plant in the southeastern South Korean city of Ulsan after a worker tested positive for a new coronavirus, Reuters reported.
This is not an isolated phenomenon. Recently, the outbreak in South Korea has rapidly worsened, the number of new cases surged, many giant companies were forced to stop production.
On February 22nd Samsung Electronics said an employee at a smartphone factory in the southeastern South Korean city of Turtle Tail tested positive for the new coronavirus. Samsung Electronics then temporarily shut down the plant.
On February 20,SK Hynix, a South Korean memory chip company, said that a new employee of its plant in Gyeonggi Dolicheon, South Korea, had been in close contact with confirmed cases of new crown pneumonia in Daegu City, and that the company had isolated all those who had contact with the employee for safety reasons, totalling more than 800.
Domestic electronics and other industries imported raw materials are at risk of supply cut-off
China, Japan and South Korea trade relations are very close, mutual support, China is also the japanese and South Korean products of the largest export market. So, Japan and South Korea part of the enterprise shutdown, will have an impact on China’s related industries?
From the point of view of import structure, Japan and South Korea and China’s trade products are concentrated in mechanical and electrical products, chemical products.
Citic Securities, a research report pointed out that Japan and South Korea in the upstream IC preparation raw materials, mid- and lower-stream memory chips, panels and other fields have a high market share. Once the outbreak spreads rapidly in these two countries, it will affect the normal production and transportation of the relevant enterprises, thereby driving up the domestic related upstream raw materials, the price of finished products in the middle and lower reaches and the risk of supply cut-off.
Quartz Hua, director of the Center for Macroeconomic Research at the China Institute of Fiscal Sciences, told the Daily Economic News that we have a relatively high degree of dependence on trade with Japan and South Korea in semiconductor, automotive, equipment manufacturing and other industries.
In 2019, the top five commodities in bilateral trade between China and South Korea are machinery, chemical products, base metals, plastic rubber, instrumentation, and the top five commodities of bilateral trade between China and Japan are machinery, chemical products, textile raw materials, base metals and transportation equipment. Among them, machinery and equipment account for half of China-ROK bilateral import and export volume, accounting for nearly half of China-Japan bilateral import and export volume.
During the rapid development of the epidemic in Japan, South Korea and especially South Korea, the manufacturing industry of the two countries will be affected by how much, china’s related industries supply chain, sales of the short-term impact of how much, are worthy of special attention. Quartz Hua believes that for China’s enterprises, may face orders can not be received, raw materials cut off or rising costs and other risks, for this reason to scientific assessment, early response.
Turning to crisis to speed up the transformation and upgrading of domestic related industries
Quartz Hua told reporters that in the short term, Japan, South Korea, some industries stop production of how much range, how long, and whether the supply of Related industries in China has a huge impact, this should be in accordance with the situation of japan and South Korea epidemic development to specific research and analysis. But on the whole, the possibility of changing the supply chain of related enterprises in China is not great.
However, Quartz Hua also stressed that the upstream chip and other supply shortage, not timely, price increases and other impact can not be taken lightly, such as leading to the rise in the cost of raw materials of domestic enterprises, as well as further affect the enterprise’s capital chain and other issues, should have a certain response.
The aforementioned research report also analyzed that the domestic electronics, machinery and equipment and other industries on Japan and South Korea export products are more dependent, Japan and South Korea panels, chips and so on if discontinued, resulting in price increases risk may increase downstream production costs.
How should Chinese enterprises deal with such undersupply risk? Quartz Hua to the “Daily Economic News” reporter stressed that risks and opportunities are often coexisting, domestic alternative related industries, enterprises to study this risk in advance, to cultivate alternative supply chain, including the corresponding technology research and development, market layout, etc., should be considered in advance.
Citic Securities analysis, upstream product selling is often a potential competitor to cut into the supply chain, will accelerate the transformation and upgrading of domestic enterprises. Its research suggests focusing on three main lines: the upstream new materials industry, the mid- and lower-stream pan-semiconductor industry, and auto parts.
Han Xiaomin, general manager of the Integrated Circuit Research Center, a consultant of Sadie, believes that because the current global spread of the epidemic is more serious, Japan and South Korea and other large East Asian electronics countries are facing the same problem, the key is to control the outbreak after the recovery of production capacity. “Danger and machine have always been mutually reinforcing, and if China’s upstream industry, especially materials and equipment, can repair capacity and improve quality as soon as possible, it may be a good opportunity to win the market.” “