The Top 5 Things You Should Know – China Supply Chain

Coronavirus – Business without travel

2020 looks set to be a year with travel to China looking unlikely. The early Spring Festival and subsequent mass cancellation of international travel makes return to China looking increasingly like it will be 2021. With 600,000 visits into mainland China from the UK every year, this will have a big impact. We look at 7 impacts on the face to face effect of covid on business relationship management.

1. China has suspended the vast majority of travel since 28th March, and there are multiple restrictions in place that will prevent effective use of your time. Locals are monitored via Alipay (Alibaba) and WeChat (Tencent) Apps and anything other than a ‘green code’ will put a swift end to any ambition of getting in to any suppliers, restaurants or shopping centres. There are many local regulations that changing on a daily basis. Any factories found to have any signs of Covid19 will be closed for at least two weeks – as such foreign visitors are banned from visiting many. There are reports of closure in Jilin Province (bordering Russia and North Korea) and a Wuhan style lockdown has been put in place.

2. There are concessions for essential foreign personnel to return to factories where they work through ‘fast track’ agreements, but none of these will apply to smaller British outsourcers. The risk of having to quarantine on the way in and out would indicate that trying to visit is pointless, and an alternative strategy is needed.

3. With many export orientated factories in China struggling with lower orders we would urge caution in making short term supply changes for short term price advantage. Whilst there is undoubtedly high pressure on everyone’s costs, a marginal saving could easily become insignificant by the end of the year if your new supplier has recovered and has no need to supply at cost price. There is always risk associated with any change.

4. If change is needed, consider using local 3rd party auditors to be your eyes and ears and establish if the new supplier are who they purport to be. Get photographs of their equipment, calibration records as well as references from long term customers before committing – don’t rely on internet results alone to find a new supplier.

5. Whilst video calls might be seen as the way forward, we would also urge caution. Conducting any business in a foreign language is difficult, and technical discussion will often not be understood. Never assume you are understood, and ensure all points are documented and sent over in unambiguous text form.

If you are already having problems it might be time to consider your options and get some help. No company can afford to waste time in this business climate. Focus on your communication to ensure that the issue are not from your side.

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