As coronavirus continues to spread globally, it is becoming clear that the economic backlash of the outbreak will be colossal. The world economy is more globalized than ever and as a result, the spread of the virus and the measures taken to contain it have become highly disruptive to fragile global supply chains. This case study explores how the outbreak has affected global supply chains, the industries which will be the worst hit and what action can be taken to improve supply chains to prevent major disruptions in the future.
To understand the impending economic impact of coronavirus through its disruption of global supply chains, it is important to appreciate how deeply integrated the global economy is. Since 2000, globalization has sped up at a fast pace, transforming the global supply chain. The ability to access global markets for manufacturing has led to choke points within certain industries, an issue which has been highlighted due to both natural disasters and disease outbreaks in the past. The outbreak of coronavirus and the implementation of quarantines and travel bans, as a result, have once again exposed just how heavily global supply chains depend on Chinese manufacturing.
While the devastating toll of the ongoing outbreak on human lives is clear, it is now becoming apparent that the economic fallout will also be significant. China, often referred to as the ‘workshop of the world’, is a manufacturing giant, as a result, the disruption caused by factory closures and export restrictions has had a knock-on effect in multiple markets globally. The automotive, electrical and pharmaceutical industries have been amongst the worst hit, due to their highly complex, globally integrated supply chains. While the impact of disruptions is already being felt, the true devastation caused by the fragility of these supply chains is yet to be seen.
- Examines the impact of coronavirus on the Chinese economy
- Looks at how Chinese manufacturing is affected by the shutdown
- Assesses whether there will be a swift recovery
- Looks at how long-term the problems may be
- Assesses how coronavirus might impact other countries
Reasons to Buy
- Just how severe is this virus for the economy?
- How long might it last?
- What sectors have been hit hardest?
- What has China seen that other countries can expect?
2. ECONOMIC GLOBALIZATION UNDERPINS THE IMPENDING DISRUPTIONS
2.1. China is highly integrated with the global economy
2.2. The Fukushima disaster highlighted the issues associated with an overreliance on a single market
2.3. Hurricane Maria revealed flaws in the US IV bag supply chain
2.4. The impact of Covid-19 will be notably more significant than that of SARS
3. CORONAVIRUS WILL HAVE A SUBSTANTIAL IMPACT ON FRAGILE GLOBAL SUPPLY CHAINS
3.1. The struggling automotive manufacturing industry will face increased pressure
3.1.1. Ramifications of the outbreak could force further consolidation
3.2. Consumer electronics manufacturers will experience month-long delays
3.3. The outbreak has highlighted the pharmaceutical industry’s reliance on Chinese ingredients
4. THE GLOBAL TRANSPORTATION INDUSTRY IS ALSO FACING MAJOR DISRUPTIONS
4.1. The shipping industry is the backbone of global trade
4.1.1. Companies are suffering at the hand of cancellations
4.2. Air freight is also facing disruptions, though the impact is less substantial
5. LESSONS CAN BE LEARNT TO IMPROVE GLOBAL SUPPLY CHAINS IN THE FUTURE
5.1. Supply chain resilience is crucial to avoid disruptions
5.2. Manufacturing hubs in Latin America and Asia could benefit
6.1. Abbreviations and acronyms
6.3. Further reading
7. ASK THE ANALYST
List of Tables
Table 1: Top 5 importers of goods and services from China
List of Figures
Figure 1: Countries with higher rates of GDP growth tend to have high rates of growth in trade as a share of output
Figure 2: U.S. and Chinese GDP (PPP Basis) as a Share of Global Total: 1980-2018 (%)
Figure 3: China automotive manufacturing industry value: $ billion, 2014-18
Figure 4: Asia-Pacific automotive manufacturing industry geography segmentation: % share, by value, 2018
Figure 5: China pharmaceuticals market value: $ billion, 2014-18, market value has surged
Figure 6: Maersk relies heavily on China, therefore cancellations have had a huge blow