Features China Manufacturing

Indian firms resume China operations amid global pandemic

23, Mar. 2020

By Atul Ranjan

NEW DELHI, NNA - On a cautious note, some Indian firms have restarted operations at their factories in China as lockdown measures eased following a devastating coronavirus outbreak in the country.

Companies such as Motherson Sumi Systems Ltd. (MSSL), Dalmia Bharat Group's Dalmia-OCL Ltd. and Tata Motors-owned Jaguar Land Rover Automotive Public. Co. (JLR) recently announced they had resumed operations at their China factories despite a weakening global supply chain as the Covid-19 pandemic spread throughout the world.

Auto-component maker MSSL, a joint venture firm between India’s Motherson Group and Japan’s Sumitomo Wiring Systems Ltd., said last Wednesday almost all of its 27 plants in China had returned to normal function with a staff strength of 70 to 80 percent.

However, its plant in Wuhan, the epicenter of the deadly outbreak, is manned by only 20 to 25 percent of its workers. The city is allowing only healthy people to return to work and resuming public transportation gradually.

Photo by Skitterphoto from Pexels
Photo by Skitterphoto from Pexels

Dalmia-OCL, India’s leading refractory maker, restarted plant operations in Liaoning province in Northeast China on Feb. 12 "after two rigorous inspections" by health authorities, its spokesperson told NNA in a statement Friday.

More than 95 percent of its workers returned to the factory where precautionary measures have been put in place to safeguard their health, said the spokesperson.

As the coronavirus threat still remains, the company set up an isolation chamber with necessary medical equipment and has instructed employees to use their own utensils and cutlery when eating, among other measures. The plant, which employs around 85 workers, has a capacity to produce 18,000 metric tons per year of magnesia carbon bricks.

Mumbai-headquartered Tata Motors, an Indian multinational automotive manufacturer, said on March 6 that its JLR China & Chery Jaguar Land Rover plant reopened in the last week of February while office staff had worked from home after the Lunar New Year holiday.

“Production will be ramped up as the number of employees return to work and demand increases,” the company said, adding that the health and safety of its employees remain a priority.

The company said JLR’s supply chain is primarily based in Europe and Britain, while China supplies a relatively small percentage of direct parts.

Tarun Pathak, an associate director for India office of research firm Counterpoint Research, told NNA that smartphone manufacturers in China have also gradually resumed operations.

Iris Pang, a chief economist for Greater China at ING Group NV, a global financial services firm, said while some reports claimed that 85.6 percent of the larger factories in China had resumed operations as of Feb. 25, other reports suggested that they might have overestimated.

“As local governments received resumption quotas from the central government, they are eager to show factories in their cities are operating as usual again,” Pang wrote in an ING report released on Mar. 6.

She warned that as more countries had been reporting new cases daily as the pandemic spread, their factories could halt production temporarily and affect the entire supply chain.

Crisil Ltd., a global analytical and rating agency, said in its report on Friday that China industrial activity, which plunged in February, “may grow in March”.

“Our industry interactions, especially in sectors such as automobiles and auto components, suggest that while some factory and industrial activities have resumed partially, utilization remains low and will take time to reach normality,” it said, adding that port dispatches have seen delays.

While shipments from China have started to arrive in India, ships could not unload their goods immediately due to fear of contagion, said the Federation of Indian Chambers of Commerce and Industry. In a statement on Friday, it called on the government to reduce quarantine delays at ports.

Crisil said the supply chain could return to normal by the end of May provided the rate of new Covid-19 cases continues to fall in China.

But as the pandemic has spread fast, far beyond China, the crisis is threatening to hit the global economy much harder than envisaged a month ago, the agency said.

As local infections fall, China is now battling a rise in imported cases. As of Mar. 23, there are 294,110 confirmed cases reported in 187 countries and 12,944 deaths globally, according to World Health Organization.