The spread of Covid-19 (Corona Virus), which started in China in November of last year, quickly became a public health emergency in China in January. Since then, China has started to “flatten the curve”, and in March, they have reported no new domestic cases in the past week.
Last week we published an article “Covid-19, Symptoms, Education, and Proactive Measures.”
https://www.manufacturer.com/news/covid-19-symptoms-education-and-proactive-measures/
Updated on March 21, 2020
A timeline of what happened:
January 23, China restricted movement (cancelled all travel) for 11 million people from Wuhan, Hubei province.
January 24, China expands lockdown to 56 million people, 18 cities in central Hubei province. In Beijing and other Chinese cities, authorities cancelled many public celebrations marking the Lunar New Year.
January 24, China New Years celebrations officially starts
January 28, Countries start limiting travel to Chinese nationals
January 30, WHO announced “ a public health emergency of international concern”
January 31, Trump suspends entry by any foreign nationals who had travelled to China in the past 14 days
In January the disease started to expand globally, with cases reported in surrounding areas of China; Hong Kong, Taiwan, and South Korea. As well, cases were reported in Thailand, Italy, Finland, Germany, Sweden, Spain, Russia, and the USA.
Epidemic curve of reported Covid-19 cases by date of symptom onset, or date of notification, WHO European Region, as at 21 February 2020
Hundreds of millions of Chinese had started on their Spring Festival (Lunar New Year) celebrations (January 24 – 30th); this is the world biggest human migration with over three billion trips planned. https://www.bloomberg.com/news/articles/2020-01-20/china-readies-for-world-s-biggest-human-migration-quicktake Tens of millions of Chinese had begun their international and domestic travel weeks before the celebration. Some will also extend the holiday a few weeks beyond the last day. Consequently, huge numbers of people were traveling without the knowledge they were carrying the virus.
In this article, we explore the regionally economic and financial consequences caused by this outbreak:
Citywide lockdowns in China meant interruptions to production in countries such as Vietnam, Myanmar, Cambodia and Bangladesh, struggling with supply delays. Many apparel supplier countries have reported major interruptions as a result of the coronavirus outbreak.
China
China exports fell 17.2% in January and February (combined) compared to the same period a year earlier, according to data released by the General Administration of Customs. This number seems low as businesses were closed in January and February with 45% of them returning to work in March.
Retail sales, an integral metric of consumption in the world’s second-biggest market, fell by 20.5 per cent. This was well under the median forecast of many analysts.
British, American (Amcham), and the German Chambers of Commerce located in China have surveyed their members, who expect a drop in revenues by 20 – 50%.
As of March 17th, 45 per cent of China’s small businesses (which account for 60 per cent of gross domestic product and 80 per cent of employment) had reopened.
Vietnam
The number of consumers visiting showrooms has dropped by 30% since the epidemic started. By the end of the March, they will be a serious shortage of materials.
The effect of Covid-19 can be felt in Vietnam’s supply chains, considering that China is the country’s largest import partner and many of the imported goods from China are essential to Vietnam’s manufacturing sector.
Dr Reza Akbari, senior lecturer at RMIT Vietnam School of Business & Management, “It is too early to predict or forecast what the full impact will be, but by looking at what is currently happening to the manufacturing industry, we can predict a significant disruption in the supply chains affecting all markets.”
The Vietnamese government is planning to issue incentives in the form of tax breaks, delayed tax payments, and delay land-use fees for businesses impacted.
Myanmar
Nearly 1,000 workers at Hua Meng Garment Factory in Kangyidaunt Township were made redundant at the end of February. The mill was unable to import enough materials to remain open. It has been given compensation and redundancy payments as needed by labour law.
The workers were offered a settlement package that was accepted by a majority of the workforce. 200 employees refused their offer for various reasons. Controversies about economic compensations are going to one of the major disruptions caused by the pandemic.
Myanmar’s government will give loans to factory owners if they can’t pay salaries.
The office of Winner Global Logistics expressed there workers are sitting idle, The 200-plus containers of cargo they dealt with each month had dwindled to just 40 since the outbreak, said the company’s general manager, Aung Myo Zaw. Now, he said, “I just want to go back to normal.”
Cambodia
In Cambodia, the authorities have warned that about 200 factories will have to slow or stop production because of the scarcity of raw materials. China, the largest suppler of these raw materials will be unable to feed Cambodia’s garment and textile mills.
More than 10,000 garment workers are unemployed because 27 factories in the Yangon Region shuttered in the wake of supply-chain disruptions.
Cambodia has announced a plan for garment workers to receive 60% of the minimum wage if their factories closed, with 40% coming from the factory owners and 20% provided by the government.
Prime Minister Hun Sen has applied pressure on China to expedite materials by plane and ship so that businesses won’t need to shut down.
Bangladesh (more research needed)
Textile and Apparel are they mainstay of the economy of Bangladesh. There is now a serious shortage of materials. The country is hoping to use diverse means of transportation in order to expedite the supply chains by 3 weeks.
The twelfth edition of the Bangladesh Denim expo, which was due to take place in April, has been postponed til May, but there are articles out there that say it is cancelled.
https://www.themds.com/trade-shows/bangladesh-denim-expo-canceled-due-to-fears-over-coronavirus.html
Factories have already seen $138 million in orders canceled or postponed due to the coronavirus.
Rubana Huq, president of the BGMEA commented, that 20 factories collectively had $10 million in orders canceled in one day this week. “Most brands are putting the orders indefinitely on hold and cancelling,” she said. “For them it’s a question of the survival of the businesses, for us it’s the survival of our 4.1 million workers.”
Europe
Italy, the luxury fashion capital of the world, has shut down all business. The country is on a nation-wide lock down. The virus crisis affected Italy, Paris, and UK Fashion weeks with shows being cancelled or replaced with virtually representation.
Fashion earnings in Italy are five per cent of their Gross Domestic Product (GDP). The nation is home to numerous luxury brands like Versace, Armani, Valentino, Dolce & Gabbana, Prada, Gucci, and more.
Zara (Inditex), the world’s largest retailer closes 3,785 stores in 39 markets. Zara has 7,469 stores in 96 markets; the question remains how many other markets will close. H&M has closed 3,500 stores around the world.
H&M, for instance, has had to “temporarily pause new orders as well as evaluate potential changes on recently placed orders” due to the global drop in demand, a spokesperson said in an emailed statement.
H&M’s spokesperson said the company’s “long-term commitment to suppliers will remain intact and we are in close and transparent dialogue with them, but in this extreme situation we need to respond fast, together with our business partners, and take decisions that can be difficult in the short-term, but necessary in the long-term.”
Retailers have been asking landlords for a 3 – 5 month rent holiday to help with the financial loses and save their businesses.
USA
Many states (California, New York) are enforcing a rule that all non-essential stores have been shut closed.
Apple, as it starts to re-open stores in China, it is forced to shut down all stores around the world. Nike, Nordstrom’s, Macys, Neiman Marcus, Gap, Sephora, Victoria Secret, TJ Maxx, Marshalls, Kohls, Urban Outfitters, Patagonia, Lululemon, have closed all stores.
An analyst has estimated this could bring about a record year for permanent retail store closures that could amount to over 15,000. Many of these businesses were under financial stress before the outbreak.
Conclusion
First the fashion world reels the effects on their supply chain with the closure of all businesses in China.
Then the world is affected by the spread of Covid-19, with hundreds of thousands of businesses, events, and social gathering places closed.
Every country is investing billions of dollars to fight the virus. The global tourism (airline, hotel) industry is losing hundreds of billions of dollars. Fashion store closures will cost companies hundreds of billions of dollars. The closure of events, restaurants, and more will cost hundreds of billions of dollars. Economies will lose trillions of dollars because of the Covid-19 outbreak.
But there are signs of human resilience and kindness. For instance, it is refreshing to see essential service stores (Wholefoods, Safeway, Fresh Market, Food Town, Dollar General, Vallarta Supermarkets) designating specific shopping times (usually the first hour of operation) for seniors who are vulnerable during the outbreak. Many people on the individual level are adopting help their neighbours actions and techniques.
Humans are finding unique ways to communicate from safe distance during this outbreak (i.e Italians signing from their patios), numerous countries (France, Canada) clapping from their patios to show their appreciation of front line workers.
What is happening to the fashion industry is a preview of the pandemic influence on the entire commercial world.
What is happening now puts a serious doubt on the benefits of globalization.
