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| Sara Hsu |
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| Harry Broadman |
"Modern companies have different vertical suppliers around the world. It could be the input that's not being produced in China – because of the disease – isn't making its way to a factory in Thailand, which then goes to Brazil and then comes to the U.S.," Broadman says.
Almost nine years ago to the day, Japan's Fukushima region was hit by a magnitude 9.0-earthquake and subsequent tsunami. Not only did the natural disaster cause three nuclear meltdowns at a nuclear power plant, it effectively took offline production facilities that reportedly produced 22% of all 300-millimeter silicon wafers, a vital component in semiconductors, globally.
On top of that, as much as 60% of certain necessary auto parts were made in Fukushima.
Although the coronavirus is a different beast entirely, it is an ugly surprise from Mother Nature forcing mainstays of the global economy to reexamine their risk tolerances and supply chain dependencies.
For Broadman, the fact that the coronavirus isn't just hitting some concentrated region is what makes it such a dynamic threat.
"The coronavirus is something that knows no borders and is far more diversified than any supply chain. That's why you're seeing pretty pronounced effects reverberating," he says.
Still, there's a lesson or two here. Even if they rhyme with the lessons presumably learned from Fukushima.
"One of the lessons is that there probably needs to be more attention paid to either redundancies or alternative suppliers should a particular supplier not be available," Broadman says.
"There's always a reaction to say, 'OK, we've learned from this.' Companies will learn, just as consumers will learn, to stockpile things if all of a sudden they're frightened because they couldn't find something. The question is: What's the half-life of that fear factor?" Broadman says.
In a way, one central question for supply chain dynamics moving forward seems to be greed versus safety. Stockpiling, redundant suppliers – these prophylactic measures cost money, Broadman says....
Broadman ... commented on a certain inertia in global supply chain practices. China's scale, combined with its foothold in capital intensive businesses that are time-consuming and expensive to relocate, give the country some enviable competitive advantages.
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| Shaun Rein |
Chinese delivery firms' strategy behind much of the growth is unique to the country itself. Compared with the United States, sending and receiving packages within China can be quick and inexpensive. Online orders of books and other goods often arrive by the next day, even on weekends. It's also possible to send parcels across town for same-day delivery, all for a negligible cost. Much of the Chinese delivery business depends on partners and a large fleet of couriers who rush packages through the country and across cities, by bike, moped, subway, truck and other modes of transit.
"The reality, though, it's going to be very hard for them to become global players," said Shaun Rein, managing director, China Market Research Group.
He said many of the companies' management teams and infrastructure aren't developed enough for international operations....
Fewer brick-and-mortar facilities may make Chinese firms more nimble, but maintaining a large labor force can be a challenge when it comes to expanding into other countries that pay their workers more. Within China, labor costs could also rise, as employees demand more money given the manual nature of the work and air pollution, Rein said.
Other aspects of the domestic Chinese market make it very competitive. More than 11,000 enterprises had authorization to operate express delivery businesses as of the end of 2014, according to a Deloitte study last year. About 60 to 70 percent of the Chinese market was spread among the top 10 players, including the state-backed delivery firm EMS. That compares with the dominance of just two companies — UPS and FedEx — in the United States.More in CNBC.
Schwerin-Parchim airport
The tidbit of news had almost escaped my attention: Linkglobal buys a German airport. I had never hear of the Beijing-based Linkglobal nor its owner Pang Yuliang. Most media did not mention it or in a very small article, but airports you do not buy like a commodity, and certainly not airports in other countries.
