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Outbreak starts to impact on supply chains

Paul Brislen, Editor. 19 February 2020, 7:28 am

The coronavirus is starting to impact on supply chains that rely on mainland China for goods and in particular the IT sector is starting to feel the pinch.

COVID 19, as the flu-like ailment is now called, has taken hundreds of lives across China and has spread to other countries as well, although so far New Zealand is fortunate to have no reported cases on the books.

The Mobile World Congress trade show has been cancelled for the year, putting a huge dent in revenue typically generated by such shows, and other smaller events are also being reconsidered or suspended for now. The impact on tourism alone is expected to be significant if the virus continues to spread.

However, it's not just trade shows and travel that are affected. With the Chinese government's decision to extend the New Year holiday period and a number of factories and fabrication plants closed or operating on reduced staffing levels, some supply chains are being impacted.

Apple has said it will likely miss its sales targets for the iOS range of devices, which are largely built in China, as a result of the virus and even companies that manufacture outside China, notably Samsung, Google and Sony, still rely on components that are produced in China.

China also produces around half the world's LCD screens as well as telecommunications equipment and a myriad of other components. Analyst firm Dunn & Bradstreet suggests the virus will also affect global growth by as much as one percent of global GDP unless the outbreak is contained.

For now the impacts on New Zealand's economy have largely been restricted to travel and to the high-growth tertiary education sector but if the outbreak continues for much longer, other parts of the economy will start to be affected as well.


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