China/Austalia economy, page-13

I have no doubt that this virus will burn out eventually but the economic impact will be felt for a long time imo.

Principally we source a lot of our imports from China due to its cheap labour force, compliance etc in the never-ending chase for profits from higher margins. The effect, unfortunately, is to centralise our supply chains while lessening our resilience to shocks that always lurk in the shadows. That is always the risk of sending manufacturing off shore.

If, for example, most of our organic materials for the production of pharmaceuticals, vitamins etc come from China (I hear 95%) then companies like Blackmores will have production issues. Limited supply will also have an inflationary affect. Rare earths likewise.

This article highlights the logistical issues with re-establishing supply chains once the contagion dies down. Looks like at least 2 quarters of quite diminished economic activity if this article is anything to go by.

quote -:
With logistics operations down, feedstock cannot be delivered to factories, nor finished products sent out for delivery to customers, blocking the supply chain at both ends.

Considering that most land logistics is expected to remain under constraint until March, local sources have estimated that delays in sending shipments to destination markets may extend for more than two months, in some cases.

"If you reach port in the second half of March, add more than 40 days for the vessel to reach a European port, one week on either end for loading/unloading and clearing, and a few more days to deliver to your customer’s plant," one distributor said. "In short, nothing is going to arrive from China into Europe before May – probably the end of May."

One refractories producer in Southern Europe said that he has been given even later estimated times of arrival from his suppliers. "Most of the inquiries I have put out," he said, "now estimate arrival in June or July."

https://www.indmin.com/Article/3918688/Border-closures-leave-Chinese-inland-miners-cut-off-from-export-markets.html