China's production resumption stabilizes global supply chain

NANJING -- Chinese carmaker SAIC MAXUS Automotive Co Ltd has managed to buck the trend of a global automobile industry recession amid the COVID-19 pandemic, with vehicle sales rising by 26.4 percent year-on-year in July.

"Our team has gone through all of our 1,288 suppliers to sort out possible problems early during the epidemic, which is full of twists," said Wang Ying, general manager of SAIC MAXUS's Nanjing Plant in East China's Jiangsu province.

"We even requested the local authorities to help transfer parts and even equipment from Wuhan, a strategically important city of China's automobile industry that was hard hit during the epidemic," said Wang.

Thanks to the resilient supply chain in the world's largest auto market, SAIC MAXUS resumed full operations of its four manufacturing bases on Feb 24.

China's broader auto industry has seen a recovery. Data from the Ministry of Industry and Information Technology (MIIT) showed that the country's automobile production and sales increased by 21.9 percent and 16.4 percent, respectively, year on year in July.

BACK ON TRACK

Governments at different levels in China have made concerted efforts to help enterprises resume production, in a move that also helps stabilize the global supply chain.

According to Wang, the company's auto parts imports were affected as the epidemic quickly swept the world. "Thankfully, the local government quickly helped us find substitute domestic suppliers, which were key to the recovery of the automobile industrial chain."

"Authorities also sent medical supplies, such as masks and disinfectants, to help us resume production at the very beginning of the epidemic," Wang added.

The quick industrial production resumption across China has helped the company ensure the smooth operation of its global supply chain by exporting product parts to Europe and the United States via intercontinental trains and ships, said Steve Jin, plant manager of ASSA ABLOY Entrance System Suzhou Co Ltd in the eastern Chinese city of Suzhou. The ASSA ABLOY Group is a global leader in access solutions with factories in more than 70 countries.

"Orders for our swing doors have increased by 20 percent and 19 percent year on year in the American and European markets so far this year," said Jin. "Manipulators and other components of these swing doors are made or purchased by the Suzhou plant."

Xin Guobin, vice minister of MIIT, said China's industrial performance has improved month by month with effective epidemic control and policy support.

Statistics showed that China's industrial output went up by 4.8 percent year on year in June, picking up from the 4.4 percent and 3.9 percent expansion in May and April, respectively.

SUPPLY CHAIN STABILITY

During the COVID-19 epidemic, China's manufacturing sector has withstood the "stress test" from the virus, and helped ensure a steady global supply of medical goods, as well as stable industrial and supply chains, said Xin.

According to Jin, the pedestrian access door business of the ASSA ABLOY Group has established four plants in America, the Czech Republic, Canada, and China. As a global purchasing center, the Suzhou plant also supplies some of the core components for the other three factories.

The Suzhou plant also produces many half-finished goods of the pillar products to reduce the costs of raw materials and labor in the entire supply chain.

"The fact that the Suzhou team has been able to maintain product supply during these challenging times is vital to our ability to continue operations across the world, including installing and servicing key infrastructure like healthcare," said David Johansson, PDS Supply Chain Director of ASSA ABLOY.

As the pandemic swept other parts of the world, fast-recovering Chinese companies are playing a role in stabilizing the global industrial supply chain.

The Nanjing High Accurate Drive Equipment Manufacturing Group Co Ltd (NGC), one of the world's leading wind-turbine gearbox suppliers, saw sales increase over 30 percent year-on-year during the Jan-July period.

The company is expected to accomplish a sales record in 2020, as it has attracted new customers in the global market, and is seeing strong sales growth in the European and Asian markets.

As an important link in the industrial supply chain, the company focuses on product development and technological innovation, with all its products owning their intellectual property rights, according to Hu Yueming, NGC's chairman and general manager.

During the epidemic, China's business environment and stable industrial supply chain have won widespread recognition from foreign investors. Statistics from the Ministry of Commerce showed that China saw an 8.4 percent year-on-year increase in the actual use of foreign investment in the second quarter of this year.

MIIT Vice Minister Xin said China will focus on increasing the stability and competitiveness of its industrial and supply chains, and improve the industrial foundations and level of modernization for the industrial chains.