The growing threat—and, yes, the growing panic—about novel coronavirus, known more familiarly as COVID-19, is going beyond affecting travelers. It’s harming manufacturing in China, too, and that’s harming businesses in the U.S.
Eighty percent of smartphones and tablets and 55 percent of the world’s computers are manufactured in China.
Because U.S. businesses depend so heavily on goods manufactured in and shipped from China, consumers can soon expect to start seeing products ranging from cell phones to dolls missing from store shelves.
Isaac Larian, chief executive of MGA Entertainment, the maker of L.O.L. Surprise! Dolls, says that the situation is “a disaster, frankly.” Production of the dolls has dropped 60 percent compared to this time last year, and MGA is responding by filling only partial toy orders. “If a retailer wants 100,000 pieces, we’re giving them 15,000 or 20,000.”
According to Edward Kelly, a stock-market analyst from Wells Fargo, U.S. shoppers may begin seeing products with links to Chinese manufacturing absent from store shelves as soon as April, even if production is able to resume pre-COVID-19-levels today. Kelly also says that big-box stores like Walmart and Target could be the first to experience issues with merchandise being out of stock because they use “just-in-time” stocking methods.
At the moment, many Chinese factories are closed or operating at minimal levels due to quarantines. In late January, when the disease struck, many workers had traveled to their hometowns for Lunar New Year. Since then, travel bans meant to restrict the spread of COVID-19 have prevented them from returning to work. Many factories that can open can’t get necessary supplies or can’t ship their products due to those same travel bans. Even if they can, freight ships of Chinese origin or carrying Chinese goods or crew are being turned away from international ports around the world.
Major companies like Apple and Mattel are already concerned about the delays. Apple is already seeing product shortages of both iPhones and AirPods, both manufactured entirely in China. Facebook Inc. has stopped taking orders for the Oculus Quest headsets until there is an end in sight to the quarantines.
Most of the time, people don’t take into consideration where their tech or toys come from—they just grab them off the store shelves. But throw COVID-19 into the mix, and suddenly geography matters, and it matters big.