[Asia Economy Reporters Kiho Sung, Seonae Lee, Changhwan Lee, Yoonju Hwang] The factories of our companies in China, which had come to a halt due to the spread of the novel coronavirus infection (Wuhan pneumonia), have started to resume operations. Accordingly, concerns over product supply disruptions are expected to be partially alleviated.
However, since the spread of the novel coronavirus in China has not yet subsided, it is anticipated that more time will be needed before full normalization is achieved. Certain industries, such as the automobile sector, still face significant risk of damage.
◆ Normalization begins in the electronics industry including Samsung Electronics and LG Electronics = According to related industries on the 10th, local factories of our companies operating in China, such as Samsung Electronics, LG Electronics, and LG Display, will resume operations starting today.
A Samsung Electronics official stated, "The home appliance factory in Suzhou, China, which had stopped operations due to the extended holiday caused by the novel coronavirus, will reopen today." Samsung Electronics operates a home appliance factory in Suzhou and a TV factory in Tianjin, China.
However, the Tianjin factory will resume operations on the 17th. A company official said, "The Tianjin factory delayed its reopening in accordance with local government guidelines due to concerns over the novel coronavirus," adding, "Since it mainly produces parts for the Chinese domestic market, the damage is not expected to be significant."
LG Electronics has restarted operations at 7 out of 10 factories located in 7 regions including Nanjing, Qingdao, and Tianjin in China. The remaining 3 factories may have extended holidays as per local government decisions, so the situation remains fluid.
An LG Electronics official explained, "Seven factories have started operations for now, and the three factories in Tianjin, Hangzhou, and Jinhuangdao, which mainly produce home appliance parts, are currently awaiting government approval," adding, "The timing of reopening is uncertain."
LG Display, which had suspended operations at factories in Yantai and Nanjing, also resumed factory operations today. The company plans to gradually increase operating rates considering the returning workforce.
POSCO, which operates an automobile steel sheet processing factory in the Hannan Development Zone of Wuhan City, plans to resume factory operations from the 14th. Other regional processing factories have sequentially resumed operations starting today.
Construction of electric vehicle battery factories by SK Innovation in Yancheng and Changzhou, China, had been halted since the Lunar New Year holiday due to the spread of the novel coronavirus but is scheduled to resume today. An SK Innovation official said, "We are preparing to restart in consultation with local partners."
The distribution industry has also resumed operations. CJ CheilJedang, which operates seven food factories in China, started operations today. A CJ CheilJedang official said, "After consultations with the Chinese government, we have resumed operations at seven food factories in China from today, ensuring thorough safety and hygiene," adding, "With this, all 21 food, bio, and feed factories (14 locations, which were not stopped even during the Lunar New Year holiday) in China are operating normally."
Nongshim's bottled water factory located in Yanbian also resumed operations today. Nongshim had stocked inventory ahead of the Lunar New Year holiday, so there were no immediate sales disruptions, but resuming operations today has eased concerns. Orion, which operates six factories in China, also resumed production while conducting infection checks and strengthening hygiene inspections for local employees returning after the holiday.
◆ Full normalization will take time; concerns remain in the automobile industry = Although companies have resumed operations after about two weeks, it is expected to take time to reach 100% operational normalization. The novel coronavirus is still rampant in China, and some employees may not return due to infection concerns.
A display industry official said, "Since many employees work in the factories, concerns about virus infection remain, and workforce shortages could become a reality," adding, "It may take time to achieve full normalization."
Many factories across China have experienced operational disruptions due to this incident, and consumption has also contracted, so supply chain deterioration and sluggish sales could become additional variables.
The automobile industry still faces significant concerns. Hyundai and Kia Motors' factories in China are expected to resume operations on the 17th. Although partner companies producing wiring harnesses and other parts in China began operations last week, it is anticipated that it will take time before normal parts supply is restored.
Hyundai and Kia Motors halted all domestic finished vehicle factories today and will sequentially resume production starting from the 11th. Renault Samsung Motors will stop its factory for four days starting from the 11th, a decision made considering the time lag for parts produced in China to arrive in Korea. SsangYong Motor will also halt production until the 12th due to parts issues.
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