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China's product supply chain affected by Japan quake

2011-3-30

"Because the supply is running low, we have hoarded some products for the right time," he said.

He expected price fluctuations to continue for another six months.

Among the hardest-hit sectors is the auto industry. After the quake, joint venture Dongfeng Nissan announced that it would reduce production and that its factory in central China's Hubei province also slowed down operations. Also, officials at Honda Motor's Japan factory said last week that its production halt would continue through Sunday.

IHS Automotive Insight predicts that one-third of global automotive output would be cut due to the ruptured supply chain. Currently, the global auto output has shrunk by 13 percent to about 320,000 units.

China would be severely affected by the reduction. According to customs statistics, China imported $10.9 billion worth of auto parts from Japan in 2010, which accounted for over one-third of the country's total imports of auto parts.

Despite the negative impact of the earthquake, analysts expect the global supply chain to adjust to the effects of the earthquake in Japan.

A report from Ccidnet, an IT platform in China, said that the supply chain squeeze would prompt some enterprises to consider replacement plans. For example, in the IT sector, companies in South Korea and Taiwan would be given more opportunities. Affected companies in Japan could set up factories abroad to explore new opportunities overseas.

Zhou Yi, an analyst with Ccidnet, said that the earthquake would press more Japanese enterprises to expand in the global market and encourage the transfer of technology to emerging economies to lessen risks.

"The most suitable target for technology transfer would be China. Though the replacement would not happen overnight, there will be a gradual shift in the two countries' position in the electronics industry," he said.

Source:Xinhua
 
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