Retailers keep a nervous eye on Chinese manufacturing

Sunday, 9 February 2020

A Chinese woman wears a protective mask as she walks by a flag and lantern placed for the Chinese New Year holiday.

New Zealand companies that rely on Chinese manufacturing are keeping a nervous eye on the supply chain after the Chinese government put in place coronavirus prevention measures, says New Zealand Trade and Enterprise (NZTE).

Measures were introduced for those travelling during the Chinese New Year period, and factories will be closed for longer than usual, NZTE said.

Over Chinese New Year there was a mass migration of workers back to their home provinces - often some distance from the factories where they were employed - and coronavirus prevention measures could further delay production.

The Warehouse Group works with about 200 Chinese factories.

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Kathmandu Group did not expect supply to be impacted in the short term because it had sufficient inventory.

NZTE regional director for greater China Fiona Acheson previously told Stuff those workers would have to go into 14 days' stand down when they returned.

First Retail Group managing director Chris Wilkinson said large retailers were extremely mindful of the situation and while there was currently sufficient stock, if delays continued, it could have impacts globally.

'One of the challenges is more and more with fast fashion and retail in general it's a much more dynamic space in terms of getting stock over. So with shorter lead times it is becoming a concern and people are certainly watching with interest,' he said.

The Warehouse Group chief product officer Tanya Benyon said about 60 per cent of its private label products came from China and it worked with 200 factories there. It was due to receive a shipment soon.

'We are monitoring the situation closely and should know more after the Chinese New Year holiday period. We have a range of options available including moving some of our sourcing to factories outside China. As this is a fast-moving situation we will assess what needs to be done on a daily basis,' she said.

In an announcement on Friday outdoor apparel company Kathmandu said it sourced products from across Asia but was monitoring developments that could affect its supply chain.

It did not expect material supply to be impacted in the short term because it had sufficient inventory and slower turnover of technical products. The group had mitigation plans ready in case of prolonged disruption to its Chinese suppliers.

Glassons and K Mart did not respond to request for comment, and Harvey Norman declined to comment.