Novinky: Czech companies starting to feel the bite of coronavirus epidemic

18-02-2020

Czech companies are slowly starting to feel the effects of the coronavirus epidemic that is a major threat to China and its economy, the news site Novinky.cz reports. Some companies have goods locked in Chinese warehouses and scheduled deliveries of components for computers, mobile phones and various other electronic devices are late or have stopped altogether due to production restrictions or closed factories in China.

Photo: Calvin Teo, Wikimedia CC BY-SA 2.5Photo: Calvin Teo, Wikimedia CC BY-SA 2.5 Companies assembling various telecommunications, security or entertainment systems or manufacturers of lighting and industrial automation equipment are particularly worried, Noviny says. China supplies LED lamps, solar panels, electrical components, various sensors as well as complete circuits and batteries to Czech producers in large quantities.

“Of course, companies can obtain them elsewhere, but usually at a significantly higher price and not always in sufficient quantities” Radek Špicar, Vice-President of the Confederation of Industry of the Czech Republic told Novinky.cz. “In addition, sick workers may be missing from companies that have their own branch office in China or produce parts there. This may affect, for example, some companies supplying parts to the automotive industry” Špicar pointed out.

According to Algotech CEO František Zeman a number of factories that produce parts for well-known electronics and computer hardware manufacturers in Europe have closed down due to measures taken to control the coronavirus epidemic. "There will certainly be a delay in supply, which may cause problems, but the European economy will not be put at risk," he said.

Traders are also starting to register delays in deliveries from China, which is a global manufactory for parts, components and end products. The biggest domestic e-shop Alza.cz expects a negative impact of the coronavirus epidemic on production and availability of goods from China.

The infection has also dampened production and sales of Škoda cars in China. China is the world's largest market for Škoda, where it sold 282,000 cars last year. Due to the coronavirus, the Volkswagen Group has now extended an enforced leave at its Chinese factories. Originally, production was to resume on Monday, but they will remain closed until further notice.

Experts say that if the situation in China is brought under control and the epidemic does not spread to other countries, the impact on the Czech economy should be minimal. However if the problem persists long term, Czech buyers of Chinese goods will need to look for new suppliers.

Although China is not one of the Czech Republic’s top export destinations, there are indirect links via the European market. "Czech exports to China accounted for 1.2 percent of total Czech exports last year. This year, the coronavirus crisis should not significantly affect Czech exports. However, the decisive factor for further development will be how the country will cope with the epidemic in the coming months,” Štěpánka Filipová, spokesperson of the Ministry of Industry and Trade told Novinky.

18-02-2020