Russian Businesses Facing Shortage Of Chinese-Made Components: Contingency Plans

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Российским предприятиям может потребоваться поиск альтернативных поставщиков, из-за задержек, вызванных коронавирусом в Китае

China’s Coronavirus outbreak has impacted on businesses in Russia being able to obtain supply deliveries, according to Industry and Trade Minister Denis Manturov.  “Indeed, there is such an issue, which is the result of the respective restrictions due to the outbreak of coronavirus in China. I cannot say that it is a severe problem right now.” he has stated in Tass.

He did suggest that companies should search for alternative suppliers should real problems with the deliveries of components from China arise.

There are a number of issues Russian businesses face with supplies from China at this present time:

When Will My China Supplier Return To Production?

This varies on a national basis in China. Some factories return today, Monday 10th February. However travel restrictions still in place can be expected to slow their initial ability to resume production by about 20-30%. This article explains what dates which regions in China can be expected to resume operations: China Factory Reopening Schedules. However logistics and shipping companies will also not return to full capacity operations for about another month. Delays will be inevitable.

Applying Force Majeure To China Production Contracts

It may be necessary to invoke force majeure clauses with your China suppliers to protect both your business and theirs, and to allow renegotiated terms or cancellation. This article explains the details: Coronavirus in China: Applicability Of Force Majeure

Looking At China Alternative Suppliers And Manufacturing

A longer term strategy may be to reduce dependency on China and to look at replacing part or all of your China production elsewhere. Many foreign investors in China have moved part of their production facilities to Vietnam for example. This applies especially to Russian companies who are not looking to supply the domestic China market. Vietnam also has a Free Trade Agreement With Russia via the Eurasian Economic Union. This article Relocating Your China Sourcing And Manufacturing To Asia: Procedures & Choices contains a great deal of content, including about Vietnam, and also has links to numerous complimentary downloads.

Our firm has 12 offices in China, and another 15 across Asia. We can provide assistance throughout the region. Russian businesses looking for assistance or news about the situation in China may contact us at russia@dezshira.com for assistance.

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About Us

Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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