Coronavirus in China: Contingency Plans for Businesses in India Facing Production Challenges

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By Chris Devonshire-Ellis, Founding Partner, Dezan Shira & Associates 

The coronavirus outbreak in China is impacting businesses in India. At present, Indian businesses are facing massive challenges when it comes to obtaining supply deliveries.

This article will discuss when the factories in China are expected to resume production, and if Indian businesses should strategize moving their production facilities to other countries.

When will factories in China start production?

There will be regional variations across China, but some factories are expected to start operations from February 10. With travel restrictions still in place, it can to slow down their initial ability to resume production by about 20 to 30 percent.

Logistics and shipping companies will also not return to full capacity operations for about another month. Delays are inevitable.

The article, China Factory and Offices Reopening Schedule, gives an insight to when regions in China are expected to resume operations.

Applying force majeure to China production contracts 

It may be necessary to invoke force majeure clauses with your China suppliers to protect their businesses and yours, and to allow renegotiated terms or cancellation.

This article explains the details: Coronavirus in China: Applicability Of Force Majeure.

Looking at alternative suppliers and manufacturers 

A long-term strategy may be to reduce dependency on China, and look at moving some or all of the production from China to another country.

For example, many foreign investors in China have moved part of their production facilities to Vietnam. This applies to Indian companies who are not looking to supply the domestic Chinese market.

Vietnam, a member of ASEAN, and has certain free trade advantages with India under the ASEAN-India Free Trade Agreement.  

Indian investors can consider countries in ASEAN as an alternative to China. This article, Relocating Your China Sourcing And Manufacturing To Asia: Procedures & Choices, sheds a light on ASEAN import-export procedures, establishing a business in Indonesia, Philippines, Singapore, Thailand, & Vietnam and also has links to numerous complimentary downloads. 

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

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India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for business support in India.