China over-reliance? Corum says COVID-19 presents opportunity to reconsider supply chain strategy

The novel coronavirus originated from China’s Hubei province just days leading up to the Lunar New Year festivities in China and other parts of Asia.

Taiwan-based company Corum told CosmeticsDesign-Asia​ that it felt the effects of the epidemic immediately.

“We’ve observed dramatic slowdown of most business activities in China. The vulnerable consumer confidence has been lingering since the start of US-China trade war last year and is now hitting an even more catastrophic bump with no end in sight,” ​said Snow Hsieh, international sales manager at Corum.

According to Hsieh, the outbreak of the virus has spooked its customers, some of which have made large orders hoping to stock up on materials.

She noted that fellow ingredient suppliers operating in the North East Asia region have also experienced this behaviour.

The anxiety is understandable considering that China, the world’s largest producer, effectively shut down its industrial core in a desperate bid to curb the spread of the virus.

While factories have begun to reopen, Hsieh believes China will take some time to reboot itself.

“Given all the quarantine orders and limited rotating shifts in China, the supply chains around the world have been disrupted in one way or another. It will be a while for the world’s largest producer to resume its normal production level, let alone for the global economy to recover.”​

Fortunately for Corum, all its production lines are located in Taiwan and it only obtains a fraction of raw materials from China.