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Clock is ticking for companies that depend on China imports

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AP Washington
Last Updated : Feb 04 2020 | 8:52 PM IST

For companies bracing for losses from China's viral outbreak, the damage has so far been delayed, thanks to a stroke of timing: The outbreak hit just when Chinese factories and many businesses were closed anyway to let workers travel home for the week-long Lunar New Year holiday.

But the respite won't last.

If much of industrial China remains on lockdown for the next few weeks, a very real possibility, Western retailers, auto companies and manufacturers that depend on Chinese imports will start to run out of the goods they depend on.

In order to meet deadlines for summer goods, retail experts say that Chinese factories would need to start ramping up production by March 15. If Chinese factories were instead to remain idle through May 1, it would likely cripple retailers' crucial back-to-school and fall seasons.

There's complete uncertainty,'' said Steve Pasierb, CEO of the Toy Industry Association.

This could be huge if it goes on for months.'' Wuhan, the Chinese city where the outbreak hit hardest, is a center of automotive production.

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It's been closed off, along with neighbouring cities, isolating more than 50 million people and bringing factories to a standstill.

So far, US automakers haven't had to curb production for want of Chinese parts. But David Closs, professor emeritus at Michigan State University's Department of Supply Chain Management, said the clock is ticking.

I would say it's weeks at the most,'' Closs said. One to two to three weeks.''

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First Published: Feb 04 2020 | 8:52 PM IST

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