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Business trends

Only 43% of Japanese companies to resume in China on Monday

Poll shows many still cautious as outbreak throws wrench into supply chains

Honda on Friday announced that it will aim to restart production in the Wuhan area of Hubei Province, China, on Feb. 17.

TOKYO -- Less than half of major Japanese businesses that have halted Chinese operations plan to resume them from Monday, a Nikkei survey shows, demonstrating the chilling effect of the coronavirus outbreak.

Friday's poll targeted companies with office, factory, store and other locations in China, drawing 124 respondents.

And 108, or 87.1%, have partly or fully suspended Chinese operations. Among these, 43.8% said they will start as early as Monday to return operations to previous levels.

Business activities were originally supposed to resume after Jan. 30, the end of the weeklong Lunar New Year break. The virus forced the Chinese government to extend the official holiday to Feb. 2.

Shanghai mandated Feb. 9 as the final day of the break. With the slowdown in transportation of people and goods alike, a wide swath of businesses have been forced to suspend operations.

It appears that things will slowly start getting back to normal Monday at the earliest. "We will start providing products and services to customers again as soon as possible," said a representative at Japanese chemical supplier Asahi Kasei, which has production facilities on the outskirts of Shanghai.

"We expect to resume operations, based on directives from the central and regional governments," electronic device maker Murata Manufacturing said. Toppan Printing said it has determined that operations can be run even without workers who stay home.

Bearings maker NSK reported that it will resume business across the board. But it will start up factories only after confirming worker safety, which it deemed the "highest priority."

Trading house Itochu will tailor its business restarts by each city "based on the policy of governing authorities, and the situations with transit and medical facilities."

Businesses are said not to jump back fully into operations right after the Lunar New Year break even during normal years, instead gradually increasing utilization rates. The changes seen this year appear due to the number of workers unable to return.

If the outbreak worsens, it threatens to once again trigger mass shutdowns of businesses.

Supply chain snags have impacted manufacturers operating in China. Toyota Motor said it is exploring stocking up on components or finding alternative producers.

The automaker will not restart four Chinese plants until Feb. 17 -- a week later than previously planned. Honda Motor has postponed restarts apart from certain facilities.

Supply chains within China are also affected. Mitsubishi Heavy Industries said it will start considering alternative sources for parts after the holiday.

Convenience store chain Lawson said it has about two months of inventory. "We are working to source products from outside China once that runs out," it said.

Some players are adjusting their global supply chains in case the outbreak drags on. Of 80 companies answering Nikkei's question on alternative production plans, 17 said they could shift Chinese operations to other countries and regions.

Nitto Denko is considering supplying automotive materials out of South Asia instead of China. Rohm will rely on products from such places as Thailand, Malaysia, the Philippines and South Korea if Chinese hubs face prolonged shutdowns.

DMG Mori will source certain cast-iron products used at its Chinese production facilities from Japan instead of China, a move expected to push up costs.

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