China supply disruption deepens, business worry for future

A consignment of 75 tonnes of yarn for the Alliance Worldwide Accessories Ltd, a Dhaka-based company, was supposed to reach the Chattogram port from China in the first week of February. 

But there is no sign of the shipment as the operation of the Chinese supplier has remained shut down for the last 15 days in the wake of the deadly coronavirus outbreak.  

An official of the importer company said they don't expect to get the delivery soon as the supplier's factory is located at Wuhan, the epicentre of the outbreak.

Businesses from all sectors have been facing a supply disruption as the virus outbreak has cut business communications between Bangladesh and China in many cases.

According to the Customs Intelligence and Investigation Directorate, the export-import activities with China have fallen significantly.

The import from China fell by 22 percent to 6.73 lakh tonnes in January this year from 8.52 lakh tonnes over the same period last year.

In the first eight days of February, it dropped by 38 percent to 1.37 lakh tonnes from 2.73 lakh tonnes in the corresponding period a year before.

China alone provides 26 percent of the country's total imports.

In January, the export to the country also fell to 1.35 lakh tonnes in contrast to 1.73 lakh tonnes over the same period a year before.

Businesspeople said, Bangladesh imports raw material and different products from China in large amounts. A big portion of those is used in the manufacturing sector. China is a prime source of raw material for the readymade garments sector.

The suppliers cannot deliver the products as the factories there have remained closed after the coronavirus outbreak coinciding with the Chinese New Year holiday.  

According to the Chattogram port sources, on February 11, three goods-laden ships reached the outer anchorage. But the port authority did not release the consignments as the suppliers did not submit all necessary shipping documents.

Abdul Kadir Khan, president of the Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association, said, "Although several Chinese ships reached the Chattogram port in the last 10 days, we cannot release the shipments as the suppliers could not provide necessary documents because their offices are closed."

Most equipment required for the country's construction projects comes through the Chattogram port from China.

If the current situation continues, the arrival of goods from China may be suspended in the coming days.

Mohammed Abdus Salam, the first vice-president of the Bangladesh Garment Manufacturers and Exporters Association, said, "We are still getting the delivery of goods as their letters of credit were opened earlier. As no importer is opening LC now, we will see the crisis in near future." 

There is hardly anything on the import list that the country does not get from China. From small tools like screwdrivers, to machinery meant for government and private projects, industrial raw materials, commercial products, spices and many other products are imported from that country.

In the last fiscal year, the country imported goods amounting to Tk1,14,593 crore from China, which was 26 percent of the total imports.

NKA Mobin, senior vice-president of the Dhaka Chamber of Commerce and Industry, said, "China is one of our biggest trade partners. Importers are in trouble now as the county's business establishments have not reopened yet after the end of the New Year holiday." 

The businessmen have already started to look for alternatives, he added.

The Chinese Lunar New Year holiday started on January 24 and was supposed to end on January 30. But China extended it to February 2 to contain the novel coronavirus outbreak. Later the country again extended the holiday to February 9.  In some states, the holiday would continue till February 17.

Leather export to be affected most

The leather export is going to be affected the most as stock lots of leather remain stockpiled after China stopped its import in the aftermath of the virus outbreak. The country buys 70 percent of Bangladesh's leather and leather goods.

Besides, exports of jute goods, crab and eel remain suspended as well. 

Entrepreneurs said they are already feeling the impact as China has cancelled several export orders.

Yarn supply falls drastically

The supply of yarn, the main raw material used in the garments industry, has also remained suspended due to the coronavirus outbreak.

Every month 20 lakh cones of yarn (one cone is equal to 4,000-metre yarn) is imported from China. 

Latifur Rahman Azim, the first vice-president of the Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association, said yarn is not arriving as China has suspended all types of exports till February 20.  On the other hand, the price of this main raw material for the apparel sector is higher in other countries.

Impact on printing press

The printing cost in the market has risen by about 72 percent due to the impact of the coronavirus outbreak in China. The printing businesses have increased prices of 10 printing items, including PVC (component used in digital banners), and CTP (printing plate) as a result of decreased supply from China.  They said there is a crisis of different printing related items as the import from China has remained suspended due to the outbreak of coronavirus.

One month back, the price of a plate of demy size was Tk180 which increased to Tk250 on Monday.  The businessmen said the price of everything has been increasing with each passing day.  The printing industry would face a serious disaster if the crisis was not resolved.

Selim Chowdhury, organising secretary of Chattogram Press Malik Samity, said, there are 1500 printing presses in Chattogram.  These firms have 3,000 machines of demy and double demy size. Many presses are sitting idle as they are not getting work for making CTP.