China Auto Parts Procurement COVID Disruption
Current General Manager, Procurement and Supply Chain, SAIC General Motors Corporation
inpractise.com/articles/covid-china-autoparts
Why is this interview interesting?
- How COVID has impacted the supply of auto parts and logistics network fuelling the global auto supply chain
Liang Zhou
Current General Manager, Procurement and Supply Chain, SAIC General Motors Corporation
Liang has been working on the ground in the Chinese automotive market for the last 20 years at various different Chinese Joint Ventures with Western automotive companies. He began his career as a Purchasing Manager at Changan Ford Automobile, the JV between Changan and Ford. In 2012, Liang joined General Motors China as a Global Procurement and Supply Chain Manager. He is well connected with OEM's, Tier 1 suppliers and also larger dealer groups in China which proves invaulable given how opaque the market is to Westerners.
Interview Transcript
Liang, could you just explain the major points of disruption you are seeing in the automotive supply chain, due to coronavirus?
Firstly, the situation for the raw material, the components that we need delivery of, for the mass production, they are not able to supply these on time, due to transportation. Locally, we have a closed railway and highway. For the raw materials and the components, they are not able to ship to different areas in China. So there are supply shortages of the raw materials or finished goods, in the impacted areas, especially in the Wuhan area.
Secondly, because most of the people, especially in February, they were constrained, inside their homes. They were unable to go to their work. There is no white collar or blue-collar workers, which are able to go out. Also, from the purchasing side and the sourcing side, because we are restricted on travel, so we are unable to go to certain areas, such as in the epidemic center in Wuhan, because Wuhan is responsible for one quarter of Chinese automotive production. So local suppliers and global suppliers, they were focused on that area. For sourcing, we are unable to go to this area, so we are not able to start new projects or new programs and to be able to undertake transactions.
Also, there is an issue regarding logistics, because the established hubs and supplier networks, they are currently experiencing limitations in their capacity and the availability. So even if materials are available, they would not be able to be shipped to their destination and they are stuck somewhere else. Also, finding the authority for goods to be transported is very difficult, because of the lockdown of the cities and provinces.
The other issue is regarding the consumers. The consumers are also restricted to certain areas and they are unable to go out normally, as I said, such as going to the dealership in order to limit exposure to the virus. Many have moved to online sales, which is also challenging. So these are all effects of the virus, in China.
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