Chinese workers assemble electronic components at the Taiwanese technology giant Foxconn’s factory in Shenzhen, China.

AFP | AFP | Getty Images

Uncertainty about work resuming at factories in China is setting in, with provinces or cities posting different dates for an extended shutdown as the coronavirus outbreak continues to spread.

Authorities had initially said operations could pick up again on Monday, but the already-extended delay in reopening could be dragged out even further for many factories — including Apple’s largest manufacturer Foxconn.

Even if businesses were up and running again, their workers would still have to fulfill quarantine requirements of around two weeks.

With the further delay, analysts warned of a big hit not just to the Chinese economy, but globally.

Shutdowns further extended

Last week, more than 20 provinces and other regions told businesses to not resume work before Feb. 10 at the earliest. In 2019, those parts of China accounted for more than 80% of national GDP, and 90% of exports, according to CNBC calculations of data accessed through Wind Information.

It’s uncertain whether factories could resume production this week amid local quarantine efforts and traffic controls.

Some provinces and districts have now told companies to not return to work until March 1, according to officials.

While it appears that business activities in some provinces will partially resume Monday, workers returning from other provinces are still subject to quarantine and some sectors, such as construction, will need to delay resumption of work, Morgan Stanley wrote in a report on Monday morning.

“It’s uncertain whether factories could resume production this week amid local quarantine efforts and traffic controls. Indeed, many authorities and enterprises at local levels are targeting Feb. 17th or later to restart business, and the resumption is likely to be a phased approach,” the investment bank wrote.

But, it said, “there are still uncertainties as to how quickly the coronavirus situation will be brought under control and when production and goods transportation services will be ramped up to normal levels.”

“That … is a major blast to the global value chain, not only for China, but the world. That’s already, basically a month and a half without factories working,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis.

“So indeed, it’s a big blow to the Chinese economy, and the world,” she told CNBC on Monday.

What we know about Foxconn and other companies

This reportedly includes major companies like Taiwan-listed Hon Hai Precision Industry, better known as Foxconn and the world’s largest iPhone assembler.

Reuters reported Monday, citing a person familiar with the matter, Foxconn received approval to resume production at a facility in Zhengzhou. But the company is still “trying very hard” to get clearance to reopen plants in other parts of China, Reuters reported.

Foxconn did not directly confirm its plans to restart operations, but it told CNBC in a statement: “The operation schedules for our facilities in China follow the recommendations of the local governments, and we have not received any requests from our customers on the need to resume production earlier.”

But delays could potentially hit Apple, analysts say.

In a note on Sunday, Wedbush Securities wrote that this development could be “a shock to the system and disrupt the supply chain further for Apple” for both iPhones and AirPods which were already facing a shortage.

In the autos sector, Toyota and BMW said they are extending the shutdowns for plants in China until next week — among several automakers who said they were delaying reopenings.

Among tech companies in China, Hong Kong-listed Tencent has asked its employees to continue working from home for another week, extending the return date to from Feb. 14 to Feb. 21.

— CNBC’s Eunice Yoon, Hilary Pan contributed to this report.



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Some factories in China extend shutdowns amid coronavirus outbreak

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