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Break the China Habit? Lobsters, Lights and Toilets Show How Hard It Is Break the China Habit? Lobsters, Lights and Toilets Show How Hard It Is
(7 days later)
As the coronavirus pandemic amplifies longstanding concerns over the world’s economic dependence on China, many countries are trying to reduce their exposure to Beijing’s brand of business.As the coronavirus pandemic amplifies longstanding concerns over the world’s economic dependence on China, many countries are trying to reduce their exposure to Beijing’s brand of business.
Japan has set aside $2.2 billion to help companies shift production out of China. European trade ministers have emphasized the need to diversify supply chains. Several countries, including Australia and Germany, have moved to keep China, among others, from buying businesses weakened by lockdowns. Hawks in the Trump administration also continue to press for an economic “decoupling” from Beijing.Japan has set aside $2.2 billion to help companies shift production out of China. European trade ministers have emphasized the need to diversify supply chains. Several countries, including Australia and Germany, have moved to keep China, among others, from buying businesses weakened by lockdowns. Hawks in the Trump administration also continue to press for an economic “decoupling” from Beijing.
But outside government circles, in the companies where the decisions about manufacturing and sales are actually made, the calculations are more complex.But outside government circles, in the companies where the decisions about manufacturing and sales are actually made, the calculations are more complex.
China is a hard habit to break.China is a hard habit to break.
Even after its early mishandling of the coronavirus disrupted the country’s ability to make and buy the world’s products, further exposing the faults of its authoritarian system and leading it to ratchet up its propaganda war, China’s economic power makes it the last best hope for avoiding a protracted global downturn.Even after its early mishandling of the coronavirus disrupted the country’s ability to make and buy the world’s products, further exposing the faults of its authoritarian system and leading it to ratchet up its propaganda war, China’s economic power makes it the last best hope for avoiding a protracted global downturn.
“When this all started, we were thinking, Where else can we go?” said Fedele Camarda, a third-generation lobster fisherman in Western Australia, which sends most of its catch to China. “Then the rest of the world was also compromised by the coronavirus, and China is the one getting back on its feet.”“When this all started, we were thinking, Where else can we go?” said Fedele Camarda, a third-generation lobster fisherman in Western Australia, which sends most of its catch to China. “Then the rest of the world was also compromised by the coronavirus, and China is the one getting back on its feet.”
“Although they’re just one market,” he added, “they’re one very big market.”“Although they’re just one market,” he added, “they’re one very big market.”
To understand how businesses are responding to the shifting dynamics and risks, The New York Times profiled three companies in three countries that are heavily reliant on China. Their experiences vary, but they are all trying to work out just how much of a breakup with China is needed — or whether they can afford one.To understand how businesses are responding to the shifting dynamics and risks, The New York Times profiled three companies in three countries that are heavily reliant on China. Their experiences vary, but they are all trying to work out just how much of a breakup with China is needed — or whether they can afford one.
When Mr. Camarda fished for lobster off Australia’s west coast in the 1990s, his catch ended up on plates in a variety of countries.When Mr. Camarda fished for lobster off Australia’s west coast in the 1990s, his catch ended up on plates in a variety of countries.
Fresh crays, as the lobsters are known, went to Japan. Canned lobster meat went to the United States. The rest was sold inside Australia or to its nearest neighbors.Fresh crays, as the lobsters are known, went to Japan. Canned lobster meat went to the United States. The rest was sold inside Australia or to its nearest neighbors.
But starting around 2000, China began paying more for live lobsters, and ordering more. That led to a near-total reliance on that market and a sense of complacency: By the beginning of this year, 95 percent of Australia’s spiny lobsters were being shipped to sellers and restaurants in China.But starting around 2000, China began paying more for live lobsters, and ordering more. That led to a near-total reliance on that market and a sense of complacency: By the beginning of this year, 95 percent of Australia’s spiny lobsters were being shipped to sellers and restaurants in China.
“We all talked about different strategies to overcome the problem, to not be so reliant on China,” Mr. Camarda said. “We just didn’t get around to it.”“We all talked about different strategies to overcome the problem, to not be so reliant on China,” Mr. Camarda said. “We just didn’t get around to it.”
And they still haven’t, even after the need for diversification hit like a hammer on Jan. 25.And they still haven’t, even after the need for diversification hit like a hammer on Jan. 25.
That’s when China, in the midst of its outbreak, stopped buying. Officials shut down the wet markets that sell fresh meat, vegetables and seafood, forcing the entire fleet of lobster boats up and down Australia’s west coast — all 234 — to stop fishing. More than 2,000 people found themselves without work.That’s when China, in the midst of its outbreak, stopped buying. Officials shut down the wet markets that sell fresh meat, vegetables and seafood, forcing the entire fleet of lobster boats up and down Australia’s west coast — all 234 — to stop fishing. More than 2,000 people found themselves without work.
Australia’s lobster processors tried to quickly diversify, calling buyers in every country they had ever worked with, reaching back to contacts from decades earlier. The industry association pleaded with the Australian government for help: requesting a larger quota for the year, an extension of the season and more freedom to sell directly to the public, all of which were approved by fisheries managers.Australia’s lobster processors tried to quickly diversify, calling buyers in every country they had ever worked with, reaching back to contacts from decades earlier. The industry association pleaded with the Australian government for help: requesting a larger quota for the year, an extension of the season and more freedom to sell directly to the public, all of which were approved by fisheries managers.
But none of it did much good for Mr. Camarda. While certain food exports to China from other parts of the world increased — chicken meat from Brazil, for example — only a few boats went out in February, March and April, pulling in very little.But none of it did much good for Mr. Camarda. While certain food exports to China from other parts of the world increased — chicken meat from Brazil, for example — only a few boats went out in February, March and April, pulling in very little.
Mr. Camarda returned to the water only about a month ago. Orders to his company, Neptune 3, are starting to come in again from China, at prices that are roughly half what they were in January. The orders aren’t anywhere near as large, either, but the industry has coalesced around trying to rebuild its ties with China, rather than looking elsewhere.Mr. Camarda returned to the water only about a month ago. Orders to his company, Neptune 3, are starting to come in again from China, at prices that are roughly half what they were in January. The orders aren’t anywhere near as large, either, but the industry has coalesced around trying to rebuild its ties with China, rather than looking elsewhere.
“Even if prices are low and the amount of product is down, we need to find a way to service that market, because providing that market is what works for us,” said Matt Taylor, the chief executive of Western Rock Lobster, the industry’s professional association.“Even if prices are low and the amount of product is down, we need to find a way to service that market, because providing that market is what works for us,” said Matt Taylor, the chief executive of Western Rock Lobster, the industry’s professional association.
As of about a month ago, there was still one major challenge: shipping. Supply chains had been scrambled, as passenger planes that carry much of the world’s cargo have been idled and shipping has decreased. So once again the Australian government stepped in, this time with around $70 million to subsidize charter flights for seafood exports.As of about a month ago, there was still one major challenge: shipping. Supply chains had been scrambled, as passenger planes that carry much of the world’s cargo have been idled and shipping has decreased. So once again the Australian government stepped in, this time with around $70 million to subsidize charter flights for seafood exports.
Despite calls for greater self-sufficiency, diversification and sovereignty, as well as moves by China that have hurt barley and beef exports, Australia is not running away from the Chinese market. It is subsidizing efforts to get back in.Despite calls for greater self-sufficiency, diversification and sovereignty, as well as moves by China that have hurt barley and beef exports, Australia is not running away from the Chinese market. It is subsidizing efforts to get back in.
The last time German industry faced a severe downturn, relief came from China. The country’s explosive growth and hunger for Western technology helped German exporters bounce back quickly from the deep recession a decade ago.The last time German industry faced a severe downturn, relief came from China. The country’s explosive growth and hunger for Western technology helped German exporters bounce back quickly from the deep recession a decade ago.
“In 2008, there were two markets that I ran to: China and the Middle East,” said Olaf Berlien, chief executive of Osram, one of the world’s largest lighting companies, which is based in Munich.“In 2008, there were two markets that I ran to: China and the Middle East,” said Olaf Berlien, chief executive of Osram, one of the world’s largest lighting companies, which is based in Munich.
But he does not expect Chinese sales to save German industry again.But he does not expect Chinese sales to save German industry again.
“China is still a market,” Mr. Berlien said, “but it’s not a growth market.”“China is still a market,” Mr. Berlien said, “but it’s not a growth market.”
Osram had turned bearish on China even before the coronavirus forced the country into quarantine. Car sales were down in 2019 after years of double-digit growth, largely because of the trade war with the United States.Osram had turned bearish on China even before the coronavirus forced the country into quarantine. Car sales were down in 2019 after years of double-digit growth, largely because of the trade war with the United States.
The problem is that there is no other market to take China’s place as an engine of world growth. India has potential, but is too disorganized, Mr. Berlien said. Middle Eastern countries like Saudi Arabia and Qatar are no longer as wealthy now that oil prices have collapsed.The problem is that there is no other market to take China’s place as an engine of world growth. India has potential, but is too disorganized, Mr. Berlien said. Middle Eastern countries like Saudi Arabia and Qatar are no longer as wealthy now that oil prices have collapsed.
Osram’s diminished expectations for China reflect a deepening skepticism across Europe about the benefits of turning to the Asian superpower in times of need. Phil Hogan, the European Union trade commissioner, echoed the concerns of officials in Germany and France when he called in April for a discussion “on what it means to be strategically autonomous.”Osram’s diminished expectations for China reflect a deepening skepticism across Europe about the benefits of turning to the Asian superpower in times of need. Phil Hogan, the European Union trade commissioner, echoed the concerns of officials in Germany and France when he called in April for a discussion “on what it means to be strategically autonomous.”
Osram, which provides lights for cars and other uses, didn’t need the nudge. It has four factories in China, Mr. Berlien said, but the company manufactures its more sophisticated products in Malaysia, Germany and the United States because of China’s lack of protection for intellectual property.Osram, which provides lights for cars and other uses, didn’t need the nudge. It has four factories in China, Mr. Berlien said, but the company manufactures its more sophisticated products in Malaysia, Germany and the United States because of China’s lack of protection for intellectual property.
“China is no longer the workbench of the world,” he said.“China is no longer the workbench of the world,” he said.
Mr. Berlien said that his company and others in Germany had learned from past crises to insure themselves against supply chain disruptions, by taking steps like having at least two suppliers of every component or raw material.Mr. Berlien said that his company and others in Germany had learned from past crises to insure themselves against supply chain disruptions, by taking steps like having at least two suppliers of every component or raw material.
Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
He added that while Osram had no plans to reduce its presence in China, the coronavirus crisis would prompt companies to look harder for suppliers closer to home.He added that while Osram had no plans to reduce its presence in China, the coronavirus crisis would prompt companies to look harder for suppliers closer to home.
“What we are all learning, and I talk to a lot of managers and C.E.O.s in Germany, is that we all have to rethink our logistics and supply chains,” Mr. Berlien said.“What we are all learning, and I talk to a lot of managers and C.E.O.s in Germany, is that we all have to rethink our logistics and supply chains,” Mr. Berlien said.
“They were very fragmented and very vulnerable,” he added. “Because of the price pressure that we are all under, we took the cheapest provider wherever in the world it might have been. We undervalued the provider who was just around the corner.”“They were very fragmented and very vulnerable,” he added. “Because of the price pressure that we are all under, we took the cheapest provider wherever in the world it might have been. We undervalued the provider who was just around the corner.”
Toto makes what China’s nouveau riche really want: electronic bidet toilets with heated seats, warm water jets, pleasingly shaped ceramic bowls and automated lids.Toto makes what China’s nouveau riche really want: electronic bidet toilets with heated seats, warm water jets, pleasingly shaped ceramic bowls and automated lids.
The company, Japan’s largest toilet maker, opened its Beijing office in 1985, and its reliance on China has grown along with the country’s rise. China accounted for half of Toto’s overseas sales last year, and it has seven factories in the country.The company, Japan’s largest toilet maker, opened its Beijing office in 1985, and its reliance on China has grown along with the country’s rise. China accounted for half of Toto’s overseas sales last year, and it has seven factories in the country.
But even after China’s lockdown closed Toto’s assembly lines in January and February, causing delays and lost revenue, the company never considered withdrawing.But even after China’s lockdown closed Toto’s assembly lines in January and February, causing delays and lost revenue, the company never considered withdrawing.
For one thing, it’s a huge market with a high rate of homeownership and rising disposable incomes. For another, many of its workers have the kinds of technical skills that Toto needs.For one thing, it’s a huge market with a high rate of homeownership and rising disposable incomes. For another, many of its workers have the kinds of technical skills that Toto needs.
“China is close to Japan, and it has the power of a lot of people,” said Sonoko Abe, a Toto spokeswoman.“China is close to Japan, and it has the power of a lot of people,” said Sonoko Abe, a Toto spokeswoman.
In daily meetings, executives discussed “how we can adjust to the situation,” Ms. Abe said. Although the company has plants in Thailand and Vietnam, it did not try to shift production, but instead relies on a pipeline of stored inventory.In daily meetings, executives discussed “how we can adjust to the situation,” Ms. Abe said. Although the company has plants in Thailand and Vietnam, it did not try to shift production, but instead relies on a pipeline of stored inventory.
Many other Japanese companies, even when there are incentives to look elsewhere, are stepping away from China only slowly, if at all.Many other Japanese companies, even when there are incentives to look elsewhere, are stepping away from China only slowly, if at all.
The Japanese mask maker Iris Ohyama, for example, which has factories in Dalian and Suzhou that produce goods for both the Chinese and Japanese markets. It is drawing on some of the government’s funding to open new factory lines in Japan to accommodate the domestic market, and is exploring options in France and the United States.The Japanese mask maker Iris Ohyama, for example, which has factories in Dalian and Suzhou that produce goods for both the Chinese and Japanese markets. It is drawing on some of the government’s funding to open new factory lines in Japan to accommodate the domestic market, and is exploring options in France and the United States.
But it has no plans to stop manufacturing in China. “We think the Chinese market is very important in the long run,” said Atsuko Kido, a spokeswoman.But it has no plans to stop manufacturing in China. “We think the Chinese market is very important in the long run,” said Atsuko Kido, a spokeswoman.
It is also important right now: The International Monetary Fund has reported that China will be one of the few countries to see economic growth in 2020, while the U.S. economy is expected to contract by about 6 percent and the eurozone by 7.5 percent.It is also important right now: The International Monetary Fund has reported that China will be one of the few countries to see economic growth in 2020, while the U.S. economy is expected to contract by about 6 percent and the eurozone by 7.5 percent.
Kathy Matsui, chief Japan equity strategist at Goldman Sachs in Tokyo, said that in a time of severe economic pressure, even those who oppose China’s politics feel that they need the country’s economy to prosper.Kathy Matsui, chief Japan equity strategist at Goldman Sachs in Tokyo, said that in a time of severe economic pressure, even those who oppose China’s politics feel that they need the country’s economy to prosper.
“We are all interconnected,” she said. “So it’s vital that China continues to grow for pretty much every major economy around the world.”“We are all interconnected,” she said. “So it’s vital that China continues to grow for pretty much every major economy around the world.”
Makiko Inoue contributed reporting.Makiko Inoue contributed reporting.