Yahoo Finance’s Akiko Fujita joins the On The Move panel to discuss the impact that the coronavirus has had on global supply chains disrupting many businesses.

Video Transcript

- I want to bring Akiko Fujita into this. Because we look at places like India, part of the global supply chain, on lockdown. 1.3 billion people on lockdown. So Akiko, when we look at supply chain and what's happening, we know that China is slowly getting back to work, but is it going to be fast enough? Is it sufficient?

AKIKO FUJITA: Yeah, we have a tendency to really focus on China because of just, the amount of manufacturing that happens out of there. But what you're seeing right now is just, how complex the global supply chain. And companies all around the world-- whether it is the big pharmaceuticals, the big hospitals, or the apparel makers-- are mapping out their supply chains right now and finding that there are closures on so many different levels.

In the long-term, what I'm increasingly hearing is that this is going to force a dramatic rethink-- a decoupling, if you will-- of these supply chains. Instead of putting that factory over in China, we may see, at least companies in North America, move things back to Mexico.

Or if you look in Europe, for example. With all the focus on China, a lot of the medical supplies and medicine comes out of Europe, too. So what happens when Italy shuts down? What happens when France shuts down? It's an interesting conversation that's happening right now.

What we should point out, though, is that there is a long-term conversation that's happening, which is at the end of all of this, where do we put our factories? And do we bring them regionally closer? In the short-term, all fingers are pointing back to China right now. Because that is the country that is starting to reopen everything. And we are seeing a lot of the manufacturing, the huge demand for medical supplies globally helping to fuel that bounceback that we're seeing over in China. Anywhere from 50% to 65% capacity is what I'm hearing, in terms of how things are operating there.

So in the short-term, the closures that we're seeing globally are going to help the Chinese companies. But I think in the long-term, you're certainly going to want to watch to see how companies increasingly diversify where their factories are. Because what this has taught us is that basically, you just can't rely on one specific region. Because when that shuts down, you don't have other alternatives.

- I want to read, Akiko, from Johnson & Johnson-- third largest pharmaceutical company in the world, largest in the United States. And here's what they said about their supply chain. That they're taking steps that include maintaining key inventory at major distribution centers away from high-risk areas and working with external suppliers to support our preparedness plans.

Is that going to be sufficient? Because we know that New York City is the epicenter of coronavirus outbreak in the United States. But that's going to start moving westward. And it's going to move east from the West Coast, is it not?

AKIKO FUJITA: I think one of the challenges of this pandemic is just not knowing which direction things head in. One of the things we talked about last year during the US-China trade war is the shift in supply chains. But in many ways, that was so much easier because you knew when the tariffs were going to take effect.

Now what you're having companies having to assess is, where are we seeing the hotspots? Looking at some of the medical data that's coming in and then trying to get ahead of it. Which is a lot bigger challenge. And I'm not so sure that every company really has the direction, all the visibility to map out exactly where they need to be to keep their businesses operating right now.

- And Akiko, I guess, I'm just wondering, what types of industries have you seen in the countries that have been able to get started back up again were kind of the first to reopen their doors, if you will? I know in China, for example, it seemed to be Apple retail stores that were among the first to reopen. So is it tech? Are there other types of industries that are best prepared and have the most capital to open up on day N plus one of whenever we get out of this?

AKIKO FUJITA: Apparel, you could argue, is probably easiest to uproot because the supply chains aren't as complicated. You saw that during the trade war with China, a lot of companies moving to Vietnam. Still sourcing raw materials out of China, but being able to manufacture things in Southeast Asia.

One of the interesting conversations I had yesterday with a professor over at USC who has been consulting with these companies on their supply chains is the fact that he said look, at the end of the day, you're still seeing this impressive build out in China. There's a factory that within a matter of five days was able to convert their operations over to building out masks, building up ventilators. And then ship them over to the US to one of the big hospitals. And so, we are seeing that ramp up.

The tech sector is the most complicated right now. Even if you look at semiconductors, we're talking about three, four different layers. Starting in Japan, moving over to Taiwan, going to South Korea, and then, finally being placed in products in the US. So that's going to be a lot more difficult to diversify. And so that's what I'm watching very closely.

Because if things starts start up in China, how quickly will it take for us here in the US to see the impact on that front.