Coronavirus:Impact of New Crown Epidemic on Manufacturing Industry and Analysis of Market Opportunities

At present, the new coronavirus is entering an "outbreak period", and the people of the country are working together to fight the virus.
During special periods, the country extends the Spring Festival holiday, traffic control is implemented in major cities, and medical supplies are in short supply in the short term. What is the impact of the epidemic on China's economy? How does it affect manufacturing? Will the automation industry decline further in 2020? Look at Rui Industry's detailed analysis of these issues.
Source | This article is published under license from MIR
Author | Mao Ying / Kang Anqi
Analysis of the overall impact of NO.1 on China's economy
● The most important reference is the impact of SARS on the Chinese economy in 2003. The GDP of that year had a significant decline in the second quarter, but under the circumstances of China's rapid economic growth after China's entry into the WTO at that time, the impact was very short.

(Data source: National Bureau of Statistics)
● The current situation is very different from that in 2003. On the one hand, China's total GDP and economic strength are different from the original; on the other hand, China's economic situation in 2019 due to the Sino-US trade war and the electronics industry The impact of the industrial cycle of the automotive industry is severe. Therefore, judging future economic trends will be more complicated. The author believes that the most critical factor is whether the epidemic can be effectively controlled within a short period of time. According to the current situation of China's economic development, the strong thrust of 5G, semiconductors, new energy vehicles, and the end of the Sino-US trade war, if the epidemic can be controlled within a short period of time, China's economic situation is better than last year's high probability event.
Impact of NO.2 epidemic on manufacturing
● The outbreak has also had a greater impact on Chinese manufacturing. Central China, centered on Wuhan, Hubei, has always been one of the centers of Chinese manufacturing. Even if the epidemic is under control in the near future, due to the combined effects of personnel isolation, prolonged holidays, and traffic control, it is difficult for the manufacturing industries in Hubei and Wuhan to recover in the short term. The author summarizes the situation of the most affected industries as follows:

(Data source: MIR Databank)
● Nevertheless, the outbreak will also have a beneficial impact on a few industries, especially those related to medical supplies. From a national perspective, medical masks and related protective equipment industries are the industries that most directly benefit. Among them, Zhejiang, Shandong, Jiangsu, Henan, Hebei, and Guangdong provinces have relatively concentrated production enterprises. From the perspective of automation, a large change in demand and supply in the short term is one of the application scenarios of intelligent manufacturing. Therefore, it is the best time to promote digitalization to these enterprises in 2020.
Distribution map of national medical masks and protective equipment enterprises

(Data source: MIR Databank)
● In addition, new coronavirus inhibitors are also under intense development. According to the author's current situation, the nation's major medical virus research institutes are cooperating with some well-known pharmaceutical companies to develop related drugs. Once the relevant formulation is developed and passed the test, it will be mass-produced in the short term. The following companies deserve immediate attention:

(Data source: MIR Databank)
● The pharmaceutical equipment industry is also one of the beneficiary industries. Among the various pharmaceutical equipment, pharmaceutical packaging equipment has the largest sales volume and the largest number of manufacturers. The following table analyzes the situation of pharmaceutical packaging equipment and related companies:

(Data source: MIR Databank)
● In addition to the pharmaceutical-related industries, a new round of hospital construction is also essential. Through this epidemic, fever clinics for medium- and large-scale medicine are set up independently, and various isolation measures for fever wards will be systematically put on the agenda. This will drive the rapid development of related industries, such as the HV / AC industry.
NO.3 forecast of the automation market in 2020
● First of all, you should understand that before this epidemic, in 2019, due to the impact of the Sino-US trade war, the electronics industry, and the automotive industry cycle, the growth rate of most products in the automation market did not meet expectations or was negative. Some well-known foreign companies, such as Siemens and GE, have experienced layoffs. Some companies that have maintained rapid growth in previous years, such as Huichuan, have also experienced a significant decline in growth rate in 2019. Beginning in 2020 to catch up with such an epidemic, the prospect of the automation market is not optimistic. However, the author believes that under such strict and powerful measures across the country, the rapid control of the epidemic is a high probability event, so the impact on the market throughout the year is relatively limited. Moreover, with the large-scale application of 5G in China this year, electric vehicles, semiconductors and other industries have strongly promoted the Chinese economy, and the situation in the automation market will be better than last year.
■ The growth rates of major products are forecasted as follows:

(Data source: MIR Databank)
● There are a wide range of application industries for automation downstream, which basically involve all walks of life, and the development of different industries is not the same. The chart below shows the growth of MIR's automation products in various industries in 2020.
■ Equipment manufacturing industry:
Growth rate of automation products in various equipment manufacturing industries

(Data source: MIR Databank)
● As can be seen from the above chart, most industries are still negatively affected in 2020 due to the overall economic downturn in the manufacturing industry. However, like the semiconductor industry and the lithium battery industry, which are national policy tilt industries, they will still grow rapidly in 2020. The pharmaceutical industry and logistics industry are the beneficiaries of the epidemic. Electronics industry, LCD industry, with the popularity of 5G mobile phones, will grow rapidly in 2020.
■ End-user industry:
Growth rate of automation products by end-user industry

(Data source: MIR Databank)
● See the chart above for the end user industry growth forecast. Metallurgical, chemical and other industries will maintain a good growth trend in 2019, while the transportation industry, due to the impact of the epidemic, will see a sharp decline in growth. In addition, the automotive industry has fallen into a trough in 2019. MIR expects that in 2020, with the pull of new energy vehicles and the conclusion of a new Sino-US trade agreement, the overall automotive industry will improve.