THE EFFECTS OF COVID-19 ON MANUFACTURER OPERATIONS: EVIDENCE FROM CHINA

ABSTRACT

The COVID-19 outbreak has spread globally at an extremely fast pace and has seriously affected the economic development and stability of the social order in various countries, impacting the normal business operations of manufacturers. In this study, a sample comprising 1329 manufacturers in Hangzhou, China is analysed using logistic regression and path analysis methods to identify the main factors related to COVID-19 that affect manufacturers' operations, as well as the possible causal relationships between them. The empirical results of the logistic regression reveal that COVID-19 primarily affects the operating performance of manufacturers in five regards business continuity, capital chain gap, supply chain integration, laborforce availability, and stimulating policies. The conclusions derived from the path analysis indicate that the degree of traffic and logistics congestion is a key factor, as it hinders manufacturers' business continuity, which ultimately causes a gap in the capital chain and determines manufacturers' demand for stimulating policies. Based on the research results, we propose recommendations to support manufacturers in their efforts to resume operations and realise economic recovery.