Normally, no electronics company wants extra inventory. Operating under the rigors of “just in time” delivery, businesses can afford to carry only a few weeks’ — or sometimes even just a few days’ — worth of extra parts. In the electronics hubs of China, such as the Pearl River Delta in southern Guangdong province, so many suppliers have built factories that it’s easy to get parts quickly. And that’s essential: With prices falling because of the prolonged tech slump, corporations more than ever need to keep down their manufacturing costs. And that means they need to keep inventory levels low.
That’s the situation in normal times. But with severe acute respiratory syndrome (SARS) wreaking havoc with economies in Greater China, things are anything but normal these days. That’s why some electronics outfits are doing a sudden reversal: Rather than reducing their inventory levels, they’re actually increasing them. The goal is to provide some buffer in case of a shutdown if somebody at their factory — or at a supplier’s factory — becomes a suspected SARS carrier.