China will be less the 'factory of the world' after coronavirus: Expert

CNBC's Kelly Evans breaks down the future of supply chains with Ian Bremmer of Eurasia Group.

At some point, the biggest American companies are going to tell their employees it’s time to leave home and return to work.

That decision will be fraught with risk without widespread testing for the COVID-19 virus. For some industries, such as Wall Street banks, ubiquitous testing is essential to bringing back their workforce to offices around the globe. For other industries, such as automakers, plans are already being made to open factories in a few weeks, with Fiat Chrysler and Tesla both saying they expect to begin production again on May 4.

Other industries, especially retail, are looking to China for guidance. China’s economy has been slowly coming back online in recent weeks as the government lifts lockdown orders. As people begin shopping there again, retailers like Levi Strauss said they’ll be looking at consumer habits and adapt accordingly once stores open in the U.S. Other retailers are expecting an acceleration of the shift to online shopping as people are forced to order goods online during the lockdown. That’s bad news for malls and other brick-and-mortar stores that will have to adapt to lower foot traffic.

How the U.S. will go from widespread quarantine to some semblance of normal is still a giant unknown. But returning to work will almost certainly happen in waves, driven by consumer demand and employer desperation, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

“For some things demand will snap back immediately,” said Gordon. “Those jobs — dentists, health care, barber shops — there’s a backlog of demand. Then there’s a similar category, like restaurants and bars, where people may be cooped up for so long that they’re desperate to go out to eat or get a drink. For other industries, the same urgency may not exist. It’s going to take a while for people to start buying new cars and new homes. And for some industries, like retail and airlines, things may never get back to normal.”

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